In 1995, Virginia became the first state to fully enable the private sector to develop transportation infrastructure on a concession basis by passing its landmark Public-Private Transportation Act. Under the 1995 law, Virginia pursued its first public-private partnership in 1998, developing the Pocahontas Parkway as a design-build agreement between VDOT, private contractors and the Pocahontas Parkway Association. As a tax-exempt entity, the Pocahontas Parkway Association was able to borrow money at interest rates significantly below those available to private-sector investors. VDOT chose this approach because all the project's debt obligations would be held by the Parkway Association protecting VDOT from any repayment obligation. The Pocahontas Parkway Association financed the entire cost of the project without providing any upfront equity and the facility opened to traffic in 2002.
In the years after opening, traffic and revenue levels on the road failed to meet the optimistic forecasts used to justify its construction. By 2005, toll revenues only reached $7.7 million annually, roughly 50 percent below forecasts. As the Pocahontas Parkway Association struggled to make debt payments, Transurban, an Australian toll road operator, offered to pay off the Parkway Association's debts in exchange for a 99-year lease to operate the facility and complete a planned extension to the airport.