LAX AUTOMATED PEOPLE

MOVER SYSTEM
PROJECT FINANCE

SUBMITTED BY:
CREW 12
ANKIT ABHISHEK D002
APRAM KOUR C034
ARPIT MALHOTRA E041
ATUL SHARMA C057
 Contents
Introduction ................................................................................................................................ 3
Automated People Mover ................................................................................................................. 3
Los Angeles International Airport ................................................................................................. 4
Los Angeles Airport Modernization Plan ........................................................................................... 4
Automated People Mover Project Details ........................................................................................ 5
Project Bid .......................................................................................................................................... 6
Evaluation Criteria .............................................................................................................................. 6
Deal Structure.............................................................................................................................. 7
Handback Condition ........................................................................................................................... 8
Financing ............................................................................................................................................. 8
Revenues and Costs............................................................................................................................ 9
Term Sheet ................................................................................................................................ 10
Financial Analysis ....................................................................................................................... 11
Alternative ways to finance this project ...................................................................................... 12
Metro Funding Sources .................................................................................................................... 12
Measure R ..................................................................................................................................... 12
Competitive Major Capital Investments (New Starts & Small Starts) ........................................ 12
Transportation Investment Generating Economic Recovery (TIGER) ........................................ 13
Congestion Mitigation Air Quality (CMAQ) ................................................................................. 13
Surface Transportation Program (STP) ........................................................................................ 13
Public Transportation Modernization, Improvement, and Service Enhancement Account
(PTMISEA) ..................................................................................................................................... 13
State Transportation Improvement Program (STIP) ................................................................... 13
Proposition A - Rail Development Program (A35)....................................................................... 13
Proposition C – Discretionary (C40) and Transit-related Highway Improvements (C25) .......... 13
Urbanized Area Formula Grants .................................................................................................. 13
LAWA source of financing ................................................................................................................ 14
Transportation Infrastructure Finance and Innovation Act (TIFIA) ............................................ 14
Customer Facility Charge ............................................................................................................. 14
Airport Revenue Bonds/Private Activity Bonds .......................................................................... 14
Airport Improvement Program .................................................................................................... 14
Partner Loan or Equity ................................................................................................................. 14
Risk Analysis .............................................................................................................................. 15
Pre - completion Risk ....................................................................................................................... 15
Completion Risk............................................................................................................................ 15

1
 Force Majeure .............................................................................................................................. 15
Environmental Risk ...................................................................................................................... 15
Post Completion Risk ....................................................................................................................... 15
Cost Risk........................................................................................................................................ 15
Demand Risk ................................................................................................................................. 15
Inflation Risk ................................................................................................................................. 15
Revenue Risk ................................................................................................................................ 15
Financing Risk ............................................................................................................................... 16
Default Risk................................................................................................................................... 16
References................................................................................................................................. 17

2
Introduction
The US aviation has been booming for the past few years with LAX, JFK and Las Vegas airports seem
to be leading the way with higher O&D (Origin & Designation) passengers. In 2017 the airports
passenger traffic in the US grew at a rate 3.3% over the previous year, a trend which is expected to
continue in the years to come, which is a factor for the airports to add additional capacity. According
to industry reports the airline and concession revenues are performing well, in line with rising
operating and debt cost and the need for airport redevelopment capital remains high, particularly
for terminal projects at larger hubs. Los Angeles International airports is one of the leaders with
30.1million O&D passengers from a single airport, while New York city with its 3 major airport caters
to a total of 52million O&D passengers. Kennedy, Las Vegas, San Francisco, Orlando also carry large
amounts of O&D passengers in tune of 20millon passenger each.

Automated People Mover

An APM or Automated people mover is a small-scale automated transit system guided on a guide
way used in lighter applications such as airports, amusement parks, etc. An APM is capable of
transporting anywhere between 1,000-15,000 passenger per hour. As of 2013, there were about 13
operational lines of Automated people mover covering a total operational area of 150km distance,
currently about 1000 APM are in use across the world. The first ever APM used in an airport in the
United States was in 1971 at the Tampa International Airport. APM have now largely become a part
of many US airports and Hospital.

