The nonprofit operator of South Carolina’s Southern Connector toll road is asking firms to submit a list of qualifications to take over the license and concession of the under-trafficked highway, in an attempt to meet outstanding financial obligations. The proceeds from the concession, which would most likely take the form of a public-private partnership, would lift the threat of default brought about by traffic revenue that has fallen short of debt service. “The purpose of this is to restructure our debt,” said Connector 2000 Association Inc. spokesman Tim Brett. “The traffic will not reach the expectations in time to meet our obligations.”In fiscal 2006 — the last year for which total numbers are known — transactions, or the total number of vehicles paying tolls, were 54% lower than anticipated, resulting in revenue of just under $5.1 million. Projections indicate that collections at this point in the road’s lifespan should be about $9.4 million a year. Traffic continues to pick up, setting a new monthly record in August of 513,695 transactions, but it continues to fall short of projections.This move to seek a takeover comes nearly two months after Standard & Poor’s downgraded the association’s outstanding debt to CCC, from B-minus, with a stable outlook. The downgrade applied to the $66 million of senior current interest and $144.8 million of senior capital appreciation bonds, but not the $80.5 million subordinate CABs that Standard & Poor’s does not rate.South Carolina’s third toll road when it was built in 2001, the 16-mile Southern Connector joins Interstates 85 and 385 in Greenville. From the beginning, the toll road has struggled to draw the traffic that planners expected. As a result the association has had difficulty earning the revenue necessary to pay on the more than $200 million in bonds issued to build the project. Debt service has averaged $3.5 million annually through 2007, during which time the association routinely dipped into the reserve funds. Debt service is expected to jump to $7.1 million in 2008 while averaging $18.6 million a year, from 2007 on until the bonds mature. Current reserve funds stand at $11.5 million which could be depleted by the end of 2009, according to Standard & Poor’s,While it is still unclear what form the restructuring they seek will take, and whether bonds will be paid off outright or during the life of the debt, it could be similar to the 99-year lease recently negotiated for the Northwest Parkway in Colorado. Under an agreement signed in August, the Northwest Parkway Public Finance Authority will defease some $500 million in project debt under the $603 million tollway concession it signed with private developer Brisa/CCR.The Connector 2000 organization will be accepting submissions for the RFQ until November 14.
