PPI Contracts
7) What activities can be included in PPI contracts and how are they typically combined?
8) What does the Letter of Intent to Negotiate (LOI) include?
9) Who approves the LOI?
10) Is the LOI binding to either the state or the private entity?
11) Does an approved LOI mean that the project as proposed will be built?
12) If the LOI is approved, what are the next steps?
13) What does the Project Framework Agreement (PFA) include?
14) What activities are included under the Developer Services Agreement (DSA)?
15) If the PPI project is implemented, how will GDOT ensure that environmental regulations are followed and enforced?
16) Will GDOT have less control over engineering and construction related project decisions?
17) What activities are included under the Contract for Public Private Initiative (CPPI)?
Managed Lanes
18) What are managed lanes and how are they used?
19) How does congestion pricing work?
20) What are the benefits of HOT lanes?
21) How will HOT lane tolls be collected?
22) What are the benefits of TOL/TOT lanes?
PPI
PPI was introduced in the Georgia legislature in 2003 and implemented under Senate Bill 257. This law created the process that allows the Georgia Department of Transportation (GDOT) to consider unsolicited proposals from private companies to build transportation improvement projects. Fully supported by the Federal Highway Administration (FHWA), public-private partnerships have been used successfully in many other states for almost a decade.
In 2005, the Georgia General Assembly passed Senate Bill 270, which amended SB 257 and gave GDOT the ability to solicit proposals for much-needed transportation projects, extends the time for receiving competing proposals from 90 to 135 days, and most importantly, provides more opportunities for public review and input.
The Public-Private Initiative (PPI) is a faster, more streamlined process for meeting Georgia's transportation needs. PPI allows the Department to partner with private/corporate businesses to help finance, design, construct, operate and/or maintain transportation projects.
Georgia is challenged by a fast-growing population and expanding commerce, which impact our transportation infrastructure needs. Traffic congestion is the number one transportation issue in Georgia's metropolitan areas, while improving access to education and jobs drive transportation priorities in other parts of the state. There are not enough resources to meet all of our state's transportation needs in a timely manner with the current funding and delivery methods. PPI gives us a faster and more efficient way to solve our transportation problems without compromising quality. The private partners bring innovation, new technology and private resources and capital to a project, which may free up state resources for other transportation needs. Whether or not the PPI proposal develops into a final contract for construction, GDOT can continue to use the design and engineering documents produced by the private partner to continue working on the project.
There are two types of PPI proposals: unsolicited and solicited. For unsolicited proposals, private entities can submit a unique and innovative proposal for the finance, design, construction, operations and/or maintenance of a transportation improvement of facilities for consideration by GDOT. GDOT can also solicit proposals for transportation projects, as a way to accelerate necessary improvements to the transportation infrastructure. Both unsolicited and solicited proposals must meet the requirements of state law.
Yes! PPI is new and innovative project delivery process, which allows the Department to partner early-on with an integrated team of designers and contractors to provide faster and more efficient project delivery in comparison to the traditional design-bid-build method. A typical PPI project utilizes the design-build method of project delivery, thereby, streamlining project delivery time and costs. The design-build delivery process can also be used for other transportation projects.
PPI projects are financed through a variety of revenue sources, which may include any combination of the following:
- Grant anticipation bonds (GARVEEs and GANs);
- General obligation bonds;
- Flexible Matching (including toll credits);
- Section 129 Loans;
- Transportation Infrastructure Finance and Innovation Act (TIFIA) Credit;
- Direct user charges (tolls and transit fares) leveraged to obtain bonds;
- Equity partnerships and revenue sharing; and,
- Concessions or long term leases.
No, roads constructed under PPI contracts will be designed and built to GDOT approved design standards and specifications comparable to other projects in the state. Although there may be new transportation choices for drivers such as managed lanes, the roads will be appropriately signed, user friendly, and easy to navigate.
PPI Contracts
Public-private initiatives can be applied to a large range of transportation functions across all modes including: Project conceptualization and origination; Design; Financial Planning and finance; Construction; Operation; Maintenance; Toll Collection; and, Program Management. These activities are typically bundled into contract packages reflecting the public agency’s objectives related to: schedule and cost certainty; innovative finance; or transfer of management and/or operational responsibility. Typical procurement packages include:
- Private sector operations and maintenance on a performance basis;
- Private sector program management for a fee and/or with program costs and schedule maintenance incentives;
- Design-build for fixed fee on fixed time frame;
- Project build-operate-transfer (BOT);
- Design-build finance-operate-transfer (DBFO); and,
Build-own-operate (BOO).
