Project Overview

The Dulles Greenway is a six-lane, 14-mile, limited access toll highway in Loudon County, Virginia, a suburb of Washington, DC, connecting Dulles International Airport with US-15 in Leesburg. It serves as an extension of the state-owned Dulles Toll Road (DTR), which connects Dulles Airport and other high density employment centers in the corridor to the rest of the Washington metropolitan area.  The two toll roads connect at a toll plaza, where drivers pay a single toll that is divided by the two operators.

The Dulles Greenway was the first toll highway in the U.S. in the Interstate era to be developed under a long-term design-build-finance-operate-maintain (DBFOM) public-private partnership (P3) concession.  The project was developed by Toll Road Investors Partnership II (TRIP II), currently owned affiliates of the Australia-based Macquarie Group. The road is operated by Autostrade International, one of the original investors in the project.

Project History

Washington Dulles International Airport opened to commercial service to serve long distance air travelers in the National capital region in 1962. The new airport project included the Dulles Airport Access Road (DAAR), a four-lane, 14-mile highway developed on land owned by the airport authority linking the airport to the District of Columbia and other areas in the region’s core.  The toll-free DAAR had no intermittent points of access or egress, and was designated exclusively for traffic traveling to and from the airport.

Heavy development in the Dulles corridor in Fairfax County during the 1970s brought mounting pressure to expand the roadway network in the area.  In the early 1980s, the Dulles Airport Authority allowed the Virginia Department of Transportation (VDOT) to build the Dulles Toll Road (DTR) within in the airport access corridor, outside of the lanes of the DAAR. As growth in the corridor continued to spread into Loudoun County west of Dulles Airport, VDOT became interested in extending the DTR to serve traffic in that developing area.

In 1988, the state legislature passed the Virginia Highway Corporation Act (VHCA), which allowed private developers to submit applications to the Virginia State Corporation Commission (SCC) to build and operate toll roads in the Commonwealth.  Under the terms of the VHCA, toll rates and rates of return would be regulated by the SCC, similar to a public utility. The VHCA also required that any privately developed toll roads would be turned over to the state after a specified period of time.

In 1989, the Toll Road Corporation of Virginia presented a proposal to privately fund and construct an extension of the existing Dulles Toll Road to Leesburg.  The application was approved by the Commonwealth Transportation Board in July 1989, and in June 1990 the SCC issued a Certificate of Authority to the private consortium, by then known as TRIP II, to build and collect tolls on the Dulles Greenway over a 40-year operating period. The Shenandoah Group, a local family-owned investor, held a majority interest in TRIP II, while minority stakes were held by Autostrade International S.p.A (a large Italian toll road operator) and Brown & Root (a U.S.-based construction firm).  Financing was secured by 1993, and construction on the $350 million project began in September of that year. The Dulles Greenway opened to traffic in September 1995.

The Dulles Greenway was the only toll facility in Virginia to be developed under the public utility model of the VHCA. Subsequent long-term P3 concessions for transportation facilities in the state have been implemented under the Public Private Transportation Act, enacted in 1995.

Project Financing and Delivery

To finance the construction of the Greenway, TRIP II put up $40 million in private equity, and secured $310 million in privately placed taxable debt. Ten institutional investors led by CIGNA Investments, Prudential Power Funding Associates, and John Hancock Mutual Life Insurance Company provided $258 million in long-term, fixed-rate notes (due in 2022 and 2026). Three banks agreed to provide part of the construction funding and $40 million in revolving credit. Repayment of loans was to come from toll revenues generated by the facility.

After opening in 1995, traffic and revenues on the Greenway fell far short of expectations, with traffic volumes nearly 70 percent below projected levels. In response, toll rates were reduced nearly in half, a measure that increased traffic levels but not revenues; the state also allowed the speed limit on the facility to be increased from 55 to 65 miles per hour to increase its attractiveness. Still facing financial challenges, TRIP II restructured its debt in 1999 with $332 million in privately-placed, insured bonds maturing in 2003 and 2005. In 2001, the Virginia State Corporation Commission (SCC) extended the term of TRIP II's concession for an additional 20 years to 2056. In September 2004, variable peak and discounted off-peak point-to-point rates were introduced to better manage peak period congestion on the facility.

In March 2005, Macquarie Infrastructure Group (MIG) acquired TRIP II and gained control of the Dulles Greenway for $617.5 million, also issuing $391 million in additional revenue bonds at that time.  Ownership in TRIP II is now held in equal shares by Macquarie Atlas Roads and Macquarie Investment Partners I, funds both managed by Macquarie Group Limited.

Despite changes to the 1988 Act allowing for annual toll rate increases and the Dulles Greenway’s location in the highest-income county in the U.S., the facility continues to struggle financially. Traffic levels on the toll road have seen declines due to toll rate increases and the effects of the economic recession, combined with improvements made to competing, untolled facilities in the area. The outstanding revenue bonds issued by TRIP II are currently rated BB+ by Fitch Ratings, one notch below investment grade.