DALLAS - Approval of a $211.4 million, 35-year low-interest federal loan may be the final piece of the funding needed to begin work on a $643 million toll road in Delaware after decades of stalled plans, state officials said Monday.
The US 301 Mainline Project will replace an eight-mile, two-lane bottleneck with a new four-lane toll road on a portion of the highway that begins in Delaware and winds up 1,099 miles away in Sarasota, Fla.
Delaware Transportation Secretary Jennifer Cohan said the Delaware Transportation Authority plans to issue $241 million of 40-year toll revenue bonds for the Route 301 project later this year. The timing of the bond sale depends on whether the initial construction cost estimate of $470 million is verified through competitive bids on two of the project's seven segments, she said.
Some hurdles remain, Cohan said, but the TIFIA loan "validates all the work that we've done to date in that this is going to be a self-sustaining road, which is hugely important to us."
The approval of the federal TIFIA loan by the Transportation Department gives the state two reasons for confidence in going ahead with the toll road, she said.
"The first is that the financial and traffic assumptions that underlie the cost recovery aspects of the toll road are workable and sound," Cohan said. "The second is the project will receive the benefit of low-cost financing and a deferred repayment schedule giving the road the time it needs to begin generating significant revenue."
The TIFIA loan provides a lower cost of capital and means better debt service coverage on the toll revenue bonds required to fund construction, Cohan said.
Interest payments will be deferred for the first five years of toll operation, with principal payments deferred for 10 years. The agreement also allows for the creation of a reserve fund for the first five years to lessen the likelihood that the state's transportation trust fund will be called on for debt service, she said.
The intent is that toll revenues will account for all debt service on the planned bonds, although the bonds will be secured by the state transportation trust fund for a better credit rating, she said. The Delaware Transportation Authority's $943 million of outstanding revenue debt is rated Aa3 by Moody's Investors Service and AA-plus by Standard & Poor's.
Work on the toll road could begin in January with completion in 2018.
The project has already cost the state about $125 million in planning and right-of-way costs, which were funded in part with proceeds from a $111 million issue of federal highway grant anticipation vehicles, or GARVEEs, in 2010.
The toll road financing includes $18 million of the GARVEE bond proceeds that became available because of lower than anticipated land costs.
A new traffic analysis in 2013 reduced the number of expected vehicles using the toll road and led to the current proposal for a toll road in southern New Castle County funded with revenue bonds and the TIFIA loan.
A 2010 study found that 41,000 vehicles would use the road daily by 2060, but the later analysis lowered the daily total to 17,400. About 14,000 daily trips are expected in 2020, the toll road's first year, rising to 15,900 per day by 2023.
Cars will pay $4 per trip through an all-electronic toll system, with an $11 charge for trucks traversing the entire length. Trucks total only 18% of the traffic but those tolls are expected to account for 56% of total revenue.
