During the 2019 General Assembly session, SJR 254 (attached to this report as Appendix A) was enacted requesting that the Virginia Department of Transportation (VDOT) study the feasibility of purchasing all or part of the Dulles Greenway (Greenway) and report on its findings. SJR 254 includes four specific actions for VDOT to complete, which are summarized below:

1. conduct a review of Toll Road Investors Partnership II’s (TRIP II) outstanding bonds, focusing on the 1999 series A and B bonds, which are callable, to determine if the bonds could be replaced with lower rate revenue bonds;

2. devise an optimized buy-back plan to allow the Commonwealth to obtain partial ownership in the Greenway in order to pass along to the public any resulting cost reductions as toll rate reductions to motorists, with a dollar-for-dollar reduction in tolls and implementation of distance-based pricing;

3. determine the ownership percentage the Commonwealth would need in order to enact toll-reducing measures, including granting tax-free status to the Greenway, eliminating fees charged for State Police patrols while allowing for VDOTperformed operations and maintenance (O&M); and

4. evaluate the feasibility of distance-based tolling.

VDOT worked with the Office of the Attorney General and bond counsel to complete the study. The State Corporation Commission's (SCC) Division of Utility Accounting and Finance, which oversees the Greenway, provided publicly available information. Independent traffic, revenue, financial, and tolling operations experts also conducted supporting analyses.

The Greenway was developed, constructed, and is the only roadway that operates under the Virginia Highway Corporation Act of 1988 (Act) as an extension of Route 267 into Loudoun County.(*1) The Greenway is regulated by the SCC in accordance with the Act. The Act is included as Appendix B of this report.

The report concludes that:

• Based on the Act and other legal limitations, the Commonwealth cannot require TRIP II to refinance its outstanding debt obligations at a lower rate even if such debt instruments were available.

• Further, in accordance with the Act, VDOT cannot assume the cost of O&M (inclusive of snow removal), and State Police charges cannot be eliminated even if the Commonwealth or another public entity owned the Greenway.

• An optimized buy-back plan would require General Assembly action and TRIP II’s cooperation. For purposes of this analysis, buy-back is defined as the acquisition of all or a portion of the rights and obligations of TRIP II in order for the Commonwealth to obtain ownership interests or operational control of the Greenway. This report does not examine other aspects of a potential buy-back, such as the assumption of operational and revenue risks inherent in the takeover by the Commonwealth of a more than 20-year-old facility.

• Assuming General Assembly action and TRIP II cooperation, a buy-back plan could involve use of distance-based tolling revenue to issue 9(c) general obligation bonds or the creation of a 63-20 corporation. But each option has limitations. While 9(d) bonds are also a potential financing option, the Commonwealth’s debt capacity could be impacted by this option.

• VDOT, working with the Office of the Attorney General and bond counsel, has determined that with General Assembly action, tax-free status2 for the Greenway could be granted if the Commonwealth or another public entity were the exclusive owner of the Greenway or if Greenway assets were redefined as indirectly owned by the Commonwealth. Existing sources of law do not provide clarity on the effects of a partial ownership structure.
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(*1) The Route 267 corridor also includes the Dulles Toll Road (DTR) and Dulles Airport Access Road (DAAR).