Transit Mega Projects: Legal Issues (2023) / Chapter Skim
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IV. TRANSIT MEGA PROJECT TOPICS
IV. TRANSIT MEGA PROJECT TOPICS
Pages 12-39
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From page 12... ...
The responsible transit agency normally also serves as the "project sponsor," another IV. TRANSIT MEGA PROJECT TOPICS term of art, in the federal transportation, environmental, and regulatory context, and may also refer to a federal grant (or This section addresses the foundations of a mega project loan)
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From page 13... ...
As pointed out by one interview participant, because proposed mega project is consistent with the project's scope.104 90 to 95% of typical transit agency's resources and attention are The NEPA Sponsor will be the point agency determining the normally allocated to day-to-day operations, it is not surprispreferred alignment for the project, the affected resources, and ing that such agencies are often not sufficiently equipped or reconsideration of alternatives to the preferred alignment.105 The sourced to handle the challenges of a transit mega project, thus NEPA Sponsor must also ensure that reasonably foreseeable presenting a significant constraint. One such challenge identitransportation improvements are not foreclosed by the project.
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From page 14... ...
Activities for which funds Each mega project sponsor should consider the use of special may be spent include: capital costs such as planning, engineerpurpose entities, legislation, or key agreements to expand the ing, design, and evaluation of transit projects; capital investagency's authority as needed. ments in new and existing fixed guideway systems including rolling stock, overhaul and rebuilding of vehicles, track, signals, B
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From page 15... ...
and Real Property Acquisition Policies Act of 1970 (URA) ; Although CIG grants are the primary vehicle for FTA to federal procurement and Buy America requirements; labor fund transit mega projects, the FTA also provides capital fund requirements (see Section IV.C infra, Project Contracting and ing for maintenance, replacement, and rehabilitation projects Procurement)
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From page 16... ...
State and Local Funding The utility of these programs for mega projects varies. For ex- The other major source of funding of transit mega projects ample, eligible INFRA project costs may include reconstruction, aside from federal funding is state and local funds.131 The source rehabilitation, acquisition of property (including land related of state and local funding and financing covers a wide specto the project and improvements to the land)
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From page 17... ...
Federal loan programs Extension light rail project and Maryland's Purple Line project offer a potential source of such financing for mega projects. are case study examples of transit mega projects that made use Loans for transportation infrastructure projects are primar- of USDOT BAB TIFIA financing.141 ily administered through the USDOT's Build America Bureau Also relevant is the RRIF program, which provides loans for (BAB)
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From page 18... ...
Private Investment and Participation in Financial Risk State, regional, and local authorities have traditionally relied Allocation on tax municipal bond issues to finance transit mega projects, While a smaller source of financing for transit mega p rojects among many other needs. Through such debt issuances an in the United States, private investment is important and inauthority can covert a long-term funding or revenue source into creasingly considered as a component for structuring transit current (borrowed)
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From page 19... ...
In practice, transit mega project sponsors must seek fund- Though the public agency does not need to resolve such issues being in many places. One case study project is indicative of the fore starting procurement, the pre-procurement stage of identifydiversity and scope of funding needed for a transit mega p roject.
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With transit mega projects, the scale the designer. Recognizing the potential of these innovative soluof the project generally lends itself to more nuanced approaches to allocating risk, which is reflected in more sophisticated and 153 Fed.
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Project revenues phase, which can streamline and speed up the project, but also include user fees, utility fees, parking revenue, rental fees, con requires the recipient to have adequate oversight and leadership cession revenues, advertising or other business revenue, and during both design and construction.155 This delivery method is lease revenue. The developer takes the revenue risk (or demand a good candidate for a mega project with multiple infrastructure risk)
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Instead of focusing on a of the financial requirements for a transit mega project. NJ Transit typical risk allocation conversation, private developers are keen used a DBFOM method to deliver its HBLR project.
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. In mega projects it is typical for evaluations to Upon receipt of proposals, public agencies must have trans- be conducted by an evaluation team.
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poser may not wish to put in writing. Obtaining such real-time Several interviewees highlighted Buy America169 provisions feedback not only helps the public agency make necessary ad- as particularly challenging for mega projects.170 Globalized justments to the procurement, but also enables the proposer to 169 49 U.S.C.
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From page 25... ...
Credit issues may arise where responsibil project may constitute a problem under Buy America.171 ity for project delivery and funding and/or financing are divided Disadvantaged Business Enterprise (DBE) requirements172 are thereby requiring potential funders or lenders to have to factor similarly difficult for a transit mega project.
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From page 26... ...
