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United States Department of Transportation United States Department of Transportation

Pocahontas Parkway / Richmond Airport Connector

Pocahontas Parkway / Richmond Airport Connector
Project Type
Roads and Bridges
Financing Type
TIFIA
Status
Credit Agreement Executed
Sponsor/Borrower
Virginia Department of Transportation (VDOT); Pocahontas Parkway Association (PPA)
Project 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 with funds generated by bonds issued by the PPA in 1998 under Virginia's Public Private Transportation Act of 1995. The PPA was established for the sole purpose of financing the Parkway’s construction. The Parkway's development costs were funded through PPA-issued tax-exempt revenue bonds ($354M), a State Infrastructure Bank (SIB) loan ($18M), and Federal funding for roadway design ($9M). 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 PPA, a 63-20 nonprofit corporation, and entered into the Amended and Restated Comprehensive Agreement 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, a 1.58-mile, four-lane extension of the toll road to Richmond International Airport. The TIFIA loan amount was determined through a cost-benefit analysis, showing that $150 million was the minimum required to incentivize Transurban to assume the risk of constructing a much needed airport connector roadway that was not economically feasible otherwise.

Project Details
TIFIA Assistance
$150.00M
Primary Revenue Pledge
User Charges
Project Cost
$597.40M
Fiscal Year Closed
FY2007
Duration/Status
Opened in September 2002, the Richmond Airport Connector reached substantial completion in January 2011.  Transurban transferred its interest to the senior lenders in May, 2014.
Funding Sources
Original Construction
63-20 Corporation Tax-Exempt Toll Revenue Bonds: $354M
SIB Loan: $18M
Federal Funds for Design Costs: $9M     
Long-term Lease (2006):
Senior Bank Debt: $420M
Subordinated Debt: $55M
Equity Contribution: $141M
TIFIA Loan: $150M
Project Delivery/Contract Method
The original construction used a Design-Build (DB) methodology, while the long-term lease (2006) relied on the Lease-Develop-Operate method.
Project Participants
Transurban USA (long-term lease)
Project Advisers/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
Project Lender
USDOT TIFIA
Credit Assistance Detail
Direct loan: $150 million
Financial Status
TIFIA loan agreement was signed on July 19, 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. The TIFIA loan was sold to the senior lender concurrent with Transurban transfer of assets in May 2014.
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.
Application Details
Applicant
Transurban (895) US Holdings LLC
LOI Fiscal Year Received
FY2006
Application Received Fiscal Year
FY2006
Estimated Project Cost
$653.00M
TIFIA Request
$150.00M
Instrument Type
Direct Loan