In a three minute court hearing in Virginia, Portsmouth Circuit Judge James A. Cales Jr. rejected as “unconstitutional” the ability of the state’s Department of Transportation to set tolls on a Norfolk tunnel. The tolls are being collected to fund 17 percent of a new tunnel that is being built by a public private partnership (PPP). The private entity in the PPP is putting up 12 percent of the cost, but it will receive most of the cash flow over the term of the 58-year lease. I wrote about this project last year:
The project, which is now owned by Australian infrastructure company Macquarie, will add another tunnel under the Elizabeth River to relieve congestion in the Norfolk and Hampton Roads area. Getting control of the project will bring in rich rewards for Macquarie and its construction partner Skanska. For an equity investment of $208 million, Macquarie stands to realize over $5 billion in cash flow over the 58-year concession after repayment of bonds, loans and mandated capital expenditures.
Judge Cales did not discuss the unfair economics of the deal, rather he said the Virginia Assembly could not give the Department of Transportation unilateral power to set tolls and taxes. The judge wrote:
The General Assembly has exceeded its power by ceding the setting of toll rates and taxes in violation of Article 4, Section 14, of the Constitution of Virginia.
The Bond Buyer described the potential consequences of the ruling (emphasis mine):