An unusual and enticing proposal by a consortium of private investors to give Virginia a lump sum of more than $1 billion in return for 50 years' worth of revenue on the Dulles Toll Road presents state leaders with an intriguing option.
They could accept the windfall and use the money to quickly improve the state's transportation network, or they could turn it down, betting that they would make more money over the long term by continuing to pocket the tolls.
If the toll revenue is "profitable to the consortium, it ought to be even better for the state," said Stephen S. Fuller, a professor of public policy at George Mason University. But the deal "could be attractive to the state, because it gets it out of a bind by coming up with a billion dollars quick."
State officials said the money would be used to upgrade the toll road and help pay for a $2.4 billion rail line through Tysons Corner.
The Dulles Toll Road is an eight-lane highway that stretches 14 miles between the Capital Beltway and the Dulles Greenway. It carries about 200,000 vehicles a day and runs through Reston, Herndon and Tysons Corner, home to many of Virginia's leading companies. Tolls on the road range from 50 to 75 cents, and state officials said they would maintain control over the rates as part of any deal.
The toll road is a separate facility from the Dulles Airport Access Road and the privately owned Greenway, which are not part of the proposal.
The group behind the proposal includes Clark Construction Group, Shirley Contracting, Dewberry LLC and Autostrade, which operates the Greenway.
State officials must consider whether they want to make a commitment on how the toll road is operated for the next half-century.
"This is an extremely valuable asset, and the agreement is for a very long time," said Transportation Secretary Pierce R. Homer. "It's very difficult to predict what the transportation needs will be 10 years from today, let alone 50."
Homer and other state leaders, including Gov. Mark R. Warner (D), said yesterday that although they are intrigued by the proposal, they are eager to receive competing bids. They noted that nine bids were received in a similar deal on a toll road in Chicago that eventually netted the city $1.8 billion in exchange for a 99-year lease.
Ken Reid, a representative of Virginia Mobility Associates LLC, said his company would soon put forth a competing plan to widen the Dulles Toll Road, Dulles Connector Road and Interstate 66 inside the Beltway. Reid said two lanes of each road would become express lanes, open to carpoolers without charge and to solo drivers willing to pay a toll that would vary according to traffic levels.
Backers of the 50-year plan, submitted yesterday said the benefits extend beyond getting a pile of cash. House Speaker William J. Howell (R-Stafford), who has pushed for such deals, said they are advantageous because "you eliminate all risk, all responsibility" and because "you're getting the future value of tolls 50 years down the road in a lump sum up front, and you can do a lot more with that."
Howell added that drivers would benefit because "I just think that the private sector can run things more efficiently and more effectively than the public sector."
But the proposal raises another issue: If private groups can pay a billion dollars and still make a profit by borrowing money against the toll revenue, why doesn't the state do the same?
State officials said they do not have the flexibility of private companies. Virginia's constitution prohibits the state from taking out loans of more than 30 years, and common practice is to limit borrowing to 20 years. That time frame would raise costs needed to repay the debt.
Virginia also has a self-imposed annual debt limit, and a deal of this magnitude would consume a chunk of that, reducing its ability to fund other priorities. The debt limit could be raised, but officials said that would jeopardize the state's financial standing and its coveted AAA bond rating.
"Our bond capacity is limited, and transportation projects are tremendously expensive," said Finance Secretary John M. Bennett.
Some argued that the public would not gain much from the proposal. They noted that toll road money is already earmarked for the Metrorail line. And improvements proposed for the highway, such as upgrading interchanges, would be helpful but would not dramatically ease the region's transportation problems.
"The improvements they talk about are minuscule; they're cosmetic," said John F. Herrity, a Republican who is a former chairman of the Fairfax County Board of Supervisors and an opponent of the rail plan. "This is just another way of financing rail to Tysons."