A federal loan has been approved for construction of new fluctuating toll lanes on the highly-congested I-495 (Capital Beltway) in Virginia near Washington DC, according to information from the Department of Transportation (DOT).
When construction is finished, with two additional lanes on each side of the beltway, the two existing middle lanes will be converted to HOT lanes with prices that fluctuate according to traffic volume. The price fluctuations are designed to reduce congestion. The companies will maintain and operate the express lanes, using facility revenues to repay the $588 million loan and the $600 million in private-activity bonds. About $1.2 billion will be made available for the project in the form of a direct loan and tax-exempt private-activity bonds.
The 14-mile project, estimated to cost $1.9 billion, includes two new variably priced high-occupancy-toll (HOT) lanes added to the beltway between Georgetown Pike and the Springfield Interchange. Two private companies, Transurban and Fluor Enterprises, will finance and operate the facility. The Commonwealth of Virginia is also providing significant resources to the public-private partnership.
The loan was made possible through the Transportation Infrastructure Finance and Innovation Act (TIFIA) loan program that was developed to encourage private sector participation in the financing of highway projects with flexible repayment terms. As part of the surface transportation legislation signed in August 2005, private companies building and operating public use facilities are authorized to borrow up to $15 billion nationwide on a tax-exempt basis to build highways and certain freight facilities. So far, DOT has authorized the issuance of $3 billion in these private-activity bonds and expects to issue billions more in the upcoming months.