Virginia Court Declares PPP Toll Financing Arrangement Unconstitutional - White Case


In many ways, the state of Virginia's Public-Private Transportation Act (PPTA), which allows new, innovative methods of financing from private sources to supplement state funding and public debt financing, has been a model public-private partnership (PPP) law in the United States. However, as a recent court case shows, opponents of a PPP project in the United States can use litigation to stall or derail the project-even in Virginia and even post-closing.Based on this new case, a toll-based financing arrangement for a PPP project in Virginia may now be deemed a "tax" that would require legislative approval for the project. This could increase costs, cause transaction delays and add uncertainty to an already time-consuming and expensive process.On May 1, 2013, the Circuit Court in Portsmouth, Virginia declared that an agreement between Elizabeth River Crossings OpCo (ERCO, a private contracting company) and the Virginia Department of Transportation (VDOT), which included new tolls as a central part of the financing arrangement for a US$2.1 billion highway and tunnel project, violated Virginia's Constitution. 

Share this document