The Lincoln South Beltway is a first of its kind transportation project utilizing an innovative contractor-led financing structure to deliver the largest single contract project in the history of the Nebraska Department of Transportation at $350M. The 11-mile four lane freeway connecting NE-2 and US-77 south of Lincoln reduces congestion through Lincoln and improves east-west connectivity. The project includes two system interchanges, three service interchanges, 43 miles of roadway alignments, 21 bridges and 11 roundabouts.
The Lincoln South Beltway project was first conceived by the State of Nebraska in the 1960s but delayed due to lack of funding, reflecting the inability of the State to issue debt to accelerate construction due to a constitutional prohibition against debt. Under the State’s traditional pay-as-you-go (“PAYGO”) procurement method, it would have taken NDOT 8-10 years to complete the Project. However, to open the door to potential innovative approaches and accelerate Project construction to less than 3 years, NDOT modified its traditional bid-build unit price construction contract to allow teams to submit proposals based on a number of financing provisions which permitted use of tax-exempt or taxable gap/receivable financing, a TIFIA loan, or other sources of private third party financing, while NDOT retained its traditional PAYGO payment obligation.
To meet the financing challenge, Hawkins brought together a finance team that developed a novel Build Finance structure that allowed Hawkins to issue bonds to provide construction financing on a non-recourse basis to Hawkins, NDOT, or the State. The bonds are secured by and payable from Deferred Contract Payment Certificates (“DCPCs”), which are contractual obligations paid by NDOT.
Hawkins won the contract to build and finance the Project on December 20, 2019, accepting the transfer of construction and finance risk from NDOT. Hawkins next successfully brought the bonds to market and guided the finance team to reach financial close during the unprecedented market volatility of the spring of 2020 which was caused by the onset of the COVID-19 pandemic.
After beginning construction on the project in February 2020, the job has progressed on schedule and is currently over 85% complete. To date, the project has moved over 7 million yards of earthwork, completed 37 box culverts, built 18 of the 21 bridges, and installed over 550,000 square yards of pavement.
Read more on Nebraska DOT website here.