The LOI outlines the project description, proposed schedule and terms of the project, and allows GDOT and a private entity to begin negotiating the details of a proposed transportation improvement project. The LOI is not a binding commitment for GDOT or the State of Georgia.
If the State Transportation Board receives and reviews:
- a favorable recommendation by the Department,
- a favorable recommendation by the Evaluation Committee,
- results from the public comment period of 15-days;
then, the State Transportation Board, in an open meeting, may decide whether to approve the LOI.
No, the LOI is not binding to either party. It merely establishes the framework for future agreements between the two parties for the project development.
No, the signing of an LOI begins negotiations for the project. The LOI does not necessarily mean the project will be built at all or that it will be built as a PPI. The project still has to go through an environmental process where the aspects of the project may be modified from the original PPI conceptual proposal.
Upon approval of the LOI, the Department and the private developer will negotiate a project framework agreement and the developer services agreement to assist the Department in advancing the project.
The PFA is a general outline of the activities that occur after the LOI has been approved and before the final contract (CPPI) is executed including the following: Framework for the project including schedule/ milestones; Roles and Responsibilities of Department, Developer, and other agencies or parties; Project development obligations and finance provisions; Design, Construction, and Operations provisions; and/or Risk Management and liability provisions.
The DSA is a contract similar to a traditional Consultant Services Agreement that defines the roles of the developer during the development phase, which may include: Coordination of overall project development; design support for the environmental process; investment grade traffic and revenue studies; preliminary engineering; ROW surveys, plans, and draft agreements; utility identification; fixed price cost proposal for Design-Build contract; and financial plan.
The PPI project will be subject to the same environmental process as any other project. Federal and state agencies, through continuous project guidance and oversight, will ensure project decisions are compliant with state and federal regulations including appropriate public input and stakeholder reviews.
No. Engineering and construction-related project decisions will be subject to GDOT oversight, according to terms of the agreements to be negotiated prior to the Development and Design Build phases.
The final contract or CPPI includes the final terms for professional and engineering design services, finance, construction, maintenance and/or operation of the transportation facility. The CPPI will allocate risk and liabilities.
Managed Lanes
Managed lanes are used in conjunction with general purpose lanes to improve traffic flow on the overall highway system and are restricted based on occupancy, tolls and/or vehicle classification. Types of managed lanes include: High Occupancy Vehicle (HOV); High Occupancy Toll (HOT); Truck Only Lanes (TOL); Truck Only Toll (TOT); and Express Toll Lanes (ETL).
"Congestion Pricing" refers to managing traffic flow by charging a variable price depending on traffic conditions and may vary by time of the day, day of the week or direction. This typically involves higher prices under congested conditions and lower prices at less congested times. Congestion pricing is intended to reduce peak-period vehicle trips. Tolls can vary based on a fixed schedule, or the rates may change depending on the level of congestion that exists at a particular time. Highways may have a combination of free lanes and congestion priced lanes, allowing motorists to choose between driving in the free general purpose lanes or paying a toll for a faster and more reliable trip.
 |
SR 91 HOT Lanes in California |
High Occupancy Toll (HOT) lanes are "managed" through congestion pricing to maintain free flow conditions even during the height of rush hours and provide the following benefits:
- New transportation choices for drivers willing to pay a premium for this service.
- Faster and more reliable travel times to users including buses.
- New sources of funding to pay for transportation improvements.
- Better utilization of the HOV lanes.
- Reduced congestion in existing general purpose lanes.
HOT lane tolls will be collected electronically allowing vehicles to maintain travel speeds by eliminating toll booths.
 |
Separate truck lanes with exit ramps that overpass or pass under automobile traffic |
Truck Only Lanes (TOLs) are managed lanes primarily intended for the use of heavy trucks and are typically barrier separated where feasible. These lanes would primarily serve "through-trucks" which do not have local deliveries. These options improve safety and operations by physically separating heavy trucks from automobile traffic and provide truckers with faster and more reliable travel time. Truck Only Toll (TOT) Lanes include the same benefits as TOLs and are a combination of TOLs with tolling to allow heavy trucks to the use TOLs by paying a toll.
