Governor announces legislation to reform state’s process on public-private projects

Published December 10, 2014 by Paula C. Squires

While announcing the upcoming opening of one public-private transportation project on Wednesday – the 95 Express Lanes on I-95 — Gov. Terry McAuliffe used the occasion to unveil his plans for reforming the state’s process on such projects.

The new lanes on I-95 in Northern Virginia will open on Dec. 14 to drivers. They can use the lanes for free until tolling begins on Dec. 29.

McAuliffe also announced that he would offer legislation in the upcoming General Assembly session that makes key reforms to the process the state uses to procure projects under the Public-Private Transportation Act.  This public-private partnership (P3) process allows the private sector to invest in and deliver highway projects such as the 95 Express Lanes. Yet it has come under criticism recently as a result of discontent over two projects in Hampton Roads: the U.S. 460 highway improvement project and the Midtown Tunnel toll project.

Using the 95 Express Lanes as an example, McAuliffe noted Wednesday that large transportation projects represent an investment in Virginia’s economy.  “Not only did the project create thousands of jobs during construction and put more than 500 businesses to work, the new infrastructure will also support future economic development and job growth in the region,” he said in a statement.

According to the governor, construction of the 95 Express Lanes supported nearly 12,600 jobs and generated about $1.54 billion of economic impact statewide. The project also exceeded its Disadvantaged Business Enterprise and Small, Women-owned, and Minority-owned Business goals and created nearly $200 million in contracts to more than 180 small and disadvantaged businesses.

 
It also converted the existing high-occupancy vehicle (HOV) lanes to high-occupancy toll (HOT) lanes.  The express lanes will operate from I-95 near Garrisonville Road in Stafford County to the vicinity of Edsall Road on I-395 in Fairfax County (approximately 29 miles).  Carpoolers and vehicles with three or more people ride the express lanes for free, while vehicles with one or two people pay a variable toll to ride the Express Lanes.

Until Dec. 29, travelers can continue to travel the regular lanes for free. Between Dec. 14 and Dec. 29, existing rules will remain in effect during rush hours requiring three or more occupants for a vehicle to use the express lanes for free.

The 95 Express Lanes are being delivered through a public-private partnership between the Virginia Department of Transportation (VDOT), the Virginia Department of Rail and Public Transportation, the Federal Highway Administration, and Transurban. Fluor-Lane 95 LLC constructed the lanes.

“The 95 Express Lanes project is a model of how P3 projects should be done,” McAuliffe said. “Transurban shared in the risk, bringing private capital to the table and putting the money to work for motorists and ultimately Virginia’s economy.  I want to congratulate Transurban and thank them for completing this project early and on budget.”

Yet as Virginia celebrates the opening of a project expected to decrease congestion on one of the state’s busiest highways, McAuliffe said, “We must also work together to ensure that every single P3 project is negotiated in a way that puts taxpayers first.”

In what has been a collaborative effect with Del. S. Chris Jones, R-Suffolk, chairman of the House Appropriations Committee, McAuliffe plans to back legislation to reform the P3 process.

Jones, who will sponsor the legislation, said the reforms retain Virginia’s ability to execute P3 projects while protecting taxpayers. “I believe the P3 system must be reformed to strengthen accountability and improve transparency,” he said in a statement.

Many taxpayers were outraged last spring when it came to light that the state had spent $300 million for design and other work on the U.S. 460 project, a 55-mile highway project stretching from Suffolk to Petersburg, without first obtaining the necessary federal environmental permits – permits that were in question due to the project’s ability to destroy hundreds of acres of wetlands.

The governor and Jones’ P3 reform legislation would require the following:

Earlier involvement by lawmakers. Staff from the House and Senate transportation committees will be on the P3 steering committee to determine if a project meets the criteria for a public/private project. This should increase transparency and reduce political risk and uncertainty.

Minimize risk to taxpayers by putting in place new procedures for high-risk projects that will shield the public from unexpected liabilities.

Establish clear lines of accountability. The secretary of transportation would be required to sign a document attesting that the project qualifies as a P3 project, meaning risk has been transferred to the private sector and that the original purpose of the procurement has not changed.

“This legislation is good government,” said Transportation Secretary Aubrey Layne.  “There will be no way to duck responsibility for transportation decisions.  It will protect taxpayers from undue risk, while using the P3 process in the right way to deliver projects, like the 95 Express Lanes, that move Virginia’s economy.”