Portsmouth Bypass PPA Requests for Clarification Bypass – PPA Requests for Clarification July 25,...
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Portsmouth Bypass – PPA Requests for Clarification
July 25, 2014 Page 1
No. Date Category Section Question Response Response Date
1 5-28-14 None provided
PPA Exhibit 9A Please move Sections:
(i) Pursuant to Section 2.6 of the Project Scope, the
Department shall have reviewed and commented on
Developer’s Safety Plan;
(o) Pursuant to Section 17.2 of the Project Scope,
Developer shall have developed a Traffic
Management Plan (TMP) for maintaining traffic
during construction; and
(n) Pursuant to Section 3.5.1 of the Project Scope,
Developer shall have conducted an introductory
briefing with City of Portsmouth Staff, Scioto County
Staff, the Department, and key stakeholders to
present major aspects of the Project such as scope,
estimated schedule, impacts, contacts, construction
phasing, maintenance of traffic, public involvement
and communications, aesthetics and enhancements,
demolitions, and construction, operation and
maintenance; from the Exhibit 9-A (Conditions Precedent to Issuance of the Notice to Proceed) to the Exhibit 9-B (Conditions Precedent to the Commencement of Construction Work)
The Department will make a change
response to this comment for Items (i)
and (o).
The Department will not make the
requested change for Item (n).
June 2, 2014
2 5-28-14 None provided
PPA Exhibit 9A Please allow the following submission currently in the Exhibit 9-A (Conditions Precedent to Issuance of the Notice to Proceed) (j) Pursuant to Section 2.7 of the Project Scope,
Department shall have reviewed and commented on a Durability Plan addressing durability for all structural elements with a service life of 75 years or greater;
to be submitted within 60 days after Notice to Proceed.
The Department will make a change
responsive to this comment in a future
addendum.
June 2, 2014
Portsmouth Bypass – PPA Requests for Clarification
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No. Date Category Section Question Response Response Date
3 6/2/14 3 PPA 6.4.1.1
Subject to Section 6.4.5 and Compensation Event (r), the Developer is responsible for causing, in accordance with the Project Scope, all Utility Relocations necessary to accommodate construction, operation, maintenance and/or use of the Project. All Utility Relocation Work performed by the Developer shall comply with the Contract Documents. To the extent consistent with the Project Scope, Developer shall coordinate, monitor and otherwise undertake the necessary efforts to cause Utility Owners performing Utility Relocation Work to perform such work timely, in coordination with the Work, and in compliance with the standards of design and construction and other applicable requirements specified in the Contract Documents. However, regardless of the arrangements made by the Developer with the Utility Owners, to the extent consistent with the Project Scope, the Developer shall continue to be the responsible party to the Department for timely performance of all Utility Relocation Work so that upon completion of the Construction Work, all Utilities that might impact the Project (whether located within or outside the Project Right of Way) are compatible with the Project.
The Department will provide revisions
responsive to this request with the
next update of the RFP.
June 6, 2014
4 6/5/14 1 Exhibit 18
The following revisions are requested: Modify the calculation of Department Termination Sum in Exhibit 18 of the PPA to allow all amounts shown in the Financial Model as payable by Developer to Equity Members from the Early Termination Date, either in dividends or other distributions on the share capital of Developer or as payments of interest or repayments of principal made by Developer under the Equity Members Funding Agreements, each amount discounted back at the Fair Market Value Discount Rate Base Case Equity IRR from the date on which it is shown to be payable in the Financial Model to the Termination Date. Define Fair Market Value Discount Rate as Base Case Equity IRR minus three hundred (300) basis points.
The Department will not make the
requested change.
June 12, 2014
5 6/12/14 3 PPA, 8.10
PPA Section 8.10 set forth: The Developer shall employ a Diversity and Inclusion Consultant familiar with the Disadvantaged Business Enterprise (DBE) community in the area to specifically communicate
The PPA will not be revised regarding
this subject.
