P3 Focus

As federal, state, and local budgets continue to shrink and the nation’s infrastructure needs escalate, the prospect of integrating private financing into the nation’s infrastructure investments is gaining steam. As such, it is expected that public-private partnerships (P3) will become increasingly important financing mechanisms for future infrastructure investments throughout the US.

P3 Focus offers a snapshot of the dynamic and rapidly evolving P3 market in the US.1 This issue’s P3 Focus looks at three recently closed deals (Luis Muñoz Marín International Airport P3, the East End Crossing P3, and the Ohio State University Car Parking Concession), and provides an overview of recently passed and potential upcoming US P3 legislation.

Deal Flow

In the first half of 2013, deal flow remained relativelyslow, but not insignificant, with two P3 deals reaching fi nancial close for a total value of about $1.7 billion. The number of industry forums and requests for information (RFIs) issued has been encouraging, with seven forums being scheduled or having taken place since April 2013, including the Purple Line in Maryland, the Illiana Parkway in Illinois and Indiana, and the I-4 Ultimate project in Florida.

Luis Muñoz Marín International Airport P3

The Luis Muñoz Marín International Airport P3 in San Juan, Puerto Rico, reached financial close in February 2013 (Box 1). The project is a long-term airport concession that grants a private concessionaire the right to operate, manage, maintain, develop, and rehabilitate the airport. The airport has five terminals and two runways, saw enplanements of 4.1 million in fiscal year 2011, and has a capacity of five to six million enplanements. The deal includes an upfront fee of $615 million and has a 40-year term.

Aerostar Airport Holdings (AAH), a joint venture between Mexican airport operator Grupo Aeroportuario del Sureste (ASUR) and US investor Highstar Capital, is the concessionaire. AAH will provide $327 million in equity and will be compensated through airport revenues, which consist of landing fees, parking fees, passenger fees, commercial revenues, and other space rentals. The deal includes a revenue sharing mechanism whereby AAH will make annual concession payments of $2.5 million to the Puerto Rico Ports Authority during the first five years, followed by five percent of gross airport revenues over the next 25 years, and 10 percent of gross revenues for the remaining years. AAH has also committed to investing $1.4 billion in capital improvements in the airport over the life of the concession, including over $200 million in the first five years.

The concessionaire obtained $350 million in financing through the issuance of commercial bonds on the private placement market, and will use the funds to help finance the upfront $615 million concession fee. The bonds have a maturity of 22 years, a yield of 5.75 percent, and received a rating of Baa3 from Moody’s.

Additionally, the concessionaire will use a $50 million credit facility in the first two or three years of the deal to fund investments, and will also receive a $10 million revolving credit facility.

East End Crossing P3

The East End Crossing P3 (Box 2) between Utica, Indiana, and Prospect, Kentucky, reached financial close in March 2013. The project, Indiana’s portion of the larger Ohio River Bridges project, involves construction of a new bridge over the Ohio River linking Lee Hamilton Highway in Indiana to the Gene Snyder Freeway in Kentucky, and completion of the I-265 loop in the Louisville-Southern Indiana metro area. The deal is structured as a DBFOM, dictating that the concessionaire will design, build, finance, operate, and maintain the project for the length of the $1.1 billion, 35-year term deal.

The concessionaire for the project is the WVB East End Partners, a consortium comprised of Vinci Concessions, Bil finger Berger, and Walsh Investors. WVB will provide $78 million in equity, and will receive availability payments from the Indiana Finance Authority funded by toll revenues. WVB will also receive a $392 million in milestone payments during the 43-month construction period.

The concessionaire raised $677 million through the issuance of private activity bonds (PABs), issued in two series: $482 million in long-term bonds and $195 million in short-term bonds. The long-term PABs were split tranches with maturities ranging from 2035 to 2051 and yields between 4.6 and 5.0 percent. The shortterm offering has a maturity of 2019, with a yield of 2.3 percent. The PABs received a rating of BBB from Fitch.

Ohio State University Car Parking Concession

A third P3 deal, the Ohio State University Car Parking Concession (Box 3), reached financial close in September 2012. This is a 50-year brown field concession to operate and maintain the parking facilities at the university, including approximately 36,000 spaces, with over 13,000 spaces across 17 garages, over 22,000 spaces on more than 150 surface lots, and approximately 150 on-street metered spaces throughout the main campus in Columbus. The deal included a $483 million upfront fee and has a 50-year term.

