Virginia downsizes PPP project

A privately-backed effort to expand capacity on interstates 95 and 395 in Northern Virginia will move forward without the 395 portion due to local opposition. Virginia Secretary of Transportation Sean Connaughton said the commonwealth ‘simply cannot wait any longer’ to move forward on the project, which will cost $1bn.

The Virginia Department of Transportation has downsized one of its infrastructure deals, a privately-backed bid to add toll lanes to interstates 95 and 395 in Northern Virginia, due to local opposition from one of the counties affected by the project.

A new project was launched today which will include only the 29-mile, I-95 portion of the project, Virginia Secretary of Transportation Sean Connaughton said on a conference call with reporters this morning.

This is something we believe is very doable

Sean Connaughton

“We just simply cannot wait any longer to make those improvements,” Connaughton said, pointing out that a lawsuit by Virginia’s Arlington County against the six-mile, I-395 portion of the original project could not be resolved. Virginia will proceed without the I-395 portion.

Virginia will continue to pursue the new I-95 project as a public-private partnership (PPP), Connaughton said. The original private partners, engineering firm Fluor and Australian toll road operator Transurban, will be retained because “we’ve had a very strong partnership with them”, Connaughton said.

The new I-95 project will piggyback off the work Virginia and its private partners already completed on the original project, such as environmental permitting. Connaughton said Virginia hopes to advance the new project’s environmental, design, engineering and financial planning “simultaneously” so that “we can be in a  position to move as quickly as possible”.

The project will cost about $1 billion, Connaughton said. “We’ll be working with Fluor and Transurban on the financials to determine what magnitude of public participation will be necessary,” he added. When asked what portion of the $1 billion would be funded by Virginia, Connaughton declined to give a precise figure but noted that historically the commonwealth has picked up about 25 percent of the costs of its public-private partnerships.

Republican Virginia Governor Bob McDonnell’s transportation funding proposal includes $1.5 billion dedicated to public-private partnership projects, according to Connaughton. Federal financing, such as TIFIA, a type of low-cost loan provided to infrastructure projects by the US Department of Transportation, will also be sought for the project, Connaughton said.

Virginia has been pursuing PPPs since a 1995 law allowed for private participation in infrastructure projects like the I-95 capacity improvement. Since then, Virginia has pursued more PPPs than any other state.

Connaughton also updated reporters on progress with Virginia’s other PPPs. On the Midtown Tunnel, a Skanska- and Macquarie-backed project to build a new two lane tunnel near Norfolk, “we are moving forward with developing all the financials and we are hoping to move to financial close sometime this year,” Connaughton said.

On the Route 460 Corridor Improvement, a $2 billion highway improvement project in Southwest Virginia, the commonwealth has received three bids and hopes “to have an award by late this year”, Connaughton said. Commercial close, or agreement on all key terms of the project, is expected early next year.

If all goes well on the I-95 project, Virginia hopes to finish up environmental, financial, design and engineering planning in the next year and begin construction “sometime next year”, Connaughton said.

“This is something we believe is very doable,” he added.