Toll road traffic plummets because of coronavirus pandemic
Toll road agencies across the country are seeing precipitous declines in traffic and toll collections due to emergency "stay at home" orders and school closings, making it difficult to project revenue collections that support operations and debt.
At the Miami-Dade Expressway Authority, for example, the system reported a 23.33% year-over-year decrease in traffic count in March, with weekly traffic volume declining to 50.46% as of March 28.
The decline tracks orders closing Florida’s public schools on March 13, and when Miami-Dade County Mayor Carlos A. Gimenez issued a "safer at home" emergency on March 26.
"With no certainty as to how long the public health crisis will continue, or whether and for how long the county and/or the state of Florida might extend current or impose additional emergency precautionary measures, it is not possible to project with any certainty the full extent of the revenue loss to be realized by MDX through the end of fiscal year 2020," the authority posted on the Municipal Securities Rulemaking Board’s EMMA filing system April 2.
MDX said its gross toll revenues were about $164.8 million, while other revenues were approximately $13.8 million, for a total of $178.6 million as of March 31. Unaudited operating expenses were $34.4 million, resulting in net revenues of $144.2 million.
Fiscal 2020 debt service payments are $69.1 million in interest and $37.5 million in principal.
"If the traffic counts remain down by 50.46% for the remainder of fiscal year 2020, gross toll revenues could decrease compared to fiscal year 2019 by approximately 10% and net revenues available for debt service would be reduced correspondingly," the disclosure said.
Texas tollways are also reporting reduced traffic levels as cases of COVID-19 rise and drivers remain home to help stop the spread of the virus, which had killed at least 12,700 Americans as of Wednesday morning, according to the COVID Tracking Project.
Texas Gov. Greg Abbott ordered schools to close March 20. On April 1, he asked people to stay home.
The North Texas Tollway Authority said it also saw declining toll transactions in March, with the exception being the first week when collections were up 1.4%.
In the second week of March, transactions declined 9.9%, in the third week they dropped by 43.5%, and by the last full week of collections they were off by 52.7%, according to data provided by NTTA spokesman Michael Rey.
On the Golden Gate Bridge in San Francisco, traffic was down 70% on the first Tuesday of the state's stay-at-home-order from a normal Tuesday, according to its general manager.
Standard & Poor's, Moody's Investors Service and Fitch Ratings all have negative outlooks on the toll road sector, but relief could be coming.
The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, which was signed into law March 27, didn't provide funding for toll roads and state transportation agencies. But that may change as Congress considers new legislation.
Bill Cramer, spokesman for the International Bridge, Tunnel and Turnpike Association, said his organization will seek help for the country’s toll road agencies.
"Because of America’s unified response to limit the spread of COVID-19 by restricting public gatherings, shuttering non-essential businesses, and limiting travel, toll facilities have suffered traffic and revenue declines of 50% to 90%," Cramer told The Bond Buyer Tuesday.
"Traffic declines have sharply reduced revenues and there is no certainty as to how deep the traffic declines will go or how long it will take to return to normal traffic levels," he added.
In normal times, Cramer said the 342 toll facilities run by 128 operators in 34 states are self-sustaining, and support more than 8.5 billion freight and passenger trips per year generating more than $20 billion in toll revenues annually to pay off bonds issued to maintain and upgrade 6,300 miles of highways, bridges and tunnels.
Cramer said IBTTA will submit its own request for financial relief to Congress for consideration in Phase 3 of funding, or what's become known as CARES 2.0. He did not say how much would be requested.
In a letter Monday, the American Association of State Highway and Transportation Officials asked Congress for $50 billion to offset revenue loss due to restrictions imposed because of the virus, and to pass a surface transportation reauthorization bill soon.
The group said $50 billion would provide states the ability to meet existing debt obligations.
On March 16, S&P placed a negative outlook on all U.S. public transportation infrastructure, including toll roads, saying its view of the sector "has changed due to the unprecedented and still-developing travel and trade disruptions and the likely broader and still-undetermined economic impact caused by the coronavirus pandemic."
S&P primary analyst Kurt Forsgren said there are credit exposures for airlines, airports, consolidated rental car facilities at airports, ports, toll roads, transit operators, and parking facilities, all of which have issued debt supported by revenues affected by activity levels.
"The revision of credit rating outlooks to negative provides clarity to market participants that issuers face at least a one-in-three likelihood of a negative rating action over the intermediate term for investment-grade credits, generally up to two years, and over the short term for speculative-grade credits, generally up to one year," Forsgren said in a follow-up report on March 26.
S&P said all ratings will be individually reviewed for issuer's specific exposure to, and ability to mitigate against, the financial and operational challenges in the near-to-intermediate term.
On March 20, Moody's revised its outlook for the U.S. toll road sector to negative from stable, saying that traffic and revenue will decline in the first half of 2020 because of the expanding coronavirus outbreak and the unprecedented public health response.
"If public health measures are effective, the negative impact will be smaller, but if they prove ineffective, stricter measures may be implemented that will have an even greater negative effect on traffic and revenue,” said Moody's analyst John Medina.
For the Miami-Dade County Expressway Authority, the coronavirus outbreak represents another existential threat. It has been fighting state government efforts to dissolve the agency.
A month ago, Florida's First District Court of Appeal heard oral arguments on a motion by the Florida Department of Transportation and the state House of Representatives for a writ of prohibition in an attempt to strike down a lawsuit MDX filed on May 6, 2019.
In the case, Leon County Circuit Judge John Cooper on Aug. 29 struck down House Bill 385 because it violated the state constitution, which protects Miami-Dade County's home rule authority and prevents the state from passing a law pertaining only to the county.
HB 385, signed into law by Gov. Ron DeSantis on July 3, 2019, dissolved the MDX and replaced it with a new agency and board, both subject to more state oversight of its budgeting and debt issuance.
On March 10, FDOT and the House argued before the appellate court that a writ of prohibition should be issued throwing out the lower court lawsuit because MDX didn't have standing to bring the suit because it was dissolved by HB 385.
Through the pandemic, the appellate court has said it can issue orders, opinions, and mandates electronically, but justices have given no indication when they’ll rule on the writ.
Until then, MDX continues to operate with staff but the state's legal maneuvering places a stay on Cooper's ruling and the board of directors can't meet.