How a refinancing move could boost Complete 540
Triangle Business Journal, May 14, 2018
A refinancing move by the state could put a dent in what North Carolina has to pay for the Complete 540 project, the final section of the $2.2 billion highway that connects Apex to Knightdale.
The N.C. Turnpike Authority, part of the N.C. Department of Transportation, just refinanced a portion of the Triangle Expressway’s outstanding bonds, an action that, according to the state, could mean more than $10.9 million in present value savings.
Coupled with the state’s other two refinancing actions on outstanding bonds for the expressway, it culminates in total savings of about $103 million for the remaining life of the project, says NCTA Executive Director Beau Memory.
And that means those funds can be applied to other projects.
One possibility is reducing the state’s contributions for Complete 540, which obtained Federal Highway Administration approval for its final environmental impact statement ahead of schedule late last year. The project, if built, would complete the 540 Outer Loop, linking the towns of Apex, Cary, Clayton, Garner, Fuquay-Varina, Holly Springs and Raleigh. And it’s been labeled a priority project by NCDOT Secretary Jim Trogdon, as well as the Regional Transportation Alliance business coalition.
“Any time we’re able to reduce the amount of debt service we have on the [Triangle Expressway], it allows us more flexibility,” Memory says. He cautions that most of the savings to be achieved are on the “outer years” of the project.
“It’s not immediate flexibility – it doesn’t give us the ability to budget things right now, but it gives the Turnpike Board that ability in the future,” he says, adding the caveat that the savings potential depends on market conditions. But it could contribute to investments even beyond what’s currently planned for Complete 540.
The savings could also mean future toll rate flexibility or expedited project debt payoff. A quicker debt resolution could mean taking tolls off the Triangle Expressway earlier than planned. Revenue raised through tolls is used to help pay off bonds sold to fund the $1 billion highway, as well as for maintenance, such as road repairs and winter weather response.
As part of the refinancing, both Moody’s and Standard & Poor’s upgraded all outstanding NCTA appropriation debt for both Triangle Expressway and Monroe Expressway to Aa1 and AA+.
Joe Milazzo, executive director of RTA, says the ratings upgrades are “huge,” and speaks to the quality of both management and the success of the highways.
“People are using it,” he says of the Expressway. “They’re speaking with their vehicles.”
The Triangle Expressway opened seven years ago, and has seen revenues that are nearly 30 percent above what was initially projected by the state.
Milazzo says its success gives further credibility to other planned projects by the agency.