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No. Date Category Section Question Response Response Date
employment opportunities, including on the job training opportunities, consulting opportunities, contracting opportunities, and materials supply opportunities. This consultant shall have experience with the DBE program and dealing with DBE eligibility and certification issues. The consultant shall develop innovative and aggressive strategies to attract and retain a diverse pool of vendors, consultants, Contractors, and Suppliers for the Project’s procurement opportunities, and to recruit potential DBEs eligible for certification. The Developer shall report outreach progress and results at least quarterly. The Diversity and Inclusion Consultant shall track and report all DBEs recruited or solicited for each procurement opportunity issued by the Developer with DBE/SBE participation goals. The Diversity and Inclusion Consultant shall coordinate its outreach activities with the Department’s staff and/or consultants. The Diversity and Inclusion Consultant shall be qualified to perform both outreach and assist the Developer with overall compliance monitoring/reporting for both the DBE and EEO program administration for the Developer. They shall have management responsibility for implementing, managing, and reporting on achievement of the DBE Goals, reviewing and communicating subcontracting opportunities, designing and implementing business development and supportive services activities for all tiers, ensuring compliance with the non-discrimination provisions and the affirmative action and equal employment opportunity provisions. The DBE Goal for the Project during the Construction Period shall be eight percent (8%) of the D&C Contract Amount (the “DBE Goal”).
It would be appreciated if ODOT could reconsider the requirement on an Independent Diversity and Inclusion “Consultant” if the Developer/Construction Joint Venture has internal personnel who can fulfill the requirements of the Diversity and Inclusion Manager.
The Developer and Design-Build Joint Venture Team have personnel within their organizations who have been trained on industry best practices and can implement all of the requirements of the position internally. An internal candidate can also safeguard the integrity of the reporting process as the
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Developer and Design-Build Joint Venture Team has made significant investments in training and software for the purpose of reporting on federal projects on a monthly and quarterly basis. The Developer and Design-Build Joint Venture has written policy and procedures that govern internal personnel that are responsible for DBE and OJT contractual requirements and objectives on federally funded projects.
6 7/13/14 2 PPA 4.2.1
Please clarify the intent of: “The IQF shall monitor and report on Quality Assurance and Quality Control.”
The last sentence of PPA 4.2.1 will be
deleted. The responsibilities of the
IQF are set forth in Section 2 of the
Project Scope.
July 25, 2014
7 7/13/14 4 PPA, Section 6.4.2.1
Please correct the cross reference to Section 6.4.2.2. The most recent Interim Draft
circulated 7/18/14 does not have a
Section 6.4.2.1 This is a cross
reference error due to the blackline.
July 25, 2014
8 7/13/14 4 PPA, Section 6.4.7.2
The cross reference in this section should be to Section 6.4.7.1, not to Section 6.4.6.1.
The most recent Interim Draft
circulated 7/18/14 does not have a
Section 6.4.7.2 This is a cross
reference error due to the blackline.
July 25, 2014
9 7/13/14 3 PPA 7.7.1.1 Please confirm that if a maintenance facility is built outside of the Project’s ROW, the maintenance facility will not be transferred to the Department at the end of the Term.
The Department confirms that, so long
as a maintenance facility is not on land
owned by the Department, the
maintenance facility will not be
transferred to the Department at the
end of the Term.
July 25, 2014
10 7/13/14 2 PPA 8.11 PPA Exhibit 9-A (a) Project Scope
PPA 8.11 requires submission of an “initial DBE Subcontracting Plan” for review and approval within 30 days after Financial Close. PPA Exhibit 9-A (a) requires as a CP to NTP the approval, by the Department, of a final DBE Subcontracting Plan. Table 2-6 of Project Scope requires the DBE Subcontracting
The Department will retain Sections
8.11 in its current form. PPA Exhibit
9-A(a) and Table 2-6 will be revised
appropriately
July 25, 2014
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No. Date Category Section Question Response Response Date
Table 2-6 Plan for non-discretionary approval before NTP. Please clarify discrepancy. We suggest: - Keep requirement of PPA 8.11, but change to non-discretionary approval. - Remove the requirement from PPA Exhibit 9-A. - Modify Table 2-6 of Project Scope to require the plan within 30 days after Financial Close. In addition, if different, please define (clarify difference) the initial and the final DBE Subcontracting Plan.
