Is it really a windfall?
In a turnabout, City Council is questioning the merits of the city’s proposed $60.3 million deal with the Richmond Metropolitan Authority.
Some council members recently have expressed the need to further study the proposal. The $60.3 million payback stems from early loans the city made to finance the construction and operations of the Downtown Expressway and Powhite Parkway. The authority, a political subdivision of the state that was created in the 1960s, owns and operates the tolled expressway system, which resides entirely in the city.
The authority is planning to refinance its existing debt and raise capital for maintenance needs over the next 11 years. When it issues bonds in November, the authority intends to carve out $60 million to repay the city.
Earlier this month, however, council members Bruce Tyler, Charles Samuels and Chris Hilbert began to question whether the city is giving up too much for a short-term payday. If City Council approves the current proposal, the long-term debt on the expressway would be extended until 2040. If it rejects the deal, the current debt on the expressway system would be paid off by 2022. In 2023, the city would then gain ownership of the toll road.
“This is the most important fiscal decision that we will be faced with in a while. We do need to make sure that this is the right decision,” Councilman Chris Hilbert says.
Indeed, accepting the current deal means the city would have to wait 30 years before taking ownership of the toll road. If the city says no, and the authority doesn’t float new bonds, the city could own the road in 2023. At that point, the city could operate the roadway itself, or potentially lease the expressway system to private investors. Leasing the roadway could net hundreds of millions of dollars.
The problem, say some, is that the city hasn’t evaluated the potential value of the expressway system. Neither has the authority.
Mayor Dwight Jones, however, dismisses outright the prospect of city ownership of the toll road. Doing so, Jones says, would damage regional cooperation with the surrounding jurisdictions, particularly Chesterfield County, where more than 60 percent of the expressway system’s customers live.
“I’m still somewhat perplexed with the argument that regional cooperation has somehow entered into the discussion,” Hilbert says. “This vague notion of regional cooperation pales in comparison to the fiscal integrity of the city.”
Because the $60.3 million deal involves forgoing about $1.3 million in interest payments to the city, City Council must approve it. City Council will hold a special meeting Sept. 29 with city and authority officials to discuss the matter. A final vote is scheduled for Oct. 10.