APM Projects in United States are:

1. Detroit People Mover, Detroit Michigan

2. United States Capitol Subway System, Washington DC
3. Huntsville Hospital People Mover, Huntsville, Alabama
4. Indiana University Health People Mover Indianapolis
5. Mandalay Bay Tram, Las Vegas
6. Las Colinas APT System, Las Collins
APM seems the most suitable system for smaller scale transportation system than larger rail based
system due to its technical ease of use, such as rubber tires, signalling system, communication
system, power distribution, low maintenance, platform doors. The biggest cost advantage of APM is
the lack of need of a driver which increase operation time to around the clock and reduce
dependences of drivers.

Leading APM Manufactures around the world

1. Bombardier Innovia APM (rolling stock used in Los Angelis airport People Mover)
2. Ansaldo STS
3. Mitsubishi Heavy Industries Crystal Mover
4. Leitner Group
5. Poma Group

3
Los Angeles International Airport
Los Angeles International Airport, usually referred by its IATA (International Air Transport
Association) code LAX is the primary international airport serving the city of Los Angeles, California.
LAX is situated at an approximate distance 18 miles southwest of Downtown Los Angeles. Van Nuys
Airport, is another public airport which serves the city.
LAWA (Los Angeles World Airports) is the City of Los Angeles’ airport oversight and operations
department that owns operates LAX and VNX airports, it is headquartered at the LAX airport. LAX is
the largest and the busiest airport on the US West Coast, and is a major international gateway to the
US. It is also the second busiest airport in the country and the fourth busiest worldwide. Owing to it
being one of the busiest airports, it is also the designated hub for more passenger airlines than any
other airport in the US.

Los Angeles Airport Modernization Plan

A $14 billion capital improvement program is underway at LAX airport, which is projected to last
through 2023. Considered to be the biggest public works program in the city of Los Angeles, it began
in the year 2009 and is expected to create approximately 121,000 annual construction related jobs.
The program would help improve the passenger experience, relieve traffic congestion and make LAX
a world class airport. The following are the major projects which were undertaken as a part of this
program:

 New Tom Bradley International Terminal (Opened in 2013)

 Land Access Modernization Program (LAMP), which includes an Automated People Mover
project, a consolidated Rent-a-Car center (ConRAC) and a stop linking to the regional pubic
rail system.
 Midfield Satellite Concourse (MSC)

4
Land Access Modernization Project (LAMP)
A major concern for the LAX central terminal has been the traffic into and on the roadways.
Approximately 50% of the passengers drive to and from the airport by car and the number is
expected to increase as the passenger volume continues to increase rapidly. The traffic congestion
during normal days is due to around 90,000 vehicles entering the LAX Central Terminal Area (CTA)
which can peak to 120,000 vehicles during the Thanksgiving Holiday leading to significant delays.
About 50% of these vehicles are cars, buses and shuttles from the rental car companies, hotels and
shared ride hailing services along with taxis which compete for the limited curbs and drop zones at
the CTA. Another pain point is the scattered rental car lots which are 23 in total and this causes
confusion among passengers as well as traffic congestion. Los Angeles will be hosting the 2028
Summer Olympics (commonly known as LA 2028), the traffic choked airport area is being developed
keeping this in mind as well.

The Land Access Modernization Project is a $5.5 billion that will provide the passengers and guests a
reliable, swift and convenient access to LAX as well as connectivity and mobility within the airport
and easier access to car rentals. Basically, LAWA us working towards creating a new “front door” for
the airport. LAMP includes five major elements:

 A 2.25-mile automated people mover providing a seamless connection to public

transportation i.e. the city metro rail
 A Consolidated Rent-a-Car
 Two Intermodal Transportation Facilities for additional parking
 Ground transportation services and meeter-greeter activities
 Roadway improvements

The project is scheduled to be completed by 2023.

