BRADENTON, Fla. — A new turnpike authority in North Carolina is preparing its first bond issue — $635 million for a toll road in the Raleigh/Durham area — as it also moves forward with a plan for a new toll bridge to the Outer Banks utilizing the state’s first public-private partnership.
The North Carolina Turnpike Authority is expected to make its debut offering in September to finance a major portion of the 18.8-mile Triangle Expressway. The toll road is estimated to cost as much as $960 million and would create a bypass west of Raleigh to help relieve heavy traffic congestion on existing roads serving the area and its famed Research Triangle Park. A subordinate federal loan will be sought for nearly $400 million of the financing.
Meanwhile, planning for the new Mid-Currituck Bridge is well under way. The seven-mile bridge spanning the Currituck Sound will link the mainland to exclusive resort areas on the northern Outer Banks. Turnpike officials held an industry forum last week and decided Tuesday to seek qualifications from prospective concessionaires to enter into a pre-development agreement for the project, currently estimated to cost as much as $720 million.
Those are just two of five concurrent projects in planning by the fledgling authority as North Carolina builds its first toll road in decades and sets the stage for future public-private partnerships with the Mid-Currituck Bridge project leading the way.
Daunting but necessary, he said, since the state is facing severe transportation funding problems and a $65 billion shortfall in new road funding over the next 25 years. There already are more highway miles to maintain in North Carolina than in any other state except Texas.
The problems are compounded by a legislative cap on state gas taxes and the fact that the state’s Department of Transportation maintains all county roads in addition to its own. As a result, much of its $3.4 billion budget goes toward maintenance rather than new construction.
Recognizing the problems and the need to find new sources of funding, the General Assembly in 2002 created the NCTA to use tolls, bond financing, and P3s to build some of the most expensive proposed-but-unfunded highway and bridge projects. Its Web site is www.ncturnpike.org.
“The legislature wanted us to find new and efficient ways to build and finance highways sooner rather than later, if at all,” Joyner said.
The Triangle Expressway project is expected to be the first.
Agency officials are putting the finishing touches on an application for a 35-year, $386 million loan under the federal Transportation Infrastructure Finance and Innovation Act program. They also are preparing to meet with rating agencies on the 39-year, $635 million of senior toll revenue bonds that will be sold later this year, Grady Rankin, the NCTA’s chief financial officer, said Tuesday.
Rankin said the authority is working with its finance team to introduce itself as a new credit to Wall Street. The NCTA may also seek issuer credit ratings from all three major rating agencies.
“I do anticipate that there will be considerable effort put forth to tell our story in an investor presentation,” Rankin said.
More than a year ago, the authority selected UBS Securities LLC and Banc of America Securities LLC as its primary underwriters. UBS announced May 6 that it would close or sell most of its municipal bond business, but Rankin said the Swiss bank had not notified the turnpike agency formally of any plans to withdraw.
“This is something we’re looking at very carefully,” Rankin said.
The agency has been working with Public Financial Management Inc. as its financial adviser and Womble Carlyle Sandridge & Rice PLLC as its bond counsel. HNTB Corp. is the general engineering consultant.
The authority also is in the process of determining whether to hire a P3 consultant and expects to make a decision soon, Joyner said.
The agency held an industry forum last week that drew more than 200 individuals interested in the Mid-Currituck Bridge project. Turnpike officials met individually with 16 different firms and consortiums.
“The best and the brightest in the whole world were at this forum,” Joyner said. “That’s a lot of interest and a lot of horsepower.”
Joyner said that initial opposition from Outer Bank locals to the bridge plan has gradually shifted to strong support from many as traffic congestion in the region has become worse in recent years.
One other hurdle remains for the Turnpike Authority to begin fulfilling its duties.
While planning goes on to refine cost estimates, Joyner said most of the projects won’t be supported solely by tolls and will require gap funding from the legislature.
It is expected that the Triangle Expressway project, for example, could need as much as $25 million a year in annual appropriations from the state in addition to toll revenues to secure its financing.
On Tuesday, the state’s 21st Century Transportation Committee recommended a series of steps designed to increase funding, which included gap funding for the authority.
The 24-member committee, appointed by the legislature last year to study the transportation infrastructure needs of the state as well as innovative methods of funding, has recommended ending an annual $172 million annual transfer from the Highway Trust Fund to the triple-A rated state’s general fund. The money is part of what the state DOT receives from a sales tax on vehicle purchases.
The committee recommended that $75 million of the $172 million go toward gap funding of Turnpike Authority projects.
The remaining $97 million of the $172 million would be used to leverage up to $800 million of bonds, or more if other funding can be found, to finance state DOT projects.
The recommendation was forwarded to the General Assembly, which began its annual session on Tuesday. The primary focus of the session will be on adjusting the biennial state budget.
Gov. Mike Easley has proposed a $21.5 billion general fund budget for fiscal 2009, which recommends a $25 million reduction in the Highway Trust Fund transfer to the general fund as the first step in phasing out the $172 million annual diversion.
“These funds may be used for gap funding for N.C. Turnpike Authority projects authorized by the legislature or [an] urban loop project in the Transportation Improvement Program,” Easley’s spending plan says.
In addition to the DOT recommendation, Easley is proposing $553 million in special debt financing over three years for state agency and university capital projects, construction of a women’s medical and mental health facility, additions to correctional institutions, and a new visitor center and parking deck for the state Capital.
Easley also is recommending depositing $61 million into the rainy-day fund for fiscal 2009, increasing the balance to $848 million.
While year-over-year revenues supporting the state budget are still positive, the increase has slowed along with the economy, state officials said. North Carolina’s baseline general fund revenue growth is expected to be 3.5% in fiscal 2009, down from the 4.7% increase anticipated this year.