Over the last three months, the U.S. transportation P3 pipeline has gained momentum and illustrated its diversity. From parking lots to highway lighting, OEI’s newest member Yousef Salama analyzes notable transportation related P3 opportunities in the market.

These opportunities were first reported by Inframationgroup.com, which provides a subscription news service called InfraNews tailored to help the infrastructure investment community stay in the loop on major deals in the industry.

Parking Facility at the Smithsonian: sub-$100 million P3s have a place in the U.S. P3 market

After shortlisting four teams earlier this year, the Smithsonian Institute released an RFP for its $75- to 100- million parking facility. The RFP seeks a private partner to design, build, finance, operate and maintain (DBFOM) it’s parking facilities for 30 years at the National Zoo in Washington D.C. The Project includes a multi-level structure comprising nearly 1,300 parking spots, a new pedestrian bridge, a mid-zoo entry point and drop-off and turn-around access for buses. RFP responses are due in March. Metro has 87 parking facilities serving 56 transit stations with more than 25,000 parking spaces and is diligently monitoring innovations in this RFP and the parking industry at large. The reason: parking is expensive to build, maintain and operate.

Fare Collection at Massachusetts Bay Transportation Authority

The nation’s first transit-based fare system P3 was awarded in November, when the Massachusetts Bay Transportation Authority (MBTA) selected a consortium led by John Laing and Cubic to design, install, finance, operate and maintain the fare collection system in Boston. Cubic has taken on operations and maintenance of many fare systems in the past, but this partnership is unique because of its financing and availability payment mechanisms. The 13-year operating contract is valued at $724 million and includes two five-year extensions. The new system will include payment flexibility via mobile payment and contactless debit or credit cards, an interactive website and mobile app for riders, balance protection and the ability to load value and products.

Metro is also working with Cubic and Salesforce integrator, Vertiba to implement a hybrid, account-based system that will layer onto and integrate with our existing TAP smart card transit system. The new super-cost-effective solution will expand functionality and add a mobile app with new features. These improvements will allow customers to use TAP to pay for a variety of choices for Bike Share and many other multi-modal programs.

The MBTA estimates their new system will cost about $65 million less to operate over the contract term than the current system. The transaction is expected to reach commercial and financial close in March 2018 and be ready for revenue service in May 2020. According to MarketsandMarkets, the Automated Fare Collection market is estimated to grow from $6.42 billion in 2016 to $11.95 billion by 2021 at a Compound Annual Growth Rate (CAGR) of 13.2 percent. MBTA’s pathfinder project could be the impetus to unleash a new and higher growth market for P3 opportunities.

Arizona Department of Transportation brightening its freeways through P3

We are starting to see added momentum in the freeway lighting P3 market. The Arizona Department of Transportation (ADOT) will be issuing an RFP in January for its $200 million DBFOM Phoenix Metropolitan Area Freeway Lighting P3. The project scope includes upgrading approximately 19,000 existing lights to LED technology with remote monitoring and controls, covering approximately 300 miles (482km) of road. The private partner will operate and maintain the system for a 15-year term before it is turned over to the ADOT. The project will include energy savings-linked performance provisions.

The Washington DC Office of Public Private Partnerships (OP3) is targeting the release of a shortlist for its Street Lighting Modernization P3 by the end of this year. In 2015, Michigan closed the first U.S. freeway lighting P3, a 15-year DBFOM valued at $123 million. Christophe Petit, President and Managing Partner at Star America, noted to InfraAmericas that “lighting projects are attractive to cities and states because they can provide almost immediate energy cost-saving benefits, compared to a huge project that could take years or decades to deliver economic benefits.”

These examples (and several others we’re tracking) show that such partnerships can be versatile and the concepts can apply across a variety of project types.

Perhaps we are seeing an influx of P3 projects in the market because agencies want more innovation, risk transfer and the ability leverage private capital financing when public resources are scarce. P3s have the ability to shift responsibilities for non-core functions, enabling agencies to focus on core activities.

These kinds of P3s, similar to a recently submitted unsolicited proposal involving Metro’s roofing and pavement assets, may not be sexy, but could potentially save government money and get mission critical projects done sooner rather than later — something most taxpayers want.

This post was written by Yousef Salama of the Office of Extraordinary Innovation