CMAA Owners Forum May 3, 2010

1. CMAA Owners Forum May 3, 2010 Ronaldo T. Nicholson, P.E. Chief Engineer District Department of Transportation

2. Past, Present, and Future • USA Past • National Road 1806 - 1839 • The Federal Aid Road Act of 1916, (established a federal-state partnership) • USA 1920’s and 1930’s • Toll roads or “free” roads? • Needs based or public works programs? • Federal-Aid Highway Act of 1956

3. Past, Present, and Future • The funding debate • Toll roads or free [taxed] roads? • A public works program or a needs based system? • Bureau of Public Roads [FHWA] • 1939 Report to Congress • Fundamental premise of the Interstate Highway System • Toll roads would not satisfy all needs • Promoted tax based system of funding

4. Past, Present, and Future Current Nationwide Transportation Fund Trends • Reliance on Federal funds increased • Revenue was static • Buying power diminished • Maintenance and Operations Cost increased • Transportation needs increased

5. Past, Present, and Future • Present Challenges • The highway system is aging • Maintenance requires increasingly larger share of budget • Population and economy are growing • Current needs exceed available funds • A strong economy requires efficient transportation • For FY-10 • Maintenance cost increased as services decrease • Construction funding remained static; • Down turn in economy was reflected by reduced state revenues

6. Owner’s Challenges • Funding • 100-year tradition • Design – Bid – Build • Means and methods • Design-Bid-Build are DOT’s most common project delivery method • Match delivery method to project needs D-B-B and DB and P3 are Fundamentally different

7. DB Time Savings

8. Public-Private Partnerships • Policy • A public need for timely transportation development • Current methods may not be adequate • Private development or operation may be more timely or more efficient or less costly – thereby serving the public interest • Intent is to encourage private investment in transportation facilities • Innovative improvements • Investment of private funds/equity of funds not otherwise available • Risk sharing • Such partnerships are for carefully selected projects

9. Project Delivery Options Design Build Operate Maintain (DBOM) Design Build Finance Operate (DBFO) Design Build Own Operate (BOO) Private Contract Fee Services Long Term Lease Agreement Design Bid Build Design Build Public Agency Controlled Public Private Partnerships Concessions / Privatizations More Private Sector Control Public Pays Tax Exempt Financing Public Control Public Equity User Pays Taxable Financing Private Control Private Equity

10. Degree of Risk Time Project’s Life Cycle Risk Profile Financial Close Startup- Turnover Political Availability Traffic and Revenue Performance O&M Costs Environmental Quality Changes Legal Financing Schedule Cost Development Design and Construction Operations & Maintenance

11. P3 Risk/Cost Management • P3 – lowest cost program delivery • Parallel interests with Owner • DB a phase prior to O&M • Rewarded for managing life-cycle costs • Business deal must make sense, but successful relationship is essential

12. PPTA DB Contract Issues • Concession agreement between owner and concessionaire • DB terms • Contract between Concessionaire and DB • Concession agreement describes • Scope • Reference standards • Relationship between Owner’s IA/IV and Concessionaire’s independent engineer

13. PPTA Concession Agreement • A comprehensive DBOM or O&M contract with single-source delivery • Applies to various funding schemes • Public funds • Private financing • Mixed funding sources • Not limited to revenue positive projects • Concessionaire is responsible for service delivery

14. Past, Present, and Future • Future PPTA or P3s - A fundamentally different way of doing business • Long-term partnerships that accommodate change • Shared risks/rewards based on effective, long-term successful performance • An important part of a DOT’s solutions – applicable to select few projects

15. Industry’s Challenges • What is your business objective? • Design - construct - get out • DBOM - long-term stake in outcome • P3 is fundamentally different • Primary project delivery methods • Design-Bid-Build • Design-Build • PPTA • Private companies can succeed or fail, and they do both equally well • Engineering is the easy part …

16. Public Perceptions • P3 is not a panacea • Most roads are not attractive as an investment • Choose projects carefully • Create a fair and competitive procurement environment • Optimize use of public and private funds

17. Other Virginia PPTA Efforts • Mid-Town Tunnel, Petersburg Va • Dulles Corridor Metro Extension, Fairfax Virginia • US 460 Corridor Improvements, City of Suffolk Virginia to Prince George County Virginia • Route 28 Improvements, Fairfax & Loudoun County Va

18. Current PPTAVirginia Hot Lanes • Two separate projects in different stages: • Capital Beltway • I-95/395 • Proposed 70-mile, seamless network • Adds new lanes to region’s most congested routes • Expands public transportation and carpooling • Provides new option to pay a toll for faster, more reliable trip time with a free alternative always available

19. Capital Beltway HotlanesContractual Arrangements Capital Beltway Express LLC Amended Reinstated Comprehensive Agreement Design-Build Contractor Operations & Maintenance Design-Build Contract O&M Contract Subcontractors Consultants/Subcontractors TMS Integrator – TBD ETC System Integrator - TBD

20. 14-miles of two new lanes in each direction Beginning this summer construction is expected to take 4-1/2 years Scheduled to begin operation in 2013 Replacement of more than $260 million of aging infrastructure, including more than 50 bridges & overpasses, with pedestrian and recreational facilities. 70,000 lf of Soundwalls. Average toll expected to be $5-$6 during rush hour Capital Beltway HOT Lanes

21. 11th STREET BRIDGE PROJECT 11th Street Bridge Project 11th street over the Anacostia River

22. PROJECT LOCATION IN DISTRICT OF COLUMBIA Project Site

23. PROPOSED TRANSPORTATION IMPROVEMENTS

24. KEY 11TH STREET BRIDGE PROJECT ASPECTS • Improve mobility through separate new freeway and local connections • Provide shared pedestrian/bicycle path and streetcar rails • Provide alternative evacuation route from Nation’s capital • Include environmental investments SOUTHEAST/SOUTHWEST FREEWAY MARITIME PLAZA M STREET SE ANACOSTIA PARK FREEWAY BRIDGES NAVY YARD DC 295/I-295 LOCAL BRIDGE GOOD HOPE ROAD ANACOSTIA RIVER MARTIN LUTHER KING JR AVENUE SE

25. Multi-Modal Transportation oPTIONs

26. DESIGN-BUILD-TO-BUDGET • Performed by an integrated construction contractor and designer (design-build team) • Increases opportunities for innovation, flexibility, and cost-savings • Allows construction to begin sooner after the project is awarded • Differs from the traditional design-bid-build method in which project awarded to the lowest bidder for construction. • $260 million design-build contract

27. DESIGN AND CONSTRUCTION CONTRACTOR A joint venture of Skanska USA Civil of Alexandria, Va., and Facchina Construction of La Plata, Md