WASHINGTON — A group headlined by Spanish infrastructure investment giant Cintra will be the private partner on a more than $1 billion public-private partnership to develop the Route 460 Corridor project in southeastern Virginia, according to the commonwealth’s Office of Transportation Public Private-Partnerships.
US 460 Mobility Partners, comprised of Cintra and another Spanish company, Ferrovial Agroman, was one of three groups being considered for the concession until this week.
Other contenders were Moreland Property Group and Infrastructure Capital Partners, LLC, and a group made up of Edgemoor Real Estate Services, Clark Construction, and Shirley Contracting.
Virginia picked Cintra’s group because they offered a financing plan requiring the least public subsidy, the P3 office said in a release.
The project involves the construction and operation of 55 miles of tolled highway between Petersburg and Suffolk, Va. under a 40-year lease and will be partly bond financed.
Under the terms of the arrangement presented to the Commonwealth Transportation Board on Wednesday, a nonprofit called Route 460 Funding Corporation of Virginia will use $285 million of tax-exempt debt, issued by the Virginia Department of Transportation and backed by toll revenue, for the estimated $1.4 billion project. The Virginia Department of Transportation will contribute between $753 million and $930 million, and the Port of Virginia will add up to $250 million.
Those numbers are not set in stone, because commonwealth officials hope to benefit from a $422 million Transportation Infrastructure Finance and Innovation Act loan they applied for earlier this year. Any TIFIA assistance the project receives will reduce the amount of public money needed for the project.
Virginia would maintain overall ownership of the road and the ability to set the tolls. Tolls will start at about seven cents per mile for cars and 21 cents per mile for trucks, and will escalate 3.5% per year, according to the P3 office.
There has been some pushback on the project, which the commonwealth has had underway since 2003. The Southern Environmental Law Center is concerned that the project would be destructive, warning in its newsletter that the road “would destroy wetlands and farmland and cost up to $2.7 billion with minimal benefits.”
Others have questioned whether the Route 460 project deserves such a high level of priority, given other large projects in need of financial support, such as the Downtown Tunnel/Midtown Tunnel/MLK Extension Project in Norfolk.
“Based on a report prepared by Chmura Economics & Analytics in December 2011, it is estimated that the project will create more than 4,000 jobs per year during construction. Upon completion of the new highway, the annual economic impact is estimated at $7.3 billion, which can support more than 14,000 jobs,” the P3 office said in a statement.
Virginia is actively pursuing development of more than a dozen major P3s, and is currently in the procurement process for partners to privately operate the Port of Virginia and an expansion of the Hampton Roads Bridge Tunnel. Earlier this year, VDOT announced a “pipeline” of projects designed to encourage P3 development in the commonwealth.
Officials expect to finalize a contract with Cintra before year’s end. Construction would begin in 2014 with the highway scheduled to open in 2018.