project neon delivery method - nevada
TRANSCRIPT
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Project NEON
Delivery Method
August 18, 2014
Transportation Board
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Project Benefits
• Safety & Congestion – 1,000 crashes per year!
• Connectivity /Mobility for City Redevelopment Efforts
• Congestion: Improves Freight Mobility & Economy
• Creates 5,000 Jobs in Hard-hit Employment Sector
• Southern NV needs 21st century transportation system
• Benefit / Cost Ratio = 5.8 (exponential improvement!)
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Statewide Comparison
• Insert Project Map
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Downtown Redevelopment
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US 95
I-15
Charleston Blvd.
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Major Construction Elements
HOV Connector
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Major Construction Elements Local Connectivity
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NEON at a Glance
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Can We Afford NEON?
• Maintain a minimum of $90M in Highway Fund
– Helps bridge potential gaps in federal funding
• Do not exceed Historical Annual Debt Service Payments
– $100 Million per year maximum
– Under $89 Million per year maintains AAA rating with S&P
• Maintain the same Statewide Capital Program
– No decrease in funding for other statewide projects
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What’s Changed?
• Reanalyzed delivery method due to federal funding uncertainty caused by federal highway bill debate
• Continuous monitoring of interest rates and market variability/quantitative easing
• Bonding payments eligible for up to 95% federal reimbursement vs. 64.9% with P3
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Due Diligence
• Sale of $100M ROW Bonds
– High demand for bonds
– AAA Rating + 16 bidders = lower interest rate for state
• Working with Treasurer’s Office
– Sale conducted by Public Financial Management, Inc. (PFM)
– PFM Provided Independent third party analysis of future bond sales
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Why Bond instead of P3?
1. Market demand for bonds and competitive pricing makes bonding even more affordable than originally projected
2. Right-of-way acquisitions may affect schedule
3. P3 teams concerned about appropriation risk and are now requesting progress payment(s)
4. Project can be completed within similar timeframe by bonding as with P3 resulting in no realized efficiency savings
5. NDOT maintains control of future O&M program and funding
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Recommend Bonding
• NDOT has good experience with DB method • Ability to structure bond sales more closely around
ROW acquisition schedule • NEON paid off by 2039 providing an average annual
capacity of $47M (after paying O&M and lifecycle costs) for new projects starting in 2040
• Continue to realize savings of $250M from doing 4 phases together
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$40
$50
$60
$70
$80
$90
$100
Mill
ions
$500M Baseline $540M Conservative 3X MADS (AAA)
Both bond scenarios under 3X MADS to maintain AAA rating. Assumes no increase in ROW costs
Construction Bond Debt
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Affordability Concerns Concern: Can NDOT afford NEON if project costs are substantially
greater than projected?
Answer: Yes! Even with a worst case scenario, NDOT can still afford NEON and can still fund needed projects through out Clark County and other parts of the State.
Mitigation: NDOT has engaged risk analysis and bonding experts to analyze risks: Bonding provides greatest flexibility against unknown outcomes
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$40
$50
$60
$70
$80
$90
$100
$110
Mill
ions
50% Increase 70% Increase 3X MADS $100M Affordability Target
Bond debt profile in the event there are unanticipated increases in costs
Bond Debt Service
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Delivery Timelines Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014 2015 2016 2020
Design and Construction RFP Response and Evaluation
RFQ Response and Evaluation and RFP Development
Issue RFQ
Issue RFP
Preferred Proposer Selected
Contract Execution
RFQ Dev.
Design Build Delivery
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Request Approval to Bond
• NEON is largest project in Nevada history • Bonding more affordable than projected • Top benefits for P3 Procurement have eroded • Bonding provides greatest flexibility to control
– Right-of-way acquisition schedule – Timing bond sales and managing payments – O&M and lifecycle schedule
• Request Board approval for DB procurement
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Delivery Timelines
Design and Construction
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Financial Close
Issue RFP
Technical Proposals Due
Preferred Proposer Selected
Financial Proposals Due
Neg. RFP Response and Evaluation
2014 2015 2016 2020
Design and Construction RFP Response and Evaluation
RFQ Response and Evaluation and RFP Development
P3 Delivery Schedule
DB Delivery Schedule Issue RFQ
Issue RFP
Preferred Proposer Selected
Contract Execution
RFQ Dev.
Delivery Timelines
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Construction Costs
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100 150 200 250 300 350 400 450 500 550 600
Construction Design Administration Contingency
Increase was due to including more phases
Estimated construction costs have fluctuated little