Transurban to build Richmond Airport Connector in return for help with refinancing

Transurban say they have reached an agreement with Virginia DOT and the Federal Highway Administration (FHWA) to build an approximate $45m Airport Connector spur off the Pocahontas Parkway (VA895) in Richmond in return for assistance in an advantageous $150m refinancing of the larger tollroad. The refinancing, the outlines of which were part of the original concession for the Pocahontas Parkway in June 2005, uses a heavily subordinated low interest 35-year TIFIA loan from the federal government.

The Airport Connector will be a 2.6km (1.6 mile) spur of 2x2 lanes north into the Airport area off a trumpet interchange not far from the eastern end of the Parkway. It will serve traffic to the airport  from the southwestern portions of the Richmond metro area (pop 1m) over the James River on the Parkway and also traffic on I-295, the eastern peripheral expressway. At present traffic to the Airport from the west has to exit about 6km (4mi) before the airport and travel on local roads.

Toll of a dollar

The Connector will levy a $1.00 toll on cars but traffic and revenue forecasts show the prospective toll revenue won't justify the capital and other costs. Henrico County and VDOT wanted it built to help develop the Airport and offer a better level of service to people going to the Airport area so they and Transurban negotiated the deal in 2005 whereby the concession would build the spur road if VDOT persuaded the feds to provide a $150m refinancing loan needed to make it financially feasible.

Michael Kulper senior VP North America says Transurban specializes in looking for ways to maximize value to local governments, customers and investors and the Airport Connector agreement is an example of this.

The agreement signed yesterday provides for $150m of debt at a state and local government average interest rate (5.16%) plus one basis point with interest capitalized for five years, and a 35 year term.

History

Transurban took over the Parkway from a failing not-for-profit Pocahontas Parkway Association. The Parkway with very expensive ship channel clearance bridges over the James River just south of the port, and long ramps down to I-95 was overbuilt for the traffic available. The 99 year Transurban concession enabled the Association debt to be paid off 100c in the dollar, plus debt to VDOT on the project.

Transurban hopes to start work on the Airport Connector early 2008 and to open the spur early 2010.

THE COMPANY: Headquartered in Melbourne Australia Transurban is a publicly traded company with $7.3b capitalization and has interests in seven tollroads in Australia including Melbourne CityLink. It is working with Fluor and VDOT on 113km (70 miles) of toll lanes along I-95/395 and I-495 the Capital Beltway. It was bidding in Texas.

TOLLROADSnews 2007-07-20