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Project Profiles

Pocahontas Parkway / Richmond Airport Connector

Location

Greater Richmond, Virginia

Project Sponsor / Borrower

Virginia Department of Transportation (VDOT)

Pocahontas Parkway Association

Program Areas

Project FinanceP3TIFIARevenue - Road Pricing Revenue

Fiscal Year Approved

Fiscal Year 2007

Mode

Toll Road

Description

The Pocahontas Parkway (Route 895) is an 8.8-mile tolled highway seven miles south of Richmond, Virginia. The four-lane road connects Chippenham Parkway at I-95 in Chesterfield County with Interstate 295 south of the Richmond International Airport in Henrico County. Construction began in fall 1998, and the Parkway was opened to traffic in stages beginning in May 2002. The facility includes a high-level bridge over the James River and an interchange at Laburnum Avenue.

The Parkway was constructed using funds generated by bonds issued by the Pocahontas Parkway Association (PPA) in 1998 under Virginia's Public Private Transportation Act of 1995. The PPA was established for the sole purpose of financing the construction of the Parkway. The Parkway's total development costs were funded through tax-exempt revenue bonds ($354 million) issued by PPA, a State Infrastructure Bank loan ($18 million) and Federal funding for roadway design ($9 million).

After 18 months of negotiation between VDOT and Transurban (USA), a private Australian toll road operator with subsidiaries in the U.S., Transurban executed an Asset Purchase Agreement with the Pocahontas Parkway Association, a 63-20 nonprofit corporation, and entered into the Amended and Restated Comprehensive Agreement (ARCA) with VDOT on June 29, 2006.

Under the terms of those agreements, Transurban acquired the sole rights to enhance, manage, operate, maintain, and collect tolls on the Parkway for a period of 99 years. Transurban also defeased all of PPA's underlying debt and was obligated to construct the Richmond Airport Connector (RAC), a 1.58-mile, four-lane extension of the toll road to Richmond International Airport. The size of the TIFIA loan was determined through a cost-benefit analysis that showed that $150 million for construction and refinancing was the minimum amount required to incentivize Transurban to assume the risk of constructing a much needed airport connector roadway that is not economically feasible otherwise.

Cost

$597.4 million (eligible project costs including refinancing, construction of the RAC and installation of an electronic tolling system)

Funding Sources

Original construction:

  • 63-20 corporation tax-exempt toll revenue bonds - $354 million
  • SIB loan - $18 million
  • Federal funds for design costs - $9 million

Long-term lease (2006):

  • Senior bank debt - $420 million
  • Subordinated debt - $55 million
  • Equity contribution - $141 million
  • TIFIA loan - $150 million

Project Delivery / Contract Method

Original construction: Design-Build

Long-term lease (2006): Lease-Develop-Operate

Private Partner

Transurban USA (long-term lease)

Project Advisors / Consultants

Original design-build consultant: Joint venture of Fluor Enterprise and Morrison Knudsen (now URS)

Long-term lease (2006):

  • Nossaman, Guthner, Knox & Elliott, LLP
  • Christian Barton
  • Public Resources Advisory Group

To USDOT TIFIA JPO:

  • TIFIA Legal Counsel: Nixon Peabody
  • TIFIA Financial Advisor: Taylor DeJongh

Original Lenders

USDOT TIFIA

Senior bank debt:

  • DEPFA Bank (Ireland)
  • Banco Espirito Santo de Investimento (Spain)
  • Bayerische Hypo- und Vereinsbank (Germany)

Duration / Status

Opened in September 2002; Richmond Airport Connector reached substantial completion in January 2011.

Transurban transferred its interest to the senior lenders in May, 2014.

TIFIA Credit Agreement

Direct Loan: $150 million; sold to senior lender concurrent with Transurban transfer of assets in May 2014.

Financial Status / Financial Performance

TIFIA loan agreement was signed on July 18, 2007.

The TIFIA funds refinanced approximately $95 million of the long-term senior bank debt, and paid for the $7 million needed to upgrade the electronic tolling systems and approximately $48 million toward the construction of the Richmond airport connector.

Innovations

  • First construction project implemented under Virginia's Public-Private Transportation Act of 1995 (PPTA). The Pocahontas Parkway was only the second transportation project nationwide to be financed through a 63-20 corporation.
  • This creative financing approach is why the Pocahontas Parkway could be built without a 15-year delay to assemble financing. Only $27 million of the Parkway's total $324 million price tag came from public funds. The vast majority of the original funding was raised through the sale of private bonds, which minimized the risk to both the localities and the taxpayers.
  • The TIFIA loan represents the first time that TIFIA eligible projects costs include the cost of refunding long-term project debt. Approval of a SEP-15 application was required for the TIFIA loan to deviate from "eligible project costs" and allow a portion of it to finance the construction of the RAC.

Related Links / Articles

Pocahontas Parkway Website

VDOT PPTA Documentation on the Pocahontas Parkway

FHWA Innovative Finance Quarterly coverage of the Parkway

Public-Private Transportation Act of 1995 information

SEP-15 Application

Contacts

John W. Lawson
Chief Financial Officer
VDOT
john.lawson@vdot.virginia.gov

Federal Highway Administration | 1200 New Jersey Avenue, SE | Washington, DC 20590 | 202-366-4000
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