BECKLEY, W.Va. -- Construction to make U.S. 35 a toll road took a key step forward Thursday with passage of a legal agreement between West Virginia's Parkways Authority and Division of Highways to operate the new turnpike.

Approved unanimously by the authority, the memorandum of understanding spells out the nuts and bolts of how the two agencies will cooperatively operate the proposed 31.88-mile toll road through Putnam and Mason counties.

"We're moving forward," Parkways General Manager Greg Barr said after the meeting at the Tamarack conference center.

Much still has to happen for the toll road to become a reality, including getting endorsements for the project from a local citizen advisory committee and from the two county commissions. That's expected to occur during meetings scheduled over the next two weeks.

Then, in October, the authority will receive an engineering study with traffic and revenue projections for the newly built four-lane, and also open bids for the design-build contract to complete the final 14.6-mile stretch of the highway.

Initial estimates were that the project could cost about $240 million, Barr said. However, the recession has led contractors to bid low on other recent road-building projects in the state, he said.

"We're hopeful it may be as low as $180 million," Barr said. "That will make the project much more doable if it is."

The next step would then be for the authority to sell bonds to fund the highway, bonds that could go to market before the end of this year, Barr said.

Bond counsel Roger Hunter spent more than an hour Thursday explaining the lengthy legal document, which outlines exactly how the new turnpike would operate.

Unlike the West Virginia Turnpike, which is operated and maintained virtually entirely by the Parkways Authority, the authority will be responsible only for the operation and maintenance of the toll plazas on a U.S. 35 turnpike.

The new turnpike will not have its own maintenance division, West Virginia State Police detachment or travel plazas, as the West Virginia Turnpike does.

"We will treat this like we do the rest of the state highways system," Transportation Secretary Paul Mattox said of the new toll road.

Once the traffic study is complete, the authority will approve a schedule of toll rates and set commuter discounts.

As with the Turnpike, the proposed toll rates -- as well as the proposed locations for the toll plazas -- will be put out to public hearings.

Unlike the Turnpike, where the authority must vote each time it raises tolls -- resulting in a major public outcry when tolls were increased in 2009 -- the authority has the option to build in periodic rate increases for the new turnpike's tolls when it approves the preliminary rate schedule.

Meanwhile, the authority delayed until its October meeting a vote on another memorandum of understanding, to operate a third toll road in the state.

Under that agreement, the authority would operate a toll plaza on the West Virginia side of the Mon-Fayette Expressway, a north-south turnpike expected to link Pittsburgh with Interstate 68, east of Morgantown.

On the West Virginia section of that highway, set to open in spring 2011, the authority's only function would be to collect and remit tolls, at a toll plaza to be constructed and maintained by the Division of Highways.

"One way of thinking about it is like being a contractor or subcontractor to the Division of Highways," Hunter said of that agreement.

The legislation authorizing the state to link up to the Pennsylvania expressway gives the highways commissioner sole authority to set tolls for that turnpike.

Reach Phil Kabler at ph...@wvgazette.com or 304-348-1220.