DTP will design-build-finance-operate-maintain (DBFOM) these lines over a 34-year period, the total contract length. “That’s very unique and very successful to date,” Van Meter says. “The bid came in well under our budget. I think because these concessionaires to bid on the job, they really have skin in the game.”
The public-private partnership route was a financial strategy to get projects underway. But at this point, Van Meter says, “The more we got into it, we just felt it was a good procurement process and we get a lot of innovation and risk-sharing with the private sector.” He adds, “We’re pretty pleased with how it’s turning out.
Washington stresses, “You’re moving the project forward sooner than you would be able to without this private sector financial involvement.”
He calls it the three-legged financing stool and says he thinks it’s the process that’s going to be used in this country for megaprojects.
“This three-legged financing stool is the private sector with that one leg of that stool, the private stool, the private sector funding – in our case to the tune of about $486 million,” Washington says. “Then you add the local investment, ie sales tax to the tune of about $500 million and then you add the federal involvement of the 1.03 billion full funding grant agreement.
“It takes all three to do these multi-billion dollar projects of infrastructure, whether it’s rebuilding or building it out, you’re going to need all three.”
And to people that say there shouldn’t be any federal involvement? “No, there has to be,” Washington says. “There’s always been federal involvement, whether you’re talking about the building of the Trans-Continental Railroad, the Erie Canal, the Interstate Highway System; there’s always been these public private partnerships out there.
“So we preach that we’ve got this three-legged stool and we needed all three to get it done.”
One thing Washington says is important with a PPP, to understand the allocation of risk between the public agency and the concessionaire. “Understand how to put together the risk allocation matrix,” he explains. “Who takes on what risk; who takes on the risk of the ridership; who takes on the fare risk? Put these risks in some type of matrix and decide who does what and how you cross those things out.
“That was a big one for us in terms of this procurement,” he stresses.
With many more lessons learned, there will be an article focused on public-private partnerships and the Eagle P3 Project in the Mass Transit March issue.
Transit Means Jobs
I talked to a lot of RTD and FasTracks employees about the massive infrastructure projects underway and they, in turn, talked about all of the other jobs that are being created in the region. FasTracks West Corridor Construction Project public information officer with Denver Transit Construction Group (DTCG), Kathy Berumen stresses, “We have had a significant economic impact; we spend 250 million in local subcontractors. It’s been substantial.”
Washington says RTD has always had a pretty strong minority-owned, woman-owned, veteran-owned business program. “I think that our team took it to a new level,” he says.
“We know small businesses in this country hire the most people and so we advocate very aggressive goals on projects, that we have a very strong compliance piece that says to a prime, ‘Hey look, when you bring a small business on to a project, we’re going to bring your feet to the fire to give them meaningful work and do what you say you’re going to do. You’re not going to be putting small businesses on a project just to get the bid and then six months later you kick them off, you have to come to us.’”
And to do this, it also means training your project managers, Washington says. Project managers are trained in the DBE, small-business area and they are encouraged to unbundle packages. There is also a goal on everybody’s performance appraisal, a small business goal. When these goals are tied to money, like being tied to an employee’s performance appraisal, Washington says, “You’ll be surprised how folks start looking at the program differently.”