Virginia Toll Road Moves Forward with Help from Orrick, Ballard Spahr

Drivers stuck in traffic in Northern Virginia, take heart: As of Tuesday, a long-stalled $935 million highway project aimed at easing congestion by widening a 29-mile stretch of Interstate 95 is finally on the road to completion.

A consortium known a 95 Express Lanes LLC—made up of Transurban Drive, a company that funds infrastructure projects in Australia and the United States, and Fluor Enterprises, the country’s second-largest construction company—are partially financing the deal and, under terms finalized this week, ensuring it will be built, operated, and maintained for the next 76 years.

The two companies are contributing $400 million to the project, with 90 percent of that sum coming from Transurban. Those funds, along with the proceeds of a $241 million bond offering and $71 million from the Virginia Department of Transportation (VDOT), will serve as the project’s initial financing. While the VDOT has committed an additional $223 million to the initiative, the developers hope to land a $300 million loan this fall under the federal Transportation Infrastructure Finance and Innovation Act to help subsidize their efforts.

The highway job is the latest major infrastructure project in Virginia to be financed via a public-private partnership—and the second this year. In April, a $1.5 billion tunnel project connecting Norfolk and Portsmouth moved forward. A third, to improve Route 460, is expected to close later this year.

With the proliferation of public-private partnerships, or P3s, in recent years, several law firms—including Allen & Overy; Ballard Spahr; Holland & Knight; Latham & Watkins; Mayer Brown; Nossaman; Orrick, Herrington & Sutcliffe; and White & Case—have established expertise in handling such matters. Two of those firms, Orrick and Ballard Spahr, took the lead on the I-95 deal.

Orrick partner Daniel Mathews, who heads the firm’s energy and infrastructure group out of New York, counseled the private sponsors. The companies, both of which Mathews says he has represented on various other projects, initially bid for the work in 2006. But in 2009, an environmental lawsuit brought by Arlington County against the state and federal governments stalled the job until last February, when Arlington withdrew its case. The plans were altered so that the road no longer extends to Arlington, Mathews says.

Ballard Spahr advised the VDOT, with a team led by Philadephia-based partner Brian Walsh. Walsh says Ballard started working for the department in the fall of 2008, when the public agency sought proposals from firms to work specifically on P3 projects. A year and a half ago, at the direction of Governor Bob McDonnell, the state committed to P3 work even further by establishing a separate office within the transportation department to oversee such projects.

“The governor is a real proponent of transportation, and of using these kind of structures to get projects done,” says Walsh. “There are not a lot of sources out there for funding major projects.” (Even with private funding, some P3 projects have failed in recent years, including a toll road near San Diego that Orrick first helped the arrange the financing for, then sold in December after it emerged from bankruptcy).