11 7/13/14 3 PPA 8.14.6.1 PPA 8.14.6.1 requires an initial OJT plan within 30 days of NTP. Please clarify that the initial OJT plan must be submitted within 30 days after NTP and that it is, therefore, not a CP to NTP.
The OJT Plan is not a condition to NTP. July 25, 2014
12 7/13/14 4 PPA, Section 8.16.2
PPA Section 8.16.2 states that, "The provisions of Attachment 3 to Exhibit 19 shall apply to the entire Project and to all covered classifications of employees…"
Will the payment of Prevailing Wage Rates apply to maintenance and rehabilitation work performed during the Operating Period? Or does the requirement apply only to the Construction Period?
Payment of Prevailing Wage Rates will
apply to any Construction Work
performed during the Term of the
Agreement, including Construction
Work performed during the Operating
Period. The Department will include
amendments in the next draft of the
documents that are responsive to this
request.
July 25, 2014
13 7/13/14 2 PPA, Section 14.2 The Department's contractual commitment to apply its funds to the obligations under the PPA should be clarified conceptually and mechanically in the PPA, as follows:
• Please clearly define the funds available to the Department that are not project-specific funds (dedicated to the Project or any other project of the Department) and are subject to application in accordance with the priorities in Section 14.2:
"Discretionary Funds means all funds appropriated by the General Assembly and available to the Department pursuant to the State Public Safety and Transportation
The Department’s Whitepaper, as
revised, provides information
regarding available funds for the
payment of Availability Payments.
Payments will be made from all legally
available funds, albeit that they will be
subordinate to debt payments. No
amendments will be made to the
documents in response to this
comment.
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No. Date Category Section Question Response Response Date
Budget for each current Fiscal Biennium and each prior Fiscal Biennium (to the extent that such appropriated funds have not yet been applied to fund the Department's obligations in any such prior Fiscal Biennium)."
• Please provide historical details for the most recent ten years regarding the Department's balance of funds that would have been available for application in accordance with Section 14.2.
• Please revise PPA Section 14.2 to clearly commit the Department to apply its project-dedicated funds and discretionary funds as per the proposed specific project and priorities as follows:
"The Department shall reserve Appalachian Development Highway System (“ADHS”) funds, and such other demonstrated sources of funds dedicated to the Project from time to time (together with the ADHS funds, the "Dedicated Funds"), in a dedicated account, shall apply such Dedicated Funds to the obligations of the Department under this Agreement and shall not apply the samesuch Dedicated Funds to any other obligations of the Department. To the extent such Project-specific dedicated fundsDedicated Funds are not sufficient to pay [the Milestone Payments,] any Availability Payments, any Compensation Amount, any Termination Sums or any other amounts due to the Developer under this Agreement (collectively, “Portsmouth PPP Payments”) and any other payments due under other public/private partnership agreements (“Other PPP Payments” and, together with the Portsmouth PPP Payments, “PPP Payments”), the Department will fund suchapply its Discretionary Funds to fund its obligations (including any PPP Payments and all other amounts) falling due for payment in any Fiscal YearBiennium in the following order of priority:"
• The Department should commit to provide a certificate from the Director of the Department calculating and certifying
The historical amount of available
funds is discussed in the Whitepaper.
No amendments will be made to the
documents in response to this
comment.
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the amount of Dedicated Funds (project-specific) and Discretionary Funds (available for application in accordance with Section 14.2) (a) within a fixed period of time following the appropriation for each Fiscal Biennium; (b) at any time that the Department has knowledge that a shortfall in any payment to Developer under the PPA may occur; (c) upon request of Developer, at any time following (i) any Department Default pursuant to 19.4.1 of the PPA; and (ii) 60 days after the commencement of any Force Majeure Event for which the Parties are unable to agree appropriate mitigation terms pursuant to Section 20.2.3; and (d) concurrent with any termination of the PPA pursuant to Article 20 (and as a condition to the Department's right to terminate for convenience).
No amendments will be made to the
documents in response to this
comment.
