Virginia Renegotiates Contract on New Elizabeth River Tunnel
Faced with mounting opposition over the immediate use of tolls to begin financing the $2.1-billion Midtown Tunnel P3 project, the Virginia Dept. of Transportation has negotiated an amendment to its comprehensive agreement with Elizabeth River Crossings LLC, or ERC, potentially delaying tolls for two years until construction of the parallel tube is substantially complete.
The delay is contingent upon Virginia's ability to find an alternative funding source for the approximately $125 million in revenue expected to be generated if the existing Midtown and Downtown tunnels between Norfolk and Portsmouth begin collecting tolls as scheduled this summer. Construction of the four-year project remains on track to begin later this year.
ERC is a joint venture of Skanska Infrastructure Development and the Macquarie Group of Australia. Besides adding a new two-lane tunnel parallel to the 50-year-old, 4,300-ft-long Midtown Tunnel, which currently carries more than one million vehicles a month, the project also includes a one-mile extension of the Martin Luther King Expressway with a new interchange at I-264.
Both tunnels are set for extensive rehabilitation and fire and life safety systems upgrades. ERC also assumes the operation and maintenance of the tunnels for the duration of its 58-year concession.
Gov. Bob McDonnell (R) resisted attempts in the state's General Assembly to postpone the tolls, claiming that legislatively altering the state's existing contract with ERC is illegal and would add "significant financial costs." VDOT is already committed to contribute $362 million to the project, mostly from federal bonds and maintenance savings.
Jeff Caldwell, Gov. McDonnell's press secretary, says the amendment, developed by VDOT and ERC, gives the state "flexibility to adjust the contract if a decision is made to alter the original agreement."
Caldwell adds, "There is no firm decision on a source for alternate funding or the actual cost if a decision about changing the tolling schedule is made."
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With no alternative source identified, "as far as VDOT is concerned, the tolls will go into effect the third quarter of this year," says an agency spokesperson.
While tolling existing transportation infrastructure, even for related improvements, has proved unpopular nationwide, tolls have been part of the Midtown Tunnel's financing strategy since 2004, when the state began exploring the use of P3 to construct a parallel tube.
