DALLAS - Virginia officials will decide in November whether to finance a proposed $2.1 billion project to build managed express toll lanes on Interstate 66 near Washington through a public-private partnership or conventional public financing.
An economic analysis of how to fund the new lanes on the congested highway indicates the state could save up to $600 million in upfront financing costs with a design-build approach rather than a P3, Transportation Secretary Aubrey Layne told the Commonwealth Transportation Board on June 3.
A P3 concession would require upfront costs of $900 million to $1 billion while the initial costs of a conventional approach would total $400 million to $600 million, he said.
"Now that we have analyzed the baseline public option and know what [it will take for] the Commonwealth [to] finance this project on its own, it is time to sit down with the private sector to see if they can offer us a better deal," Layne said.
Building the 25 miles of toll lanes as a public project without private partners also could provide the state with up to $500 million of toll revenues that could be used to fund other transportation projects in the state, Layne said.
A design-build approach with public funding seems to be the best way to go at this point but other proposals will be considered, Layne said.
"Our administration would welcome a private partner on I-66, but they must propose the best deal for Virginia," he said. "Until we receive a better private proposal, these preliminary numbers indicate that a public finance option may be in the best interest of Virginia taxpayers."
The state wants to toll the existing high-occupancy lane along both sides of the interstate that stretches east-west through Fairfax and Prince William counties outside the Washington Beltway, and add another express toll lane in each direction.
Motorists could opt for the three free lanes maintained in each direction or pay a toll, based on the time of day, to use the express lanes. Cars with three or more occupants could use the restricted toll lanes at no charge.
The project also includes rapid bus service along the corridor and a series of park-and-ride commuter lots with direct access to the express lanes.
Officials from the Virginia Department of Transportation, the Department of Rail and Public Transportation, and the Virginia Office of Public-Private Partnerships will hold confidential meetings with investment consortiums through June to hear their best offers, Layne said. While those talks are under way, the state also will move ahead on a conventional design-build approach.
"These discussions will allow us to make a decision by November on the best path forward." Layne said. "This should be driven by the numbers, not by empty ideology or outside interests." A P3 would be recommended if the private partners indicate that they can deliver the project by taking on more risk and providing more benefits to taxpayers than the state can, he said.
The recently created Transportation Public-Private Partnership Advisory Committee would be advised in July if a P3 procurement is the best option, Layne said. The committee was created by legislation earlier this year that revised and reformed Virginia's 20-year-old Public-Private Transportation Act.
If the review committee affirms the recommendation favoring a P3 approach, a request for qualifications from private partners would be issued in early 2016. Work could begin on the express lane project in 2017 with completion in 2020.
The I-66 project may qualify for a federal Transportation Infrastructure Finance Innovation Act loan, Layne said.
Virginia opened 29 miles of managed express toll lanes on I- 95 south of Washington in December. Funding for the $950 million project included a $300 million TIFIA loan, $280 million of private equity from concessionaire Transurban and its partners in 95 Express Lanes LLC, $252.6 million of proceeds from tax-exempt private activity bonds, an $83 million state transportation grant, and $25 million of early development costs by Virginia Department of Transportation.
