Plenary hits financial close on State Street Redevelopment Project

The Plenary Roads State Street consortium has achieved financial close on the State Street Redevelopment Project, just 22 days after formal identification as Preferred Offeror and more than two months sooner than initially scheduled. 

Sole equity investor, lead developer and financial advisor, Plenary Group, led the winning consortium on the project, which also consists of Indiana-based Rieth-Riley Construction Co as lead contractor, Janssen & Spaans Engineering as lead engineer and Shrewsberry & Associates as landscape architect. 

Plenary’s US Executive Chairman, Dale Bonner, said the past month has seen a tremendous effort from all those engaged in the closing process. 

“We are excited to get going on this innovative project and be a part of the transformation of this key corridor for the City of West Lafayette and Purdue University,” Mr Bonner said. 

The project seeks to modify traffic patterns on State Street, which will downplay the corridor’s historical use as a highway through-route and help establish the corridor as a destination for residents, students and visitors. 

It will promote multimodal travel features, including bike paths and pedestrian walkways, with the goal of enhancing safety for pedestrians, bicyclists and drivers throughout the university and the city, and to enhance community and campus resident cohesiveness.

Under the terms of the public-private agreement Plenary Roads State Street is responsible for financing, designing and constructing the project, and for maintaining the pavement for a 22-year period following project completion. 

The project will see an approximately US$120 million total investment shared between the university and the city in a unique tax increment financing (TIF) structure whereby funding for the project comes from the enhanced value associated with the property within the district. 

US$60 million is sourced from a West Lafayette TIF district and another US$62.7 million is sourced from a Purdue TIF district. 

The financing for the project included a US$25 million Senior Credit Facility from SMBC maturing in 2026, alongside US$40 million in Senior Notes purchased by Babson Capital which mature in 2040. 

Plenary provided US$5 million in equity. 

Plenary’s US Chief Operating Officer Matt Girard, said the project is the first US availability payment P3 project to reach financial close where the consortium’s bid included a privately placed bond with fixed credit spreads, a groundbreaking milestone for the market. 

“We worked hard to put together a strong package that best served the residents of West Lafayette and the Purdue community,” Mr Girard said. 

“The innovative financing and funding mechanisms employed on this project will hopefully serve as a model for future projects around the US.” 

In January the City of West Lafayette and Purdue University Joint Board conducted a series of presentations to residents and elected leaders to walk through the details of the proposal. 

Following this public engagement, Plenary Roads State Street and the Joint Board collaborated to further optimize the project structure and accelerate financial close, taking advantage of favorable interest rates and allowing the remaining perimeter parkway segments to be negotiated into the project scope without increasing the overall project cost. 

The State Street Redevelopment Project is a collaborative effort between the City of West Lafayette and Purdue University in cooperation with the West Lafayette Redevelopment Commission and Purdue Research Foundation. 

Detailed project designs are currently being developed, with construction set to commence mid-2016. 

Plenary Roads will continue on in a maintenance capacity following the completion of construction, set for December 2018.