In response to a growing interest in the private investment of transportation facilities, Virginia's General Assembly authorized the private development of toll roads in 1988.
In addition, Virgina's Public-Private Transportation Act of 1995 authorized the state government and sub-state entities, that meet certain qualifications, to enter into agreements with private firms to acquire, build, improve, maintain, and operate qualifying transportation facilities.
The Dulles Greenway
With the legislative backing of the General Assembly, the Toll Road Investors Partnership II ("the Partnership"), made up of a group of private investors, presented a plan to develop a 14-mile, limited access, toll road linking Washington's Dulles International Airport and Leesburg, Virginia. Initial research was based on residential and commercial growth in the area, which was causing increased congestion on existing arterial roads serving the corridor.
The Dulles Greenway ("the Greenway") was a build/operate/transfer facility with ownership reverting back to the state after 42.5 years.
To finance the Greenway, investors put up $40 million in cash and secured $310 million in privately placed taxable debt. Ten institutional investors led by Cigna Investments, Prudential Power Funding Associates (a unit of the Prudential Insurance Company of America), and John Hancock Mutual Life Insurance Company provided $258 million in long-term, fixed-rate notes (due in 2022 and 2026). Three banks (Barclays, NationsBank, and Deutsche Bank AG) agreed to provide part of the construction funding and $40 million in revolving credit. Loans were to be repaid with toll revenues, and the financing was secured by a first mortgage and security interest in the developer's right, title, and interest in the facility. Virginia's State Corporation Commission limited the rate of return on the project to 18 percent.