Another Public-Private Partnership Project Moving Forward in Virginia

On Thursday, July 16, 2009, the Commonwealth Transportation Board (the governing body for transportation in Virginia) approved the Downtown Tunnel/Midtown Tunnel and Martin Luther King (MLK) Extension as a project to be pursued under Virginia’s Public Private Transportation Act of 1995. This project adds new tunnel capacity and upgrades the tunnels and access ramps between Portsmouth and Norfolk, Virginia. The estimated capital cost for this project is between $1.3 and $2.2 billion. (2008 dollars)

The two tunnels originally replaced ferry service on the Elizabeth River which divides the two cities. The Downtown tunnel opened in the 1952 and the Midtown Tunnel opened in the 1960’s. These tunnels were financed by bond issues supported by tolls (25 cents each way). The tolls were removed in the late 1980’s as the bonds were paid off.

With the rapid growth in this area of Virginia and the booming ports in Hampton Roads the tunnels became outdated and have become a choke point between Portsmouth and Norfolk Virginia.

Studies have been undertaken for years dating back to the late 1980’s and early 1990’s to find ways to improve the facilities; however state financing was always limited. State and federal funding has become even more difficult now as the Commonwealth faces the downturn in transportation revenues similar to virtually all other state as well as the downturn in federal transportation revenues.

An unsolicited proposal from the private sector was submitted to Virginia Department of Transportation as permitted under Virginia’s Public Private Transportation Act of 1995. After a time for competitive proposals to be submitted the proposal was referred to an Independent Review Panel (IRP). Under the Virginia law, the IRP was appointed to review and evaluate the proposal and make a recommendation to the Commonwealth Transportation Board. The IRP included local officials and representatives from the transit community, the ports, the planning organizations in Hampton Roads and Virginia Department of Transportation. The IRP held many meetings and hearings over the year and recommended that the project be pursued as a public-private venture.

As a public-private partnership, the project will be funded by the private sector and the public sector, both state and federal. The project will also require tolls and it is proposed that the tolls will be adjusted according to congestion. There will be no long lines at toll booths as open road or transponder tolling will be used.

Important lessons emerge regarding this project in Virginia.

  • First, it is another example of the private sector coming forward with a proposal to solve a problem. While the financing is not yet settled, the congestion problem is well on its way to finding a solution.
  • Second, the IRP listened to the discussion that had to take place regarding (higher) tolls being imposed again and “how else will the project be done?” The discussion in the public forums led the IRP to recommend the project move forward as a public-private partnership.
  • Third, the transparency and involvement of the community and citizens were key in brining this project to where it is today.

It is another example of Virginia continuing its leadership in the public-private ventures as it potentially adds another project to its list of other projects including the Pocahontas Parkway, the Dulles Greenway and the Beltway HOT lanes.