O’Hare Express Train Showcases the Viability of P3s for Mass Transit

by Bilzin Sumberg
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Wednesday, the City of Chicago selected two finalists in its procurement process for the planned O’Hare Express, a mass transit system that will connect downtown Chicago to O’Hare International Airport within 20 minutes–substantially faster than either existing mass transit service on the Blue Line or vehicular alternatives.  The two finalists are Elon Musk’s firm, The Boring Co., and a P3 consortium including experienced firms in the P3 market such as Meridiam Infrastructure and Mott MacDonald.

Whichever firm ultimately prevails in the competition, O’Hare Express is likely to jump-start the market for mass transit P3s in the United States.  Significantly, O’Hare Express is conceived as a revenue P3, which means that  the private developer and operator of the system will be repaid by the revenues (e.g., fares) that it collects from users of the system.  Although revenue P3s are common for toll roads, because mass transit is generally viewed as unprofitable, they are often dismissed as an option. Recent mass transit P3s, such as the Purple Line and the LAX Automated People Mover, are both delivered with availability models, under which the grantor has agreed to make performance-based periodic payments to the project developers during the projects’ operating phases. What O’Hare Express shows, however, is that a mass transit system can be funded by revenues so long as the technology is appropriately matched to the anticipated ridership and the selected route has sufficient riders, as appears to be the case with the planned O’Hare-to-downtown connection.  There are likely to be many other opportunities for revenue P3s for mass transit both throughout the United States and in South Florida in the coming years, including as part of Miami-Dade County’s SMART Plan.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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