Insurance jitters, financing questions and air-quality issues are causing changes to the Route 28 widening. What was planned as a 10-interchange, eight-lane project is now viewed as having six interchanges and six lanes — at least for the foreseeable future.
Fairfax and Loudoun County leaders discussed it Friday in Leesburg at the Route 28 District Commission's annual meeting. Now county officials are being asked to be ready to back up the Route 28 landowners' financing for this project, should the need arise.
"The counties are investigating putting their moral obligation behind some of the bonds that would be issued, if there's a debt-service shortfall," said Garry Palleschi, proposal manager for Shirley Contracting Corp.
This company and The Clark Construction Group — along with Public Private Solutions Inc. (PPSI) and Dewberry & Davis LLC — have entered into a public/private partnership with the
Virginia Department of Transportation (VDOT) to do the road project.
As originally envisioned, work would be done along the 14 miles between I-66 in Centreville and Route 7 in Loudoun County and would be completed in 2005. It would eventually result in a total of eight lanes on Route 28.
In Fairfax County, full cloverleaf interchanges were proposed for Westfields Boulevard and Willard and Barnsfield roads, with trumpet-shaped interchanges planned for McLearen and Frying Pan roads. (Barnsfield will connect Route 28 to and from the new National Air and Space Museum Annex).
The Route 28 Tax District is to pay 75 percent of the cost, and VDOT, 25 percent. However, circumstances are now changing what can actually be done. Since the region must meet federal air-quality standards before beginning new transportation projects, items not in the Constrained Long-Range Plan of the Washington Council of Government's Transportation Planning Board must be tabled.
That means Route 28 will not be widened from six to eight lanes until then, and just six of the interchanges — Barnsfield, Westfields, McLearen, Routes 625 and 606 and the CIT exit — can be constructed.
But another large hurdle still looms — money. Although VDOT and Shirley/Clark negotiated a comprehensive agreement regarding the project, it's not actually executed until the financing piece is in place. And that's still awaiting action because of what happened with the Route 28 Tax District's bond rating.
"The initial cost of the project when it was first proposed was $305 million," said Palleschi. "But the bond rating that came back from the bond agency in February was a low-investment grade — meaning it would have a higher interest cost, so the [road] improvements would cost more money to the landowners."
He said Shirley/Clark wants to build as much of the project as is possible — especially the six interchanges. "It's just a matter of how much can be financed by the various parties," he said. "That's what the counties are doing now — trying to see how much bond money they'd stand behind."
Ray Pelletier Jr., PPSI chairman and CEO, said the bond rating was BBB — which would have meant 7 percent interest on the project's debt. "But if the counties can get the interest rate down, they could get a AAA rating and 5 1/2 percent interest and could buy more project," he said. "The taxpayers would save $200 million."
Besides, he added, delaying the transportation improvements would only cause them to become even more expensive. "So now is the time to buy and build as much of the project as is reasonably possible," he said. "If not, [the counties] are going to lose out on future tax revenue in that corridor."
Pelletier said two problems affected the bond rating — the economic recession and especially the shaky insurance industry. "They were going to insure the bond payments [thereby changing a low bond rating to a AAA], but insurance companies have had lots of problems in the last 12-18 months, so they have less capital," he explained.
"Then came the World Trade Center and Enron, and insurance companies are now paying big bucks on things they never thought they'd have to," said Pelletier. "So they've retrenched and regrouped and aren't insuring as much as they did before. So we were caught by third-party events not of our making."
Palleschi said Shirley/Clark had hoped to have the project under construction by now. "We're still offering a guaranteed price and completion schedule, but we'd have to move the ending date by probably a few months [because of what's happened]," he said. "Once the counties determine how much new debt they can [underwrite], we'll know how much project that will buy."
Tom Boyd, VDOT Assistant Commissioner for Finance, wants an answer in the couple weeks because of the state's commitment to build the Barnsfield Road interchange in time for the December 2003 opening of the Air and Space Museum.
Supervisor Michael R. Frey (R-Sully) attended Friday's meeting and says the counties will exercise their moral obligations: "The question is how optimistic we get in assuming future growth in the Tax District?"
Figuring no growth, only $140 million would be available for the project — $70 million in state highway funds and $70 million total debt-support from the two counties. But this amount, said Frey, would probably just finance four interchanges.
"So we're [seeing if] there's some reasonable amount of growth that would let us float a little more debt," he said. "Interest rates are reasonable now but, if the economy rebounds, they'll creep back up. So it's in the public's interest to try to push as much as we can now — you get more bang for the buck."
Fairfax County staff is now developing scenarios assuming from zero to 4-percent growth to see how much revenue the Tax District would generate and how much debt the county could leverage with that revenue. They're due April 12, and then the Tax District Commission will meet again.
"It's taken a lot of cooperation and effort by all the parties, but it's definitely worth it," said Palleschi. "Everyone's still at the table, and we're hopeful that things can get underway soon."