14 7/13/14 3 PPA, Section 14.2 / Appropriations generally
Following the Department's articulation of the proposed lease/sub-leaseback we have reviewed recent examples (including that precedent cited by the Department in the one-on-one meeting) of the standard Ohio lease agreement securing public finance bond obligations. We appreciate that the head lease and PPA-sublease will be substantially different in form from the standard form of bond lease, but have the following observations:
• As discussed in the one-on-one meeting, we believe that the classic reinstatement provision from the bond lease should be included in the PPA-sublease whereby (following a termination for non-appropriation) the PPA-sublease is reinstated in full force and effect upon the necessary appropriation being made and overdue amounts paid (taking into account Developer's financing and delay costs associated with the non-appropriation termination delay).
• Our assumption is that no standard bond lease
provisions would be included in either the head lease or the sublease that would change the position of the parties other than in relation to the structure (e.g., no additional use, operations and maintenance covenants would apply other than the requirements in the PPA for
The Department will include
amendments in the next draft of the
documents that are responsive to this
request, however the full extent of
protection requested may not be
appropriate. The Department will
take into consideration the extent to
which the obligations of the Developer
continue during any period of
termination when determining what
compensation would be appropriate.
The amounts paid will include interest
on the unpaid amount as provided in
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so long as the PPA is in effect and the head lease would contain no such obligations; neither the Department nor Developer would be able to subordinate each other's interest in the Project to raise debt other than as already contemplated in connection with the Project financing; etc.).
• Our assumption is that the head lease will be not include
any independent obligations which, short of an eminent domain taking, would entitle the Department to break the lease without compensation or grant the Department a right of re-entry.
Section 27.20 of the PPA.
The Department generally concurs
with your assumption; the head lease
will include limitations on use of the
leased property for roadway purposes.
The head lease will include
appropriate indemnification provisions
which could give rise to independent
liability but would not permit the
Department to terminate the lease
other than upon payment of purchase
price.
15 7/13/14 2 PPA 17.1.2.6, Exhibit 16 Part A (Professional Liability)
Section 17.1.2.6 of the PPA requires project specific insurance except as “provided otherwise in Exhibit 16.” Exhibit 16, paragraph D covers professional liability insurance. Please confirm if it is acceptable for the lead design contractor to utilize its own professional liability policy to cover the $15M professional liability policy obligation.
The Department will include
amendments in the next draft of the
documents that are responsive to this
request.
July 25, 2014
16 7/13/14 4 PPA, Section 17.1.2.12.a.
Please add at the end of the first paragraph “Any adjustment agreed by the Department and Developer will comply and not be in conflict with Lender Requirements.”
The Department will agree that any
more stringent Lender requirements
will apply. The Department will
include amendments in the next draft
of the documents that are responsive
to this request.
July 25, 2014
17 7/13/14 3 PPA, Section 17.1.2.13
Section requires that all insurance policies shall have defense costs outside of the limits of coverage except that litigation and mediation defense costs may be included within the limits of coverage of professional liability and pollution liability policies.
Comment: There are other costs beyond litigation and mediation defense costs that insurers include within the limit of liability (i.e. cost of investigation). Please modify this provision remove litigation and mediation and indicate that all forms of defense costs may be included within the limit of liability for all professional and pollution liability policies.
The Department will include
amendments in the next draft of the
documents that are responsive to this
request
July 25, 2014
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18 7/13/14 3 PPA, Section 17.5 The benchmarking process is based off of a calculation of the Base Benchmarked Insurance Cost (“the benchmark”), calculated as the greater of:
The estimated premium supplied to ODOT before the bid.
The actual insurance cost for the first Insurance Review Period (e.g. project substantial completion for O&M coverages)
In both cases, this base is escalated annually at CPI throughout the term
The benchmark is compared to actual insurance premium costs at each Insurance
Review Period, occurring after the first year of operations and every three years
thereafter…
Comment: The current benchmark mechanism poses a higher risk to the Concessionaire of fluctuation of O&M premiums prior to Substantial Completion. It is hard to predict what insurance will be 4-5 years in advance, not to mention that O&M is a fairly unknown exposure in the US market from a loss data standpoint. The Concessionaire will have to add contingency for this unquantified risk which results in lesser value for money for ODOT.
The Department will include
amendments in the next draft of the
documents to make it clear that the
first benchmarking exercise will occur
when the operating insurances are
first put in place (Substantial
Completion) and every three years
thereafter.
