Virginia is another state considered to be at the forefront of states using PPPs as a preferred approach to project delivery.45 While a number of the early PPP projects procured by VDOT did not include significant private financing or private involvement in long-term operations and maintenance, recent PPP procurements have increasingly been for long-term, concession-based PPPs. In addition to the 2006 concession of the Pocahontas Parkway, which was discussed in Section IV(A), VDOT is in the process of procuring the Route 460 Improvements Project. Three private sector consortia are competing to design, construct, finance, operate and maintain approximately $1 billion to $2 billion improvements to Route 460 between I-295 in Prince George County and the Suffolk Bypass (US 58) in Suffolk. Route 460 is considered to be a vital shipping, commuting and emergency-response route for southeastern Virginia.
Virginia also expects to procure the Midtown Corridor Tunnel Project and the Southeastern Parkway and Greenbelt Project as PPPs. The Midtown Corridor Tunnel Project involves (i) modifications to the existing tunnel linking Portsmouth and Norfolk, (ii) construction of a new parallel tunnel and (iii) freeway extensions. Three private sector consortia expressed interest in 2005 for the Midtown Corridor Tunnel Project and VDOT issued a Solicitation for Conceptual Proposals for the project on May 30, 2008. The procurement for the Southeastern Parkway and Greenbelt Project is expected to get started after the Record of Decision is finalized. The corridor being studied for this project runs east-west from Chesapeake to the Oceana Naval Air Station in Virginia Beach.
Perhaps Virginia's most innovative PPP effort is a proposed network of high-occupancy toll lanes ("HOT lanes")46 in northern Virginia south and west of Washington, DC. On December 20, 2007, VDOT and a private sector consortium reached commercial and financial close for a concession to design, build, finance, operate and maintain two HOT lanes on an approximately 14-mile portion of the Capital Beltway (I-495) around southwest Washington, DC (the concessionaire will construct two new general purpose lanes and convert the two innermost existing general purpose lanes into HOT lanes). This portion of the Beltway connects Springfield, Virginia, and I-95 with Tyson's Corner. The private sector consortium is led by Transurban, an Australian toll road operator, and Fluor Enterprises, an American contractor and developer. The concessionaire is using toll revenues to be collected on the HOT lanes to finance approximately $1.4 billion of the project's expected cost of approximately $1.8 billion. The financing includes a $588 million loan from the USDOT's TIFIA program, $589 million of private activity bonds ("PABs") authorized by the USDOT and issued on June 12, 2008, and private equity contributions totaling $350 million from the members of the concessionaire (the TIFIA and PABs programs are described in Section IV(D) with other Federal programs that facilitate PPPs). Approximately $409 million will be funded from Federal-aid and State sources.
Virginia is also pursuing a PPP with the same private sector companies for a 56-mile HOT lanes corridor along I-95 and I-395 south of Washington, DC. This is a heavily congested commuter corridor that links up with the Capital Beltway HOT Lanes Project in Springfield. For this project, the concessionaire will expand the two existing high occupancy vehicle lanes on I-95 and I-395 and construct two new lanes heading further south on I-95, to Massaponax, Virginia. All of these lanes will be converted to HOT lanes. These lanes will also incorporate facilities for bus rapid transit, park-and-rides and bus stations. VDOT expects these HOT lanes to provide an innovative solution to serious congestion problems and to provide new alternatives for carpoolers, vanpoolers, transit riders, motorists, slugs, businesses and communities throughout the northern Virginia area. Taken together, the I-95/I-395 and Capital Beltways HOT Lanes Projects will not only demonstrate the value of PPPs and private sector innovation, but will also demonstrate the value of congestion pricing for traffic management in one of the Nation's busiest commuter corridors.
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45 VDOT's PPP website is: http://www.virginiadot.org/business/ppta-default.asp (last visited July 7, 2008)
46 High-occupancy toll lanes, or "HOT lanes", are lanes that are open to buses and high-occupancy vehicles, just like traditional high-occupancy vehicle and carpool lanes, or "HOV lanes", but which are also available to single-occupant vehicles that pay a toll. Tolls charged in HOT lanes can be variable, meaning they are reduced when there is little or no traffic and they are increased when there is more traffic. Variable tolls encourage people to travel when there is less traffic and ensure that a reliable travel time is always available for drivers willing to pay a toll. HOT lanes implemented in the U.S. include the 91 Express Lanes in Orange County, California, the I-15 HOT Lanes in San Diego, California, the I-394 HOT Lanes in Minneapolis, Minnesota, and the I-25 HOV/Express Toll Lanes in Denver, Colorado.