In 1995 Virginia became the first state in the U.S. to enable the private sector to develop transportation infrastructure by passing its landmark Public-Private Transportation Act. After the enactment of this legislation, a number of public-private partnership projects-also known as P3s-were initiated in the Commonwealth. They include the Pocahontas Parkway south of Richmond in 1998 and the Capital Beltway High Occupancy Toll Lanes in 2002. When plans for the Midtown Tunnel expansion were stalled due to lack of funding in the early 2000s, VDOT considered reintroducing tolling on the crossing and advancing the project as a P3 procurement. At the same time, the Hampton Roads Transportation Planning Organization completed a study suggesting that tolling both the Downtown and Midtown Tunnels and completing the MLK Extension would create a network that would provide commuters a choice if one crossing were to be congested. The MPO also noted that the financial feasibility of the project would be enhanced and that diversions would create fewer impacts if both tunnels were tolled.
In November 2004, VDOT issued a Request for Information on a possible Midtown Tunnel P3 procurement from potential private partners. The Department received three responses and gained helpful feedback on how the procurement could be structured to attract private developers. Two of the three firms suggested reintroducing tolls on the Downtown Tunnel and grouping the three facilities in a single P3 concession. They pointed out that a combined project would accelerate the completion of the MLK Extension and provide VDOT and its partners with the revenue from both tunnels to help pay for the cost of the new improvements.
The City of Portsmouth also supported the idea, so VDOT made the final decision to combine the three projects in May 2005. Tolls would be reinstated on both crossings and would be used to pay for the tunnel improvements and extension of the MLK Expressway. Combining the projects also allowed VDOT to leverage the private sector's technical and financial resources. The private sector would provide technical expertise in the construction of an immersed tube tunnel as well as the operation of an all-electronic, open-road toll collection system. It would also bear the major risk elements of the project, including construction cost escalation and on-time completion, as well as toll revenue risk.
With the decision made to toll the tunnels and combine the projects, both the MLK Extension and the new Midtown Tunnel and eastern tunnel approach were added to the region's fiscally constrained long-range plan in 2006. FHWA revised its earlier approval of the Midtown Tunnel to include the missing pieces of the project in 2007 and then approved the MLK Extension in 2009 after studying different interchange configurations. Given that the improvements to the Downtown Tunnel were limited to upgrades of the water supply, ventilation, electrical, and emergency response systems, the approvals for that facility were straightforward and were gained from FHWA in 2009.