DALLAS — Virginia terminated its contract with the developer of a proposed $1.4 billion toll road after spending almost $300 million on the project, which never received the required environmental clearance.
Virginia Transportation Secretary Audrey Layne said Wednesday that the state would try to recoup the payments already made to US 460 Mobility Partners for the proposed toll road in southeastern Virginia.
"The state will aggressively pursue all options available to do what is best for the public interest," Layne said in announcing the termination of the contract. "We believe there are significant monies owed to the Commonwealth of Virginia."
Layne said the contract called for regular payments as an incentive to get the road built within a five-year construction schedule.
"Just because there was money paid doesn't mean there was money earned," he said in Norfolk at the monthly meeting of the Commonwealth Transportation Board. "There was a payment schedule, not an earned payment schedule based on contract performance."
The monthly payments, which were suspended in 2014, averaged $19 million a month but could have escalated to $35 million, Layne said.
Virginia paid a total of $240 million to US 460 Mobility Partners and Virginia Department of Transportation spent approximately $43 million on the project before the suspension, he said.
The contract terminated by Layne was awarded in late 2012 by the administration of Gov. Bob McDonnell for the design and construction of a highway that would parallel the existing Route 460 from Suffolk to Petersburg.
McDonnell said the toll road would provide greater access for truck traffic to the state's seaports and serve as a secondary hurricane evacuation route for the Hampton Roads area.
Gov. Terry McAuliffe, who was elected in November 2013, suspended work on the toll road in March 2014. He halted the project after the U.S. Army Corps of Engineers said the state was proceeding at its own risk until the environmental permitting process was completed.
A preliminary estimate by the Virginia DOT said the work would affect 129 acres of wetlands. A later analysis put the environmental danger zone at more than 550 acres filled with sensitive cypress and tupelo trees.
The state failed to negotiate a new pact with US 460 Mobility Partners for delivery of a 17-mile project along a less-sensitive alignment, Layne said. Virginia DOT estimated that the new alignment would cost between $375 million and $425 million to build.
"We were not able to reach agreement on what we thought was appropriate credit for the money paid on the previous commitment," he said. "The Commonwealth has determined it is in the taxpayers' best interest to terminate the contract."
The notice of intent to terminate begins a 60-day mediation period to resolve the dispute, Layne said.
"We are owed a great deal of money back," he said. "And we will do whatever steps are necessary to claw that money back. I don't know how much that would be."
The state had hoped to build the 55-mile Commonwealth Connectors toll road as a public-private partnership and fund it mostly with toll revenue bonds, but instead created the Route 460 Funding Corp. as a non-profit to collect the tolls, issue bonds, and operate the highway.
The corporation issued $232 million of tax-exempt private activity revenue bonds in December 2012 for the project. The funding corporation also is authorized to issue $62 million of capital appreciation bonds.
The funding corporation's revenue bonds are rated Baa3 by Moody's Investors Service and BBB-minus by Standard & Poor's.