Automated People Mover Project Details

The Automated People Mover will be an elevated guideway of 2.25 miles for electric train having six
stations in total, three outside the terminal loop and three inside the terminal loop. The project aims
to improve the passenger experience at the LAX airport and reduce traffic congestion in and around
the LAX airport. The APM will improve connectivity by joining LAX to regional public transportation
infrastructure.

The APM will have 9 trains, every train will comprise of 4 cars each having a capacity of 50
passengers and their luggage. Each car will have a seating capacity of 12 passengers. The end to end
travel time for the trains will be of 10 minutes and the frequency of trains at each station will be of 2
minutes. The maximum speed of the trains will be 47mph. It is anticipated that the APM will service
around 30 million passengers every year and will be FREE for all users and will be operational at all
times. Real time flight information, will be displayed in the trains which will provide ride quality of
industry leading standards.

In April 2018, the Los Angeles City Council

unanimously approved the $4.9 billion Design,
Build, Finance, Operate and Maintain (DBFOM)
project for APM that will connect the LAX’s
central terminal area to a car rental facility, a
ground transportation hub and a station on the
Metro Crenshaw line. Construction will begin

5
in late 2019, first APM will be delivered in late 2020 and major construction will be completed by
2022 followed by extensive testing; APM will be operational for passengers by early 2023.
On the east side of the airport the people mover will connect to a ground transportation hub where
passengers can wait to be picked up or dropped by a friend or ride-share driver or board a shuttle to
a nearby hotel or the car park. On the other hand, the last stop of the people mover will be near the
405 Freeway, where a consolidated car rental facility is being developed. The APM trains, elevators,
moving sidewalks improve accessibility to the terminals and the stations. Apart from reducing the
traffic, APM fleet will comprise of 44 electric powered cars, 98% recyclable and will generate a
portion of their own power through regenerative breaking. Thus, helping in reducing the carbon
footprint of the airport area. For the emerging workforce and the business community, the APM
project is also of significant importance. The project will be solely responsible for creating 15000
construction jobs out of which 30% will be reserved for residents of Los Angeles and the impacted
communities near the LAX airport. During the initial 25-year Operations and Maintenance period,
60% of the careers are being reserved for the local workers.

Project Bid

The contract for the APM is one of the largest in the history of the city. The consortium of companies
which won the contract was LAX Integrated Express Solutions LINXS which includes the following
companies: Bombardier Transportation, Fluor Enterprises, Balfour Beauty, ACS Infrastructure
Development, Dragados USA, HOCHTIEF PPP Solutions, Flatiron, and the design team comprised of
HDR and HNTB. LINXS had the highest technical score and the lowest cost bid, which was
approximately 4% lesser than the airport official’s estimates and $700 million lower than the other
bidders. The construction estimate was $1.95 billion.

Evaluation Criteria

The APM developer selection consisted of two independent steps to determine the Lowest Ultimate
Cost Proposer (LUCP), where the technical as well as the financial proposal was evaluated and the
scoring was done by assigning a 60:40 weightage to the technical and financial proposal respectively.

Evaluation Criteria
Steps in Evaluation Criteria 1. Evaluate Technical Proposal 2. Evaluate Financial Proposal
% of Total Evaluation Scoring 60% 40%
6000 Points 4000 Points

Technical Proposal Evaluation & Scoring

Components Points
APM System 700
Approach to Execution of Project Construction 500
Approach to Maintenance of Traffic/Mitigation of Construction Impacts 500
Approach to Operations & Maintenance 700
Inclusivity 600
Public Outreach/Stakeholder Communication 200
Sustainability 300
Technical Merit Project Safety & Security 500
Architectural Appeal of the APM Fixed Facilities 750
Visual Merit Vehicle Aesthetics 250
User Experience User Experience 1000
Total 6000

6
Each financial proposal included an NPV for comparative evaluation. It also evaluated Capital Cost,
O&M cost and financing cost.

LINXS scored the highest in the three categories for technical proposal i.e. technical merit, visual
merit, user experience. LINXS’S design and construction costs came in 4% lower than the original
cost estimate. ($2.028B est. vs. $1.95B actual). LINXS presented the lowest cost for both design &
construction and operations & maintenance.