July 25, 2014
19 7/13/14 3 PPA, Section 17.5.5 and 17.5.6
The exceptional cost and saving thresholds is 30% more and 30% less respectively of the Base Benchmarked Insurance Cost.
Comment: We believe this threshold should be reduced to 20% as 30% is too high. Most premium fluctuations, other than hard insurance markets which occur infrequently, will fall below 130%. For example, according to the Insurance Information Institute, there have been market impact events (9/11, Hurricane Katrina, etc.) where insurance rates/premiums increased by roughly 20%+ in the commercial insurance market. We consider the 9/11 events to be an
No amendments will be made to the
documents in response to this
comment.
July 25, 2014
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exceptional occurrence in the insurance market. Therefore we believe the percentage threshold of premium increase and decrease should be 20% in lieu of 30%.
20 7/13/14 3 PPA, Section 19.1.1
Indicative term sheet for TIFIA (June 26, 2014 draft)
Included as a Developer Default under 19.1.1.11 (b) and 19.1.1.14 is the failure to replace the Design-Build Contract, the Design-Build Guaranty or the O&M contract entered into with the Lead Operations and Maintenance Contractor within 60 days of an Insolvency Event or termination prior to any scheduled date thereof, respectively. Similarly, the baseline TIFIA term sheet includes under “Events of Defaults and Remedies” a requirement to replace a Principal Project Party within no more than 60 days after the commencement of the Bankruptcy Related Event. While we are familiar with similar provisions under other P3 agreements, a large majority do not include an equivalent Developer Default (and even financing documents typical provide significant latitude), and we feel these provisions are not appropriate under this PPA.
The Department is provided sufficient protection against any potential impact resulting from the termination of the Design-Build Contract, the Design-Build Guaranty or the O&M contract, as there exists other incentives to ensure a timely replacement of these contracts with a reputable counterparty. In particular, from the Developer’s perspective, the significant, negative financial impacts resulting from a failure to reach Substantial Completion by the Baseline Substantial Completion Date and subsequent delay in availability payments should provide a similar degree of comfort to the Department that any scenario contemplated within this provisions is resolved in order prevent this delay. Furthermore, the PPA includes a Default Event for failure to achieve Substantial Completion by the Long Stop Date (with no Cure Period).
In order to provide the Developer with relative flexibility to properly replace Design-Build Contract, the Design-Build Guaranty or the O&M contract, we request that the Department increase the window of time from 60 days to 180 days, and request that a similar revision is implemented within the baseline TIFIA term sheet.
The Department has amended the
period of time to replace the Design-
Build Contract, the Design-Build
Guaranty or the O&M Contract to
ninety (90) days. Please note that the
Department is not in a position to
revise the TIFIA Term Sheet.
July 25, 2014
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21 7/13/14 3 PPA, Section 20.1 As a condition precedent to the Department's exercise of its right to terminate for convenience pursuant to PPA Section 20.1, the Department should be required to deliver a certificate from the Director of the Department and the Director of Budget and Management calculating and certifying the amount of the Department's 'Discretionary Funds' and evidencing, to the reasonable satisfaction of Developer, that such funds will be sufficient to pay all termination compensation and other amounts to be owed by the Department to Developer as a result of the exercise of its right to terminate for convenience.
The Department will include
amendments in the next draft of the
documents that are responsive to this
request.
July 25, 2014
22 7/13/14 3 PPA, Section 25.1 Subject to the details of any sale-leaseback contractual structure, the waiver of claims/rights in PPA Section 25.1 needs to be limited to permit Developer to enforce its rights against the Department to the extent that the Department breaches its obligations under the PPA resulting in a shortfall in amounts available for termination compensation or other amounts owed to Developer.
The Department will include
amendments in the next draft of the
documents that are responsive to this
request.
