by James A. Bacon
The Commonwealth Transportation Board approved Wednesday the issuance of up to $425 million in tax-free bonds to finance construction of the U.S. 460 Connector between Petersburg and Suffolk in one of the priciest economic development initiatives in Virginia history.
The state will contribute roughly 80% of the cost of the $1.4 billion project with funds funneled through the Virginia Department of Transportation (VDOT) and the Virginia Port Authority. Bonds, to be supported by toll revenues, will pay for the balance of the 55-mile, Interstate-grade highway, which is designed to bolster the competitive position of Virginia’s ports and attract large industrial and logistical investments to the U.S. 460 corridor.
Most of Virginia’s transportation mega-projects address a congestion crisis, but U.S. 460 represents an opportunity, Aubrey L. Layne, the Hampton Roads district representative, told fellow CTB members. Layne, who has worked behind the scenes for years to bring the project to fruition, described the project as “forward looking.” An upgraded U.S. 460 will relieve an overloaded Interstate 64 north of the James River and it will serve as an alternate hurricane evacuation route, but its main purpose is to stimulate economic development. U.S. 460, he said, has great “potential.”
“If the governor were here today, he’d say one word: jobs,” injected Gary Garczynski, Northern Virginia district representative, later in the meeting. He hopes the U.S. 460 project will provide a model for a north-south outer beltway for Northern Virginia, he added.
“The new Route 460 highway is critical to economic development in this growing region of Virginia,” confirmed Governor Bob McDonnell in a prepared statement released shortly after the vote. “The new highway will stimulate business development in the region and accommodate freater freight traffic from the Port of Virginia, benefiting the entire Commonwealth. Chmura Economics estimates that the new highway will have an annual economic impact by 2020 estimated at $7.3 billion.”
Although several CTB members pressed McDonnell administration officials for assurances that the state was amply protected in the event of a hypothetical bond default, the board voted unanimously to approve the bond issue.
The main note of skepticism came from Stewart Schwartz, executive director of the Coalition for Smarter Growth. Speaking during the public comment session, he described the administration’s approach as a “rush to judgment” on the project, which has received little public scrutiny and review. The case for the highway, he said, was based upon a number of economic assumptions, such as an anticipated jump in container traffic that Hampton Roads will see when a major Panama Canal widening project is complete and an ensuing surge in the number of trucks and tolls on U.S. 460.
Schwartz also questioned whether the state’s commitment of between $753 million to $930 million was the optimal use of finite resources. The state has tapped out its borrowing capacity and state funds for new construction is fast eroding. There won’t be any more money for mega-projects available for years, he said. In a knowledge-intensive economy in which knowledge workers are increasingly stuck in traffic, he asked, is betting on factories and distribution centers a wise use of money? “Are there better investments you could be making with scarce money? … If this were your business, would you make the investment?” Read more.