Deal Structure
DBFOM Model: The Automated People Mover will be built using a DBFOM (Design-Build-Finance-
Operate-Maintain) contracting model. DBFOM is a public-private-partnership (P3) model that allows
the public sector agencies to utilize private sector innovation and expertise, while sharing risks and
responsibilities for financing. In return, the private players earn a reliable revenue stream which is
subject to their performance.

In this project, the developer SPV is LAX Integrated Express Solutions LLC (LINXS). LINXS comprising
of following five-member companies as equity investors:

1. Fluor Enterprises, Inc.

A FORTUNE 150 company consistently ranked #1 or #2 on Engineering News Record (ENR)
magazine’s list of ‘Top Design-Build Firms’ with revenues of $18.1 billion. Fluor is one of the
world's largest engineering, procurement, construction and maintenance companies and is
presently leading the delivery of four of the largest transportation projects in the U.S.

2. Balfour Beatty Investments, Inc.

A leading international infrastructure group which has invested and structured over 80 P3
projects globally and has constructed 20 aviation projects.

3. Hochtief PPP Solutions GmbH

One of the largest global providers with 140 years of experience in construction-related services
and has successfully delivered more than 55 P3s and is currently responsible for 12
transportation concessions globally.

4. ACS Infrastructure Development, Inc.

A subsidiary of ACS Group which is a global leader in transportation infrastructure development
and construction, and one of the largest P3 developers in the world having developed over 80 P3
projects globally.

5. Bombardier Transportation (Holdings) USA Inc.

A global manufacturer of innovative transportation solutions, from commercial aircraft and
business jets to rail transportation equipment, systems and services, Bombardier is leading
provider of automated people mover (APM) systems.

7
 LAWA and LINXS have entered into a 30-year BDFOM agreement – 5 years for Design &
Construction (D&C) and 25 years for Operations & Maintenance (O&M).

Under the agreement, LINXS is responsible for the design & construction of the APM System
including the Operating System (Vehicles & operating technology) and Fixed Facilities (Stations,
guideway, infrastructure). For this the developer will receive six Milestone payments during
construction. Post this, LAWA will disburse annual Availability Payments for the O&M. LINXS has a
contractual obligation to meet the service availability date of March, 2023.Failure to meet this
deadline would result in lost Availability Payments which cannot be recovered.
To ensure that the APM project has a useful life of 5 years when it is handed over to LAWA by the
developers, there are certain criteria which are mentioned in the agreement between LAWA and the
developer team.

Handback Condition

After the completion of 25 years of O&M (in 2048), the APM System will be handed over to LAWA.
At this time, as per the agreement, the system must have a minimum of 5 years of remaining useful
life. The developer needs to diligently perform and complete all the renewal work that is required to
be performed before the handback date of the contract. The APM operating system supplier,
Bombardier, would be responsible for meeting the minimum remaining useful life clause at the time
of surrendering the project to LAWA.

Financing

The project will be financed through the following sources:

 $1.2 billion proceeds of the series 2018A&B bonds issued by the California Municipal Finance
Authority on behalf of LINXS
 $270 million construction period credit facility
 an equity contribution of approximately $96 million from member companies:
o Fluor Enterprises, Inc. (27% equity)

8
 o Balfour Beatty Investments, Inc. (27%)
o HOCHTIEF LINXS Holding, LLC (18%)
o ACS LINXS Holdings, LLC (18%)
o Bombardier Transportation (Holdings) USA Inc. (10%)

LINXS will start paying the interest on credit facility from the first year (2019). The principal amount
will be repaid in full in 2023.The long-term loan raised through bond will be repaid over a period of
25 years (O&M phase) starting from 2023.The interest on the same will be paid from the first year
(2019) itself.

