Shining the Light on Detroit-Area Highways

Improving safety and energy efficiency and trimming taxpayer costs - those were the goals of our efforts with the Michigan Department of Transportation (MDOT).  Together, we achieved simultaneous commercial and financial close on a groundbreaking agreement with a private developer to provide an approximately $125 million street lighting project for the Detroit Metro region.

PROJECT DETAILS

The project includes the replacement of around 15,000 bulbs across bridges, tunnels and roadways with newer, more efficient LED versions.  

We worked with MDOT to devise an innovative DBFOM concession agreement with Freeway Lighting Partners LLC, a consortium of Star America/Aldridge Electric/Cofely Services.  Under the agreement, the concessionaire agreed to complete the replacement and rehabilitation work within a two-year period and operate and maintain the improved lighting system over the entire 15-year term (with reduced operating standards prior to completion of the replacement and rehabilitation work).  Per the agreement, Freeway Lighting Partners must hand back the system to MDOT at the end of the contract term in a manner that meets contractual performance requirements.

The P3 was financed through a private placement with Allianz Life Insurance of North America (a Blackrock entity) with Star America and Aldridge Electric contributing equity to the deal.  The project includes an availability payment structure that incorporates a risk/reward mechanism for energy savings.  The annual cost for Michigan taxpayers is anticipated to be lower than the cost MDOT would incur to improve the system and meet required performance levels.

The new lighting network is expected to serve as a template for other states seeking to better illuminate their own highways through alternative delivery methods.

INNOVATION

  • The first transportation P3 in Michigan.
  • The first freeway lighting P3 in the U.S.

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