Ferrovial-backed team wins Georgia P3 project with another whopping concession fee

A Ferrovial-backed consortium has snagged Georgia’s latest transportation public-private partnership, a 50-year deal for new toll lanes along I-285 East in metro Atlanta.

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The team pledged a $23.6 billion concession fee as part of its winning bid. The move comes two months after Ferrovial won a Tennessee P3 bid with a $24.8 billion fee.

The two concession fees separately are six times higher than the previous record, set by the $3.8 billion fee in the Georgia SR-400 express lanes project.

The Tennessee bid has been challenged in court from one of the losing bidders, who has asked for records related to the concession fee, among other things.

Express toll lanes, separate highway lanes that charge variable-rate tolls, are having a moment in the U.S. and in the Southeast region in particular. As firms compete for the projects, the size of the concession fees has become controversial. Some industry experts, like Reason Foundation transportation policy director Robert Poole, warn the large fees will translate into higher tolls or lower developer profits than would otherwise be the case.

Others, like Steven DeWitt, CEO of ACS Infrastructure, argue that concession fees reflect a host of factors and projections, such as 50-year traffic demand, operating innovations and lifecycle performance. ACS Infrastructure is part of the consortium, along with Meridiam, that is building Georgia’s SR-400.

After the Tennessee bid, Ferrovial took a market hit after some banks downgraded the stock. UBS analysts warned that the high bid relative to the other teams “leaves a question mark around the value creation potential of the deal,” and that a “potential perceived lack of bid discipline in the industry leaves in our view an overhang” on the Ferrovial stock.

The I-284 East Express Lanes project is part of the state’s move to build a network of toll lanes around the metro Atlanta region.

Top End Mobility Group includes Ferrovial subsidiary Cintra Global BV and TSI I-285 LLC as equity members and Ferrovial Construction-Webber 285 as lead contractor.

TEMG put the cost at $8.9 billion, the Georgia State Transportation Board said in a release Thursday.

That’s up from the $7.6 billion price tag named in the state’s application for a $2.5 billion Transportation Infrastructure Finance and Innovation Act loan.

Georgia did not release details of the losing bids for the 285 East project. The two other shortlisted bidders are 285 East Peach Partners, led by ACS Infrastructure, Meridiam, and Acciona; and East Perimeter Partners, led by Plenary, Sacyr, and Shikun & Binui.

Like the Tennessee concession fee, the Georgia payment won’t be paid out in a lump sum but instead split into annual payments following financial close, set for October 2027.

The fee is” subject to interest rate movements and financial structuring” prior to close, the state board said.

The team also agreed to reimburse the state $515 million for costs already spent on the project.

“In Georgia, we are proud to lead the way in private investment and innovative solutions to meet the infrastructure needs of our fast-growing regions,” Republican Gov. Brian Kemp said Thursday in a statement. “I am confident this public-private partnership will deliver this important project for the hardworking people of our state and all who depend on our reliable highways.”

The state’s approval authorizes the team to serve as the developer of Phase 1 — which adds two new, barrier-separated express lanes along I-285 connecting to SR 400 and I-85 express lanes facilities — as well as first dibs on developing Phase 2 and future phases under a separate Comprehensive Development Agreement.

Unlike the first phase, the following phases will be structured as progressive or project development agreements, Jay Gillespie, director of the alternative finance office at the Georgia Department of Transportation, previously told The Bond Buyer.

The full I-285 East Express Lanes project includes 34 miles of new, barrier-separated express lanes in both directions of I-285 in Atlanta.

It’s Ferrovial’s first managed lanes project in the state, CEO Ignacio Madridejos said in a statement.

“The I-285 East Express Lanes marks …. an important milestone for Ferrovial in a state where we have been present for over a decade,” Madridejos said. “Together with our construction projects across the region, it demonstrates our ability to deliver complex, large-scale infrastructure that is essential to improving mobility and supporting economic growth in the region.”

GDOT said construction is set to begin in late 2027. Substantial completion of Phase 1 is anticipated in 2034, and all remaining phases of I-285 East Express Lanes are scheduled for completion by 2041.

The projects are part of the Georgia Department of Transportation’s Major Mobility Investment Program. A third toll lane project, I-285 West Express Lanes, which will also be structured as a design-build-finance-operate-maintain P3, is not yet in procurement.