Agreement Synopsis, Context and Review
Transport - urban
Name of Agreement:
Concession agrement between Regional Transportation District (RTD) and Denver Transit Partners (DTP) for railway
Type of Agreement:
Region (if known):
Purpose and Context:
Circumstances surrounding this contract to identify where the application of one or more of the concepts contained may be appropriate :
This contract has many features and it is unlikely that subsequent projects will embrace all the features that this one has. RTD ([Denver] Regional Transportation District] is a corporation which is stand alone from the State or local administration in term of liability Thus there is no express or implied financial support in the event of financial difficulty from either the State of Colorado or from the City of Denver or any surrounding municipalities or other authorities.
A tranche of funds was to be made available to RTD by the Federal Transit Administration but, in addition RTD, has a right to a percentage of local sales tax but Colorado has a Taxpayers Bill of Rights (TABOR) which limits overall tax increases to inflation and increases in population (capita). Under an amendment to TABOR, approved by referendum, if in any year there is a fall in tax revenue (a recession year) subsequent increases are fixed by reference to what notionally could have been taken in tax based upon the inflation and capita formula rather than what was received in the recession year. However those particular increases in tax take (based on the difference between the actual and the notional) can only be applied for certain special purposes of which transportation is one. Otherwise, if in any year the overall tax take is greater than it should be by applying the inflation and capita formula then the excess monies have to be returned to the Colorado taxpayers. "RTD has certain bonds and subordinated bonds which are payable out of its sales tax take but the concept is that the PPP payments should be paid after the payments to the Bondholders in any year have been met but before payment in relation to the Subordinated debt. "Another approach in other jurisdictions could have been to use monies from property tax but in Colorado sales tax is the solution for transportation subsidy.
The project envisages three stages. The first is advanced or enabling works, the second is Phase 1 and the third is Phase 2. In addition, there is an option for additional rolling stock. During Phase 1 additional specified work may be ordered by RTD (it is a menu but not all the items on the menu can be ordered together).
Part of the system is used by Heavy Rail and part of the facilities (the rolling stock maintenance depot and access to it) will be used by rolling stock for a route not concessioned to the Concessionaire.
RTD had already entered into agreements with the three heavy rail companies using parts of the system two of which owned infrastructure connected to the system. Related to that, it had entered into an agreement for the redevelopment of Denver Union Station, part of which was to be taken over by the Concessionaire on completion of those works. It had also entered into agreement with affected local authorities and with numerous utilities including communication utilities. Some utility works were to be procured through RTD and some through the Concessionaire.
RTD had entered into agreements with Trustees for the administration of income generated from the sales tax it received in relation to two bond issues and a subordinated bond.
RTD had obtained certain consents to allow the works to proceed in principle although more detailed consents would require to be obtained by the Concessionaire.
The existing facilities, including the rolling stock, were to be delivered by RTD to the Concessionaire and held under leases incorporated in the Project Agreement which would embrace the future works and other assets to be supplied by the Concessionaire under the Project Agreement.
Drafted for common law/ civil law jurisdiction:
For more information about this sector, please visit Public–Private Partnerships in Transport.