NEW YORK, Oct 24 (Reuters) - Pennsylvania, with more bad bridges than any other U.S. state, said on Friday it selected Plenary Walsh Keystone Partners' $899 million proposal to replace 558 structurally deficient bridges.
Pennsylvania's project is one of the first such public-private partnerships in the U.S. to try to reconstruct hundreds of spans under one contract.
The Plenary Walsh team will design, build, finance and maintain the bridges in exchange for regular payments from the state. Under the 28-year contract, the project will cost an average of $65 million annually, state transportation officials said on Friday.
The move could save the state more than $220 million over the life of the contract. The average cost per bridge under the consortium's proposal is $1.6 million, compared with the state's more than $2 million average cost per bridge, according to transportation officials.
Pennsylvania, which legalized P3s for transportation projects in 2012, is one of at least 33 states to have passed legislation allowing some form of P3s.
Short on funding but much in need, many states have begun looking at so-called P3 models, more commonly used in Europe and Canada, to help build infrastructure projects.
Pennsylvania has more than 4,300 structurally deficient bridges, state officials say. Overall, about a quarter of its more than 22,000 bridges fall into that category, more than any other U.S. state, according to a 2013 report by Transportation for America, a Washington-based transportation advocacy group.
The consortium includes the Plenary Group, The Walsh Group, Granite Construction Company and HDR Engineering, as well as 11 Pennsylvania-based subcontractors.
To help finance the project, the team plans to issue $772 million of private activity bonds, a type of municipal bond which can help private companies get lower borrowing costs for public projects.
JP Morgan and Wells Fargo have provided commitment letters to lead underwriting of the bonds, which will be issued through the Pennsylvania Economic Development Financing Authority, according to a partially redacted document provided to Reuters by the state.
Equity members of the team will also contribute $62.7 million. The consortium is eyeing a financial close in March.
Construction on the Pennsylvania bridges, which are scattered throughout the state, must begin next summer and be completed within 36 months. Though the team must pay for upkeep for more than two decades, the state will own the bridges. (Reporting by Hilary Russ; editing by Gunna Dickson)