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Pocahontas Parkway / Richmond Airport Connector

Pocahontas Parkway / Richmond Airport Connector
Project Type: 
Roadways and Bridges
Sponsor / Borrower: 
Virginia Department of Transportation (VDOT)
Pocahontas Parkway Association (PPA)
Credit Agreement Status: 
Retired/Sold
TIFIA Assistance: 
$150 million
Primary Revenue Pledge: 
User Charges
Project Cost Details: 

$597.4 million

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.

Fiscal Year Closed: 
FY2007
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.

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 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
Project Lender(s): 
USDOT TIFIA
DEPFA Bank (Ireland) - Sr Bank Debt
Banco Espirito Santo de Investimento (Spain) - Sr Bank Debt
Bayerische Hypo- und Vereinsbank (Germany) - Sr Bank Debt
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.
Project Contacts: 

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

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