AASHTO Journal, 21 August 2015
The Delaware Department of Transportation said it received eligibility approval from the U.S. Department of Transportation for a long-term, low-interest loan of up to $211.35 million to help build a 14-mile toll road.
The project would tap the federal TIFIA loan for part of a $470 million mainline toll road to replace the current two-lane US 301 that angles northward and eastward in the Middletown area from the Delaware/Maryland state line to connect with north-south State Route 1 as it runs along US 13 near Biddles Corner.
The DelDOT financing plan covers the rest of the cost with $241 million in toll revenue bonds it expects to issue in November, and $18 million in grant anticipation revenue bonds.
In all, counting plans to add a future limited-access spur road and other local improvements, road work in that corridor is estimated to cost $643 million, the News Journal reports.
DelDOT Secretary Jennifer Cohan said lining up the USDOT loan “means two important things for the US 301 toll project. The first is that the financial and traffic assumptions that underlie the cost recovery aspects of the toll road are workable and sound.
“The second is the project will receive the benefit of low-cost financing and a deferred repayment schedule, giving the road the time it needs to begin generating significant revenue. Receiving approval from the USDOT gives DelDOT great confidence in pursuing this important project.”
The agency provided a computer-generated simulation, included below, to show how the project will build a major four-lane highway to replace the narrow, winding US 301.
DelDOT planners say the long-planned toll project would remove the “neck in the bottle” of the area’s highway network from the Maryland/Delaware state line to the Interstate 95 corridor.
It will greatly improve highway safety and better manage truck traffic, they say, in an area where accident rates are far above the statewide and national average, and support economic development in in high-growth southern New Castle County. And it is seen improving local access to Amtrak’s Northeast Corridor passenger rail service plus the SEPTA commuter rail and DART bus services.
“The pledge of federal financial assistance to this project will deliver significant benefits to the people of Delaware in terms of economic growth, increased traffic flow and stronger safety measures,” said Gov. Jack Markell. “There are still more steps to move forward, but we are hopeful construction of the US 301 road will serve as starting point for more great projects that will support the ongoing growth and prosperity of southern New Castle County.”
The terms of the TIFIA loan, which Delaware officials applied for in May and plan to close in November, include several that DelDOT said are “crucial to the project’s success.”
Besides providing credit below market interest rates at the government’s cost of funds, the TIFIA program allows five-year deferral of interest payments and 10 years before principal payments are due, which gives the project time to build up traffic and toll revenue.
The deferrals also allow for creation of a reserve fund during the first five years of toll operation to provide “an additional financial margin of safety between the US 301 repayment obligations and the state’s Transportation Trust Fund, which is securing the repayment,” DelDOT said.
And because it reduces the project’s overall cost of capital and increases debt service coverage, the TIFIA loan reduces the amount of toll revenue bonds the state will need to issue to fund construction.
Now, with the federal loan commitment, DelDOT will verify construction cost estimates this month by advertising for bids on the two largest construction segments that represent 55 percent of the costs. It wants to lock in bids in the September/October period, begin construction in January and open the toll road for revenue service in December 2018.
Here is the agency’s vision of how the project will unfold: