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I-495 Express Lanes Extension Project Detail-Level

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I-495 Express Lanes Extension Project Detail-Level I‐495 Express Lanes Extension Project Detail‐Level Project Screening Report This report and recommendation is part of the screening process used by the Virginia Office of Public‐ Private Partnerships (“VAP3”) to assess the suitability and desirability of delivering a project under the Public‐Private Transportation Act (“PPTA”) of 1995, as amended. If the Agency Administrator decides to advance the project under the PPTA based on the findings presented in the Detail‐Level Screening Report, then the VAP3 Director and the Agency Administrator will submit the findings and recommendations to the PPTA Steering Committee for review and consideration. PROJECT BACKGROUND Date: 11/24/2014 Project Name: I‐495 Express Lanes Extension Project Sponsoring Agency: VDOT Project Concept Source: Solicited VIRGINIA P3 OFFICE RECOMMENDATION Proceed with adding project to PPTA prioritization list? Yes No Executive Summary recommendations from VAP3: The I‐495 Express Lanes Extension Project (the “Project”) would add two Express Lanes in each direction for an approximate two‐mile roadway section of I‐495 (see Figure 1). The existing I‐495 Express Lanes opened to traffic in 2012 and comprised 14 miles of Express Lanes from the Springfield Interchange to just south of Old Dominion Drive. The two‐mile extension would begin just south of Old Dominion Drive and extend north to the George Washington Memorial (“GW”) Parkway (see Figure 2). The Project would be located within Fairfax County, which is one of the most densely populated localities in Virginia, and address the increasing travel demand in the Northern Virginia area by adding capacity to the existing roadway. The I‐495 Northern Section Shoulder Use Project (the “Shoulder Project”) is currently under construction in the Project area. The Shoulder Project provides for the use of the northbound shoulder as a travel lane during peak periods. While this project will improve the performance, it cannot fully address the specific congestion and safety issues present in the Project area and thus a longer term solution, such as the Project, is needed. This report compares a Toll Concession Public‐Private Partnership (“P3”), which is a design‐build‐ finance‐operate‐maintain (“DBFOM”) delivery model, against a two design‐build (“DB”) delivery models. Page 1 The two DB delivery models are: (1) DB‐State Toll, in which the Virginia Department of Transportation (“VDOT”) operates and maintains the toll facility; and (2) DB‐Lease, in which the current operator of the existing I‐495 Express Lanes operates and maintains the toll facility. Under the Toll Concession P3 delivery model, the Project could be delivered five years earlier and cost approximately $600M over the lifecycle of a two‐year construction period and 30‐year O&M concession period. The approximate total lifecycle cost includes: $340M for construction, $50M for O&M and $210M for private financing. This model would require an approximate $265M upfront public subsidy, which is about 78% of the initial construction cost of $340M. The high subsidy amount is needed because the potential toll revenue of $335M is not large enough to cover the approximate $600M total project lifecycle cost. Thus, the Project delivered as a Toll Concession P3 provides little opportunity to leverage debt. Furthermore, a Toll Concession P3 delivery model limits the competition amongst proposers due to the Project’s short length and close proximity to the existing operation of the current I‐495 Express Lanes. Limited competition may result in only one proposer, the current operator of the existing I‐495 Express Lanes. If the scope of the Project were to be extended across the American Legion Bridge into Maryland, then it may draw more private sector interest and competition. This may potentially make a better case for delivering the Project as a P3. The Maryland Department of Transportation (“MDOT”), however, currently has no plans to expand the American Legion Bridge and extend the Express Lane network. Due to the large subsidy needed, little opportunity to leverage debt, and limited competition, the Project is not well suited to be delivered as a Toll Concession P3. While the Project is not suitable for a Toll Concession P3, the two DB delivery models may offer opportunities to capture value and deliver the needed improvements. Both the DB‐State Toll and DB‐ Lease models offer an opportunity to capture value in a competitive procurement process for design and construction of the Project through a DB contract. Furthermore, the DB‐Lease with the current operator of the I‐495 Express Lanes offers the opportunity to take advantage of cost efficiencies by integrating the Project into existing Express Lane O&M activities. Therefore, the VAP3 believes the best value today can be realized through one of these two DB delivery models. If VDOT decides to move forward with the DB‐Lease, then the potential toll revenue should be taken into consideration