Ga. 400 toll lanes, state’s most expensive project, close on financing

The group that last year won a massive contract to build and operate the new Ga. 400 express lanes has closed on the record-breaking financing package needed to pull off the nearly $11 billion project.

SR 400 Peach Partners expects to build the new 16-mile managed lanes by 2031 and collect tolls along the route for 50 years.

It’s the most expensive project the state has ever pursued, but because of the unique private-public partnership, state officials say it will have limited impact on taxpayers. It also will allow for future bus rapid transit connection from the North Springs MARTA station.

In order to fund the project, the consortium on Tuesday closed on a $3.9 billion low-interest loan from the U.S. Department of Transportation — the largest ever issued to a single borrower, the government said.

“Thanks to this loan, this crucial project will become a reality,” said SR 400 Peach Partners CEO Javier Gutierrez in a statement. Gov. Brian Kemp applauded the “largest public-private partnership in USDOT history.”

The massive consortium behind the project comprises two Spanish infrastructure development companies, ACS Group and Acciona Group and French infrastructure investor Meridiam.

The loan has been a long time coming, as the state has been working for years to lay the groundwork with the federal government, Nuria Haltiwanger, CEO of ACS’ North American investment division ACS Infra, told The Atlanta Journal-Constitution.

“It’s a pretty fundamental project, and as anybody who’s driven on SR 400 knows, congestion relief is critical there,” she said.

The group also finalized $3.32 billion in tax-exempt private activity bonds Tuesday and will likely be the largest deal in American municipal capital markets this year, ACS estimates.

It’s the fruit of “bipartisan” lobbying efforts by the state and Georgia officials in D.C., Haltiwanger said.

Overall, the project’s capital investment will reach nearly $11 billion, ACS estimates.

That includes $4.6 billion to construct and $3.8 billion in an up-front concession fee to the Georgia Department of Transportation and the State Road and Tollway Authority.

“We’re building a project that is worth $4.6 billion of construction costs, and we’re paying GDOT $3.9 billion to do that,” she explained. While the group is putting in equity as well, “the financing is huge.”

ACS Group’s U.S. construction subsidiary FlatironDragados and Acciona Construction USA will design and build the project in a joint venture.

Public-private partnerships are becoming more common in other states for managed toll lanes, Haltiwanger explained, but Georgia has opted to uniquely structure its deal by “transferring the revenue risk to the private sector.”

That means the companies have made a bet on how much traffic will in fact flow through the lanes over the next half-century.

However, if the lanes bring in more revenue than expected, the state will be able to share in that revenue as well — to go back to the corridor’s further development.