Rail

Chicago Transit approved to pursue PPPs

Posted on February 9, 2012

The Chicago Transit Authority (CTA) was approved to engage financial advisors to pursue innovative, alternative financing options to invest in transit projects in the coming years.
 
With more than $5 billion in capital needs envisioned for the Red Line, CTA is taking steps to explore a range of opportunities for revenue, investment and financing, including public-private partnerships that would reduce reliance on traditional funding sources, officials said.
 
“Traditional federal, state and local funding sources are uncertain, and may be insufficient to meet our needs within the next several years,” said CTA President Forrest Claypool. “This agreement will allow the CTA to pursue innovative ideas and possible new funding sources to complete some of the important projects we have planned.”
 
Among those projects are the modernization of the Red and Purple Lines north of Belmont (known as Red-Purple Modernization, or RPM) and an extension of the Red Line from 95th Street terminal south to 130th Street.
 
Public-private partnerships, or P3, could entail transit-oriented development, new non-farebox revenue sources and other ways to capture real-estate value created by the Red Line.
 
In the first year of the four-year agreement, the financial advisors will not be paid, as they complete an intensive due diligence process to assess how P3 approaches could add value and/or reduce costs for Red Line projects.
 
The lead financial advisor would be Goldman Sachs, supported by two co-financial advisors — Chicago-based Loop Capital Markets LLC and Estrada Hinojosa & Co.
 
They will be paid a monthly fee in the remaining years, as well as small percentage of any successful transactions. The advisors were chosen through a professional services agreement, and their selection was based on their industry expertise and strong experience with P3s, transit finance and municipal financing.
 
Public-private partnerships have helped improve transit and transportation systems across the country and throughout the world. Notable examples of P3s for transit include the Canada Line in Vancouver and the Docklands Light Railway in London.
 
In the U.S., a key precedent for such deals is the Denver RTD Eagle P3, a $2 billion new commuter rail project currently under construction. The project represents the first transit public-private partnership in the country in which a private consortium will design, build, finance, operate and maintain a new transit line in return for payments from the public agency based upon performance. The Eagle P3 project is being recognized nationally as a model for efficient transit project delivery, cost control and risk transfer.
 
Financial Advisor Fees
The first year of these agreements is free. CTA can terminate the agreements before starting to incur fees if we don’t think there are viable P3 opportunities to pursue further. Only if CTA decides to proceed past the first year of work will retainer fees be paid.

View comments or post a comment on this story. (0 Comments)

More News

Sound Transit orders 122 new Siemens light railcars

The $554 million order will nearly triple the fleet from its current 62 cars, adding needed capacity as rail begins to extend north, south and east as part of the Sound Transit 2 package.

Calif. SMART policy proposes cellphone ban onboard trains

The proposed ban highlights debate over the use of cellphones in public spaces for work or leisure purposes, and the annoyance many feel at being roped into someone else’s conversation.

Metra police focus on crossing violators during rail safety week

Metra police issued more than 200 citations to motorists and pedestrians who failed to obey railroad gates and signals or trespassed on railroad property. 

FTA awards $1B federal grant for San Diego trolley extension

The extension will improve access to employment hubs and numerous educational and medical facilities north of downtown, making it easier for people to travel throughout the city.

Brookville delivers first of six Detroit M-1 RAIL streetcars

The streetcar’s early arrival marks the second early delivery by Brookville this year. Two option vehicles were delivered to Dallas Area Rapid Transit six months ahead of contractual delivery this summer.

See More News

Post a Comment

Post Comment

Comments (0)

More From The World's Largest Fleet Publisher

Automotive Fleet

The Car and truck fleet and leasing management magazine

Business Fleet

managing 10-50 company vehicles

Fleet Financials

Executive vehicle management

Government Fleet

managing public sector vehicles & equipment

TruckingInfo.com

THE COMMERCIAL TRUCK INDUSTRY’S MOST IN-DEPTH INFORMATION SOURCE

Work Truck Magazine

The number 1 resource for vocational truck fleets

Schoolbus Fleet

Serving school transportation professionals in the U.S. and Canada

LCT Magazine

Global Resource For Limousine and Bus Transportation

Please sign in or register to .    Close