Virginia moves on toll concessions to build NoVA/I-95 toll lanes, upgrade 3 Norfolk tunnels
Virginia governor Bob McDonnell this week announced big progress on two major toll concessions: $1.7 billion of investment by Macquarie and Skanska to enhance three key tunnels under the estuarial Elizabeth River in Norfolk under a 58 year toll concession, and $843m in a 73 year toll concession deal with Transurban and Fluor to develop 29 miles,46km of toll express/bus lanes on I-95 in northern Virginia.
The state will put up some $400m for Norfolk tunnels and $97 toward the I-95 lanes, and in both cases ownership of major assets remains with the state and there's a formula for profit sharing.
Both projects have been many years in planning and negotiation.
In the case of the Norfolk tunnels there is now a 'comprehensive agreement' or contract and apparently all that remains is a financial close. On the NoVA/I-95 HOT lanes there an 'in-principle agreement' so the state and the concessionaire have yet to sign a detailed contract.
In both cases though the Governor says construction should begin in 2012. The tunnels project contract is with a corporate entity named ERC (Elizabeth River Crossings) a joint venture between Skanska Infrastructure the large international infrastructure operator headquartered in Stockholm Sweden and the Macquarie Group head-officed in Sydney Australia. That project is reported as "authorized" for construction to begin in 2012.
Three Norfolk tunnels
Key components of the Norfolk tunnels project are:
- 58 year concession period
- doubling the capacity of the Midtown Tunnel by building an additional two-lane tunnel near the existing one
- rehabilitating the existing Midtown Tunnel and both of the Downtown Tunnels
- extending the connecting Martin Luther King Freeway from London Boulevard to I-264, with an interchange at High Street
- modifying the interchange at Brambleton Avenue/Hampton Boulevard in Norfolk
- increasing transit service between Portsmouth and Norfolk
The comprehensive agreement is described as having a value of $2.1 billion. This includes total project costs such as financing, designing, building, maintaining and operating the tunnels and the MLK extension. VDOT's contribution is $362 million specifically designated to lower tolls.
"VDOT's contribution is reduced due to lower interest rates. ERC will provide financing through a $422 million TIFIA loan, and approximately $1.3 billion through equity, debt and revenue from operations."
The project will be financed through tolls, initially ranging from $1.59 to $1.84 per car for the tunnels and 50c for the Martin Luther King Freeway extension for tunnel users and $1 for non-tunnel users.
Tolls will be all-electronic, no stop-to-pay cash toll collection.
The Governor is quoted: "Virginia is recognized as a national leader in leveraging limited public dollars to attract significant private-sector investment and innovation, making complex transportation projects possible. By partnering with the private sector, Virginia can advance construction of a second Midtown Tunnel and make other improvements that are critical to the mobility, safety and the economy of the Hampton Roads region."
State secretary of transportation Sean Connaughton: "The Midtown Tunnel project has been at the top of the region's priorities for many years. The state's use of a public-private partnership structure will enable VDOT to attract approximately $1.7 billion in private investment to a project that yields tangible long-term benefits to the region and the state."
I-95 HOT Lanes
The NoVA/I-95 HOT lanes in-principle agreement is with Transurban and Fluor, companies that are now three years into reconstruction and widening of 10 miles,16km of the VA/I-495 Capital Beltway to provide 2x2 HOT lanes. Indeed the northern end of the I-95 HOT Lanes will connect with the southern end of the Capital Beltway at the Springfield Interchange. Transurban is based in Melbourne Australia and Fluor in Dallas Texas.
The I-95 HOT lanes will be 3 lanes reversible most of their distance, 2 lanes reversible at the southern end.
The concession period is 73 years.
On the VA/I-95HOT lanes the Governor is quoted: "“Through this action, we will put to work nearly $1 billion in private sector investment to address one of Virginia’s most critical transportation needs. The project will bring congestion relief and new travel choices to Northern Virginians."
State secretary of transportation Sean Connaughton is quoted: "Virginia recognizes it must get the most out of its existing transportation assets and find innovative solutions to move people and freight more efficiently. With HOT lanes on both the Beltway and I-95, we will create a region-wide network of managed lanes that will enable travelers to get to and from some of Virginia’s most important employment centers and military sites.”
The Virginia Governor's announcement says that construction will start in the spring of 2012 using state money.
Independently of the concession the state says it will spend $200m on expanded bus service int he corridor and build 3,000 new park and ride parking spaces for bus riders. The concessionaire won't toll the buses.
Transurban says in a statement to the Australian stock exchange that it welcomes the agreement with Virginia on the 95 Lanes but calls it "non-binding…on key commercial terms."
It continues cautiously: "Transurban highlights that financial close remains contingent upon acceptable final risk allocation within the primary concession agreement, arrangement of project financing, and Transurban Board approvals."
Fluor has made no statement though it has posted a short "Business Wire" report.
Key aspects of the agreement require Fluor-Transurban to:
- provide a fixed-price, fixed-date, design-build contract, finance, design and build the facility, manage and fund all operations and maintenance for a period of 73 years following construction
- share revenue with the state at agreed upon rates to fund other transportation improvements in the corridor should the HOT Lanes be a financial success
- provide "substantial contract opportunities" for "disadvantaged" groups etc
- maintain free access for High Occupancy Vehicles (HOV) and buses
- manage traffic levels over the long-term to facilitate quality, reliable travel for HOV and buses
- develop and operate a dynamic tolling system
"Tolls will vary based on demand to provide fast, reliable travel times. All tolls will be paid with an E-ZPass and there will be no toll booths. Electronic signs will alert travelers to current toll rates so they can make an informed choice whether or not to use the HOT Lanes."
The asset is to be returned to the state "in good working order at the end of the agreement."
The I-95 HOV/HOT lanes will:
-expand the I-95 HOV lanes from two to three lanes for 14 miles from Edsall Road to the Prince William Parkway,
- improve six miles of existing HOV lanes from the Prince William Parkway to Route 234
- extend the HOV lanes for nine miles from Dumfries in Prince William County to Garrisonville Road in Stafford County, "alleviating the worst bottleneck in the region"
The project would provide a "seamless connection" to the I-495 HOT Lanes under construction to Tysons Corner
It would allow free travel for carpools with three or more persons as well as buses, vanpools, motorcycles and emergency vehicles.
Single-person vehicles would be charged a toll based on time of day and travel distance. How two person vehicles would be charged is left unstated.
on the I-95HOTLs:
on the Norfolk tunnels project: