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UPDATE: The RTD board Tuesday night approved the issuance of the Eagle P3 request for public-private partnership proposals, along with the increased stipends to the unsuccessful bidders and the $20 million payment to the winning bidder in the event RTD later cancels the project.

The vote was 14-0, with Director Bill James absent but sending a statement of support.

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RTD simulation shows the larger heavy-rail electric commuter rail cars along Grandview Avenue in Arvada. Different than light rail cars, these are proposed for use on the Gold Line and East Corridor.

RTD board members tonight will consider increasing the $1.75 million stipends it is offering to each of the three teams of bidders on the FasTracks lines to the airport and Arvada-Wheat Ridge, to $2.5 million each, to encourage them to stay in the chase for the innovative and risky public-private partnership.

That’s in addition to a new $20 million fee RTD will take up tonight to be paid to the winning team in the event it signs a deal with RTD and the transit district later backs out.

It is all part of a vote to release a request for proposals by the end of the month to the three teams.

The public-private partnership idea is part of RTD’s strategy for bringing down the upfront costs of FasTracks, now $2.2 billion underwater with expenses over finances if it wants to finish on the original schedule of 2017.

The winning private team would enter into a concession contract with RTD to provide significant private financing – up to $1 billion – plus a design-build project delivery approach similar to that used by RTD and CDOT on the successful T-REX highway-transit project, and then capped off with a 40-year operating and maintenance agreement with the private partner. Under the concession, the private team would receive annual payments from RTD in exchange for providing the system and operating it to RTD schedules and standards.

At the end, all of the assets would revert to RTD.

You can view a presentation RTD staff made to the board last month here.

It helps RTD upfront by lowering the initial capital costs, exchanging that with the private partner for the annual concession payments. It’s similar to a homeowner paying a monthly mortgage over time for a house instead of paying cash to build it. It requires less money now, although more over time. It helps ease RTD’s need for more money now if it hopes to build the entire FasTracks system.

RTD staff also said that in the current economic climate, the guarantee of a higher stipend helps make the process financially feasible for the bidders.

Also tonight, the board will discuss a proposal from directors John Tayer and Noel Busck to negotiate an “equity agreement” with northern and eastern communities at risk of not getting their FasTracks corridors as promised if RTD fails to close the budget gap. RTD is planning to ask voters for a second tax increase as early as fall 2010 to complete the original plan, but Tayer and Busck said shortchanged communities need to know what will happen if that fails. They want a pledge of increased bus service to fill in.

Both the $2.5 million stipends – a maximum of $7.5 million if RTD doesn’t pick any – and the $20 million kill-fee if it backs out after a deal is reached – would be based on actual expenses incurred by the teams in the bidding and contracting process.

The stipends are likely to fall short of the private teams’ total costs of preparing for the multi-billion-dollar deal. But they are considered crucial to keeping the teams competitive, RTD staff told board members, for what is the next rail corridor project to head down the FasTracks pipeline, the East Corridor to Denver International Airport and the Gold Line to Arvada-Wheat Ridge – plus construction of a commuter rail maintenance facility for the heavy-rail passenger cars the lines will use.

The total cost of the various elements of Eagle P3 is estimated at more than $2.1 billion. The corridors are among four in FasTracks – including the Northwest Rail to Westminster, Broomfield, Boulder and Longmont, and the North Metro Corridor to Commerce City and Thornton, that use self-propelled “heavy rail” passenger cars, unlike the light rail lines RTD operates elsewhere. The heavy cars are crash-safety compliant for use in corridors where freight trains also operate.

RTD simulation shows what the East Corridor electric powered commuter train would look like near DIA.

The package of three FasTracks projects – two corridors and the maintenance facility – is being called Eagle P3 by RTD. “Eagle” is a combination of East and Gold, and “P3” refers to the project delivery method of “public-private partnership.”

To view an RTD video summary of the East Corridor project, click here.

Actually, there’s one more piece of terminology for it as well – Penta-P, for Public Private Partnership Pilot Program. In July 2007, the Federal Transit Administration approved RTD’s request to be part of the Penta-P, which seeks to demonstrate the cost savings and efficiencies that can be derived from using this model of project delivery. Two rail projects in Houston also were selected.

FTA says Penta-P will “study whether public-private partnership projects speed completion, allow more reliable projections of project costs and benefits, and improve project performance. The pilot will study projects that, among other things, use methods of procurement that integrate risk-sharing and streamline project development, engineering, construction, operation, and maintenance. The amount and terms of private investment in such projects is a significant factor in selecting projects to participate in the program.”

Under the pilot program, FTA will offer some preferred handling for the Eagle P3 package, such as cutting red tape during approvals, flexibility in the use of federal funds and a higher cost threshold for qualification for grants.

RTD hopes to get $1 billion in FTA grants for the East and Gold Line corridors.

The three teams competing for the concession are Denver Transit Partners, Mile High Transit and Mountain-Air Transit Partners. They consist of design firms, investment banks, construction outfits, railway car builders and others.

RTD wants the proposals submitted by March 31 next year, with a selection of a winning team by June 15. A concession contract would be negotiated by July 6, with early construction work starting in August. RTD is looking at splitting the project into two phases, with work on the airport line first, and then Gold Line work starting in a second phase contingent on how things go in the beginning of the project. Full notice to proceed would take place by the end of 2011, with opening of both lines by the end of 2016.

The make-up of the three consortiums interested in the Eagle P3 project.