, which con- important to determine early in the planning of a mega p roject sisted of joint highway and transit improvements primarily the extent of environmental review required by the federal along the north-south I-25 corridor in Denver, required close funding agency. In most cases, final design activities, property coordination between FHWA, FTA, and local project sponsors acquisition, purchase of construction materials or rolling stock, Colorado Department of Transportation (CDOT)
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From page 27... ...
, tions must be conducted concurrently and in an integrated discussed below. manner with other forms of review, including historic and other • If an action is not categorically excluded, an agency usu- environmental laws.196 USDOT requires that project sponsors ally begins the environmental review process by prepar- "intending to apply for funds or request Administration ac ing an EA.
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From page 28... ...
The staggered timing of a tiered EIS allows lenged a $1.2 billion subway extension project in Los Angeles, project sponsors to integrate data and directives from concurrent alleging the decision to tunnel under Beverly Hills High School land use and natural resource planning, helps ensure sufficient violated NEPA. The case showcased the higher informational construction funding is available to prepare subsequent tiered burden mega projects face; the United States District Court for reports, and protects entire projects against delay if review at a the Central District of California reopened environmental respecific section of a project stalls.
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From page 29... ...
versial) means of limiting disruption of transit mega project delivery.
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From page 30... ...
agency review and public participation.222 Notably, most surface transportation projects were exempted from FAST-41 because b. Project Management they were already subject to similar streamlining procedures Given the complexity surrounding NEPA review of mega under other laws.223 projects, it is important that project sponsors begin the NEPA President Trump's Executive Order (EO)
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Undertaking extensive due diligence to identify 237 This report highlights CERCLA because it can impose substan- contamination and conducting diligent preliminary engineering tial and costly liability on project sponsors. Still, it is prudent to note work before the project began saved the agency time and money.
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.255 FTA has developed its own CE that Transit mega projects generally require acquisition of property rights to assemble rights-of-way, station and platform areas, parking lots, staging areas, and possible access ways to and from 249 The FTA grantee requirements to acquire, manage, and use real property are governed by the Uniform Relocation Assistance and Real the construction zones and transit facilities. Many public agen- Property Policies Act of 1970, as amended, 42 U.S.C.
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From page 33... ...
is to ensure equitable treatment of prop Acquisitions to preserve or create a right-of-way that will be erty owners of real property to be acquired for Federal and federally used in a mega project, may be permitted to proceed under ab- assisted projects; that people displaced by a federally supported breviated review procedures prior to the conclusion of the proj- project be treated fairly, consistently, and equitably; and that acquirect's broader NEPA review. The early acquisition of rights-of- ing agencies implement the regulations in a manner that is efficient way for future transit use is governed by 49 U.S.C.
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From page 34... ...
may be made available, and certain business and residential The complexity of property needs for transit mega projects moving expenses are reimbursable. State and local requirements may be ameliorated with an understanding of federal, state, and exceeding federal limits are not reimbursable by FTA.273 local laws as well as a thorough plan for the acquisition of the The URA establishes the requirement that a grantee must properties.
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From page 35... ...
Insurance and Indemnity Several other issues can arise on mega projects, the full num- The high cost of mega projects and the associated risks these ber of which is beyond the current report. However, some are projects present require project sponsors to carefully evaluate worth consideration as examples of the types of issues that need existing and potential liability arrangements, as well as determine to be addressed when developing project documentation: the structure of various insurance programs early on the in the Bonding.
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Tradi For transit mega projects, standard insurance coverages are tional construction insurance policies include the following: often insufficient to cover the potential risks and exposures asso • Commercial General Liability (CGL)
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Under a traditional state's credit.286 A similar analysis is applied in Colorado where model each contractor purchases its own insurance and in- a public entity's indemnification obligations may be viewed as cludes its individual policy costs into its bid, which results in a pledge of credit.287 Notwithstanding statutory limitations on the project sponsor indirectly paying for the cost and overhead public agency indemnification, developers in mega projects of dozens of policies. By streamlining everything into a single may seek recourse for harms caused through other avenues.
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From page 38... ...
may be permitted to enter into intergovernmental agreements, Another case study project sponsor worked with local another may not have the power to issue debt, while a third may governments through which the sponsor's mega project passed be restricted from condemning property. Intergovernmental because the project required many municipalities to develop agreements are an avenue often used to broaden common gov- and adopt new land use codes to allow light rail to run through ernmental functions in situations where the enabling legislation their towns.
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From page 39... ...
The panel acts like a judicial body but is pre-selected The Metropolitan Transit Authority reported that the cost for by the parties early on in the project and often has an interest in Amtrak force account work for the East Side Access project resolving outstanding matters quickly to avoid increased costs more than doubled from $295 million to $664 million.293 In for the project. the Eagle P3 project in Denver, agreements with Amtrak were For its light rail extension transit mega project, one project executed after development of the project was well under way.
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