Virginia advances three proposals for Route 460

The state's department of transportation began the road’s procurement in 2006, but scrapped the original bids last year. Cintra bid for a second time, saying that construction and design of the 55-mile extension would cost $1.5bn. Two other consortiums estimated construction costs of $2.2bn to $2.7bn.

The Virginia Department of Transportation has approved all three private proposals that were submitted last autumn to construct a 55-mile extension to the state’s Route 460 highway, clearing the way for the bidders to participate in a request for proposals that will be issued later this month.

The proposers’ cost estimate for the Route 460 project range between $1.5 billion to $2.7 billion, with the following groups making the proposals:

    –   Spanish toll road developer Cintra, along with four other engineering and 
        consulting firms;
    –   MultiModal Solutions, a team that includes Kiewit Construction, Italian toll road
        operator Autostrade, and Barclays Capital, among others;
    –   460 Partners, which includes engineering firm Skanska, Infrastructure Capital 
        Partners, CGA Capital and others.

Cintra submitted a proposal for a 99-year concession of the road. At $1.5 billion, Cintra provided the lowest estimate for the price of the design and construction of the project. Cintra said its equity commitment would make up $217 million of the $1.5 billion, with $782 million of public subsidies and a $491 million TIFIA loans comprising the balance. TIFIA, the Transportation Infrastructure Finance and Innovation Act, is the federal government’s low-cost lending programme for US infrastructure projects.

Route 460 PPP:
on its way

MultiModal Solutions projected design and construction costs at $2.2 billion, and said their equity contribution would be $686 million. The consortium also proposed $1.04 billion in private activity bonds, a type of tax-exempt bond that can be used to finance privately-backed projects, and a public subsidy of $500 million, according to their proposal. MultiModal proposed a 75-year concession.

The 460 Partners consortium priced construction and design at $2.7 billion and also requested a 75-year concession. Though the consortium’s proposal did not include an equity contribution, 460 Partners president Brad Rodgers said there is an equity component “somewhere in the 11 to 13 percent range” of construction costs. Rodgers said CGA Capital and Bank of America would provide the equity.

460 Partners said it would not require a state subsidy but asked for a “make whole provision” that would require Virginia to contribute funds if the road does not provide enough revenue to meet its return threshold. Rodgers said any money the state paid to fulfill that provision would be repaid once the road became profitable.

The Virginia Department of Transportation originally solicited proposals for the Route 460 corridor in 2006 and received bids from consortiums including Cintra and Macquarie. But Virginia scrapped the process last year, citing dramatic changes in market conditions.

Route 460 is an essential evacuation route, as well as a crucial passage for freight traffic and the military, according to the department.

In related news, Virginia Department of Transportation received two more private sector bids for expansion of the Hampton Roads Bridge-Tunnel, following an unsolicited bid submitted last autumn by a consortium including Skanska and Kiewit. The department has previously estimated the project to cost $3.5 billion to $4.5 billion.

Cintra submitted a proposal for the project, as did a consortium that comprised ACS Infrastructure Development and Dragados USA, according to a statement. The department said proposals will be evaluated and submitted to the next stage of the procurement process by 1 May.

Virginia’s public-private partnership procurement process follows the 1995 Public-Private Transportation Act (PPTA). A spokesperson for the Virginia DOT said the state has completed three PPTA projects and four more are currently under construction.