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2010 North Carolina Attorney General Reports and Opinions 1 (2010)

handle is hein.sag/sagnc0047 and id is 1 raw text is: January 12, 2010 Eugene A. Conti, Jr. Secretary North Carolina Department of Transportation 1501 Mail Service Center Raleigh, North Carolina 27699-1501 Re: Advisory Opinion -- Design, Build, Finance Agreements for the Construction of Transportation Infrastructure; NCGS §136-18(39) Dear Secretary Conti: You have requested our opinion as to legal issues which may be implicated by the North Carolina Department of Transportation's (NCDOT) proposal for completion of the Charlotte Outer Loop (1-485) on an expedited basis. You have provided us with a variety of information outlining the basic structure of the proposal, including relevant sections of a draft Request for Proposals. Based on the information reviewed, we understand that the proposal contemplates three separate design/build agreements with contractors or contractor groups: (1) the construction of the I- 485 interchange (R-2123CE); (2) the necessary widening of 1-85 (1-3803B); and, (3) construction of the last five miles of the 1-485 Loop (R-2248E). The total estimated cost of $540 million for the three projects is projected to be funded through a combination of Grant Anticipation Revenue Vehicles (GARVEE bonds) and State Highway Trust Fund revenues. The projects are required to be completed within approximately five years, however, on two of the projects payments to contractors will be extended over a ten-year period. We have been advised that structuring the contracts in this manner will accelerate completion of the Charlotte Outer Loop by five years and may save between $50 million and $100 million. It is our understanding that the delayed-payment component of two of the proposed agreements will be modeled from a Design-Build-Finance contract previously used by the State of Florida Department of Transportation. As described, NCDOT has established an estimated contract price for each of the three projects in accordance with normal contracting procedures. Revenues projected to become available from the Highway Trust Fund and the sale of GARVEE bonds have been calculated over a ten-year period. The 1-85 widening project will require completion by 2015 and will be completely funded over the five-year period through a combination of Highway Trust Fund revenues and GARVEE bonds. The other two contracts (1-485 Loop and 1-485 Interchange) will require project completion by 2015, with periodic payments extending through 2020. The 1-485 Loop project will be structured to pay out 89% of the contract value during the actual performance period and 11% post-performance. The 1-485 Interchange project will be structured to pay out 87% of the contract value during the performance period and 13% post-performance. The Request for Proposals for the 1-485 Loop and Interchange projects will inform prospective contractors of the maximum amount of funds available on a periodic basis throughout

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