Revenues and Costs

Revenues
Milestone payments
MP1 175
MP2 175
MP3 175
MP4 168
MP5 168
MP6 168

Availability payments
Capital APs (70%): escalating at 3% p.a. 2478
Operating APs (30%) escalating around 1.75% p.a. 904
TOTAL 4,243
(all figures are in USD millions)

Costs
Construction cost
Year 1 390
Year 2 390
Year 3 390
Year 4 390
Year 5 390
Operation and Maintenance costs (annual increment of 5%) 664
TOTAL 2,614
(all figures are in USD millions)

Following is a snapshot of the systematic cash flows of the APM project:

Milestone Payments Availability Payments

5
0 30
Construction costs and Long term loan interest and years
short-term loan interest principal repayment
payment

9
Term Sheet

Borrower LINXS, a consortium of companies

Use of Proceeds Proceeds will be used to design, build, operate and maintain the
Automated People Mover at Los Angeles Airport

Project Cost $2.7 Billion

Concession Period 30 years: 5 years Design and Construction and 25 years Operation
and Maintenance

Debt Contribution 96%

Equity Contribution approximately $96 million from member companies:

Credit Facilities
 Fluor Enterprises, Inc. (27% equity)
 Balfour Beatty Investments, Inc. (27%)
 HOCHTIEF LINXS Holding, LLC (18%)
 ACS LINXS Holdings, LLC (18%)
 Bombardier Transportation (Holdings) USA Inc. (10%)
$1.2 Bn Private Activity Bonds issued by CMFA on behalf of LINXS
(Conduit Financing)
$270 Mn Credit Facility guaranteed by multiple banks

Term Loan Duration 5 years for the Banks Credit Facility

30 years for the Private Activity Bonds

Distributions of Operating Cash Six Milestone Payments would be used for construction and
Flows design
Annual Availability Payments would be used for payments
towards the O&M expense

Terms At the completion of 25 years of O&M, the system should have a

minimum useful life of 5 years

Developer must meet 99.5% or greater System Availability during

O&M, Failure to achieve this will result in payment deductions
and other agreement compliance enforcement measures

10
Financial Analysis
Assumptions
The project will be completed in early 2023
Depreciation is charged at SLM over 30 years of the life of the asset
There are no changes in the working capital
Construction costs are equally divided over the five-year period
The capital APs (70%) are escalating at 3% p.a. and operating APs (30%) at around 1.75%
O&M costs are increasing at a rate of 5% annually

Particulars Amount %
Debt 1470 94%
Equity 96 6%
Total 1566 100% IRR 7.4%
Cost of Capital 3.5%
Risk free Rate (10 yr Bond Yield) 3.2%
NPV 558
Market Risk Premium 7.10%
Industry Beta 0.65
Unlevered Beta 0.05
Tax Rate 21%
Cost of Capital 3.5%

As per our analysis, the project has a positive NPV of 558 USD millions and a DSCR of around 1.1x
throughout its life. Since there IRR is greater than the cost of capital by a good margin, we believe
that the project is financially viable.
(detailed analysis in the excel)

11
Alternative ways to finance this project
Several Automated people mover projects across the country have used different sources of
financing:

 Miami International Electric Rail People Mover costs around $ 270 million. It was funded
$170 million from Miami-Dade County, $100 million from Florida Dept. of Transportation
 Tampa International Automated people mover costs $ 412 million funded by Tampa
International Airport Revenue Bonds
 Automated people mover at Orlando International airport costs $ 684 million and was
funded by revenue bonds backed by passenger facility charges and funds from state of
Florida.

Above mentioned Automated people mover projects were funded by various government agencies.
Moving on the same line, Los Angeles Automated people project can try to get fund from various
government agencies funding programs. The funds which can be accessed by Los Angeles
Automated people mover are:

The Los Angeles County Metropolitan Transportation Authority known as Metro is responsible for
public transit facilities in the county. It is in charge of dispensing funds from government, state and
local government bodies for subsidizing public transit system

