Governor McDonnell Announces That Commonwealth Signs Comprehensive Agreement and Reaches Financial Close to Build the New Route 460 in Southeast Virginia
– Project to greatly improve transportation, create thousands of jobs and have a multi-billion dollar economic impact –
RICHMOND - Governor Bob McDonnell announced today that the Commonwealth has reached a commercial and financial close with US 460 Mobility Partners (a partnership of Ferrovial Agroman, S.A. and American Infrastructure) and the Route 460 Funding Corporation of Virginia to finance, design and build a new 55-mile section of U.S. Route 460 in southeastern Virginia. Project development begins immediately for the new $1.4 billion roadway, which has been a top transportation priority locally, regionally and statewide for nearly a decade. The project was developed to address roadway deficiencies, improve safety, accommodate increasing freight shipments and reduce travel delays among many other needs.
"As recognized by local officials and the General Assembly years ago, there is a clear and critical need for the new U.S. 460," said Governor McDonnell. "In 2000, the Virginia Transportation Act designated U.S. 460 as a high priority in southeastern Virginia. In 2003, the General Assembly passed a law requiring the Virginia Department of Transportation (VDOT) to build a new stretch of U.S. 460 under the Public-Private Transportation Act of 1995. Legislative leaders supported the project because it would improve safety for motorists and connectivity for freight and military traffic among other benefits. Today, the Commonwealth is finally delivering on that need and building a project that will not only make transportation better for the southeastern region and the state, it will also generate jobs and economic development opportunities, bringing extensive long-term benefits in so many ways."
The key benefits of the new U.S. 460 include:
- Safety - Improve travel safety and efficiency along the corridor, including expanding westbound hurricane-evacuation routes
- Jobs - Generate approximately 4,000 jobs during construction and 14,000 jobs over the long-term, according to Chmura Economics
- Economic development - Attract new business opportunities, boost tourism and accommodate greater freight traffic from the growth in demand at the Port of Virginia
- Connectivity - Enhance connectivity among the region's military installations
- Choice and time savings - Provide a reliable alternative to I-64 between Richmond and Norfolk, saving 20 minutes compared to taking the existing U.S. 460
- Economic impact - Chmura Economics estimates that the new highway will have an annual economic impact of $7.3 billion by 2020
The new U.S. 460 will be a four-lane divided highway from Prince George County to Suffolk. The toll road will be parallel to the existing U.S. 460. The existing Route 460 will remain a free alternative.
Secretary of Transportation Sean T. Connaughton explained, "The Commonwealth has worked extensively with localities, the region and the public to complete environmental work, establish a corridor and then go through a lengthy evaluation process to select a private-sector partner and develop a financial plan to design and build the new highway. Today marks a major milestone with a signed contract to begin work on a transportation project that will increase safety and provide a critical link to jobs, commerce and the military."
VDOT, in coordination with the Office of Transportation Public-Private Partnerships, procured the project under Virginia's Public-Private Transportation Act, which allows the Commonwealth to partner with the private sector to finance, design and build transportation improvements. The comprehensive agreement was signed today between VDOT Commissioner Greg Whirley, US 460 Mobility Partners and the Route 460 Funding Corporation of Virginia. Financial close was also reached, which releases funding to launch project work. Bonds issued by the Route 460 Funding Corporation of Virginia to finance the project were oversubscribed, meaning there was demand for more bonds than were available. The bonds were also sold at a lower than planned interest rate, which benefits the Commonwealth.
"VDOT will work with the Route 460 Funding Corporation of Virginia to lead this project and oversee the work performed by US 460 Mobility Partners during construction," said VDOT Commissioner Whirley. "The private-sector team will design and build the project at a fixed cost by a fixed date and will take significant risks associated with delivering the project. The Commonwealth will continue to involve the community and public, seeking their input and addressing their concerns throughout project development and construction."
"We are proud to have worked with the Commonwealth, a visionary state, and regional officials to achieve financial close on the new U.S. 460 project," said Ignacio Vivancos, president of Ferrovial Agroman US, which leads the US 460 Mobility Partners. "Achieving financial close allows us to get down to the real business of delivering this important project to the citizens of Virginia."
William Fralin who chairs the Virginia Port Authority (VPA) Board of Commissioners added, "The VPA is investing in the new U.S. 460 project because it will be an economic engine for the Commonwealth over the long-term, creating opportunities for distribution centers and light manufacturing that will drive cargo through the Port of Virginia. This creates jobs and grows our economy."
"The new U.S. 460 will bring greatly needed job and business benefits to the citizens and residents I represent along the corridor," said Delegate Rick Morris, R-Carrollton. "I support this project because it is an investment in the future of southeastern Virginia. This project comes at a perfect time as the Commonwealth looks for ways to assist the smaller communities to take advantage of economic opportunities."
"The new U.S. 460 will support economic development and private industry development at a time when many in our community are unemployed and under-employed," said Al Casteen, chairman of the Isle of Wight County Board of Supervisors. "The jobs generated during construction and long term will be sought after by both local business and jobseekers. Without a doubt, the new U.S. 460 will bring economic prosperity that will benefit the region and the state well into the future."
Suffolk Mayor Linda T. Johnson said, "The City of Suffolk was recently named one of America's best places to live for job growth. The benefits that the new U.S. 460 will bring including job opportunities and economic development will further enhance this mark of distinction. I welcome this project to our community."
Key business terms and costs:
- VDOT will oversee the work performed by US 460 Mobility Partners during construction, and operate and maintain the facility after the construction is completed. VDOT will retain ownership and all potential excess revenues of the project as well as set the initial toll rates.
- US 460 Mobility Partners will design and build the project.
- The Route 460 Funding Corporation of Virginia is a non-profit corporation that has sold tax-exempt bonds to finance part of the project. The debt will be non-recourse to VDOT, the Commonwealth and US 460 Mobility Partners. The funding corporation will collect the tolls, adjust the toll rates and manage the toll collection system over the course of 40 years.
- The project cost is $1.396 billion including design, construction and toll collection set-up.
Funding sources are as follows:
- Public funding from VDOT - $903 million, which is lower than originally forecasted due to reduced interest rates in the bond market. A lower amount is anticipated should the Commonwealth secure a low-interest federal loan from the Transportation Infrastructure Finance and Innovation Act (TIFIA) program.
- Public funding from the Virginia Port Authority - $250 million, a lower amount is possible if a TIFIA loan is secured.
- Private sector tax-exempt bonds sold this month by the Route 460 Funding Corporation of Virginia - $243 million (net amount).
- The new U.S. 460 will be a 55-mile four-lane divided, limited-access highway from Suffolk to Prince George County. It will parallel the existing U.S. 460.
- There will be seven interchanges at routes 156, 625, 602, 40, 620, 616 and 258.
- Design and right of way work is expected to begin in 2013, which will include public meetings. Construction is anticipated to start in 2014.
- When the road opens in 2018, tolls will begin at approximately 7 cents per mile ($0.067) for cars and 21 cents per mile ($0.213) for trucks. This equates to $3.69 for cars and $11.72 for trucks for the entire 55 miles.
- Tolls will be collected electronically using E-ZPass and license plate video tolling. There will be no manual toll collection.
- The existing U.S. 460 will have no tolls and remain a free alternative.