Dulles Toll Road booms - heads for $125m this year, up more than 20% + FOLLOWUP ADDED

October 16, 2013

2013-10-15: There aren't many pikes like this in America now! Dulles Toll Road (DTR) revenues are up 24% over last year according to a report to the monthly meeting of directors this week and heading to the $125m mark for the full year. The strong revenue is the result of toll rate increases and the strong willingness-to-pay of motorists in Northern Virginia's relatively affluent Fairfax and Loudoun counties.

DTR toll rates rose nearly 25% January 1 - from 17c to 21c per mile. For three months at the beginning of the year traffic was down about 5% but since April it has been back up near last year's levels - about 270k transactions annual average daily.  Given that traffic in the metro area's untolled roads is flat, toll rates on the DTR seem still well below the levels at which traffic would be discouraged.

Above forecast

This year they are a few percent above forecast.

CDM Smith forecast 260k AADT for 2013 about 3% down.

The operator of the Dulles Toll Road, Metropolitan Washington Airports Authority (MWAA) is financing $3 billion of the $5.6b metro rail line on DTR tolls, so it needs all the revenue it can get.

So far this year driver behavior indicates the toll operator MWAA has in the past been leaving money on the table by underpricing.

But their aggressive financial plan for hiking toll rates in future will seriously test the point at which traffic is significantly depressed by higher toll rates.

Traffic in September was 1.5% below same month last year but it has been in slow decline since 2005 when it peaked at 320k average daily transactions. This year traffic is averaging 270k daily (98.5m), about 10k (3.6m) above CDM Smith's projections for 2013. (Tolls are collected at the mainline plaza, at the Dulles Greenway on behalf of the DTR and at ramps, so most trips involve two tolls. Trips are roughly half transactions.)

Smith's last traffic and revenue forecast sees a decline to 220k/day  (80.1m)  by 2020 and a stabilization after that.

This is based on soaring toll rates.

Big rises in tolls planned

The 2015 tolls are due to rise to $2.75/$1.75 (ML/ramp) from the current $1.75/$1.00, or $4.50 for the typical trip vs $2.75. That will make a trip the length of the 13 mile pike 35c/mile vs 21c/mile now, a 64% rise.

By 2020 tolls would be $4.00/$2.75 or 52c/mile, a 49% rise on 2015, and 2.45 times 2013 rates, a 145% increase over the seven years.

With much lesser projected drops in traffic, 10% and 6% or 15% over 7 years, toll revenues are forecast to soar from $125m this year to $189m in 2015 and to $268m in 2020.

As recently as 2009 revenues were $63m at tolls of 75c/50c or 9c/mile and 295k/day or 108m total transactions.


TOLLROADSnews 2013-10-15

FOLLOWUP Oct 16: Kimberly Gibbs an MWAA spokesman points out that their board of directors decided late last year to "put on hold" the 2015 toll increase that was part of their financing plan approved earlier. 

The 2009 finance plan with soaring tolls described here has of course been hugely controversial to the extent that even members of the board of directors who had originally adopted it got to calling it "fatally flawed." Main fault was its over-reliance on DTR tolls and lack of federal and state support, critics said.

Such tolls would cripple the development of the corridor and divert unacceptable amounts of traffic to parallel routes...

Under the plan $3.02b of $5.59b needed for the Silver rail-line project was to come from DTR tolls. $1.35b of toll revenue bonds were already issued for Phase 1 of the rail project expected to open shortly, but at least $1.67b more toll revenue financing has been envisaged for Phase 2 recently started, through about 2018.

MWAA held public hearings in the fall of 2012. And the broadly accepted aim is "toll mitigation" with the state of Virginia having appropriated $150m for MWAA to mitigate tolls. The Feds are supposed to cough up more more too.

Gibbs of MWAA sums up the current situation:

"A decision on 2015 toll rates will be made in 2014. The decision to hold off on setting rates was to ensure that we had the most up to date information prior to doing so, including project cost estimate for phase 2, the level of state contribution, and the results of our TIFIA (US) loan request."

Trouble is the financing plan using DTR revenue bonds for over half its capital cost goes back 2009 and remains at the heart of the project. The politicians have temporarily quieted criticism with their "toll mitigation" stance, but the fiscal reality is essentially unchanged.

Tolls are the only funding for about half the  $5.5b to $6b rail project.

The mitigation money available is quite small to the capital spending to be financed. The borrowing is based on the investment grade traffic and revenue studies, so bond covenants won't allow major departures from it.

The statement provided by Gibbs on this says:

"Additionally, tolls will be set in any given year to meet required debt covenants."



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