The Virginia Department of Transportation and Elizabeth River Crossings Opco LLC (“ERC”) reached financial close on a toll concession public-private partnership ("PPP") for the $2.1 billion Midtown Tunnel Project. It is the first United States transportation PPP to reach financial close in 2012 and will include construction of a new Midtown Tunnel, rehabilitating the existing Midtown and Downtown Tunnels, extending Martin Luther King Boulevard and will provide much needed transportation improvements and congestion relief to motorists in the Hampton Roads region. Construction will begin in Fall 2012 and completion is expected in 2018.
Under the Public-Private Transportation Act, the Virginia DOT will continue ownership of the Project elements and oversee ERC's activities. ERC will finance, build, operate and maintain the facilities for a 58-year concession period and also assumes risk of delivering the project on a performance-based, fixed-price, fixed-date contract, protecting users and taxpayers from construction cost overruns and delays.
The Project will involve tolling of the existing and newly-constructed assets with tolls initially ranging from $1.59 to $1.84 per car for the tunnels and $.50 for the MLK Extension for tunnel users and $1 for non-tunnel users. This is approximately 40 percent lower than the $2.89 toll rate estimated under the interim agreement signed in January 2010 before Governor Bob McDonnell took office. Additional financing includes a $422 million TIFIA loan, $663.75 million of private activity bonds and $310 million in public contribution from Virginia DOT. ERC, a joint venture of Macquarie and Skanska, will contribute up to $272 million in equity.
The Midtown Tunnel Project was a priority of the region’s leaders and is the largest transportation project to get under way in almost 30 years. More than 500 jobs will support the construction efforts and another 1,000 jobs in other sectors of the local economy. The Project is anticipated to cut round-trip travel time by 30 minutes a day and improve safety, reliability and connectivity to the region’s transportation network.
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