Presidio Parkway reaches financial close; availability payments and phase'two construction set to begin

Caltrans staff and project partners reported that the Presidio Parkway public'private partnership reached financial close on June 14, with a financing structure that will deliver project construction under a P3 availability payment model.

Financial terms and schedule

Malcolm Dougherty, Caltrans director, said financial close produced an estimated annual availability payment of about $22,100,000. Project financing includes a combination of private bank loans, TIFIA loan tranches, and private equity; Caltrans staff said the mix preserved a debt'to'equity ratio consistent with earlier authorizations and enabled favorable interest rates, including a very low short'term TIFIA tranche. The team reported total AP (availability payment) obligations materially lower than earlier high'case estimates because of market conditions and financing structure at close.

Construction and delivery

Phase 1 of the Presidio Parkway project is substantially complete; phase 2 is nearing 95 percent design and early construction activities are under way. Project representatives said full construction is expected to commence in August and the project is targeted for substantial completion in 2015. Project delivery under the P3 includes a milestone payment and long'term availability payments over a 30'year concession term.

Context and precedents

Commissioners and staff noted the project established important precedents for P3 delivery in the U.S., including federal reimbursement terms and debt structuring used in the financing. Commissioners and staff thanked Caltrans district and headquarters staff and outside advisors for work on procurement and financing. No formal commission allocation vote was required at the time of the update; staff said they would return with any contract or allocation items as required by commission rules.