Sweet Virginia

As Virginia currently plays host to the deepest P3 pipeline in the rising US market, Dan Colombini speaks to Tony Kinn, P3 programme director of the state’s Department of Transportation.

Virginia currently has the largest amount of P3 activity across the US, why is this the case?

There are several important synergies at work in Virginia delivering the tremendous P3 dealflow you’ve seen in I-495 Express Lanes, Midtown Tunnel, and I-95 Express Lanes.

In these three projects alone, Virginia has made an investment of just under $900m and the travelling public will see the benefit from almost $5bn in new transportation improvements. For every $1 Virginia invests, we are seeing the private sector invest $6-$7. 

The second element in our P3 achievements is the substantial commitment from Governor McDonnell and his administration.

In late 2010 we undertook a complete, independent assessment of the Public Private Transportation Act (PPTA) programme to determine what we’ve done well and what we could improve upon. The programme assessment resulted in an enhanced PPTA Implementing Manual that provides a project delivery framework that proactively identifies, develops and delivers Virginia’s priority transportation projects in a consistent, transparent, timely, and cost effective manner. 

The last component of our success is the creation of a separate, dedicated PPTA office working across all modes of transportation. The Virginia Office of Transportation Public-Private Partnerships provides the focused professionals with diverse backgrounds in finance, law, project development, engineering, and operations necessary to deliver these complex transportation projects. This has been one of the key assets in our success and will continue Virginia’s competitive advantage as we move into 2013. 

What areas should investors be keeping an eye on for next year? 

To date, we have completed high level assessments for Air Rights Development, the I-95 Corridor Improvement Program, I-64 Peninsula improvements, and Patriot’s Crossing.

We will shortly release high level assessments for Hampton Roads I-64 HOV to HOT, Northern Virginia’s North-South Corridor, and the I-66 Corridor Improvements. The OTP3 will complete detailed business and financial assessments of the feasibility and desirability of advancing these candidate projects in 2013.

These will help decision-makers determine the most advantageous way to deliver the transportation improvements. The I-66 Corridor Improvements in Northern Virginia and elements of the NOVA North-South Corridor will also be assessed in 2013.

The PPTA pipeline also includes 14 conceptual projects, which will be further developed in the coming year with each modal agency. Conceptual projects, such as using availability payments and air rights development, offer us the opportunity to explore new ways to deliver PPTA benefits.

Potentially some conceptual projects may bring revenue streams into Virginia as well.
The second programme-level enhancement focuses on public education regarding the benefits of P3s.

Our success partnering with the private sector has, to an extent, outpaced the public’s understanding of these complex long-term infrastructure improvements. We created a PPTA Working Group in June 2012 comprised of elected officials, public and private sector stakeholders to look at improving both P3 programme and project education and outreach. 

With this public outreach and education focus, we are managing potential political risks and reinforcing a stable, predictable business climate for P3s. 

What was the main focus for Virginia during 2012?

We’ve focused on two particular challenges: US Route 460 and the opportunities for the Virginia Port Authority. 

The two-year procurement process for US Route 460 Corridor Improvements concluded with award in October 2012 to private sector US 460 Mobility Partners for the best value with the lowest public subsidy.

Private sector partners will design and build the project at a fixed cost with a fixed date of completion; the non-profit Route 460 Funding Corporation of Virginia has issued tax-exempt bonds to finance a portion of the project. 

Another priority for long-term health is the business review underway at the Port of Virginia. At the end of the review, we may find the Port engine is running at top efficiency. Conversely the process may open the door to new relationships and innovations that will allow us to maximise the growth, shares, and volumes at the Port. 

When can we expect to see any movement on the big projects in Virginia, such as the I-95 highway and Hampton Bridge P3's?

The assessment of candidate P3 projects, including I-95 Corridor and Hampton Roads improvements, are underway and will be available in early 2013. 

Environmental studies have been presented to the public this December for the I-64 Peninsula Improvements; a series of public meetings in December have sought public feedback on Virginia’s proposal to provide long term maintenance and improvements on I-95 Corridor. The Hampton Roads Bridge Tunnel environmental analyses are anticipated to be available publicly in late December. 

How has the PPTA model helped to deliver P3 projects across the state and what are its strengths?
Through the PPTA, the private sector is able to bring private funding to the table and take significant risk to finance a significant portion of P3 projects, which Virginia would not see without their participation. 
The PPTA model’s greatest strength has been its flexibility to structure each project differently to get the greatest value from the public and private sectors. 

How do you respond to criticism from the Southern Environmental Law Centre that the Act lacked transparency and failed to safeguard public interest?

Improvements can always be made to the best processes and we appreciate the SELC’s on-going interest in our programme. Considering different viewpoints on Virginia’s transportation challenges is always healthy and beneficial.  

The Midtown/Downtown Tunnels project was the main priority of the Hampton Roads region for the past 10 years. This project reaching construction is the result of countless meetings between 2006 and 2011 with state and local elected officials, citizens, faith-leaders, civic leagues, and the Department of Transportation.

The idea that this regional priority, or any other, can be conceived of, and a deal brokered in a dark quiet room could not be further from fact. 

To what extent have projects such as Virginia's I-95 Express Lane and Midtown Tunnel P3s succeeded in boosting the US P3 pipeline?

Virginia has helped make P3 projects not the exception but part of the norm nationwide. The state can act as a model for P3s in terms of getting the public educated about the benefits and challenges of P3 projects. The I-495 Capital Beltway Express Lanes project and the I-95 Express Lanes project will help a possibly sceptical public of the tangible, measurable benefits of P3s. Like any culture change, people need to see before they believe.

What can we expect from VDOT next year and are you confident that more deals will come to market and where?

I am absolutely confident you’ll see more deals from Virginia, the Office of Transportation Public-Private Partnerships and transportation agencies like VDOT next year and for the foreseeable future.

The scope and breadth of the infrastructure deals will mature, as we explore projects that can bring in revenues such as air rights development or availability payments that may expand P3 projects to rural areas of the state that aren’t positioned for concession projects. 

Our PPTA pipeline will advance identified transportation priority projects and offers many new opportunities.