Metro Funding Sources

SI. No. Funding Source Program Name

1 Local
2 Federal
3 Federal
4 Federal
5 Federal
6 State
7 State
8 Local
9 Local
10 Federal
Measure R - Transit Capital Specific Projects
Competitive Major Capital Investments (New Starts & Small Starts)
Transportation Investment Generating Economic Recovery (TIGER)
Congestion Mitigation Air Quality (CMAQ)
Surface Transportation Program (STP)
Public Transportation Modernization, Improvement, and Service
Enhancement Account (PTMISEA)
State Transportation Improvement Program (STIP)
Proposition A - Rail Development Program (A35)
Proposition C - Transit-related Highway Improvements (C25)
Urbanized Area Formula Program (Section 5307)

Measure R

Measure R is a half-cent sales tax for Los Angeles County to finance new transportation projects and
programs. This can be used as base funding that is, include it in every alternative source of funding
as it has very low cost of capital.

Competitive Major Capital Investments (New Starts & Small Starts)

The new starts program funds fund is provided by the Federal Transit Administration to public
agencies and project operators with projects worth minimum $ 250 million.

12
Transportation Investment Generating Economic Recovery (TIGER)

TIGER was first approved by the American Recovery and Reinvestment Act (ARRA) of 2009. From
that point forward, Congress has approved funds for TIGER and US Department of Transportation
(DOT) has granted the competitive discretionary grants three additional times. The goal of TIGER is
to cultivate creative, multi-modular, and multijurisdictional transportation projects in the country,
which will significantly affect the national economy

Congestion Mitigation Air Quality (CMAQ)

Objective of program is to provide a funding source to public transportation projects to help meet
the requirements of the Clean Air Act.

Surface Transportation Program (STP)

The purpose of this grant is to improve the conditions and performance of the nation’s surface
transportation system. The STP funds are eligible for rail and other transit capital projects.

Public Transportation Modernization, Improvement, and Service Enhancement Account

(PTMISEA)

Projects which are nominated by Metro and approved by Caltrans are eligible to use PTMISEA funds.
The funding available under Los Angeles county PTMISEA are high but they are currently been
assigned to other projects and needs permission from Caltrans to shift the funds from other projects
to LA Automated people mover.

State Transportation Improvement Program (STIP)

The State Transportation Improvement Program (STIP) is a State and Federally funded program. STIP
funds grants to local agencies for their Regional Improvement Programs (RIP) and require permission
from Caltrans to be assigned to LA Automated people mover.

Proposition A - Rail Development Program (A35)

Proposition A was endorsed by Los Angeles County voters in 1980 to institute a non-lapsing ½ penny
sales tax for transportation ventures. The funds are dispensed to local organizations on Metro's
Board discretion.

Proposition C – Discretionary (C40) and Transit-related Highway Improvements (C25)

Proposition C was the second non-terminating ½ cent sales tax passed by Los Angeles County voters.
Approved in 1990, it allocates revenue to a variety of capital and operating transit programs,
including 25% to the “Transit-related Highway Improvement” program (Prop C25) and 40% to
discretionary funding (Prop C40)
Urbanized Area Formula Grants

Reauthorized under MAP-21 as USC Section 5307, the purpose of Urbanized Are Formula Grants
program is to enhance and revamp public transportation systems and eligible activities are capital
projects, planning, job access, reverse commute projects, as well as operating costs.

13
LAWA source of financing

SI. No. Airport Programs

1 Transportation Infrastructure Finance and Innovation Act
2 Customer Facility Charge
3 Airport Revenue Bonds/Private Activity Bonds
4 Airport Improvement Program

Transportation Infrastructure Finance and Innovation Act (TIFIA)

TIFIA gives funds from government credit as an immediate advance, credit extensions, and loan
guarantees to transportation projects. A TIFIA loan could bridge the time between construction and
the availability of Measure R sales tax revenues. This implies either Metro or LAWA could apply for
the credit.

Customer Facility Charge

California law allows airports to charge each customer who rents a car at an airport facility up to $10
per rental to fund direct costs, debt service, and operating expenses. LAWA is lobbying to increase
the customer facility charges to increase its fund for funding infrastructure project at Los Angeles
airport.

