$1 Billion Offer Would Privatize Dulles Toll Road
Washington Post | July 26, 2005
By Steven Ginsberg and Lyndsey Layton
A consortium of the region's leading road builders and operators said yesterday that it plans to offer Virginia a lump sum of more than $1 billion in return for revenue generated by the Dulles Toll Road for the next 50 years.
The consortium said it also would pay for operations and maintenance of the road, one of Northern Virginia's main commuter routes. It would make 19 improvements, including construction of new access ramps from the Capital Beltway and other roads, repaving of the entire length and modernization of toll collection.
The revenue paid by the consortium to the state could cover Virginia's share of extending Metrorail through Tysons Corner, a project estimated to cost $2.4 billion, up from the $1.5 billion figure that prevailed last year when the rail financing plan was set.
The proposal would push forward the frontier in Virginia's effort to privatize its transportation system and would be the latest in a small but growing number of such deals in the nation.
In recent years, Virginia has signed a handful of deals in which private groups agreed to build or widen roads in exchange for toll revenue. This deal would differ because it would exchange the tolls from an existing -- and profitable -- public highway for cash. Virginia would still own the road.
The group behind the proposal includes some of the biggest names in the road-building industry, including Clark Construction Group, Shirley Contracting, Dewberry LLC and Autostrade, which operates the Dulles Greenway, a private highway that links to the Dulles Toll Road. The group also includes former governor Gerald L. Baliles (D).
Consortium representatives said the proposal will be submitted today under the state's public-private transportation act.
"All the constituencies get what's important to them," said Curtis M. Coward, a principal of Infrastructure Investment Group, a member of the consortium. "We obviously see it as an investment, and toll payers will get something they would not get otherwise."
Public-private partnerships are popular among many state leaders of both major parties who see them as a way to improve the transportation system without raising taxes.
State transportation officials said they would reserve comment on the Dulles Toll Road proposal until it is filed.
Once the state receives the proposal, officials said they will solicit other offers. A review panel will be formed to consider all proposals and make a recommendation to the commissioner of the Virginia Department of Transportation, who will have the final say.
"Until we see an actual proposal, we're not in a position to comment," Virginia Transportation Secretary Pierce R. Homer said.
House Speaker William J. Howell (R-Stafford), who has supported such private-sector proposals, said yesterday that he thinks the toll road idea is "a very solid concept that needs to be explored. It isn't just the Dulles Toll Road. There are a lot of opportunities."
In a June speech to the Fredericksburg Regional Chamber of Commerce, Howell said Virginia should consider selling its largest, most profitable toll roads to private companies.
In the speech, he compared the idea to Chicago's decision to lease its Skyway toll road for $1.8 billion and a Texas plan to allow private firms to build the Trans-Texas Corridor for $1.2 billion in exchange for the rights to operate the toll project for 50 years.
The downside to the Dulles Toll Road proposal is that Virginia would lose a moneymaker for the next half-century, and some state leaders questioned why the state would relinquish that money. Others said Virginia should raise the money it needs by selling bonds and keeping control of the cash generated by the toll road.
About 200,000 vehicles a day use the Dulles Toll Road. Toll rates, which range from 50 to 75 cents, would continue to be controlled by the state. In fiscal 2005, which ended June 30, the tolls generated a $28.5 million surplus.
Although money from the deal could enable Virginia to pay its share of at least the Tysons phase of what eventually would be a rail line through Dulles International Airport, the additional money would not guarantee the project's construction.
Under the financing plan for the first phase, half the money would come from the federal government, a quarter from Dulles Toll Road collections and other state revenue and the rest from a tax on commercial property owners along the train route.
But cost estimates for the first phase, which would run from West Falls Church through Tysons Corner, rose 60 percent last month to $2.4 billion. The higher price tag jeopardizes federal approval because cost-effectiveness is a key factor in deciding whether to approve projects.