Early bond payoff ends registration fee for Colorado's E-470 tollway

DALLAS – Colorado’s E-470 Authority will retire its 2001 refunding bonds in September – eight years earlier than originally anticipated – allowing the toll-road operator to eliminate a $10 vehicle registration fee levied in three counties.

The fees, originally approved by the electorate in Adams, Arapahoe, and Douglas Counties in 1988, were repealed at an April 12 meeting of the E-470 board.

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Revenues from the $10 fee helped finance construction and operations of E-470, part of an outer beltway around the Denver metro area whose first section opened in 1991.

The bonds pledged by the registration fee were originally set to be retired in 2026, but the E-470 refinanced in 2001 and reduced the final maturity with a scheduled payoff on Sept. 1, 2018.

“The E-470 Board is proud to fulfill the promise of ending the fee once the debt is paid off,” said Heidi Williams, mayor of Thornton north of Denver and chair of the E-470 board.

“Arapahoe County residents have financially supported this important corridor for the last 30 years,” said county commissioner Bill Holen, who also serves as a member of the E-470 Board. “It’s my responsibility to make sure we follow through on our promise to repeal the $10 fee once the bonds are officially paid off and I’m happy to support this decision.”

E-470 is a 47-mile beltway that runs along the eastern perimeter of the Denver metropolitan area, from State Highway C-470 at Interstate 25 in Douglas County, south of Denver, past Denver International Airport to I-25 on the north end of the metropolitan area.

The first segment opened in June 1991, and toll collection began July 15 that year. Portions of segments two and three opened in July 1998 and tolling began in October. The remaining portions of those segments opened in May 1999, linking the operational northern and southern portions. The last section of E-470, from U.S. 85 to I-25 north, opened Jan. 3, 2003.

E-470 requires no local, state or federal funds for construction, operations or maintenance. The authority is a political subdivision of the state whose board is composed of eight local governments including Adams, Arapahoe and Douglas counties, and the municipalities of Aurora, Brighton, Commerce City, Parker and Thornton.

E-470, whose 75 mph speed limit draws traffic from other roadways, recorded its highest traffic volume and the highest toll revenues in 2017, marking eight consecutive years of traffic and net toll revenue growth.

With toll revenues growing and its debt profile improving, the authority earned a ratings upgrade to A from A-minus on the S&P Global Ratings scale on May 25. Fitch Ratings upgraded the toll authority to BBB-plus from BBB in 2017. Moody’s Investors Service last year reaffirmed the authority’s A3 rating with a stable outlook.

“The strong enterprise risk profile reflects our opinion that demand will continue to increase as the Denver metropolitan area expands, offset somewhat by the competition the toll road faces from free alternative routes,” S&P analyst Doug Snider explained. “The strong financial risk profile reflects financial performance that we expect to continue, coupled with very strong liquidity and financial flexibility, with no additional debt plans.”

On Feb. 9, 2017, S&P raised E-470’s rating to the A-minus category from BBB-plus as the board prepared to issue $138 million of senior revenue bonds.

Colorado's E-470 tollway was among the first in the nation to adopt electronic tolls.

The 2017 tax-exempt variable rate refunding bonds drew strong demand from investors, the authority said.

E-470 has about $1.5 billion in outstanding bond debt, with debt service payments of
$95.2 million in 2017. Payments to bondholders are scheduled to increase annually until 2020. The Authority can call bonds in 2020 to level future debt service and restructure the debt curve, officials said.

The rise in net toll revenues helped the board maintain a stable debt management program with sufficient reserves and liquidity while avoiding the need for additional debt, officials said.

The authority used its reserves to self-fund a multi-year road widening project budgeted at about $90 million.

Debt service coverage exceeded the master bond resolutions requirement of producing net income at least 1.30 times the aggregate senior debt service payment for the year. E-470 had budgeted for a 2017 ratio of 1.75 and achieved a year-end ratio of 2.12,
which was the highest E-470 has ever achieved.

In December, the authority board adopted a master capital plan for rehabilitation and
expansion needs for the toll road. Analysts see no roadblocks ahead as suburban development around the once-remote toll road contributes to stronger volume.

“The stable outlook reflects our expectation that traffic trends will remain generally favorable, and management will maintain DSC levels we view as strong,” Snider said. “If we believe improvements in net revenues lead to strengthened DSC, we could raise the rating during the two-year outlook period.”

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