Airport Revenue Bonds/Private Activity Bonds

LAWA being a government agency, can issue bonds which are backed by future airport revenues.
The proceeds from these bonds can then be used by LAWA to fund its development projects.
Interest on these bonds are fully tax exempted if they are used for infrastructure projects benefitting
public.

Airport Improvement Program

The federal Airport Improvement Program (AIP) provides grants for development projects on a
competitive basis to general aviation and commercial passenger airports nationwide.

Partner Loan or Equity

LAWA can access debt or equity from private players. Debt or equity from private players involves
high degree of flexibility on one hand but has on other hand has high cost of capital. LAWA and/or
Metro could approach a financing partner at any time, and could receive funds quickly

14
Risk Analysis
Pre - completion Risk
Completion Risk
Under the agreement between LAWA and LINXS, the developer is supposed to complete the design
and construction part of the project in 5 years, latest by March 2023. If the project gets delayed and
the construction phase exceeds the pre-specified timeline, then the Milestone Payments and the
payments for the Design and Build will be reduced to the amount decided in the financial closure of
the agreement. The developer here bears the completion risk fully

Force Majeure
The developer body has assumed a number of risks in this project, but risks related to this category
have been fully assumed by the authority i.e. LAWA

Environmental Risk
The APM is a large-scale project and as such will require a number of clearances from multiple
agencies. It faces environmental risk as the clearances for these projects are hard to come by and
often cause long delays which is a huge cost burden. Under the agreement, it is the responsibility of
the Los Angeles World Airports to assist in providing all the clearances from the environmental
agencies.

Post Completion Risk

Cost Risk
The possibility of cost overrun in a project which is spread over 30 years (both construction and
O&M) and involves construction of a complex system is quite high. But considering the strong cost
predictability and the experience of the developer team in carrying out projects of such nature
before, the overall cost risks associated with the project are in the medium range. Under the DBFOM
agreement, all the O&M and other lifecycle responsibilities are being held by the developer and the
team has passed those down to the O&M contractor

Demand Risk
The forecasting of the demand for the usage of the Automated People Mover was done by LAWA
and any deviations from the actual forecasts, LAWA will bear all the risks associated with it.

Inflation Risk
The costs of construction inputs and the operation and maintenance of the plant for 30 years
includes the risk of increase in input costs due to inflation. The developer will bear all the costs
associated with the increase in prices.

Revenue Risk
Revenue for the project for the developer (LINXS) will be payments from LAWA and it consists of six
milestone payments (and additional design and construction payments) during construction, the last
of which will be paid 60 days after final completion, followed by availability payments during
operations. The developer is not entitled to earn any Availability Payments before the Passenger
Service Availability date and in no event will APs commence earlier than Dec. 31, 2022.

15
Financing Risk
If due to change in the market-based rates for financing included in the financial close agreement- if
there is an upward movement in the municipal rate indexes, then LAWA will have to increase the
availability payments to account for the developer’s increased cost of financing.

Default Risk
Should the developer default on the agreement after financial close, LAWA will own the asset but be
responsible for up to 80% of the outstanding debt issued by the developer (but not for repayment of
the developer's equity investment.

16
References

 https://www.lawa.org/en
 Sandra J. Miller, Secretary, 2018, Report to the board of Commissioner.
 Fitch Ratings, 2018, LAX Integrated Express Solutions, LLC (LINXS) Automated People Mover
Project Presale Report
 W.J. Advisors, 2017, Final Report to Collect an Alternative Customer Facility Charge at Los
Angeles International Airport
 UCLA Luskin School of Public Affairs, Joint Financing Strategies for the Metro to LAX Airport
Connector Project
 https://airportimprovement.com/article/miami-intl-debuts-270-million-people-mover
 https://airportimprovement.com/article/tampa-int-l-kicks-master-plan-updates-new-rental-car-
center-automated-people-mover
 https://airportimprovement.com/article/automated-people-mover-sets-stage-less-curb-
congestion-new-intermodal-connections-orlando-intl
 LAX 2018 Series C
 LAX 2018 Series B
 LAX 2018 Series A

17