because the revenue ($270M) is much greater than the projected O&M costs ($39M) for the Project during the 25‐year O&M period after completion of construction. Potential ways this toll revenue value could be captured by VDOT in a sole‐source procurement for the lease agreement include, but are not limited to: transfer certain O&M activities which VDOT is currently responsible for in the comprehensive agreement for the existing I‐495 Express Lanes (such as joint bridge maintenance for the general purpose and Express Lanes) along with the O&M activities for the Project to the lessee in exchange for the toll revenue profits; receive a payment from the lessee for the rights to operate and maintain the Project and, in exchange, allow the lessee to collect toll revenue; and Page 2 retain the toll revenue risk and pay the lessee a fixed fee for O&M. In conclusion, at this time, the VAP3 recommends not advancing the Project for further consideration as a Toll Concession P3 under the PPTA. As an alternative, the VAP3 recommends VDOT advances with a DB delivery model for the Project. Agency Concurrence: Yes No Signature Date Charlie A. Kilpatrick, P.E., Commissioner of Highways Virginia Department of Transportation Page 3 PRELIMINARY SCHEDULE Completed Activities Completion Date High‐Level Screening Report May 2014 Detail‐Level Screening Report November 2014 P3 Activities with a Completion Date to be Determined: National Environmental Policy Act (“NEPA”) Documentation and Federal Highway Administration (“FHWA”) NEPA Approval IJR Documentation and FHWA Approval Request for Qualifications (“RFQ”) Request for Proposals (“RFP”) Expected Commercial/Financial Completion TRANSPORTATION NEED/SCOPE/APPROACH STATEMENT Description: The Project would be located within Fairfax County, which is one of the most densely populated and fastest growing localities in Virginia, resulting in an increasing travel demand. The two‐mile Project area of I‐495 begins just south of Old Dominion Drive and extends north to the George Washington Memorial (“GW”) Parkway (see Figures 1 and 2). I‐495 is a divided, urban interstate with four general purpose lanes and two Express Lanes, which extend from the Springfield Interchange to just south of Old Dominion Drive, in each direction. The existing I‐ 495 Express Lanes opened to traffic in 2012 and comprised 14 miles. The posted speed limit is 55 mph along the general purpose lanes and 65 mph along the Express Lanes. Within the Project area, the I‐495 general purpose lanes intersect Georgetown Pike and GW Parkway with grade‐separated interchanges. Georgetown Pike is a two‐lane undivided, urban minor arterial and, in the Project area, serves primarily residential development. George Washington Memorial Parkway is a four‐lane divided, urban principal, which is a commuter route to and from Washington, D.C. This Project would add two miles of Express Lane capacity (two lanes in each direction) at the northern terminus of the I‐495 existing Express Lanes, where the northbound Express Lanes merge into a single lane that then merges with the four general purpose lanes just south of Old Dominion Drive. Direct access ramps from the Express Lanes to the Georgetown Pike and GW Parkway are also included in the improvements. The northern terminus of the extension will be just north of the GW Parkway and allow vehicles to merge into general purpose lanes prior to the American Legion Bridge. Vehicle back up at the northern terminus of the existing Express Lanes into the general purpose lanes has created a northbound bottleneck, resulting in general purpose lane queues during peak hours which extend approximately 2.5 miles to the Route 7 interchange. Additionally, crashes due to this congestion Page 4 and weaving movements of vehicles from the Express Lanes to the exit at the Georgetown Pike interchange have created safety issues in the Project area. The Project improvements discussed above provide an opportunity to improve these specific congestion and safety issues and connect the Express Lane network to additional major roadways. This report compares a Toll Concession P3, which is a DBFOM delivery model, against a two DB delivery models. The two DB delivery models are: (1) DB‐State Toll, in which VDOT operates and maintains the toll facility; and (2) DB‐Lease, in which the current operator of the existing I‐495 Express Lanes operates and maintains the toll facility. Depending on tasks and risk allocation, there could be variations of these delivery options. If advanced as a Toll Concession P3 project, then the applicable factors will be assessed in greater detail during Project Development. SCREENING CRITERIA‐DESIRABILITY Public Need (i.e. congestion, safety, new capacity, preservation of existing assets, etc.)? Yes No TBD Safety According to crash data1 collected along northbound I‐495 from the Dulles Toll Road interchange to the American Legion Bridge over an approximate nine month period starting November 17, 2012 (the opening of the existing I‐495 Express Lanes), a total of 81 crashes were recorded in the study area (see Figures 3 and 4).
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