Project Overview
The Teodoro Moscoso Bridge Project is a four-lane, 1.4-mile long toll bridge that spans the San José Lagoon between the municipalities of San Juan and Carolina, Puerto Rico. The bridge connects roadways in the vicinity of Luis Muñoz Marín International Airport on both sides of the lagoon. The total length of the facility (including access roadways) is 2.1 miles. The Bridge opened to traffic in February 1994.
The Bridge was developed under a single design-build-finance-operate-maintain (DBFOM) concession agreement between the Puerto Rico Highways and Transportation Authority (PRHTA), an independent agency of the Commonwealth of Puerto, and Autopistas de Puerto Rico (“APR”), a private consortium. Under the agreement, the private partner has the right to collect toll revenues and use those proceeds to make debt service payments on bonds issued by the PRHTA. The concession term is scheduled to expire in 2044.
Project History
This history of the Teodoro Moscoso Bridge project can be traced back to late 1980s when the municipalities of San Juan and Carolina were faced with a growing population and severe traffic congestion. At the same time, the Government of Puerto Rico was looking to improve connectivity and access to the Marín Airport, located just north of the San José Lagoon. The PRHTA had contemplated building a bridge across the lagoon for some time, but the cost, and construction and demand risks associated with the facility limited the PRHTA’s ability to undertake the project, leading it to seek a private partner to develop the bridge project.
In 1989, following a procurement process for the development of the new bridge, PRHTA selected a private consortium capable of carrying the construction and the demand risks associated with the project and needed financial strength. The selected private consortium was APR, which was originally composed of Dragados Construction and two local construction companies, Supra and Rexach. Following a series of transactions between 1998 and 2010, APR is now wholly owned by Abertis Infraestructuras, S.A., a Spanish conglomerate.
In August 1990, the Puerto Rico legislature approved Act No. 4, which amended the PRHTA Act to allow PRHTA to enter into concession agreements with entities for the design, construction, operation and maintenance of highway projects. Under Act No. 4, ownership of the transportation assets would be retained by PRHTA but private sector developers could finance projects by leveraging future toll proceeds.
On December 20, 1991, PRHTA and APR executed a 35-year concession agreement for the Bridge project, with APR collecting and retaining all toll revenues. In March 1992, the PRHTA issued Special Facility Revenue Bonds to facilitate the financing of the Bridge. Construction on the Bridge began in April 1992 and was completed in February 1994, two months ahead of schedule. The total cost of the project was $126.8 million. The Teodoro Moscoso Bridge is considered the first modern highway P3 project in the U.S.
In 2009, the concession agreement was amended to extend the term by 17 years to 2044, 50 years after the initiation of service on the bridge, as part of a settlement of litigation between APR and PRHTA.
Project Financing and Delivery
The Teodoro Moscoso Bridge was originally financed through $117 million in Special Facility Revenue Bonds issued by PRHTA in 1992. The proceeds of the bond issue were then loaned to APR, which agreed to repay the principal and interest on the bonds. In 2003, PRHTA issued $153.2 million in Special Facility Revenue Refunding Bonds to refinance the original debt, and the proceeds were again loaned to APR.
The Refunding bonds are primarily repayable from net toll revenues collected on the Bridge by APR. If net toll revenues and available reserves are insufficient to service the debt, PRHTA is required to assume APR’s obligations to pay the bonds, exchanging them for bonds issued under PRHTA’s existing resolution, if possible. In such an event, the concession agreement with APR would be terminated.
The concession agreement for the Bridge also provides that net toll revenues be shared between APR and PRHTA once APR achieves a target rate of return on its investment, with PRHTA’s share of the excess revenues increasing at higher rate of return levels for APR.