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Features - May 2008

Accelerating on I-75

$430 Million Project is Florida’s First Use of Alternative Financing

By Debra Wood

Contractors are at work on a $430 million Interstate 75 contract that represents Florida’s first foray into alternative financing.

ACCI/API, a joint venture of Anderson Columbia Co. of Lake City, Fla., and Ajax Paving Industries of Nokomis, Fla., won the Florida Department of Transportation’s first design-build-finance contract for the I-75 Road Expansion Project, referred to as iROX. The 30-mi widening of I-75 from four to six lanes in Lee and Collier counties in southwest Florida began in October and will wrap up by the end of 2010. The state will pay the joint venture over five years.

“Design-build-finance is the kind of innovative approach that makes megaprojects happen,” FDOT District One Secretary Stanley M. Cann says in an e-mail response to questions. “This design-build job streamlines communication and allows construction to begin in areas where design has been completed. With this financial approach, iROX accelerates I-75 improvements as many as five years.”

Partnering on iROX

Cann introduced the idea of a design-build-finance project for this stretch of road in March 2006, about two years after state lawmakers approved legislation to allow public-private partnerships. FDOT spokesperson Debbie Tower says the job lent itself to design-build, because it required little new right of way.

Joe Anderson, president of Anderson Columbia, says that after representatives of his company and Ajax attended the FDOT-sponsored meeting, he and Mike Horan, president of Ajax, started talking about the possibility of teaming up to submit a proposal on the iROX project. Two weeks later, they decided to do it.

“The amount of work was enticing,” Horan says. “We met in a coffee shop, shook hands and that was it. It has worked out well, and we are happy with it.”

Richard Dun, project director for Anderson Columbia, says, “We bring similarities and some different strengths [to the partnership]. Both companies have longstanding relationships with the Department of Transportation in Florida. We’re both paving companies. Anderson has done considerably more interstate widening projects than AJAX has in the past, so Anderson is bringing that expertise to the table. AJAX is providing all the asphalt paving.”

Within 10 days of agreeing to partner, ACCI/API brought in HDR of Omaha to provide the engineering and help draft the letter of interest.

The joint-venture team secured financing from a bank. Its bid included the cost of that funding, Dun adds.

The joint-venture partners, FDOT, subcontractors, construction engineering and inspection firm Metric Engineering of Miami, the South Florida Water Management District and local government agencies have entered into a formal partnering agreement.

The iROX project

ACCI-API will add a 12-ft travel lane and 10-ft shoulder to the inside of the highway from the Golden Gate Parkway in Collier County to Colonial Boulevard in Lee County.

“This was an aggressive project from the design standpoint. From the time we won the contract, we had one year to design 30 mi of interstate construction,” says Larry Low, senior vice president of HDR and department manager of the Tampa office. HDR put engineers from five offices around the country on the project.

The scope of work includes widening 24 concrete-girder bridges, replacing two steel-girder bridges, building 23 stormwater ponds, completing associated piping and drainage structures and reconstructing the Immokalee Road interchange.

“The size of this job is sometimes mind-boggling,” Dun says. “We have 350 people on an average day engaged in construction over an area 30 mi long. It takes a lot of coordination.”

The team divided the fast-track project into five segments, starting at the south end at Golden Gate Parkway. A construction manager oversees all aspects of the projects. In addition, each section has a segment manager.

Work commenced on all segments before final drawings were completed. Low expects to deliver the last of them at the end of March.

Anderson Columbia is handling the earthwork and base and Ajax the paving. Twenty-six subcontractors and subconsultants are involved in other aspects of the job. Horan says each had worked with one of the partners before and was hand selected based on past performance.

Crews are on the job 24 hours a day, seven days a week. Construction takes place six days a week on two shifts. Road closures are limited to night hours.

The contract calls for ACCI-API to assume all responsibility for securing environmental, dewatering and U.S. Army Corps of Engineers permits and obtaining wetland mitigation credits. The project affects about 160 acres of wetlands.

“We are totally at risk,” Dun says. “That is normally done by the department.”

Tower says she suspects the permitting fell to the design-build team because permitting would occur throughout the design phases.

ACCI-API has received all but two of the permits. Low expects the final permits for the last segment in May.

The team can earn $100,000 for each day it finishes early, up to $15 million if the work wraps up five months ahead of schedule.

“Nothing would please me more than paying our iROX design/build team the $15 million bonus for early completion,” Cann says. “Everyone—residents, travelers, business and industry—will benefit tremendously with six lanes in place.”

Other innovative financing

Mike Horan, president of Ajax Paving Industries, calls design-build a good way to go to fast-track projects. But he adds that he hopes not all work is let that way because additional field engineering, overhead and leadership supervision is required.

“A company like ours can only handle so much,” Horan says. “I like the conventional way of building things, too.”

Since letting iROX, FDOT has partnered with other private entities for projects in Miami-Dade County.

Community Asphalt of Hialeah, Fla., a subsidiary of OHL of Spain, submitted an unsolicited bid to design, reconstruct and finance a 10.5-mi stretch of U.S. Route 1 in Miami-Dade County. FDOT sought other bidders and when no one came forward, negotiated with Community Asphalt and then awarded the company a $110.8 million contract.

FDOT expects Community Asphalt to complete the project in three years but will pay for it over four years. The contract includes a $1.9 million early completion bonus.

“The contractor will perform the work and will be paid with the funds in the work program in the year the projects were scheduled,” FDOT spokesman Brian R. Rick says in an e-mail response to questions. “The contractor must finance the costs of construction until the programmed funds are available.”

This is OHL USA’s first public-private partnership, but Lauro Bravar, president of OHL USA, expects the company will pursue more of them, especially in light of the slowing United States economy and limited governmental ability to fund large projects.

In February, FDOT posted a notice of intent to award Miami Access Tunnel, an international consortium headed by Bouygues Travaux Publics of France, a contract to design, build, finance, maintain and operate the Port of Miami Tunnel. The two-lane tunnels will let port traffic bypass downtown Miami and flow directly to and from the interstate system.

FDOT will pay Miami Access $100 million during the 47-month construction schedule, $350 million upon completion of the work and an annual Maximum Availability Payment of $33,234,692 once the tunnel opens.

Useful Sources:
I-75 Road Expansion Project
http://www.irox75.com/

Project Team:
Owner: Florida Department of Transportation
Design, Build, Finance Partners: ACCI/API, a joint venture of Anderson Columbia Co., Lake City, Fla.; and Ajax Paving Industries, Nokomis, Fla.; and HDR, Omaha.

 

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