July 25, 2014
23 7/13/14 4 PPA, Definition of "Baseline Substantial Completion Date"; Section 15.2.1
There is an error in the definition of "Baseline Substantial Completion Date". The reference to possible extension of the Baseline Substantial Completion Date for Relief Events is presumably vestigial to a contractual approach in which the Long Stop Date was determined by reference to the Baseline Substantial Completion Date (instead of the Financial Close Date, as is the case with the PPA). In the PPA, the Baseline Substantial Completion Date serves as a fixed point of reference for determining Financing Costs associated with Compensation Event-caused delays to achieving Substantial Completion pursuant to PPA Section 15.2.6 and thus would not be extended for Relief Events. Accordingly, please revise the definition of "Baseline Substantial Completion Date" as follows: "Baseline Substantial Completion Date means the scheduled date for Substantial Completion set forth in Exhibit 2-B to the
The Department will include
amendments in the next draft of the
documents that are responsive to this
request
July 25, 2014
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July 25, 2014 Page 12
No. Date Category Section Question Response Response Date
Agreement, as such deadline may be extended for Relief Events from time to time pursuant to the Agreement.
24 7/13/14 2 PPA, Exhibit 1, “Financial Close Deadline”/ITP Section 4.6
We appreciate the Department's indication that it will provide protection to the Successful Proposer in the event that either (a) the Department does not select the Successful Proposer within 30 days after the Financial Proposal Due Date or (b) the Department does not provide its signature to the PPA within 60 days after the Financial Proposal Due Date. We understand from the one-on-one meeting that the Department is not willing to provide any protection in respect of increased Financing Costs as a result of the delay.
Notwithstanding the increased protection, there needs to be a mechanism to excuse the Successful Proposer from its obligation to achieve Financial Close by the Financial Close Deadline (without forfeiture of its Proposal Guaranty), solely to the extent that such failure results from Developer's inability to obtain an extension to its financing commitments necessary to accommodate the Department's delay (e.g., a significant disruption in the financial markets has occurred during the period of delay).
Changes will be made in the ITP to
include this mechanism.
To address the potential impact of significant market disruption (whether caused by delay in award or otherwise), Section 1(b) of Exhibit 7 provides that where market movements result in, or in the reasonable opinion of the Department, is likely to result in an upward adjustment to the Base MAP of more than 10%, the Department can terminate the Agreement, or apply various mitigation measures. In the event where the Department elects not to mitigate the financial impact to the Developer, the Developer may terminate the Agreement without forfeiting the Closing Guaranty.
In the event that financing commitments expire as a result of Department delay, the Department would be willing to extend the Financial Close Deadline in order for alternatives to be evaluated, provided that the Department would seek corresponding extensions in this Closing Guaranty.
This would relate to the Closing Guaranty and not the Proposal Guaranty.
No amendments will be made to the PPA in response to this comment.
July 25, 2014
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July 25, 2014 Page 13
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25 7/13/14 2 PPA Exhibit 9-A Project Scope
Item (L – contact list) is a CP to NTP. Please reconcile with Project Scope Tables 2-6 and 3-1 by updating the Project Scope. Item (M – crisis management plan) is a CP to NTP. Please reconcile with Project Scope Tables 2-6 and 3-1 by removing the requirement from PPA Exhibit 9-A and updating the Project Scope to require this item within 30 days after NTP. Item (N – stakeholder meeting) is a CP to NTP. Please reconcile with Project Scope Section 3.5.1 by removing the requirement from PPA Exhibit 9-A and updating the Project Scope to require this item within 30 days after NTP. Remove item (K) since it is already captured in item (H). Item (E – Part 1 of PMP) requires the non-discriminatory approval of the Communications Plan (see Table 2-1 of Project) as a CP to NTP. Item (H) only requires the Communications Plan to be reviewed and commented by the Department. Table 2-6 and 3-1 of Project Scope require the non-discriminatory approval of the Draft PIP Plan, part of the Communications Plan. Please clarify the discrepancy. Item (G – Deliverables Log) requires the log as a CP to NTP. Project Scope, however, requires this item within 45 days after NTP as part of the Design Quality Management Plan. Please clarify discrepancy by removing item (G) from PPA Exhibit 9-A.
The Department will include amendments in the next draft of the documents that are responsive to this request.
The Department will include amendments to the Project Scope and the PPA regarding Item M.
The Department will include amendments to the Project Scope and the PPA regarding Item N.
