BRADENTON, Fla. — The North Carolina Turnpike Authority expects to move forward as soon as possible with the remainder of the financing for its second toll road following Tuesday’s final judgment in a federal case that stalled the project for nearly a year.
The 19.7-mile Monroe Connector, which will create a limited-access bypass around heavily congested U.S. 74 from Monroe to Charlotte, is estimated to cost $719 million.
The authority closed on $233.9 million of taxable Build America Bonds as the first tranche of financing on Oct. 26 2010.
Less than a month later, the Southern Environmental Law Center brought a suit on behalf of Clean Air Carolina, the North Carolina Wildlife Federation and Yadkin Riverkeeper seeking to stop work on the road and the issuance of additional bonds.
The environmental groups alleged there were violations of the National Environmental Policy Act in reviewing the proposed route.
The suit was filed against the North Carolina Department of Transportation and the Federal Highway Administration.
U.S. District Court Judge James Dever Tuesday rejected the environmentalists’ arguments, clearing the way for the project to move forward.
“We are pleased that after a thorough review of our environmental studies, Judge Dever validated our work by ruling in favor of allowing the Monroe Connector/Bypass to finally proceed,” Transportation Secretary Gene Conti said.
The Southern Environmental Law Center said the ruling would be appealed to the Fourth Circuit Court of Appeals in Richmond.
The center also said that the environmental groups are continuing a separate legal challenge of the state’s water-quality certification for the highway, and they are urging the state financing authority to withhold permission for additional bonding until all issues are resolved.
David Joyner, executive director of the NCTA, said the judge’s ruling could be difficult to appeal since the 28-page opinion provided a thorough review and essentially found no fault with the permitting process.
“We certainly plan to go forward,” he said, adding that underwriters had indicated to him that they felt comfortable proceeding with the financing plan.
The next step is to obtain the approval of the North Carolina Local Government Commission, which approves local and most state bond issuance.
Joyner said the commission has been aware of the project’s financing elements for more than a year.
The remaining plan of finance for the project calls for $214.4 million of state appropriation-backed bonds, $170 million of grant anticipation revenue vehicle bonds, and a $10 million private placement with Bank of American Merrill Lynch, which also is the book-runner for the sale of the appropriation-backed and Garvees.
The project also will be supported by a $77 million contribution from the state transportation improvement plan.
Joyner said that the NCTA wants to sell the appropriation-backed bonds as soon as possible, which most likely will coincide with the private placement.
It has not been decided if the Garvee bonds will be sold at the same time or soon afterward, he said.
Ratings will be sought right away.
The bonds could be issued as early as mid-November, according to Joyner.
Under the financing plan, the Garvee bonds are expected to be taken out in around seven years with toll revenue bonds.
“The beauty of this structure is, once the road is up and finished, and it’s open a couple of years, we have more certainty of the toll revenues,” Joyner said, adding that should lead to higher ratings. “We want to repay those Garvees so that money can be used for other transportation projects.”
The structure also will save “hundreds of millions” of dollars on total debt service and eliminates the need for capitalized interest, he said, noting that he believes the project is one of the first to use Garvees in this manner.
Once financing is in place for the Monroe Connector, construction could start later this year. It is expected to open in 2015. Public Financial Management Inc. is the Turnpike Authority’s financial advisor. Hunton & Williams LLP is bond counsel.
A design-build team will construct the new toll road.
The state plans to negotiate a contract with a joint venture consisting of United Infrastructure Group Inc., Boggs Paving Inc., Anderson Columbia Co., and Rummel, Klepper, & Kahl LLP as the lead design firm.
