The Commonwealth Transportation Board approved Wednesday the granting of an $80 million line of credit for the U.S. 460 Connector project. That sum will be subordinate to any bonds issues to pay for the road, meaning that if toll revenues fail to meet projections, the state funds will be tapped to meet interest payments before bond holders suffer any losses.
The CTB decision increases the state’s potential exposure to the project, a 55-mile highway to be built to interstate standards between Suffolk and Petersburg, to more than $800 million. The McDonnell administration has already committed $500 million, while the Virginia Port Authority has pledged another $250 million.
“The credit enhancement will allow a higher level of debt to be issued at a lower interest cost,” explained John Lawson, chief financial officer of the Virginia Department of Transportation.
Although the board unanimously approved the McDonnell administration proposal for the use of Virginia Transportation Infrastructure Bank funds, several members did express concerns about the potential for state losses. The project, which is estimated to cost roughly $1.8 billion, will incur significant losses in the early years but should increase toll revenue as an anticipated port boom, triggered by a Panama Canal expansion, generates increased freight traffic out of Hampton Roads. The question is, how fast will that projected traffic materialize?
James A. Davis, representative of the Staunton district, said he favors the project but has vivid memories of when he sat on the board of the Dulles Greenway toll road. Backers of that project were enthusiastic about the traffic growth projects but did not anticipate that state-funded improvements to Route 7 in Loudoun County would divert much of the anticipated traffic. The Dulles Greenway went broke. The 460 Connector, Davis noted, also has a competing roadway — the existing U.S. 460.
W. Sheppard Miller, an urban at-large representative from Norfolk, reiterated Davis’ concern. “This is projected to save you 10 minutes [travel time]. There’s a lot of people who won’t use it.” However, Miller said he supported the project in order to support the anticipated freight growth in Virginia’s ports and the manufacturing and logistical investment that it will give rise to.
Transportation Secretary Sean Connaughton defended the 460 Connector as a less expensive alternative to other mega-projects proposed in Hampton Roads. He also described toll revenue projections as “very conservative.”
No one made mention of the recent news from Transurban, operator of the Pocahontas Parkway, which announced that it had written down $138 million of its $548 million investment because its traffic forecasts never materialized. That road opened in late 2002. Transurban took over operation in 2006 under a 99-year lease as part of a public-private partnership with the state.