The Route 28 expansion project hit a green light again.
Loudoun County agreed to join Fairfax County in issuing a moral obligation bond for the first six interchanges of the project. The 30-year bond will be coupled with the state’s bonds.
“The risk in this is well worth it,” said Chairman Scott York (At Large) at Monday’s Board of Supervisors meeting. “The traffic is piling up. … Something has to be done. We can’t wait for the Commonwealth to do what is their responsibility.”
A bond-rating agency gave a low bond rating for the original Public-Private Transportation Act (PPTA) project, which included building 10 interchanges and adding two lanes to the corridor from Route 7 in Loudoun to Interstate 66 in Fairfax. The PPTA combined the efforts of the Virginia Department of Transportation (VDOT) and the Route 28 Transportation Taxing District of commercial properties along the corridor, including Washington Dulles International Airport.
“The PPTA financing is no longer an issue. It’s completely gone away,” said Paul Arnett, deputy director of financial services and comptroller for Loudoun County.
The moral obligation bond requires the two counties to fund a portion of the project if debt services fail from the Route 28 Transportation Taxing District. The tax district earns about $11.5 million a year from a 20-cent tax imposed on properties along the corridor, originally established to fund the expansion of Route 28 from two to six lanes. About $5.5 million remains from the tax to fund new projects, Ben Mays, budget officer, previously reported.
“This is the best use of the 20-cent tax. We think there will be enough [money] there,” Arnett said.
THE LOCAL DEBT coupled with state debt would provide $120 million for construction and another $86 million to refund existing state bonds from 1992. The two counties agreed to issue $90 to $95 million in bonds through the Fairfax County Economic Development Authority, providing $84 million toward the construction fund and $6 to $11 million in reserves, funds that would be used after the state’s funds are exhausted. Arnett said the funds from the moral obligation bond will not be needed for another year to one-and-a-half years.
The Commonwealth Transportation Board plans to issue $122 million in bonds to refund the state bonds and provide $36 million for new construction. Another $71.5 million from Federal Revenue Anticipation Notes gives a total of $190.5 million for the construction fund, which will support building interchanges at Route 625, Route 606 and Sterling Boulevard in Loudoun County and another three interchanges in Fairfax County. The project's four remaining interchanges and the widening of the roadway will be funded if revenue growth can support issuing additional bonds.
“This is closer to a pay-as-you-go approach, but not close enough for me,” said Supervisor James “Jim” Burton (I-Mercer), the only supervisor to vote against the motion, which passed 8-1.
The tax district is required to grow at a three percent annual rate to provide full funding of debt service from the bonds. The district’s average growth rate is 10 percent and the median rate is 9 percent, Arnett said.
“If the growth rate does not meet the projected growth rate, do we have the capability to slow the construction rate until growth resumes, or are we locked into … a schedule?” asked Chuck Harris (D-Broad Run).
Arnett said each interchange in the project will receive a “to proceed” order before construction can begin. “As long as the cash flow covers the debt service, none of these bonds” will affect the county’s bond rating, he said.
William “Bill” Bogard (R-Sugarland Run) suggested a friendly amendment to the original motion. The amendment, which passed 9-0, recommends the board seek a written opinion from the state general attorney on the PPTA’s standing for designing and constructing of the entire project. “We’re now part of the project. We have the right to understand if the project has a good chance of getting completed,” Bogard said.
The state will act as contracting officer for the project.
IN OTHER BUSINESS, the board approved the issuance of $22 million in bonds from the Industrial Development Authority of Loudoun County to fund expansions at the Loudoun Hospital Center in Lansdowne. The Hospital Center plans to use the bond proceeds to finance construction and equipping of a 24-bed maternity ward, to renovate and convert the existing maternity ward into a 37-bed medical and surgical unit and to renovate and expand the existing emergency department.