WASHINGTON — South Carolina lawmakers last Wednesday voted against legislation that would have paved the way for restructuring more than $200 million of tax-exempt bonds issued by the Southern Connector 2000 Association for a 16-mile toll road in Greenville, which went into default on Jan. 1.
The legislators voted 46 to 59 against an amendment, sponsored by Rep. Alan Clemmons, R-Myrtle Beach, and part of a broad transportation bill, that would have clarified the South Carolina Department of Transportation’s ability to continue to collect toll revenue on the Connector road beyond its current license agreement.
SCDOT currently has a 50-year agreement to own and collect tolls on the Connector. By extending its ability to collect tolls, the Connector’s debt could be refinanced with a longer repayment schedule, a source familiar with the situation said Thursday.
It is unclear whether the department currently has the legal authority to continue tolling beyond the license agreement, but the legislation would have made it certain, the source said, declining to be identified because the restructuring negotiations are private.
The lawmakers who voted against the Clemmons amendment are reluctant to have the state take responsibility for the toll road, which has had less than half the commuter volume that was originally projected. The toll road is owned by SCDOT and is part of the state highway system, but the Connector association operates the road and collects tolls. The state is not responsible for the outstanding bonds.
While the legislation was voted down, it is not dead. The House version could be approved in a third reading later this month, a source said.
Neither Clemmons nor Peter Femia, the Connector’s manager, could be reached for comment. The Connector’s trustee bank, US Bank NA, declined to comment.
The Connector association issued bonds in February 1998 and the toll road opened eight months early in March 2001. But toll revenue never came close to the initial estimates made by Wilbur Smith Associates, a Columbia, S.C.-based transportation and infrastructure consulting firm. The Connector collected $5.25 million in 2009, or one-third of the revenue the firm estimated the toll road would generate for 2009.
The 2009 revenue figure is in line with a May 2009 report from Stantec Inc., an Edmonton, Alberta-based infrastructure consulting company. Revenues are projected to fall 2.0% in 2010 before increasing 18.4% in 2011 as toll rates are expected to increase, the report said.
Standard & Poor’s downgraded the bonds to D on Jan. 11. The Connector has $64.4 million of outstanding Series 1998A senior current-interest toll road revenue bonds and $165.4 million of Series 1998B senior capital-appreciation toll road revenue bonds.
The agency did not rate $90.9 million of Series 1998C subordinate capital-appreciation bonds that have also defaulted.