The Department will remove Item K as requested.
The Communications Plan requires non-discriminatory approval. The Department will include amendments responsive to this request.
The Department will remove the Deliverables Log from Exhibit 9-A.
The Department will make
July 25, 2014
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Project Scope Table 2-6 requires the submission of the Safety Plan before NTP. PPA Exhibit 9-B, however, requires it as a CP to start of construction. Please clarify discrepancy by changing the Project Scope.
amendments to the Project Scope responsive to this request.
26 7/13/14 3 PPA, Exhibit 16 A.I.D.
The current requirement is for the Lead Contractor or the lead design subcontractor to carry project specific professional liability with a limit of $15M per claim and in the aggregate. All design subcontractors thereafter are required to maintain separate practice or project specific policies.
Comment: We believe all other contractors that are sub-consultants to the lead design subcontractor should be cover by that project specific professional liability policy rather than require separate coverage/limits for them in Table 1 of Exhibit 16, Part A, Section D. Table 1 would apply then to other contractors/designers who provide services for the Developer and Lead Contractor.
The Department will include
amendments in the next draft of the
documents that are responsive to this
request.
July 25, 2014
27 7/13/14 4 PPA, Exhibit 16 A.I.D.
It is unclear if there is a requirement for an extended reporting period for the Professional Liability Insurance policy to be maintained by the Lead Contractor or lead design subcontractor. This is clear in Table 1 for the Design Subcontractors.
Can the Department please confirm its intent as to whether or not such an extended reported period is expected and for how long? Typically, project specific professional liability insurance would be accompanied by an extended reporting period. The total term between construction and ERP is general a maximum of 10 years.
The Department requires that the
Lead Contractor and/or lead design
subcontractor carry coverage for 5
years after Final Acceptance. The next
draft of the documents will reflect this
requirement.
July 25, 2014
28 7/13/14 3 PPA, Exhibit 16 A.I.I.I
The current PPA language has added that the Lead Contractor is an Indemnified Party in the Lead Designer’s policy.
Comment: We would like to request that ODOT and the Developer also be added as Indemnified Parties on the Lead Designer’s policy.
The Department will include
amendments in the next draft of the
documents that are responsive to this
request.
July 25, 2014
29 7/13/14 4 PPA, Exhibit 16 A.I.I.I
The current aviation liability insurance requirement requires $10,000,000 combined single limit of liability for bodily injury,
The Department will include
amendments in the next draft of the
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No. Date Category Section Question Response Response Date
property damage and personal injury per occurrence. Aviation liability policies are generally subject to an aggregate limit of liability. Comment: It would be appreciated if the Department could modify the language as follows: “The liability insurance shall provide coverage of no less than $10,000,000 combined single limit of liability for bodily injury, property damage and personal injury per occurrence/claim and in the aggregate. Such limit shall be shared by all insured and additional insured parties.
documents that are responsive to this
request.
30 7/13/14 4 PPA, Exhibit 16 A.II.I
The current aviation liability insurance requirement requires $5,000,000 combined single limit of liability for bodily injury, property damage and personal injury per occurrence. Aviation liability policies are generally subject to an aggregate limit of liability.
Comment: It would be appreciated if the Department could modify the language as follows: “The liability insurance shall provide coverage of no less than $5,000,000 combined single limit of liability for bodily injury, property damage and personal injury per occurrence/claim and in the aggregate. Such limit shall be shared by all insured and additional insured parties.
The Department will include
amendments in the next draft of the
documents that are responsive to this
request.
July 25, 2014
31 7/13/14 4 PPA, Exhibit 16 A.II.J
The limits should be deleted from this requirement per the changes made by ODOT in Section I and state “in the amounts and for the risks described in the Railroad Agreements.”
The Department will include
amendments in the next draft of the
documents that are responsive to this
request.
July 25, 2014
32 7/13/14 3 Indicative term sheet for TIFIA
June 26, 2014 draft
We note that in the updated TIFIA term sheet provided on July 3
rd, an Operations and Maintenance Reserve Account is now
required by TIFIA. We believe this addition to be unnecessary in the context of this Project particularly given the scope of "Department-Retained O&M Work" for which Developer is not obligated and, more generally, any other P3 project, as lenders—including TIFIA—are protected from potential
The Department understands the
concerns expressed regarding the
impact to value associated with TIFIA’s
request for an O&M reserve.
