Virginia town turns down deal to replace $400m bridge

Chesapeake, Virginia has turned down an unsolicited proposal for a $390 million bridge replacement project the city received from a private group backed by Precon Construction Company, a Virginia-based contractor.

The group, Virginia 104, submitted a proposal in September 2009 to replace the city’s Steel Bridge over the Elizabeth River and make related improvements around its adjacent roadways and interchanges. Chesapeake had estimated the cost of the project at $390 million but available public funds totaled only $24 million, leaving a $366 million.

Virginia’s 1995 Public-Private Transportation Act, or PPTA, allows investors to make unsolicited proposals for public transportation projects. But Virginia 104’s proposal got turned down twice – once in October of last year and again last week – because the city wants to further study the viability of delivering the project using public funds.

The episode illustrates the opportunities and pitfalls afforded to private investors by laws such as the PPTA, which allows for unsolicited proposals. The act has resulted in numerous unsolicited proposals from investors to help the state improve its infrastructure, including last year’s high-profile bids from Goldman, The Carlyle Group and CalPERS-backed CenterPoint Properties to lease the Port of Virigina.

But the bid costs involved in putting together such proposals run the risk of resulting in losses if the bids end up getting tabled or not acted upon by government officials. To date, for example, Virginia has not taken any action to evaluate the Port of Virginia proposals, which were received a year ago.

And nor is prior acceptance of such proposals an indication that future proponents will enjoy the same success. Last year, Chesapeake accepted an unsolicited proposal from Figg Bridge Developers, a bridge construction company, and Britton Hill Partners, a Florida-based private equity firm, to build another bridge in the city, the South Norwalk Jordan Bridge.

“The City of Chesapeake currently does not have funding for a new South Norfolk Jordan Bridge. In these types of situations, working with a private company is a way to accomplish our goals of re-opening a major artery to link Chesapeake and the City of Portsmouth without utilizing tax payer money,” the city’s website said.

In the case of the Steel River bridge replacement, the city also didn’t have the funding in place to proceed with the project. Still, Chesapeake decided it would be better to “fully evaluate the financing and implementation of the public option” before accepting or soliciting a private proposal.
Doug Fuller, the managing member of Virginia 104, did not return a request for comment.

In related news, a spokesperson for the city said that Britton Hill Partners is no longer a member of the consortium developing the South Norwalk Jordan Bridge.

Britton Hill Partners declined comment.