The West Virginia Parkways, Economic Development and Tourism Authority last week voted to raise tolls on the state’s turnpike to protect bondholders and insure that the 88-mile-long toll road remains in good condition.
The toll hike was the first across-the-board increase in 28 years, although it does provide some discounted programs. The authority has approximately $89 million of outstanding debt that matures in 2019, and is rated Aa3 and AA-minus by Moody’s Investors Service and Standard & Poor’s.
“I think we’ve got a good plan that meets our bonding and maintenance requirements, yet eases the increase for most West Virginians who will use the roadway,” said a statement by Gov. Joe Manchin, who is a member of the authority’s board.
Manchin said the agency’s decision to increase tolls would give the state’s future leaders options in 2019 as to whether to return the turnpike to the Division of Highways or to keep it as a toll road.
The authority last week also voted to create an escrow defeasance account for $6.25 million of bonds backed by turnpike travel plaza food and fuel sales that were sold for Tamarack, West Virginia’s publicly funded arts and crafts showplace.
Defeasing the Tamarack bonds is expected to free up about $1.44 million annually pledged for debt service that will help offset some of the increase in tolls.
Over the next 10 years, the authority estimates that it will need to spend $335 million for essential deferred maintenance and capital costs, according to a release by general manager Greg Barr.
In explaining the need for last week’s toll hike, Barr said: “To meet its fiduciary obligation to the turnpike bondholders, the board had to ensure its ability to satisfy certain requirements under the legal documents governing its outstanding bond issues, including the requirement that it maintain the turnpike in good repair, working order and condition, and the requirement that it generate toll revenues sufficient to satisfy certain debt service coverage tests.”
“Without the board’s actions to increase tolls to address this serious financial challenge, the authority would have been in violation of these legal duties under the indenture and the bonds could have gone into technical default,” Barr said.
