Judge: Midtown Tunnel toll deal is unconstitutional
By: The Virginian Pilot
May 2, 2013
PORTSMOUTH — A judge ruled Wednesday that the state’s $2.1 billion public-private Midtown Tunnel deal and its tolls are unconstitutional, throwing uncertainty over a project that is months into construction, and setting the stage for an appeal.
The decision from Circuit Judge James A. Cales Jr. thrilled the dozens of residents who began to organize more than a year ago to kill a project they deem unfair and punitive for commuters and businesses.
“We did it,” said Portsmouth resident Terry Danaher, a leader of the group, as she hugged Mayor Kenny Wright.
Cales said in his ruling that the General Assembly exceeded its authority in giving VDOT “unfettered power” to set toll rates under the 1995 Public-Private Transportation Act. The decision was a blow for Gov. Bob McDonnell and Attorney General Ken Cuccinelli, whose office defended VDOT against the lawsuit.
McDonnell, who has lauded the tunnel project as meeting a critical need for the region, said in a statement that the state believes its position is legally correct and will appeal the decision. Cuccinelli spokesman Brian Gottstein said in a statement that if the ruling stood, it would threaten the state’s ability to use public-private partnerships to build major projects – an increasingly common approach in Virginia and other states.
Aubrey Layne, a member of the governor-appointed Commonwealth Transportation Board, a policy-setting and revenue-allocating body, said the ruling sounded so broad as to jeopardize every toll road in Virginia.
Patrick McSweeney, an attorney for the plaintiffs, predicted the case would hurt the state’s credit rating and said it calls into question future use of the Public-Private Transportation Act. McSweeney successfully argued several years ago that a legislative attempt to create regional taxing authorities was unconstitutional, killing that plan.
Work on the Midtown Tunnel project will continue, said Tamara Rollison, a VDOT spokeswoman. The state plans to ask for a stay on Cales’ ruling, keeping it from taking effect while an appeal is filed, McDonnell said in his statement.
If Cales doesn’t grant the stay, the defendants can seek one from the Supreme Court of Virginia, McSweeney said. For the appeal, a panel of three justices must agree to send the case to be heard before the full seven-member Supreme Court, he said.
Cales, a retired judge whose career in Portsmouth spanned more than 40 years, heard 3-1/2 hours of arguments from the lawyers as a full courtroom of about 60 watched. Members of the crowd, composed primarily of plaintiffs and their supporters, snickered at the beginning of the hearing at the size of the defendants’ legal team – six or seven attorneys compared with two for the plaintiffs.
Cales occasionally questioned the attorneys during their arguments. In one instance, he asked a lawyer for Elizabeth River Crossings, the state’s private partner on the project, whether the free alternative routes he showed for people who didn’t want to pay a toll at the tunnels were reasonable. A slide from the attorney, Stuart Raphael, measured the distance to the High-Rise Bridge and the Gilmerton Bridge in straight lines – as the crow flies – rather than the distance by road.
Cales said there was no dispute that those were alternative routes, but he asked whether Raphael thought they were reasonable. The judge noted later that it wasn’t for someone like him, if he were to commute from his house in the Portsmouth neighborhood of Glenshellah to West Ghent in Norfolk.
“They’re not really reasonable alternatives,” Cales said. “You know that. I know that. Everyone knows that.”
Raphael countered that legally, convenience doesn’t matter, and that what might not be reasonable for one person may be for another.
Elizabeth River Crossings took over operations of the tunnels last July. Under the terms of its deal with VDOT, the company is to maintain and operate the tunnels for 58 years. They also are overseeing construction of a second Midtown tube, renovations of the existing tunnels, and the extension of the Martin Luther King Jr. Freeway to Interstate 264.
Electronic tolls are set to start on the tunnels on Feb. 1, 2014, and on the freeway extension when it’s finished. The tunnel tolls for passenger vehicles will cost $1.59 during off hours and $1.84 during weekday rush hours, defined as from 5:30 to 9 a.m. and from 2:30 to 7 p.m. Trucks will be tolled $7.36 during peak hours.
Private equity, more than $400 million in state money, a federal loan and bonds are helping fund the project. The private partners are authorized to earn an annualized rate of return of 13.5 percent on their $272 million investment.
The plaintiffs, nearly 40 residents and businesses in all, were from across South Hampton Roads, but the center of the opposition was in Portsmouth. Its City Council was the only one that took an official stance against the project, deciding this winter to reverse its reluctance to get involved financially and approve a $50,000 public contribution to the plaintiffs’ legal bill.
Wright said he hoped Cales’ decision “sends a message to the rest of the region and the rest of the commonwealth.”
“Even small cities,” he said, “when they’re right, they’re right.”
Greg Woodsmall, CEO of Elizabeth River Crossings, deferred questions about the future of the project to his attorney. The company has spent $348 million as of March 31, the majority going to its design-build contractor, a partnership of Skanska, Kiewit and Weeks Marine, according to its recent monthly report.
Raphael said the company remains committed to delivering the project on schedule.