North Carolina's House of Representatives voted 80-28 in favour of a bill that calls for the cancellation of a $655 million toll road project that reached financial close over a year ago and which is already under construction.
According to local media, one of the primary sponsors of House Bill 954, Representative Charles Jeter, told colleagues: “The reality is this contract I believe is inherently flawed. I'd be derelict not to try to cancel it on behalf of my constituents.”
The North Carolina Department of Transportation (NCDOT) in April 2014 selected I-77 Mobility Partners, a private consortium, to design, build, finance, operate and maintain the I-77 Express Lanes project. In addition to reaching financial close and beginning construction last November, the consortium gained a new partner when UK-based developer John Laing paid $25 million for an undisclosed ownership interest in I-77 Mobility Partners.
Of the $655 million the project is estimated to cost, NCDOT's contribution will be limited to $88 million, according to the state agency's website. The contract, signed in June 2014, protects NCDOT and North Carolina taxpayers from any damages in the event the private partner defaults.
Jeter's reasons for describing the contract as “inherently flawed” remain unclear. He did not respond to a request for comment.
The possibility of reassessing or cancelling the contract arose in early March , when another consortium – SH130 Concession Company – filed for bankruptcy. That company's majority shareholder – Cintra, a subsidiary of Madrid-based Ferrovial – is also the majority shareholder in I-77 Mobility Partners.
“The filing by the SH130 Concession Company has no financial impact on I-77 Mobility Partners LLC, or the construction and operation of the I-77 Express Lanes,” the I-77 concessionaire said in a statement at the time. “While Cintra is an equity sponsor of both projects, each project maintains a separate financial structure.”
Interstate 77 is a 610-mile north-south corridor running from Ohio through Virginia, West Virginia and North Carolina to South Carolina. In North Carolina, I-77 is a crucial thoroughfare for Charlotte, the largest city in the state. The I-77 Express Lanes project is intended to alleviate traffic congestion in the city's metropolitan area by adding 25.9 miles of dynamically priced, high-occupancy toll lanes to existing toll-free road capacity.