The Delaware River and Bay Authority could raise Delaware Memorial Bridge tolls by $1 on July 1 to help finance nearly $200 million of capital needs during the next five years.
Cars currently pay $3 to cross the twin suspension bridge, which connects southwestern New Jersey and northern Delaware over the Delaware River. Trucks pay $4 per axle.
Increasing those rates by $1 would generate approximately $25 million of additional revenue per year, according to the DRBA’s chief financial officer, Victor Ferzetti.
The agency’s board could vote on the proposed toll hike at its May meeting, he said.
The authority last raised tolls for trucks and commercial vehicles in 2008. The last across-the-board toll increase was in 2000.
Officials anticipate $180 million to $200 million of infrastructure spending needs over the next five years.
The DRBA plans to finance that with a mixture of available cash and long-term borrowing, but does not have bonding capacity at this time.
“Right now in today’s world, we couldn’t even issue debt if we wanted to, more or less, because we wouldn’t be able to do that and still stay above our debt-service requirement of 1.25 times,” Ferzetti said.
The authority has $291 million of outstanding debt and its debt-service coverage level is 1.57 times, according to Standard & Poor’s.
The earliest that the DRBA would issue a new-money bond sale would be late 2011 or early 2012.
Officials are considering financing the $180 million to $200 million capital plan with a mix of 60% pay-go funding and 40% bonding, although that breakdown could change depending upon changes to the capital improvement plan and market conditions.
The agency’s last new-money issuance was in 2003. Those bond proceeds helped finance infrastructure needs for a few years, but for the last two to three years, the authority has financed its capital projects on a pay-go basis.
On March 30, Standard & Poor’s downgraded the DRBA to A from A-plus because unrestricted cash for 2010 dropped to $58.5 million.
From 2007 through 2009, unrestricted cash did not fall below $84 million. The outlook is stable.
“The downgrade reflects our view of lower liquidity, as a result of the authority having recently funded more of its capital improvement plan with cash than it has historically, and no toll increase since 2008,” according to Standard & Poor’s.
The rating agency noted that the DRBA’s capital project plans protect the structural soundness of the Delaware Memorial Bridge, its most important asset.
It added that “we have concerns that these projects cannot be completed without additional debt, which the authority cannot issue in the amount it requires without violating bond covenants.”
Moody’s Investors Service rates the credit A1.
One of the authority’s strengths is that the Delaware Memorial Bridge is the primary Delaware River crossing for the New Jersey Turnpike and Interstate 295. Ferzetti said the bridge is cheaper than other crossing options in the area. That has helped the bridge sustain traffic during the recent recession.
Traffic declined by 0.8% in 2010, which Standard & Poor’s considers minor after a 1.2% increase the year before.
Traffic for January and February is 3.9% above levels for the same months in 2009.
“Even in tough economic times our bridge traffic has held up relatively well, which means our revenue has held up well during that time,” Ferzetti said.
Along with the Delaware Memorial Bridge, the DRBA operates two ferry services, five regional airports, and helps finance economic development projects in the area.