Attorneys in Ballard Spahr's P3/Infrastructure Group represented the Virginia Department of Transportation (VDOT) in a $925 million public-private partnership project (P3) to build high-occupancy toll (HOT) lanes and refurbish high-occupancy vehicle (HOV) lanes along 29 miles of Interstate 95 in Virginia. The project, which was hailed as “historic … for transportation and the economy in Virginia” by Virginia Gov. Robert F. McDonnell, took several years to structure.
Across the country, the need to repair critical infrastructure and build for the future has exhausted available public funding sources. P3s leverage public and private investment to help bridge the funding gap and keep the nation moving. Ballard Spahr has a long history of helping states and municipalities grow, including structuring innovative P3s that utilize private investment, tax-exempt bonds, federal loan programs such as the Transportation Infrastructure Finance and Innovation Act (TIFIA), and state funds.
The Virginia I-95 project involves the design, construction, renovation, financing, and operation of HOV/HOT lanes on a heavily traveled I-95 corridor in Northern Virginia. We spearheaded the drafting of a comprehensive agreement establishing the rights and obligations of VDOT and the private concessionaire, 95 Express Lanes LLC, a joint venture between affiliates of Transurban Group and Fluor Corporation.
Project costs, including the construction of the HOV/HOT lanes, are estimated at $925 million. The private concessionaire's investors will contribute $292 million. Those funds, along with $263 million in tax-exempt bond proceeds (including investment earnings) repayable by the concessionaire and a $71 million contribution from VDOT, will serve as the initial financing for the project. In addition, the private concessionaire expects to receive $300 million in credit assistance through TIFIA. If they do not, VDOT and the private concessionaire will provide backup funding. The project is expected to support nearly 8,000 construction jobs and stimulate $2 billion in economic activity.
VDOT will own and oversee the new lanes, and 95 Express Lanes will build, renovate, operate, and maintain them as part of a 76-year concession. The private concessionaire assumes the risk of delivering the project on a performance-based, fixed-price, set-date agreement.
The HOV/HOT lanes will be free for vehicles with three or more occupants. Drivers with fewer occupants also can use the lanes but will pay through a dynamic tolling system that uses an electronic transponder to calculate toll rates, which will vary depending on the time of travel and the portion of the highway. The private investor will collect the tolling revenue.
As part of this project, Ballard Spahr attorneys also worked with VDOT and the Virginia Attorney General’s Office to develop a new implementation manual and guidelines for the Virginia Public-Private Transportation Act.
The Ballard Spahr legal team was led by partner Brian Walsh and associate Steve T. Park, with assistance from partners Charles S. Henck, Alan S. Ritterband, Randall J. Towers, and Glenn L. Unterberger.