Virginia to Pick Partner Soon for $2 Billion I-66 Toll Lane Project
DALLAS – Virginia plans to select the private partner in October for its $2 billion plan to add high occupancy toll lanes on Interstate 66 through a public-private partnership, while keeping open the public financing option.
The final, detailed requests for proposals for the project were sent last week to investments teams short-listed for the project earlier this year.
The state wants to toll the existing high-occupancy lanes along 25 miles on both sides of the interstate outside the Washington I-495 Beltway, and add a second express toll lane in each direction on the highway through Fairfax and Prince William counties.
The tolls will vary as traffic increases or decreases, with no tolls on cars with at least two passengers. The segment would retain the three existing free lanes in each direction.
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.
The I-66 project will cost between $2 billion and $3 billion over the 50-year concession, according to the Virginia Department of Transportation.
"This is a very high-level estimate that will be refined and changed as more project details are developed," a VaDOT spokesman said.
The state would get the tolled lanes back when the contract expires in 2066. At that point Virginia could leave the tolling system in place or the lanes would revert back to the original high occupancy designation.
The Commonwealth Transportation Board decided in early December that it was in the public interest to select a private partner to finance, build, maintain, and operate the project with oversight from the state.
The state will try to get the best deal possible by keeping open its options to finance and build the lanes as a public project until a concession agreement is signed, said Gov. Terry McAuliffe.
"Let's be honest, this gave us a lot of leverage," McAuliffe said. "By doing the framework the way we set it up, all the leverage was on our side for the best deal."
Virginia capped the public contribution at $600 million after a preliminary analysis found the state's share of a P3 project on I-66 could be as high as $1 billion.
The Transportation Department said in June that it would allocate $946 million of private activity bonds to the Virginia Small Business Financing Authority for the project. The PABs are dedicated to transportation projects and do not count against a state's PAB ceiling.
The PABs must be sold by Oct. 1, 2017 or the allocation will expire.
Funding could also include an $800 million low-interest federal loan.
The private partner's contribution will not be determined until the financial proposals are evaluated. The concessionaire will be expected to assume revenue risks associated with traffic volumes, absorb any construction cost increases, and provide "significant debt and equity financing," the state said.
Three teams of international financing and construction firms were put onto a short list in February. But the state said the procurement process now includes only two potential partners. Final proposals for the I-66 project are expected from Express Partners, which includes Transurban and Skanska, and I-66 Express Mobility Partners, a consortium of Cintra and Meridiam.
All three preliminary proposals included a pledge by the private partners of at least $350 million from toll revenues to fund improvements and upgrades within the highway corridor.
The bidders must submit their technical proposals by Sept. 7 and the financial proposals by Oct. 4.
Virginia DOT expects to select the private partner by Oct. 20. Work would begin by July 2017 with completion by 2022.
The P3 proposal is separate from the toll lanes on I-66 inside the Beltway, which was funded as a conventional public project.