If Transparency is what our new DelDOT Secretary is going for he can start with the Rt 301 By-Pass Project. If you look at the DelDOT website and go to the 301 Project, the explanation of the financing of this $ 800 million dollar project is weak at best.
Take a look at this link: the latest info shown on the DelDOT’s project section of their website. If you see actual calculations and numbers, I would love to know where.
It was not until The Middletown Corridor Coalition met with WILMAPCO officials and Senator Bethany Hall-Long did we see some numbers. It was not until after that meeting that I asked Mark Tudor (301 Project manager) directly, that I was given the information that literally spun my head!
It is DelDOT’s intention to sell all $570 million in bonds at once. In addition, there will be an underwriting cost of $3.5 million dollar (approx. $6.25 to 7.25 per $1000 in Bonds sold.) fee to actually sell those bonds. Then we pay an issuance cost of $250,000 that goes to attorneys, financial advisors, and rating agencies. (Right, we pay ratings agencies to rate the very bonds we sell. Ugh!) Then add approximately $6 million a year for operation and up keep. The basic debt service on this boondoggle is $25 million a year for 40 years. FYI DelDOT presently pays $134million in debt service a year. Oh and don’t forget once the main line construction is completed (approximately 5 years ) DelDOT goes back to Bond Bill and asks to sell yet another $120 million to construct the “Spur” … tack that to the bill too.
The fact is that traffic numbers are not sufficient enough to pay the debt service let alone the operations costs. In June DelDOT and WILMAPCO were told, by the independent company they hired to approve bond sales for this project, that it was not approved for sale due to the low traffic projections and even lower growth projections in the MOT area. If DelDOT was approved to sell the bonds the toll revenue projections would not enough funds to pay back the Debt service. Where do you think the $25 million a years comes from if we fall short in Toll Revenue? We surely don’t want to default on the debt service and downgrade or AAA rating (Ha Ha). I’ll save you some time; it’s the general fund that gets tapped.
Add to all that the facts about the $125 million in GARVEE Bonds we sold (against my very loud protests). Money that we have to be spent by 2013 or your chances for Federal funds the next time to ask, goes down substantially. The Debt service on that is $11 million a year for the next 14 years taken from future Road projects we NEED! And that money is to just be spent on Right of Way acquisition and Design on this project. So with that money you tell us that you are performing all new traffic studies in November of 2011. Just to see if the traffic numbers have changed since just this past June (as I explained above, where the numbers did not substantiate the sale of the Bonds).
Why then is it necessary to have yet another Workshop before those numbers are calculated? Isn’t that actually backward? Shouldn’t the numbers be crunched on the funding before we spend another dime on a road project we can’t afford, don’t need, and no one wants (oh except those developers/ land owners being paid out my DelDOT)
ALL of this is a huge waste of money, certainly, in my life time we will never get approval for the sale of these bonds. Let’s see who DOES make out….Oh that’s right our lovely consultants R K and K Engineers and Kramer and Assoc. DISGUSTING!
On this graph DelDOT forgets to inform the reader that WalMart had opened during that 2008-2010 up tick in traffic increase over the MD/DE line. One has to wonder Walmart execs know of a toll at that location that would likely inhibit consumers from traveling to this DE location from Maryland?
Chair Middletown Corridor Coalition
Here are some recent articles on the downgrade of Toll Revenue bonds and traffic counts that are rather eye-opening:
http://online.wsj.com/article/SB10001424053111903480904576508742792099046.html“In January, Moody’s Investors Service assigned a negative outlook to the Port Authority’s credit, saying a downgrade could result if the agency’s debt continued to grow faster than its revenues. Moody’s currently rates the Port Authority’s debt Aa2, its third-highest rating. “We see some pressures because of the amount of debt they’re taking on and the general sluggishness of the regional economy,” Maria Matesanz, an analyst at Moody’s, said in an interview. To be sure, the agency’s financial situation is considered far from dire, and the other two major credit agencies, Fitch and Standard & Poor’s, haven’t assigned a negative outlook for the agency. A downgrade would likely add millions in borrowing costs for the agency, which relies heavily on debt to fund its construction-heavy budget. To avoid triggering a downgrade, it has drafted plans to cut scores of projects—from repaving projects at ports to small repairs to the PATH system—if it doesn’t receive a toll increase. The Port Authority is jointly controlled by Govs. Chris Christie of New Jersey and Andrew Cuomo of New York.”
“The downgrade reflects the effects of improvements along alternative free routes and the impact of the economic recession in Loudoun County, Virginia service area (a western suburb of Washington D.C.) which have resulted in a continued decline in traffic on the Greenway since fiscal 2006. Including the drop in interest earnings, net revenue declined by 6.2% between 2006 and 2009 while annual debt service obligations grew by 15.5%. As debt service grows at a compound annual growth rate of 3.6% between fiscal 2010 and 2034, the Greenway is dependent upon consistent levels of growth that may be more difficult to achieve. In addition, there is some potential for additional loss in traffic and pricing power when the Dulles Metrorail project opens later in the decade.”
“Fitch Ratings has downgraded the $40.1 million outstanding Lake of the Ozarks Community Bridge Corporation Bridge System refunding revenue bonds, series 1998 to ‘BB+’ from ‘BBB-‘. The Rating Outlook is revised to Negative from Stable. The bonds mature in December 2026 and are secured by the net ..”
“Then there’s the federal borrowing to prop-up toll roads that can’t pay for themselves using a loan program known as Transportation Infrastructure Finance and Innovation Act (TIFIA). The first federal TIFIA loan went to a P3 venture in San Diego known as the South Bay Expressway. Less than three years later, the road went bankrupt (traffic projections were off by 40,000 cars a day) — resulting in a loss of nearly $80 million to taxpayers. Now, the local government is going buy back that failing toll road with yet more taxpayer money, which is, in effect, another bailout.”