COLAB Las Vegas
Monday, Aug. 18, 2014 | 2 a.m.
State leaders will decide today whether to reverse their decision to use private financing to pay for the biggest road project in the history of the Nevada Department of Transportation.
Last June, the agency's board of directors, which includes Gov. Brian Sandoval, approved a plan for private investors to pay the construction costs and operate Project Neon. The state would pay back the investor over 35 years, similar to a home mortgage.
But costs have jumped 23 percent in the last year and state officials are reconsidering the decision. Instead, they might choose to fund the project using public bonds, a more traditional method.
Here’s what you need to know about today's hearing.
What is Project Neon?
The goal is to untangle the Spaghetti Bowl and reduce congestion on a 3.7 mile stretch of I-15 that sees 250,000 vehicles daily. The project is being broken into phases, and the portion being discussed today is expected to cost $700 million to $800 million. Major features of this phase include a reconfigured interchange at Charleston Boulevard, improved connectivity to U.S. 95 and the expansion of carpool lanes. Construction is expected to start next year and be completed by 2020.
What’s being decided today?
The board must decide whether it wants to move forward with the public-private partnership it approved last year. It delayed the same decision at a previous meeting. If the board reverses its decision and chooses not to partner with the private sector, it needs to give approval for a more traditional model of financing to build the road with only public dollars.
What’s the difference between the two approaches?
The private-public partnership would see private money being used to finance, build, maintain and operate the new stretch of I-15 for the next 35 years. During that time, the state would make payments to the private company that built the road.
This differs from the more traditional design-build model, where the state would issue bonds to pay for construction and then make payments on those bonds for the next 20 years.
“The public private partnership would allow us to finance the project over a longer period of time,” project manager Cole Mortensen said. “It would be the difference between a 30-year mortgage versus a 15-year mortgage.”
State transportation officials declined to release an updated cost comparison between the two models. A spokeswoman said the information will be presented at today’s meeting.
Nevada Department of Transportation
What: The agency's board of directors will decide whether to reverse its decision to use private funding for Project Neon.
When: 9 a.m. today
Where: NDOT District One Office, 123 East Washington Ave.
What’s changed since last year?
The projected cost of the public-private partnership increased from $602 million to $740 million, a 23 percent jump.
The project has been in the works for a decade and was scheduled to begin in late 2015. But near the end of the planning phase, the state tweaked key assumptions about the project and its scope.
The biggest driver of the price jump are higher interest rates, an expanded project scope and increased maintenance costs
“There’s been several things that have changed, so the board has to take a look,” said board member Frank Martin, president of Martin-Harris Construction. “If we find out that a decision a year ago is not the highest and best use (of taxpayer dollars), why wouldn’t we change it?”
What happens if the board changes its mind?
The switch to a public project could delay the project's start by three to four months, Mortensen said.