Greenville SC traffic grows but still v troubled

October 1, 2003

The Greenville South Carolina Southern Connector tollroad is gaining solid increases in traffic but still is in deep financial trouble. August saw an alltime record of 13.4k average daily traffic, a full 20% improvement on Aug 2002. In Sept in its 30th month of operations it ran 13.1k/day. For the 3rd quarter traffic ran at 13.3k vs 11.5k a year ago, a 16% increase. The road began tolling in March 2001 and in its first months was doing 8 to 10k. Bonds were sold and the project launched on the basis of forecasts of 27k veh/day in the first full calendar year of operations, forecasts everyone agrees were way off. Revenue is even lower than projected due to the near-complete absence of trucks.

Toll revenue is now running at an annual $3.5m (without seasonal adjustment). The 2002 annual report says bluntly that revenue is "substantially less than that projected" - $3m vs $8.6m or 35% of forecast. Traffic at 10.9k/d was 40% of the forecast 26.9k, the report said.

For 2002 revenues were $3.1m, operating expenses $2.5m for a slim operating surplus of $0.6m. Interest to be actually paid through 2007 is only $3.5m/yr but interest incurred was $13.8m and $5.1m was due to SCDOT under the license agreement. The Connector 2000 Association, the not-for-profit which owns the project, has twice dipped into a reserve fund to make payments to bondholders. S&P has downrated the bonds to BBB-. S&P says that the road will default on its $200m of bonds in 2007 without a major upward leap in traffic.

The shortfall in traffic is partly accounted for by an almost complete stop in economic development in the area from about 1998 after the project was committed. Poor signing and connections are another issue. And the road is located too far south to make for substantial time-savings for many local trips, and it has yet to see a customer base develop alongside it. Weak local patronage is reflected in very low transponder usage - only 10% of transactions - despite discounts. TRnews 2003-09-31

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