An Australian state-owned pension manager, Queensland Investment Corporation (QIC) will provide an equity investment and will be compensated through parking revenues. The concessionaire will be permitted to increase meter rates at 5.5 percent per year for the first 10 years (three percent at the medical center), and the greater of four percent or inflation each year thereafter.

The concessionaire raised $265 million through a term loan, and raised another $20 million through a capital expenditure(CapEx) facility. Both loans have an interest rate of LIBOR (London Interbank Offered Rate) plus 2.75 percent.

P3 Legislation

Since the last issue of EFR, there has been significant movement on both the federal and state level to continue supporting future P3 procurements.2


As noted in the last issue of EFR, both the Maryland House of Delegates and State Senate passed differing versions of P3-enabling legislation, but could not reconcile their differences before the legislative session adjourned last year. Legislation was re-introduced in January, and was ultimately passed by both bodies and signed into law by the governor this April.

New York

The Innovative Infrastructure Development Act (S740) was introduced in the New York State Assembly. The bill would grant the New York State Department of Transportation, New York State Thruway Authority, and New York State Bridge Authority flexibility to utilize P3s on transportation projects. The centerpiece of the bill is a nine member board that must approve all projects before the procurement process begins. The board would also have the power to initiate projects.

New Jersey

A3177, a bill that would establish a state transportation infrastructure bank, has passed the legislative committee and will move to the full General Assembly. Before the bill goes to the General Assembly, it must be reconciled with a parallel bill in the state Senate, to iron out differences between the two.


The Arkansas House of Representatives passed legislation in March that would allow P3 procurements for projects in mass transit, parking facilities, medical and nursing care facilities, power-generating facilities, ports, oil and gas pipelines, and water supply and wastewater treatment facilities. The bill was ultimately defeated in the state Senate, but the bill’s sponsor vowed to re-introduce legislation again at a later date.


Legislation allowing for the creation of the Oklahoma Office of Privatization has progressed out of the Oklahoma Senate Appropriations Committee. The office will be responsible for privatization and surplus asset sales practices, responding to proposals for privatization, and overseeing privatization contracting.


Legislation was introduced in the Kentucky House of Representatives that would allow the Kentucky Transportation Cabinet to utilize P3s on transportation projects. The bill has been sent to the House Appropriations and Revenue Committee, but is not expected to make it out of committee during the session due to time constraints.


The Appropriations Committee of the Florida House of Representatives passed a bill establishing procurement procedures for P3 projects and a P3 board. The nine member board will issue guidelines on P3 procurement issues such as criteria for choosing between competing proposals, suggested timelines for selecting proposals and negotiating an interim or comprehensive agreement, and consideration of the non-financial benefits of a proposal. The bill has been passed and signed into law. 


P3-enabling legislation has been introduced in both the Minnesota Senate and House of Representatives. The bill allows the Commissioner of MnDOT to coordinate activities to develop P3s for public infrastructure.

North Carolina

Legislation has been introduced in the North Carolina Senate that would establish the Infrastructure Development Authority (IDA), tasked with providing P3 expertise to state agencies. The IDA would assist other agencies in evaluating P3 projects, and would have the authority to undertake its own projects and issue revenue bonds.

West Virginia

The House Roads and Transportation Committee passed legislation that allows transportation P3s to use money from the State Road Fund when project costs exceed $20 million, requires earnings in excess of return negotiated in project procurement be deposited into the fund, and streamlines the P3 approval process. The bill has moved to the Finance Committee.


The Texas House of Representatives passed a bill that authorizes 23 projects to enter into comprehensive development agreements (CDA), including new projects and others that previously received legislative authorization to enter into CDAs.


While much of the noted legislation has only advanced out of committee, many state legislatures are still in session. Further movement on this legislation may occur after the writing of this Perspective.



  1. Information in this article is taken from publicly available information.
  2. Legislation presented in this section is not a comprehensive list, and is current as of April 30th, 2013. Information is subject to change.


Image Header Source: Kristopher Volkman (Creative Commons)