4.2.1  Synthesis of Greenfield Toll Road Experience

Greenfield toll projects are new toll roads in previously undeveloped highway corridors. These projects have significant revenue risk because there is no documented travel demand in the corridors. In many cases, revenue risk is exacerbated if traffic and revenue projections are predicated on growth in population and employment along the corridor. There have been only three greenfield real toll projects built in the U.S.:

  Dulles Greenway in Northern Virginia

  South Bay Expressway in San Diego, California

  SH 130 (Segments 5-6) near Austin, Texas

Table 4-1:  Real Toll Concessions Through December 2016

The collective experience with the first greenfield toll roads in the U.S. has been mixed. The agencies sponsoring these projects and the public at large have benefitted from them. The projects have been built on budget without public sector funding and they provide new travel options to the public. However, for the private sector developers that financed, built and operate these three greenfield toll roads, their business results have been inconsistent, in large part due to larger economic conditions that influenced traffic and revenue levels. The initial developers of the Dulles Greenway were able to stave off bankruptcy by having their concession period extended by twenty years and restructuring their underlying debt. The growth in population levels and economic activity that the project's traffic and revenue forecasts were predicated upon were slow in coming, but did eventually occur. Nearly 10 years after opening, the initial investors were able to sell the concession, recover their costs and derive a profit. The new operators had the benefit of being able to price their offer based on 10 years of traffic and revenue data and, with the help of healthy toll increases, continue to operate the concession profitably.

The South Bay Expressway opened in late 2007 on the cusp of the impending financial crisis. The revenue forecasts prepared for the project assumed that it would be a catalyst for new development on the southern edge of San Diego. This growth was slow in developing and weak revenues and lingering legal action forced the private concessionaire into bankruptcy. When the concession was sold to the San Diego Association of Governments (SANDAG), the proceeds from the sale were used to repay the project's commercial debt and the private partner lost $130 million of its own money that it had invested as at-risk equity in the project. SANDAG benefitted from the sale by buying a project that had been built at a cost of $658 million for only $341.5 million. This, in turn, enabled them to lower toll rates on the South Bay Expressway, benefitting the driving public in greater San Diego.

SH 130 has suffered from toll revenues that were 60 percent below forecasts upon opening. In spite of increases to the speed limit on SH 130 and 400 signs on I-35 encouraging motorists to use SH 130, many drivers prefer to use the more congested I-35 corridor because there are no tolls. While the concession company has transferred the roadway to its creditors and lost the $210 million it invested in the project, this has no impact on the State of Texas or the customers that use SH 130 Segments 5-6.

Based on the tenuous outcomes for the private partners who developed the first three greenfield highway P3 concessions in the U.S., private sector developers appear to have little to no appetite for participating in other greenfield highway concessions unless their public sector project sponsors fund a significant portion of their cost.