However, at this stage and in light of
the extensive efforts already
undertaken by the Department to
July 25, 2014
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No. Date Category Section Question Response Response Date
reductions in Net Cash Flow from deductions, O&M cost overruns and additional costs associated with the replacement of and O&M contractor or subcontractor by the priority of payment of funds and, ultimately, the equity invested into the project company. There already exists sufficient mechanisms within the PPA and the TIFIA term sheet, including, for example, equity lock-up provisions, to ensure that cash remains available for obligations in the waterfall, and under more extreme circumstances, events of default. These provisions and other provide an appropriate buffer of protection for senior debt payment obligations. The addition of this requirement, if implemented, only serves to reduce value to ODOT, and therefore recommend that ODOT seek to eliminate this addition to the TIFIA requirements on this basis. However, should TIFIA prove unwilling to consider this revision rationale, we have provided below suggested amendments that will help to reduce the negative impact on value to ODOT as a result of maintaining this provision:
The current definition of “Operations and Maintenance Expenses” is overly broad for use in calculating this reserve amount. The costs associated with the day to day management of the SPV, including, for example, advertising, marketing, management costs, fees paid to any Governmental Authority, and general and administrative expenses should not be reserved for [6] months in advance. We recommend that TIFIA include a new definition to separate these and other “SPV related” costs from the routine operations and maintenance costs.
The current implication of the final sentence of this provision (“All aspects of the Operations and Maintenance Reserve Account remain subject to change based on technical due diligence”) and footnote (3) is that Proposers must assume an Operations and Maintenance Reserve Account sum within its financial proposal that is specifically open
address this issue, further changes to
this portion of the TIFIA Term Sheet
will not be requested. For purposes of
the Financial Proposal, all operational
period costs (excluding life cycle costs)
will be subject to reserving under the
Operations and Maintenance Reserve
Account. The Successful Proposer may
elect to discuss with the TIFIA JPO the
size of the reserve and types of costs
to be included therein following
selection.
The Department confirms that
changes to bracketed terms within the
Baseline TIFIA Term Sheet, which
negatively impact the Developer, will
be captured under the definition of a
“TIFIA Event” in the PPA. Betterments
to the Baseline TIFIA Term Sheet will
be captured by the mechanisms in
Exhibit 8.
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July 25, 2014 Page 17
No. Date Category Section Question Response Response Date
to change and subject to increases following the technical due diligence undertaken by TIFIA and its advisors. The inclusion of this language undermines the protections afforded under a TIFIA Event for any adverse effects on the Developer due to inconsistencies in the term sheet. In order to reduce the need for additional contingences to account for this uncertainty, we recommend that ODOT requests TIFIA removes this sentence from the provision, or that ODOT agrees mitigate any negative impact as a result of such changes to the term sheet by including this scenario under the definition of a TIFIA Event.
33 7/13/14 3 Indicative term sheet for TIFIA
June 26, 2014 draft
It is out of line with market practice for P3 projects (and projects financed on a limited recourse basis generally) and inappropriate that failure to replenish the full amount of any required reserve on each semi-annual payment date triggers an Event of Default notwithstanding that no actual shortfall in funds necessary for the Project to meets its opex, debt service or other obligations exists.
Each reserve is designed to provide the Project with additional liquidity to meet its obligations in the unlikely scenario of a shortfall in Project revenues. But the credit benefit provided by this buffer is negated by the impact of a potential premature Event of Default on the Project, which is why this Event of Default is a significant concern for rating agencies and potential underwriters/lenders and impacts the 'bankability' of the Project.
Any shortfall in a required reserve will effectively act as a distribution block, adequately incentivizing equity to manage and rectify any underlying issues impacting Project revenues.
The Department understands the
concerns expressed regarding the
inclusion of this Event of Default.
However, at this state and in light of
the extensive efforts already
undertaken by the Department to
address this issue, further changes to
this portion of the TIFIA Term Sheet
will not be requested.
July 25, 2014