ATLANTA — North Carolina’s efforts to build its first-ever toll roads, which would be partly bond-funded, are picking up speed as plans and legislation are being drawn up for such projects throughout the rapidly growing state.
And while there is legislation awaiting Gov. Mike Easley’s signature that will further promote those efforts, officials stress that the first toll road-backed bond issuance is at least a year off. Nonetheless, such a new class of debt from North Carolina is much anticipated, according to market participants who point out that the state’s strong credit quality could prove imperative for bonds backed by what can be an erratic revenue stream.
Bonds for toll roads would be issued by the North Carolina Turnpike Authority, which was created in 2002 to develop strategies for building toll roads. The state has traditionally paid for transportation projects on a pay-as-you-go basis with revenue from a statewide gas tax, so the creation of the Turnpike Authority marked a significant change in the way the state funds transportation projects.
According to officials with the authority, more than $85 billion of new projects need to be constructed during the next 25 years to help accommodate increasing transportation needs in the state. However, projected revenue from existing sources would enable the state to fund only about 65% of those projects, and officials say that creates a $30 billion shortfall that threatens to delay the construction of many critical new roads.
Officials, concerned about the resulting congestion that such a shortfall could cause, have worked with lawmakers on a bill that attempts to address road funding issues in two of the fastest growing counties in the state — Wake and Durham.
SB 1381, which is awaiting Easley’s signature, would alter current state law for the sole purposes of letting Wake and Durham counties add tolls to the portion of Interstate 540 under construction there. The current law states that tolls cannot be collected on existing roads. The bill would also require that no segment of the state highway system could be converted to a toll route unless the conversion were first approved by the metropolitan planning organization or rural planning organization of the area where that segment is located.
Officials have said that collecting tolls along the western and southern section of I-540 would raise enough to have the ongoing construction completed by 2015. They are considering issuing bonds to cover the project costs, but no exact amounts for any debt sale have been determined.
In addition to the legislation, the authority is working on plans for additional toll roads in other parts of the state. Still they are not ready to announce how much debt could be sold, but they do say that the need totals about $2 billion. They are considering issuing revenue bonds, and the first issuance may not come until the spring or summer of next year.
Turnpike officials are working with financial advisory firm Public Financial Management on its toll road plans. Along with bonds, officials are considering seeking loans from the federal government, such as those from the U.S. Department of Transportation’s Transportation Infrastructure Finance and Innovation Act program.
North Carolina recently added another tool to its box to help fund transportation projects. Last year, a new law allowing it to issue almost $1 billion of grant anticipation revenue vehicles was passed. None of that debt has been sold yet.
