TUNNEL OPERATOR AIMS TO SELL
Toll collector, state contract could go to the highest bidder
The company that manages the Midtown and Downtown tolled tunnels, Elizabeth River Crossings, is looking to sell itself to an interested bidder.
Commuters who have long loathed the tolls that have affected Portsmouth in particular, shouldn’t expect change anytime soon. The lucrative contract ERC secured years ago would be transferred to the buyer. Only if the buyer felt the need or desire to negotiate the terms with the state would it do so. Still, at least one local lawmaker is optimistic.
“I think everyone will be looking for the best bargain they can get,” said Del. Stephen Heretick, who represents Portsmouth. “If the new buyer is willing to sit down and negotiate these terms, I think the state would be very amenable to working out some deals that would benefit everybody.”
Tolls returned to the tunnels in early 2014 after the state agreed in 2011 to a public-private partnership that added lanes, refurbished the tunnels and developed the Martin Luther King Boulevard
Extension to Interstate 264 at a cost of $2.16 billion. The state contributed $503 million. The two partners of Elizabeth River Crossings Opco LLC — Skanska USA Inc. and Macquarie Group — were allowed to toll traffic for 58 years, with tolls increasing up to 3.5% annually, or in line with the annual consumer price index, whichever was greater.
The company has been sharply criticized in recent years, including by former Gov. Terry McAuliffe after The Virginian-Pilot reported the company had levied thousands of dollars in fees on top of uncollected tolls with much of the burden falling on low-income drivers who weren’t in a financial position to pay.
Elizabeth River Crossings agreed to pay $500,000 annually for 10 years toward a toll-relief program for eligible residents of Portsmouth and Norfolk, and instituted other customer service changes that same year aimed at easing the pain of the tolls and fees.
In a statement from the companies, a spokesman said: “It is the policy of both Skanska and Macquarie not to comment on rumors or speculation. The companies are continuously evaluating strategic alternatives for mature projects where construction is complete and operations are stable.”
With the COVID-19 pandemic and consequent stayat-home orders, fewer people have been traveling, and in particular commuting, and the collection of tolls for roads and tunnels has dropped.
Fitch Ratings analyst Jennie Mu said the ratings agency expects revenue and traffic at the tunnels to be significantly weaker this year and said a full recovery likely wouldn’t occur until 2022 at the earliest or 2024 at the latest. Stacey Mawson, a Fitch Ratings analyst, said there’s typically a big demand among investors for infrastructure projects, but with stay-at-home orders straining revenue, that could change.
Heretick, who first spoke to WAVY-10 about the possible sale, said ERC CEO Doug Wilson, who was hired in 2018, had spoken with him within the past two weeks as a courtesy to say a sale could be imminent.
“They’ve really come a very long way,” Heretick said of the company’s efforts at improving how it interacts with the community and its customers.
Heretick hopes that with a new buyer, the state might be able to negotiate a cap on toll amounts; limit the prescribed duration of the tolls; look at ways to buy down the toll obligation in the contract, much like prepaying a mortgage; or offer to cover tunnel maintenance in return for relief.
“These are very fluid concepts at this point,” he said.
Last year, Gov. Ralph Northam and the General Assembly directed Secretary of Transportation Shannon Valentine to “evaluate opportunities to mitigate the financial burden on the commuting public” at the Midtown and Downtown tunnels.
Nick Donohue, deputy secretary of transportation, said they expect to finish a report in the coming weeks after a delay because of the COVID-19 pandemic.
He said Valentine is evaluating “a number of options regarding the Elizabeth River Tunnels.”