USA Trends and Developments Contributed by: John D. O’Neill, Jr., David B. Horner, Andrej Micovic and Ryan Pedraza, Hunton Andrews Kurth LLP
The public-private partnership (P3) market for sur - face transportation infrastructure assets in the United States has seen a steady stream of activity over the past 18 months. • The Georgia Department of Transportation (GDOT) and SR 400 Peach Partners (a consortium com - prising Meridiam, ACCIONA and ACS) reached financial close on the nearly USD11 billion SR 400 Express Lanes project. • The Tennessee Department of Transportation (TDOT) shortlisted four proposers for its I-24 Choice Lanes project. The I-24 Choice Lanes project is Ten - nessee’s first transportation P3 and the first project to be procured by TDOT as part of a larger multibil - lion-dollar managed lanes programme. • Amtrak launched its procurement for the Penn Station Transformation Project and selected Penn Transformation Partners (a consortium comprising Halmar and Skanska) to serve as master developer for the multibillion-dollar initiative to overhaul New York Penn Station. Momentum in the P3 market is likely to continue in 2026, with GDOT advancing its procurement of the I-285 express lanes project and TDOT expected to complete its procurement of the I-24 Choice Lanes. Federal participation and support continue to be criti - cal for maintaining momentum and helping to create a robust pipeline of surface transportation projects. In particular, federal financing tools, including the avail - ability of private activity bonds (PABs) and federal credit support from the United States Department of Transportation (USDOT) through the Transportation Infrastructure Finance and Innovation Act (TIFIA) pro - gramme, have helped state and local transportation agencies attract billions of dollars in private investment to support surface transportation infrastructure devel - opment. Both PABs and TIFIA are key elements in the financing plans for the GDOT and TDOT projects. Two issues will be particularly important to the P3 market as Congress develops the next federal surface transportation reauthorisation: (1) whether Congress will provide additional PABs allocation and (2) whether Congress will make any changes to the TIFIA pro - gramme to encourage the use of TIFIA credit support
for other types of surface transportation projects. Air - port projects, in particular, could benefit from federal policy proposals now under consideration. Federal Surface Transportation Reauthorisation The five-year federal legislation framework that pro - vides federal funding and policy for roads, bridges, transit and passenger rail is known as the surface transportation authorisation. The current federal sur - face transportation authorisation, the USD1.2 trillion Infrastructure Investment and Jobs Act (IIJA), is set to expire on 30 September 2026. Congress currently is at work on the next five-year federal surface trans - portation authorisation, with the House Transporta - tion and Infrastructure Committee recently approving bipartisan legislation entitled the BUILD America 250 Act (Building Unrivaled Infrastructure and Long-Term Development for America’s 250th Act) that would provide an estimated USD580 billion in funding for surface transportation. The committee’s approval is only an initial step, and substantial legislative work remains before a final ver - sion of the next federal surface transportation authori - sation is passed by both chambers of Congress and signed into law. Given the current political calendar and the rapidly approaching expiration of the IIJA, Congress may need to extend the IIJA as a stopgap while work continues on a comprehensive reauthori - sation. Nevertheless, the committee-approved text of the initial BUILD America 250 Act provides observers with a sense of the committee’s policy priorities that will shape the eventual successor to the IIJA. For P3 market participants, the committee bill pre - sents a mixed picture: the bill proposes potentially useful changes to TIFIA but does not replenish the currently exhausted statutory allocation authority for transportation PABs. PABs PABs are tax-exempt debt instruments that provide a financing option for a defined class of transportation projects privately developed as P3s. As tax-exempt debt, PABs offer a lower cost of capital as compared to taxable bonds. Projects currently eligible for PABs include highways, passenger rail and surface freight transfer facilities.
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