Virginia may elect to publicly finance the expansion of a heavily traveled interstate in metropolitan Washington, D.C., and keep the toll revenue to be used for other regional transportation projects. An analysis released this week shows that the state could save up to $500 million in upfront costs by expanding Interstate 66 via a design-build contract while retaining the estimated $200 million to $500 million in toll revenue over 40 years, reported The Washington Post.
Virginia’s Public-Private Transportation Act became law in late March.
“As we work to get taxpayers the greatest value for every dollar they spend on this project, this analysis shows that there is merit to considering moving forward with a design-build contract,” Virginia Transportation Secretary Aubrey Layne said. “Our administration would welcome a private partner on I-66, but they must propose the best deal for Virginia. Until we receive a better private proposal, these preliminary numbers indicate that a public finance option may be in the best interest of Virginia taxpayers.” (Credit AP).
Layne said the figures were generated by leading public- and private-sector financial analysts using the same rigor he uses investing his own money. He said he’s confident the numbers are solid but thinks it’s important to “throw them out there for everybody to take shots. … If you’ve got a better deal, we’d like to hear about it.” (Credit AP).
The proposed expansion project, which Layne described as probably the most important transportation project in the state, would feature new toll and carpool lanes 25 miles west of the Capital Beltway.
Layne said keeping the project under state control would not be without risks. First, approval from the state’s General Assembly would be needed in some variations of the plan. Second, state leaders would have to budget $400 million to $600 million in upfront public funding. Estimates peg the state’s upfront cost at $900 million to $1 billion if a P3 is initiated.
Virginia has long been hospitable to handing over public transportation projects to private companies, like it did with new toll lanes on Interstate 95 and the Beltway, and a tunnel being built in Hampton Roads.
Layne said the state has had a good partnership on P3s that developed a network of Northern Virginia toll and carpool lanes, though there are some long-term risks. For instance, under certain circumstances, the state would have to pay the contractor if too many people carpool.
Del. S. Chris Jones (R-Suffolk), chair of the House appropriations committee, praised the secretary’s approach toward the highway expansion. “He’s taking the right approach. The P3 process was always supposed to compare what the public option would cost versus the private option,” he said. “The objective is to make sure that we get the best value for the taxpayers’ investment. Whether that’s going the P3 route or the state doing it on its own, I’m agnostic in that regard. ”
Jones championed legislation this year that establishes the requirements for a finding of public interest and requires such a finding prior to an initiation of a P3 procurement. The bill also establishes the Transportation Public-Private Partnership Advisory Committee to determine whether a highway or rail project meets the finding of public interest. According to a VDOT announcement, Layne has requested the advisory committee hold a meeting to review and consider procurement options within the next 45 days.