CHICAGO — The Illinois State Toll Highway Authority plans to issue $1 billion in toll-backed bonds in 2013, marking the agency's first borrowing to support its 15-year, $12 billion capital program.
The authority's board approved the issuance at its December meeting, along with a $1.5 billion budget for the year and an extension of its previous authorization to refund $572 million of its floating-rate bonds to a fixed-rate structure, board officials said.
The finance team has not yet been selected for the 2013 transaction, a board spokeswoman said. The authority earlier this year established new pools of qualified financial advisers, bond counsel, and senior and co-managers to draw from for upcoming deals.
The 2013 budget anticipates a $13 million increase in revenues to $986 million. That figure includes $977 million from tolls and evasion recovery, $1 million from investment income and $8 million from concessions and miscellaneous revenue. About $283 million is earmarked for maintenance and operations and $317 million for debt service.
The authority's operating costs are up about 4% due in part to increased pension and health care contributions for retired workers and fees associated with an independent review of the tollway's construction practices.
"This balanced budget enables us to keep the largest capital program in this agency's history moving forward," the authority's executive director, Kristi Lafleur, said in a statement. "We continue to work hard to keep our fiscal house in order, while at the same time provide funding for capital investments that will create thousands of jobs and help stimulate the local and regional economies."
The authority this year launched projects under its new capital program known as Move Illinois aimed at reducing congestion and pollution, expanding the 52-year-old, 286-mile system, improving roads, and creating jobs and economic development in the region.
The $1 billion in new bonding will support a $922 million 2013 capital budget. Projects slated for funding next year include the rebuilding and widening of one toll road, completion of new interchanges, and work on the Elgin O'Hare Western Access Project.
The board initially approved the new program in 2011 as it wrapped up final projects under a $6.1 billion capital program launched eight years ago. The new program is designed to keep the system in a state of good repair through 2026 — required under its bond indenture. The program provides $8 billion for improvements to existing roads and $4 billion for new and expanded roadways.
A steep toll increase of 87.5% will go toward repaying $4.8 billion of borrowing for the program. Debt service has a priority claim on the system's revenues after operations are funded. The tollway had exhausted its borrowing capacity under the current toll structure based on its policy of maintaining the two-times debt service coverage ratio considered critical to its double-A ratings.
Moody's Investors Service rates the authority Aa3. Fitch Ratings and Standard & Poor's rate its $4 billion of debt AA-minus. Fitch assigns a negative outlook. It affirmed its rating on $4 billion of outstanding debt earlier this year.
The credit is supported strong traffic demands, the essential nature of the system, flexibility to raise rates, strong liquidity, proactive financial management, and the on-time delivery of the system's former capital program, which is nearly complete, Fitch said.
The rating also reflects challenges including a dependence on traffic growth to maintain debt-service coverage ratios and the need to refinance variable-rate debt in the coming years. Nearly 33% of the authority's outstanding debt is variable rate, with plans to push that percentage down to 21% by 2015.
