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Innovative public/private partnership in Norco could expand beyond bridge repair

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By allowing the private sector to perform and finance construction work that’s previously been the purview of the public realm, transportation-related projects, even those on nontolled roads, can get done a lot faster.

What’s more, it’s an approach that not only makes the process of completing the project more efficient and less costly, it also could be replicated yearly and spread beyond roads, bridges, tunnels and other typical road projects.

That’s according to a team invested in using a public/private partnership to rebuild and repair 33 bridges in Northampton County in a contract awarded to a Lackawanna County construction firm last week.

“I think we are on the front edge of a wave that I think is unstoppable,” said Ryan Durkin, a solicitor who is representing the county on the project. Known as “P3,” it’s a model that could be applied nationally, he added.

A program hosted at the Holiday Inn & Conference Center in Upper Macungie Township on Thursday delved into the benefits and details of the county’s new project and how public/private partnerships can be successfully applied.

Norris McLaughlin & Marcus of Allentown hosted the program, with John F. Lushis Jr. and Peter D. Hutcheon representing the Northampton County General Purpose Authority on the project. The authority, which is a separate entity from the county, acts as the conduit through which the funds are sent by the developer.

Kriger Construction Inc. of Dickson City, Lackawanna County, is both the developer and the construction firm that’s performing the work through a public/private partnership and also financing the project. The Allentown office of Chicago-based Alfred Benesch and Co., an engineering firm, will provide oversight.

With a typical public/private partnership, the government entity, such as the Pennsylvania Turnpike, uses future earnings on tolls to fund projects. But the speakers said this public/private approach also can work on roads, bridges and tunnels that do not have tolls.

For this project, the developer bears the entire risk.

“It’s an innovative approach,” said Northampton County Executive John Brown.

Typically, the county’s process to fix or rebuild infrastructure is to borrow funds, acquire an engineer, get feedback and put the project out to bid, which is a lengthy process.

“The whole time, the county is paying the tab on this,” Brown said.

The developer secures money to complete the work from its lender and then insures and bonds the project for a successful completion, according to Stan Rugis, county director of public works.

The developer, in turn, is paid in installments by the General Purpose Authority, while the authority authorizes payments for all preliminary work performed by attorneys and advisers.

Money is allocated to the authority from the county’s general fund on a year-to-year appropriation authorized by county council – which also can approve or reject the entire project.

The engineer acts as the mediator in a P3 project, a third party that has the ability to shut it down, Brown said.

Since the developer is financing the project, the risk is entirely on that entity.

“That’s the wedge we have with them,” Brown said. “It puts that essence of time on the developer to move forward. It becomes a very, very important component in holding the developer accountable.”

The county is not using any federal money, either.

After discovering that 99 county-owned bridges needed to be repaired or replaced, Brown said he and his team took another look at how to fund it.

The team decided to go with a public/private partnership approach, gathered its legal experts and key stakeholders and in 2015 began to delve into the details.

“There was no model, no format, no template for us to follow, so we really had to do this from scratch,” Brown said. “It’s the first of its kind in the state. We have attracted international attention.”

Brown said the team found that the authority qualifies as a public entity and that bridges count as transportation facilities, which was a requirement in Pennsylvania’s Act 88, signed into law in 2012, which allows private companies to replace and repair bridges.

The county decided it would rehabilitate 28 bridges and replace five. The entire project is estimated to cost about $37 million and take about four years to complete, Brown said.

He estimated it would bring about 1,000 to 1,800 jobs in Northampton County over the next four years.

The request for proposals specified using prevailing wages, and four firms bid on the project.

The project includes 33 bridges in Lower Mount Bethel Township, Wash-ington Township, Tatamy, Stockertown, Bushkill Township, Plainfield Township, East Allen Township, Allen Township, Moore Township, Lehigh Township, Upper Mount Bethel Township and Upper Nazareth Township.

Work on the remaining 66 bridges is expected to start once the first project is complete.

By the fifth year, the next batch of bridges, possibly another 30, could be started.

“It really helped us collapse the time frame we were looking at,” Brown said. “It gave us a long-term planning capability without ever floating a bond. The sustainability and reproducibility of the model was very important to us.”

Previously, the county would act as the general contractor but now, the burden is shifted to the development side.

After the state Department of Transportation approved the P3 model, the team created an agreement where the developer would be in charge of designing, building and financing the project, and also be required to maintain each bridge for 10 years.

PennDOT controls the standards for building the bridges, Brown noted.

It’s possible that other counties looking to do this could use a general purpose authority or redevelopment authority as a conduit for funding these projects, Lushis said, emphasizing that the developer is the entity that finances the project.

While this project involves county-owned bridges, it is not known how this type of project could be applied to municipality-owned bridges, Lushis said.

Northampton County certainly is not alone with its many bridges that need repair, and Brown said his hope was that other counties could see how they could apply it.

“California has been doing this since circa 2000,” Lushis said. “Other states have done this and have done it successfully. Pennsylvania has fallen behind in other states that do this.”

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Brian Pedersen

Brian Pedersen

Reporter Brian Pedersen covers construction, development, warehousing and real estate and keeps you up to date on the changing landscape of our community. He can be reached at brianp@lvb.com or 610-807-9619, ext. 4108. Follow him on Twitter @BrianLehigh and read his blog, “Can You Dig It,” at http://www.lvb.com/section/can-you-dig-it.

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