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Inside Business : McAuliffe: Financing completed for new $756 million CBBT tunnel project

By Inside Business staff

Financing arrangements are complete, allowing the construction of a new two-lane tunnel under the Thimble Shoal Channel at the Chesapeake Bay Bridge Tunnel to proceed, Gov. Terry McAuliffe’s office announced Tuesday.

The Chesapeake Bay Bridge and Tunnel Commission, the entity that owns, operates and maintains the 17.6-mile-long water crossing that links Hampton Roads with the Eastern Shore, will primarily use state and federal bonds to pay for the $756 million project.

One day before the governor’s announcement, the U.S. Department of Transportation announced it had awarded a $338.5 million loan to support the project’s financing.

In addition to the federal bond, the governor’s office said $321.5 million in revenue bonds will be issued. The Virginia Transportation Infrastructure Bank also will contribute a $50 million state bond. Remaining funds for the project will come from the bridge-tunnel district’s general fund.

The federal funds will come from the the U.S. DOT’s Transportation Infrastructure Finance and Innovation Act, transportation Secretary Anthony Foxx said in an separate announcement.

“This new tunnel will expand capacity and improve safety for travelers who use the CBBT, as well as protect the economic competitiveness and quality of life of the Hampton Roads region,” McAuliffe said. “The CBBT is the only direct link between Hampton Roads and Virginia’s Eastern Shore, making this facility a vital and convenient connection, supporting commerce in the region. I am proud to announce this expansion as part of our administration’s ongoing commitment to reducing congestion and spurring economic growth through smart transportation planning.”

The bridge-tunnel commission awarded the $756 million design-build contract for the new tunnel project to Chesapeake Tunnel Joint Venture, comprised of Dragados USA and Schiavone Construction, in July. Initial bids for the project had come back at more than $1 billion. Construction of the 5,700-foot bored tunnel will supplement the existing southernmost tunnel, which is one of two that make up the bridge-tunnel complex.

Using the island’s existing footprint to build the new tunnel saved about $260 million, The Virginian-Pilot reported. But without the island expansion, the restaurant and gift shop have to be eliminated.

“The commonwealth’s infrastructure bank issues low-interest loans to help fund high priority projects that will improve transportation and benefit the economy,” Virginia Transportation Secretary Aubrey Layne said in the announcement. “The parallel Thimble Shoal Tunnel is a regional transportation priority, included in the Hampton Roads Transportation Planning Organization’s long-range planning and improvement program. The new tunnel will carry more traffic safely and efficiently, further improving transportation for the entire region.”

Above water, the CBBT is two lanes in each direction. In the tunnels, northbound and southbound traffic has one lane in each direction. The bridge-tunnel opened in 1964, and the above-water bridge portions were expanded to four lanes in 1999. The CBBT carries U.S. 13 vehicular traffic, linking Virginia Beach and points south with Philadelphia and points north.

The CBBT’s existing bridges and tunnels will remain operational during construction. Upon awarding the bid, the commission announced the parallel tunnel tube’s construction will require the closure and demolition of the bridge-tunnel’s longstanding restaurant and gift shop. The bridge-tunnel’s popular fishing pier will also close for the five-year duration of construction. The restaurant and gift shop are unlikely to return, the fishing pier is slated to reopen.

“The Chesapeake Bay Bridge-Tunnel Commission and District greatly appreciate the important investments in this project that have been made by the Build America Bureau, the Virginia Transportation Infrastructure Bank, and the Revenue Bond holders,” Frederick Stant III, the bridge-tunnel commission’s chairman, said in the statement. “We are very pleased that the blended cost of capital for this project is fixed at approximately 3.20 percent.”

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