Route 460 mandate redone for ‘least public subsidy’

A 2011 RFP for a long-gestating multibillion dollar highway project in Virginia has been retooled to offer greater control to the public side. The tweak is another turn in a mandate dating to 2006. Cintra, Kiewit and Skanska have bid on the contract.

A protracted mandate involving US Route 460 in Virginia underwent its latest permutation with a stipulation that the prospective private partner must deliver the toll road project with “the least public subsidy”.

The Virginia Department of Transportation (VDOT) issued a postscript to a request for proposals (RFP) published last summer for its Route 460 project – a proposed toll road concession agreement that would entail adding a 55-mile, four-lane extension to the highway, considered the primary thoroughfare in Old Dominion.

“VDOT is looking for the most cost-effective way to build the project,” said Greg Whirley, who was appointed department commissioner in 2006.

To that end, VDOT is pressing to control toll price and to “reduce” concession length. The ideal private partner, meanwhile, “would design and build the project at a fixed cost and a fixed date” and create “funding to bridge the gap between the cost of the project and the public subsidy”.

The tack-on to the RFP will in all “set a new financial structure, making the project more feasible for private sector involvement,” the department concluded.

The RFP that VDOT published in July – in conjunction with a newly established public-private partnership (PPP) wing – was due in November, and called for no more than $500 million in public financing. The initial RFP also called for the hopeful private partner to secure funding under TIFIA, the Transportation Infrastructure and Finance Innovation Act.

Procurement on Route 460 first began in 2006, but Virginia suspended the search in 2010, citing a detrimental market climate. By 2011, the revived project had attracted significant private sector interest, with Cintra, Kiewit Corporation, and Skanska Infrastructure Development each setting up consortia to compete for the contract.

Bidding on the project has ranged from $1.5 billion to $2.7 billion. Cintra offered a $1.5 billion estimate, while Kiewit, teamed with toll road operator Autostrade and Barclays Capital under a consortium named MultiModal Solutions, put forth a $2.7 billion bid. Skanska teamed with GSA Capital and Infrastructure Capital Partners as 460 Partners and offered $2.2 billion.

As for concession length, Cintra suggested a 99-year term, while both Kiewit and Skanska offered a 75-year period.

VDOT said a “final contract” on the Route 460 project is scheduled to be reached by the end of 2012. Construction would begin next year.