CTB Approves $80 Million Line of Credit for 460 Connector

James A. Davis, Staunton District representative
by James A. Bacon

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.

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  1. Neil Haner Avatar
    Neil Haner

    I feel the comparison the the Pocahontas Parkway is an unfair one. The PP fabricated a demand; there never was a large population of Chesterfield drivers looking to get to Varina, even go get to the airport or bypass the city on the way to 64 eastbound.

    460, however, does have a current demand, and their are reasonable ways to estimate what the demand on an improved portion of roads would be. Creating a limited access highway will siphon off most of the cars from old 460. Look at route 60 through New Kent, no one uses that, even with traffic on the adjacent interstate is congested. Granted, this all is dependent on toll pricing.

    The 18-wheelers are going to use this regardless… it’s too costly to slow down and speed up with each township. It’s going to be hard to price commercial truck traffic back onto old 460. The two-axle vehicles will make or break the project. Because you’re right, set it at a few bucks and you’ll get what people do on the Chesapeake Expressway, sucking up the extra 5 minutes to save the money. But make it a dollar or so? You’ve just turned it into a viable alternative to I64 on the peninsula for beach-bound drivers.

  2. Neil, The Pocahontas Parkway shows the risks entailed with relying upon traffic projections. Transurban is a pretty savvy outfit, but it got the projections wrong. Why? Because it forecast residential development that never materialized. If you go back and see old stories on U.S. 460 and the Panama Canal connection, you’ll see plenty of debate over how hard/squishy the numbers are regarding growth in container traffic. What if that container traffic doesn’t materialize — or if it takes longer to materialize than hoped?

  3. Neil Haner Avatar
    Neil Haner

    Jim – I understand your concern, and in cases like this, projections are typically overly optimistic.

    But whereas the PP “need” was based only on projections for future real estate developments in Varina, and contributed little else to the Richmond region’s overall traffic situation, the 460 corridor will play a major role in the system-wide reduction of congestion in Hampton Roads.

    Currently, for many commercial drivers, its still preferable to route across the various tunnels onto Interstate 64, clogging up the highways and playing a role in the region’s traffic woes. Providing them a new interstate-level, even just at the existing, not projected, demand, will divert a lot of container traffic away from highways barely able to support commuters and tourists alone.

    I guess to sum it up, the PP addressed a projected need, while the 460 project addresses a current need and a projected need both.

  4. Neil Haner Avatar
    Neil Haner

    And not to be morbid, but look at today’s paper and see a multiple fatality wreck caused by a head on collision by tractor trailers on 460 in PG County this morning. The highway in places is not divided, which is a major safety concern when large volumes of this type of commercial traffic use the route.

  5. DJRippert Avatar

    Traffic projections seem like tautologies compared to the presumed boom in port traffic.

    Has anybody done any serious analysis as to the odds of Tidewater really getting a major boost on port traffic after the canal is widened?

    I was in California this week and they don’t see a lot of shipping traffic changing to the east coast even after the canal is widened. They make some pretty good points.

    I am in Maryland a lot. The good people of Maryland seem to think that the additional traffic will come to Baltimore.

    New York is planning a huge project to raise a bridge in order to bring the new traffic to NYC.

    Somebody must be wrong here. Is it us?

  6. larryg Avatar

    well… somebody is going to lose…but at this point… it’s a question of who has decided to get in the game.

    Is this as simple as figuring out how much it costs to move a ton of freight from LA to the East Coast verses not docking in LA and diverting to the Panama Canal and doing an end run?

    Trains are getting pretty efficient. I think they are saying they can move a ton of freight 400+ miles on a gallon of fuel. I wonder how that compares to a Panamax ton. I’m thinking it’s a close calculation but perhaps someone knows.

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