NTTA Staff Recommends Toll Increase

The NTTA System Finance and Audit Committee received a staff briefing in June, but took no action, on a plan to implement a new distance-based tolling structure for its roadways.  Under the plan, motorists would pay roadway tolls that are based on actual distance traveled.  The recommended toll structure increases tolls by approximately three-and-a-half cents per mile.

If approved by the full board, beginning Sept. 1, three months ahead of a scheduled and previously announced increase, the new toll rate would be 14.5 cents per mile on the Dallas North Tollway and the President George Bush Turnpike (PGBT). This action aligns the tolls with Sam Rayburn Tollway rates and the regional toll rate adopted by the Regional Transportation Council in April 2006.  The average toll road driver with a TollTag is expected to pay an additional $10 a month.  

TollTag rates will remain at 50 cents on the Mountain Creek Lake Bridge and Addison Airport Toll Tunnel.  The rate on Lewisville Lake Toll Bridge, scheduled to open in August 2009, will stay at $1.

After  Sept.  1, the staff proposal recommends a bi-annual increase in the adjusted toll rates in at an annual rate of 2.75 percent.   Those increases would begin in July 2011.  The rates on PGBT Eastern Extension will increase at a rate equal to 3.00% per annum.  An amendment to the project agreement for the Sam Rayburn Tollway was recommended to provide for toll rate increases at a fixed annual rate of 2.75%.  

“We understand that this is a difficult economic time to raise rates,” said NTTA Chief Financial Officer Janice Davis. “But we believe this is the prudent decision that will help maintain the quality of existing roads, fulfill our debt service obligations and meet our regional commitments to finance and build much needed road construction projects.”

Davis said the rate increase is necessary for several reasons, including a response to changes in economic conditions and traffic demand.  The Authority needs to maintain a strong financial position to continue mobility projects and maintain safety and sustainability for the NTTA System.  “We continue to see a decline in traffic,” said Davis. “Transactions through April 2009 are down 4.0% compared to the same period in 2008.” 

The chief financial officer told NTTA’s System Finance and Audit Committee members that 2008 and 2009 revenues are below projections developed two years ago when the economy was more robust. New revenue projections reflect the traffic decline, as well as lower than anticipated TollTag usage and lengthy periods of collection from ZipCash.  Ms. Davis implemented quarterly traffic and revenue updates and annual investment grade traffic and revenue projections to replace previous bi-annual reports last December, in conjunction with the 2009 budget.

The NTTA board members called the decision “tough but necessary,” and reached consensus supporting the new distance-based rate system.

Davis also said the rate increase is needed to protect NTTA’s credit rating, ultimately maintaining NTTA’s access to low cost borrowing.  

“In these challenging times, the rating agencies want to see proof that NTTA’s Board is committed to the maintenance of the Authority’s financial strength and integrity,” Davis said.  “NTTA has already imposed some tough cost-cutting moves for this fiscal year, and the only other way to further increase financial capacity is through a toll rate increase.”

NTTA intends to continue to meet its regional commitments on the Eastern Extension of the PGBT and the Lewisville Lake Toll Bridge; complete the Sam Rayburn Tollway; and support projects such as SH 161 and Southwest Parkway/Chisholm Trail.

A June 2009 report by Moody’s Investor Service outlines the current challenges and the future of the toll road industry.  According to the report, “state and local governments have increasingly tapped toll roads for projects that cannot be funded through direct taxation.  Even as the U.S. Traffic growth stalls or declines, we believe there is a floor to toll-road demand since many connect residential areas to work places, or serve as crucial interstate connectors.  Over the longer term, we anticipate renewed traffic and revenue growth to offset the additional leverage necessary to fund new capital projects and maintain aging infrastructure.”