The U.S. Department of Transportation announced a $422 million loan to help provide congestion relief to drivers in Norfolk and Portsmouth, Va., by providing credit assistance for the construction of a new Midtown Tunnel and rehabilitating existing tunnels.
“Virginia is investing in this key infrastructure project that will create jobs, reduce commute times and support our economic competitiveness,” says U.S. Transportation Secretary Ray LaHood.
The project, estimated at a total cost of $2.1 billion, includes the construction of a second Midtown Tunnel that will run parallel to the existing one, rehabilitation of the existing Midtown and two Downtown tunnels, and extension of the Martin Luther King Freeway, including a partial interchange to provide an additional connection.
“This much-needed transportation investment will provide jobs in the immediate future to help make the area more productive and contribute to economic growth,” Federal Highway Administrator Victor Mendez says. “In addition, the project will help businesses provide better service to their customers.”
The Virginia Department of Transportation is pursuing the Downtown Tunnel/Midtown Tunnel/MLK Extension Project through a public-private partnership with Elizabeth River Crossings Opco, which will be responsible for the financing, design, construction, tolling and ongoing operations and maintenance of the project over a 58-year concession term, although VDOT will maintain ownership of the project.
The Department’s Transportation Infrastructure Finance Innovation Act loan is expected to keep toll rates down by lowering the financing costs of the project. Through more flexible repayment terms and more favorable interest rates, TIFIA helps leverage private capital resources to make much-needed transportation projects a reality. In this case, ERC will receive the loan to advance the project and use the toll revenue to pay it back. Overall, the program helps advance large-scale projects that otherwise might be delayed or deferred because of size, complexity or uncertainty over the timing of revenues.