I-66 Multimodal Study Final Report - Virginia Department of ...

Potential Funding Approaches5.2 Summary of Financing OptionsFinancing tools do not generate new revenue, but allow leveraging of existing resources toaccelerate the construction of projects. Debt must be repaid over time, and the total costincreases by the discounted value of interest payments. The benefit of using financing toolscomes through the public and economic benefits (e.g., travel time savings; reduced crashes;accessibility to jobs, suppliers, customers, and intermodal terminals; job creation; expanded taxbase) realized by having the asset in place earlier. The use of these tools also recognizes the factthat the cost is being paid by future users over the life of the project. These benefits may beweighed against the higher costs of paying interest on the debt through a net present valueanalysis.Local governments in Northern Virginia have traditionally used general obligation (G.O.)bonds to fund transportation improvements. Bonds are more frequently used throughout thenation for capital projects since they can be repaid over the life of the project, and are less applicablefor regularly occurring maintenance or operating costs. G.O. bonds, as is the case inFairfax County, may require voters’ approval through referendum, similar to other local optionrevenue sources.In recent years, there has been an increase in private equity investment in surface transportationthrough Public-Private Partnerships (P3), with financing packages that combine public andprivate debt, equity, and public funding.Appendix E presents some of the common project finance techniques and project delivery toolsused by DOTs and transit agencies to help states advance their transportation priorities andthat may be considered for the I-66 Multimodal Study recommendations.5.3 Evaluating Funding OptionsThe transportation finance approaches represent a range of options to support transportationinvestment which may be implemented by governing bodies at the local, state, and Federallevel. Together these approaches are intended to present a broad financial picture for Virginiawhen considering potential funding sources and financial techniques to support implementationof the I-66 Multimodal Study recommendations.However, not all of the transportation funding and finance approaches available may beappropriate for use in Virginia. The implementation of some of the proposed revenue sourcesand financing tools may require legislative action, or the implementation of policies to ensurethe use of these new sources for transportation needs. At the local level, some of the localoption revenue sources that already are in place are used to support other local public services,and dedicating or allocating a higher share of existing resources to transportation needs meansthat their availability for other important public services (which also may have a growing needfor funding) will be reduced. Moreover, many of the funding and financing strategies at theFederal level have been implemented, and the eligibility of proposed recommendations shouldbe evaluated in more detail. With the next surface transportation authorization, some of theseuncertainties will be resolved; however, others are likely to remain, specifically determining aI-66 Multimodal Study 5-7