Maryland toll authority to sign 35 year $180m/$198m PV concession on I-95 Kennedy Hwy service plazas

January 26, 2012

The board of directors of Maryland Transportation Authority (MdTA) operator of the I-95 Kennedy Highway Toll Road has approved signing of a 35 year concession on its two service plazas. The selected concessionaire Areas USA is a local subsidiary of a large established international company Grupo Areas SA head-officed in Barcelona Spain with major food concessions in 70 airports and 160 other toll and travel service plazas mostly in Europe and Latin America.

Areas USA is doing eight service plazas on Florida's Turnpike and major food/refreshment concessions at eleven US airports including Los Angeles, Atlanta and Boston.

For the Maryland concession Areas has about a dozen US, mostly Maryland firms under contract for different aspects of the Maryland Kennedy Highway work.

They will completely rebuild and enlarge both service plazas at an estimated cost to Areas of $56m.

The contract is subject to a review period of the General Assembly and state Board of Public Works approval but there are no indications of opposition there.

Clark Construction one of the larger Maryland civil builders will build the two new service plazas.

There would be 12 food and drink vendors in the main food halls.

Sunoco will do fuel sales.

In rural northeastern Maryland

The two service plazas are Maryland House at mile post 82 (MP82) in Harford County and Chesapeake House at MP97 in Cecil County.

The Kennedy Highway extends from MP60 at the end of the Harbor Tunnel in Baltimore north nearly 50 miles, 80km to the Delaware state line at MP110.

The southern end  carries considerable commuter traffic into the Baltimore/Washington DC metro area but most of the highway - and the portion with the two service plazas - carries longer distance traffic Washington DC/Baltimore into the Philadelphia and New York areas and their associated New Jersey suburbs. An average 80k vehicles a day use the Kennedy Highway's mix of 6 and 8 lanes (going to 12 lanes with toll express lanes soon at the far southern end).

Pretty wooded settings

Tolling is at one point only on the mainline - northbound a mile north of the Susquehanna River. Original ramp plazas down the highway toward Baltimore were abandoned some years ago in response to political pressure.

The two service plazas in the rural northern portion go almost back to the opening of the tollroad as the Northeastern Expressway in mid-November 1963.

They are built in very pleasantly forested, generously dimensioned widenings of the median so are both accessible to each direction of traffic.

They compete with service plazas in Delaware and on the New Jersey Turnpike in the 230 mile run between New York City and Washington DC.

We've used each of the Maryland service plazas scores of times in hundreds of trips over the years DC to NY and Philly. They've always been well run and maintained and are some of the most attractive of the older turnpike service plazas - traditional buildings of brick and stone and high pitched roofs set in unusually large buffers of natural woods.

An Italian company has the present concession which expires in September 2012.

Schedule for completion of rebuild July 2014

If the remaining permits are gotten the schedule is for Grupo Areas to take over as concessionaire September and immediately close Maryland House for reconstruction.

It would reopen by December 2013.

Reconstruction of Chesapeake House would start April 2013 keeping it open for service until Maryland House was reopened at the end of that year. It would then close for the remainder of reconstruction, aiming to reopen by July 2014.

Concession payment by royalties on sales

The state of Maryland which retains title to the two plazas but will receive its concession payment in the form of sliding scales of royalty payment over the 35 years of the concession.

This is projected at $442m to $488m over the 35 years in a report to the General Assembly.

Net present value (PV) of those amounts is put in the range $180m to $198m.

The state is to be paid 10% of gross primary sales for the first ten years, 12% for the last 25 years. Beyond sales of $75m, the state's royalties go to 15% - an addition in the best and final offer.

Fuel sale royalties vary between 5c an 11c/gallon.

Convenience store royalties for the state vary between 9% and 11%, except for cigarettes 2%.

Secretary of transportation says Areas "clearly the best"

We spoke today with Maryland secretary of transportation Beverley Swaim-Staley.

She sounded very proud of the outcome.

She said the deal with Areas was considerably better than they had expected going into the procurement.

She told us they had a good range of companies bidding but in the end the Areas proposal was "clearly the best" - both in the design and in the extent of the royalty payments to the state.

More modern design

Maryland House will be expanded the most from 459 seats to 912, Chesapeake from 343 to 405.

Areas' new service plazas will have:

- integrated parking as opposed to the present separate north and southbound parking,

- larger central courts,

- larger toilet facilities, organized so a minimum of half is kept open 24/7,

- more efficient shared storage space for vendors, and

- a more modern light design for customers.

Fuel stations will be totally rebuilt with fewer vehicle positions at pumps, but higher capacity fuel pumps for quicker fueling.

Convenience stores will be rebuilt much larger.

TOLLROADSnews 2012-01-25

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