Virginia May Charge Tolls for $2 Billion Tunnel Project

Virginia can charge tolls on Elizabeth River tunnels to finance a $2 billion project, the state Supreme Court ruled in overturning a lower-court decision.

The trial court erred in holding that the tolls are taxes because they are designed to raise revenue, the Supreme Court said. The tolls are paid “in exchange for a particularized benefit,” aren’t compelled by the government and are collected solely to fund the project, it said.

“We hold that the project tolls are user fees and not taxes,” the court said in its ruling. Thus lawmakers did not delegate the power of taxation to agencies such as the state’s transportation department in violation of the Virginia Constitution, it said.

Funding for the project, designed to reduce traffic congestion and add a new tunnel connecting Norfolk and Portsmouth, relied in part on toll revenue from two existing tunnels.

Toll-collecting was slated to start in February 2014. Then some residents of Portsmouth and longtime users of the downtown tunnel sued in July 2012 challenging the plan.

The International Bridge, Tunnel and Turnpike Association today applauded the court’s decision for preserving a “reliable funding method.” The tolls can proceed as planned this winter, the group said in a statement.

Group’s Statement

“With an ever-increasing burden on states and municipalities to pay for highway and infrastructure development and maintenance, tolling is an incredibly valuable tool that must remain in the toolbox for government officials,” Executive Director Patrick D. Jones said in the statement.

Financing for the project was developed through a public-private partnership that included $675 million of private activity bonds, a $463 million federal loan under the Transportation Infrastructure Finance Innovation Act and $421 million from the Virginia Transportation Department, according to the project’s website.

The case is Elizabeth River Crossings v. Meeks, 130954, Supreme Court of Virginia (Richmond).

To contact the reporter on this story: Sophia Pearson in federal court in Philadelphia at spearson3@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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