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Virginia hopes private group will build rail line

By Lyndsey Layton
Washington Post

After a year of exclusive and confidential negotiations, Virginia hopes to turn over to a private partnership the $4 billion project to build a rail line to Tysons Corner and Dulles International Airport.

It would be the first time a Metro segment was not built by the public transit agency. Virginia officials call it an innovative plan that would save tax dollars and set an example for other transit projects across the country. Opponents say it is a sole-source deal that would benefit Bechtel Corp. and Washington Group International, which entered into a partnership to build the rail line.

The stakes are high; the Dulles project is the third most expensive rail proposal in the country, surpassed only by two projects in Manhattan: a $17 billion plan to build a subway along Second Avenue and a $5.2 billion plan to extend the Long Island Rail Road from the East River to Grand Central station.

Metro officials are to discuss Virginia's unusual approach to the project this morning, when the state will ask them to agree to the deal with the partnership. Metro's consent is needed because it would ultimately own and operate the line. The state also wants Metro to act as a technical manager to make sure the project is compatible with the rest of the subway.

The project would extend Metrorail about 23 miles from West Falls Church to Dulles. The work would be done in two phases, with the first ending at Wiehle Avenue in Reston.

Although much of the recent public discussion about Dulles rail has focused on how local governments would pay their share, state officials have been holding confidential negotiations with Dulles Transit Partners since January 2003. There is no opportunity for public review until the deal is signed and becomes binding.

Dulles Transit Partners is made up of Bechtel and Washington Group. Until last month, the West Group, the largest landowner in Tysons Corner, was also in the partnership. The state has a draft agreement with Dulles Transit Partners for the firm to perform preliminary engineering but wants approval from the Federal Transit Administration before finalizing it.

Federal officials, who have never approved a similar deal, have been studying the plan for months and hired outside expertise to help. Federal Transit Administrator Jenna Dorn declined to comment for this article.

The Dulles deal would add to the number of Virginia transportation projects financed in part by the private sector. The state enacted the Public-Private Transportation Act in 1995 to get transportation projects built more quickly and efficiently and to encourage private investment.

Virginia is a leader among states in striking deals with companies to build road projects. Results have been mixed. One of the first projects, the Dulles Greenway, was built for $340 million by a private firm and has struggled financially since its 1995 opening. The Greenway has never made a profit, according to the General Accounting Office. But the state did not have to pay anything toward the cost of the 14-mile road and will eventually assume ownership. Motorists who use it can cut travel time by 50 percent, according to its developers.

"Virginia made a conscious decision in the '90s to go toward private participation. It was a political philosophy," said Steve Cohen, who co-wrote a recent study of public-private funding of transportation projects for the GAO. "Governor Warner embraced it and modified it, but it's something that has roots in the state. It's unusual."

Typically, a company pays for a road or other improvement and, in exchange, gets the right to collect toll revenue to pay back its costs and make a profit. The Dulles project differs because it is a transit project, and a private contractor would not be able to recoup costs and make a profit by collecting fares. In this case, the partnership agrees to build the project at a "firm, fixed price" that includes a built-in profit margin, said Karen Rae, director of the state's Department of Rail and Public Transportation.

"They agree to build the project on time and on budget," Rae said. "That's the risk that haunts most of these big projects."

In the Dulles case, the public would provide the money for the rail project. The federal government would pay 50 percent, and state and local governments would pay the rest. The local share would come from a special tax district in the Dulles corridor and the state's share from tolls paid by motorists who travel the Dulles Toll Road. The federal government has not decided whether to fund the project.

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