PPP Profiles is an ongoing series of case studies on national and international public-private-partnerships. To share ideas for future profiles, please contact Chrissy Nichols at email@example.com.
Location: Fairfax County, VA
Project Sponsor: Virginia Dept. of Transportation
Private Partner: Capital Beltway Express, LLC - Joint venture between Fluor and Transurban
Project Delivery: Design/Build
Cost: $1.93 billion
- Private activity bonds - $586 million
- TIFIA loan - $585 million
- Commonwealth of VA grant - $409 million
- Private equity - $349 million
The Capital Beltway (I-495) in northern Virginia has been synonymous with congestion for decades. When I lived in DC, I avoided driving on the Beltway because no matter the time of day or day of week, I was guaranteed to sit in traffic. To alleviate the congestion and frustration, the Virginia Dept. of Transportation (VDOT) developed an innovative tolling and finance plan to improve travel options for commuters. Teaming up with the private company Capital Beltway Express, LLC, a consortium of Transurban and Fluor, VDOT is building two new high-occupancy toll (HOT)/high-occupancy vehicle (HOV) lanes running in both directions along the entire 14-mile length of the Beltway on the Virginia side.
The project also will replace more than $260 million of aging infrastructure, including more than 50 bridges and overpasses; construct new sound walls to double existing noise reduction tools for surrounding neighborhoods, and new carpool ramps connecting I-95 with the Beltway to create a seamless HOV network; and upgrade 12 key interchanges and new access points at Merrifield and Tyson’s Corner, Virginia’s largest employment center. The project will lower commute times, congestion, and emissions, and increase the speed and reliability of bus trips on the system. Construction will be complete in 2013.
The HOT/HOV lanes will operate next to the existing highway lanes and offer users a much faster trip. Car pools (3 +), van pools, buses, and motorcycles may drive in the HOT/HOV lanes for free. Drivers traveling alone or with only one other person have a choice: They can stay in the existing free lanes or pay a toll to travel faster in the HOT/HOV lanes. Tolls will rise and fall based on real time traffic congestion. When traffic is heaviest, the tolls will be the highest. Tolls will range from $.10/mile in off-peak hours to around $1/mile in certain sections during peak hours. This variable toll pricing (also known as congestion pricing) limits the number of vehicles entering the HOT lanes to keep cars flowing freely. Drivers must use an EZ Pass to pay tolls and enter the lanes, making for even smoother traffic flow.
The additional lanes may even entice drivers to take the bus, as added capacity and free flowing traffic due to the HOT lanes will allow buses to operate on fast, reliable schedules.
The project will result in more than just a quicker ride on the Beltway. Stephen S. Fuller of George Mason University found that construction of the express toll lanes will provide a much-needed boost to the Washington-area and Virginia economies. Fuller concluded that the initial direct investment in the construction project will result in 11,800 jobs in the region between 2008 and 2013. The indirect benefits of that spending will generate an additional $8.5 billion in the economy: $2.3 billion for the Fairfax County economy from 2008 to 2013, $2.7 billion for the Washington-area economy, and $3.5 billion for the Virginia economy (as the money is re-spent in local shops and restaurants).
At a time when transportation dollars are stretched thin, states are increasingly partnering with the private sector to finance new roads and public transit projects. Public-private partnerships (PPPs) can be a resourceful approach to investing in infrastructure projects, offering taxpayers considerable cost savings and shortened delivery time while effectively allocating risk to the private sector. In this case, Virginia would not have had the taxpayer funds available to finance the $1.93 billion project. Only with the assistance of private investment and private bonds, which further leveraged federal TIFIA loan dollars, was Virginia able to combat congestion on the Beltway.
In 1995, Virginia legislators passed the Public-Private Transportation Act, which enabled VDOT to partner with private investors to improve infrastructure and make projects like the Capital Beltway happen. MPC is aggressively pursuing similar PPP enabling legislation in Springfield this session that would grant the Illinois Dept. of Transportation (IDOT) to use innovative financing tools to build infrastructure that would alleviate congestion in the Chicago region. Illinois House Bill 1091 (sponsored by Rep. Elaine Nekritz (D-57th District), which crossed a committee vote hurdle a last week) and Senate Bill 146 (sponsored by Sen. Heather Steans (D-7th District) would enable IDOT to have the option of using PPPs to finance new infrastructure.
Congestion pricing, a form of transportation demand management, is an efficient and equitable way to re-balance traffic conditions on the road. Successful only if complemented with enhanced transit, it creates incentives for people to travel during less congested times, encourages the use of carpooling and transit, and reduces the enormous waste resulting from traffic congestion. Following our July 2010 report The Road Less Traveled: Exploring Congestion Pricing in Chicagoland, MPC is partnering with the Chicago Metropolitan Agency for Planning and Illinois Tollway to identify next steps for congestion pricing in northeastern Illinois, including an additional priced lane on the Jane Addams (I-90) Tollway.