DALLAS — Virginia can move ahead with its plans to finance the $2.1 billion upgrade to Interstate 66 outside the Washington Beltway as a public-private partnership now that the state's P3 advisory committee has agreed the project is in the public interest.
The Virginia Public-Private Partnership Advisory Committee accepted last week's finding by Transportation Commissioner Charles Kilpatrick that a private partner on the project would allow the state to share or transfer major risks, including higher construction costs or lower toll revenues.
The next step in the process is a Sept. 16 decision by Transportation Secretary Aubrey Layne and the Commonwealth Transportation Board on whether to proceed with a request for qualifications from interested private partners, said Douglas Koelemay, director of the state's Office of Public-Private Partnerships.
"The commissioner determined that a P3 procurement for I-66 can deliver similar or better benefits compared with other delivery options, can increase benefits through transfer of financial risks and efficiencies from integrating project stages, and can allow multiple private teams to compete to develop more value for the Commonwealth," Koelemay said. "We'll see. That's what the procurement process is designed to discover."
The review process before the final decision on how to finance the project is required under a new law enacted this year that revised the state's 20-year-old Public-Private Transportation Act, Layne said.
The I-66 project, which is designed to relieve congestion, is the first one to undergo the review process, he said.
"We are putting into action legislation which requires a methodical, independent, and careful process to select a procurement option that minimizes risk for the public and puts their interest first," he said.
The Virginia DOT will now compare the P3 options endorsed in Kilpatrick's analysis with the costs of conventional public financing for the I-66 project, Layne said. The decision on how to finance the project is expected in November.
"We'll go with the right option that is in the public's best interest," Layne said. "That option will likely be a P3, regardless of whether the project is publicly or privately financed."
There are three options for a P3 with the I-66 project, Kilpatrick said in the analysis.
It could be a toll revenue concession agreement, with the private partner taking on the risks to finance, design, build, operate, and maintain the project with only a financial contribution from the state. Virginia could also finance the project and collect the tolls while the private partner designs, builds, and operates it, or opt for an arrangement that limits the private partner's responsibilities to the design and construction phases.
Virginia capped its financial contribution to the I-66 project at $600 million in June.
The state wants to toll the existing high-occupancy lane along both sides of the interstate through Fairfax and Prince William counties south of Washington Dulles International Airport, and add a second express toll lane in each direction.
Motorists could opt for the three free lanes maintained in each direction or pay a toll, based on the time of day, to use the express lanes. Cars with three or more occupants would not pay a toll.
The project also includes rapid bus service along the corridor and a series of park-and-ride commuter lots with direct access to the express lanes.
Five investor groups are interested in bidding on the project, Koelemay said.
The private partner on the I-66 project would be expected "to assume revenue risk related to traffic volumes, absorb any escalation in construction costs, get the environmental permits, assume costs of operations and maintenance and provide significant debt and equity financing," Koelemay said.
