Project Update(This site last updated on Wed, 18-November-2015, 02:50:19 PM, EDT)
Inclement Weather Date: Monday, December 14, 2015
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RECENT PROJECT ACTIVITIES
In August 2015, the US Department of Transportation (USDOT) approved a direct loan, not to exceed $211.35 million, under the Transportation Infrastructure Finance and Innovation Act (TIFIA) for construction of the New US 301 Mainline toll project from the Maryland/Delaware Line to SR 1.
The USDOT loan provides several advantages, including:
- Below market interest rates
- Deferral of interest (five years) and principal (10 years) payments to meet escalating debt service proportional to increasing traffic and revenues
- The deferrals allow the creation of a reserve fund during the first five years of toll operation that provide an additional financial margin of safety between the US 301 repayment obligations and the Transportation Trust Fund (TTF), which is securing the repayment.
- Reduces cost of capital, increases debt service coverage, and reduces amount of toll revenue bonds required to fund construction.
Approval of the TIFIA Loan means the US 301 Mainline toll project has passed another major milestone towards its eventual construction.
Other crucial project elements, including property/right-of-way acquisition, final design/preparation of construction contract documents, securing the necessary environmental permits, and advance utility relocations have already been funded and are nearing completion. The final cost of these activities are projected to be under budget.
New US 301 Mainline Financial Plan
As presented and discussed at a September 2011 public workshop, one of the critical next steps for the construction of the US 301 project was to develop a detailed financial plan for constructing the project. Because the US 301 Mainline will become a toll road, an important element of the plan involved the projection of traffic volumes and expected toll revenue.
In September 2013, DelDOT received a requested second independent traffic and revenue (T&R) study for the project. The September 2013 report revised downward the number of vehicles projected to use the new US 301 Mainline. Since that time, the T&R report has been updated twice with the projected US 301 traffic volumes remaining virtually unchanged. These updated traffic and revenue projections were used to develop the financial plan submitted to the Federal Highway Administration and approved for TIFIA assistance.
From the onset of the planning process for this project, DelDOT has worked to develop and refine a US 301 Mainline Financial Plan based on the goal of having those who use the new road pay for its construction, operation and maintenance.
This goal was discussed extensively with elected officials, presented to the public, and noted in the Draft Environmental Impact Statement (DEIS), Final Environmental Impact Statement (FEIS) and Record of Decision (ROD), i.e., to implement the New US 301 Mainline as a self-supporting project, with US 301 toll revenues funding all debt service, operation and maintenance costs (O&M), and repair and rehabilitation costs (R&R).
Although debt service would be secured by the State Transportation Trust Fund (TTF) to achieve enhanced bond ratings, the goal remains to avoid the use of TTF revenues and avoid any impact on the statewide Capital Transportation Program.
DelDOT believes this goal is now potentially more attainable, as a result of successful negotiations with the USDOT for a low interest TIFIA loan. However, we still intend to adhere to a financial due diligence approach, as noted below, regarding construction cost estimates versus actual construction bids received.
New US 301 Mainline construction is projected to be funded with the following sources:
|$241 million||US 301 Toll Revenue Bond (40 year maturity with subordinate lien on TTF pledged revenues)|
|$211 million||TIFIA Loan (35 year maturity)|
|$ 18 million||2010 GARVEE Bond Proceeds (resulting from PE and ROW being under budget)|
At 100%, 90% and 85% of the projected traffic and revenue forecasts, the Financial Plan projections indicate sufficient revenues to cover debt-service payments, the operating and maintenance expenses (O&M) of the road, and also fund the Repair and Replacement (R&R) account.
The Financial Plan will be updated in October 2015 prior to the final decision regarding the sale of the toll revenue bonds, as noted in the Financial Due Diligence Approach.
Financial Due Diligence
DelDOT's financial approach includes securing two construction bids, Contracts 1A and 2A, which represent about 55% of the estimated construction cost. This approach provides the opportunity to consider the reasonableness of assumed construction cost estimates, the final bond ratings, the current interest rates, etc. as part of the Financial Plan update, prior to the final decision regarding the sale of the toll revenue bonds.
Noted below are the projected “near term” activities and schedule, along with a listing and location map of the proposed construction contracts.
- Aug 2015 - Notify Contractors – Plans, Specifications, and Quantities available for informational use only
- Aug/Sep 2015 - Advertise for Bids – 2 largest construction contracts (55% of total construction cost)
- Sep/Oct 2015 - Receive construction bids for two largest contracts
- Oct 2015 - Secure final ratings from Moody’s and S&P and update Plan of Finance (cost estimates, traffic and revenue projections, interest rates, etc.)
- Oct 2015 - After review of updated Financial Plan, Secretary DelDOT, Director OMB, Secretary Finance, Co-Chairs Bond Bill, and Controller General make decision on sale of toll revenue bonds
- Dec 2015 - Sell Toll Revenue Bonds, and close on TIFIA Loan
- Jan 2016 - Begin Construction
- Dec 2018 - Open US 301 for toll revenue service
|1A||US 301 SR 896 to SR 1|
|2A||US 301, Levels Road to Summit Bridge Rd|
|3||US 301, Maryland State Line to Levels Rd|
|1C||US 301, Norfolk Southern RR to SR 896|
|1D||US 13 and Port Penn Rd Intersection|
|1B||US 301 & SR 1 Interchange|
|2B||Summit Bridge Road & Armstrong Corner Rd Intersection Improvements|
Construction contract limits established to:
- Minimize and manage construction risks (minimize contractor interfaces)
- Minimize coordination/interfaces between contractors
- Optimize competition (regional and local)
- Complete construction in a timely and cost effective manner
CONSTRUCTION INFORMATIONAL MEETINGS (CIMs)
As the US 301 project moves to the construction phase, it is important that the extensive proactive public outreach that has been a significant part of the project from inception continue. Therefore, the project team will conduct periodic public Construction Informational Meetings (CIMs) from the potential start of construction through the completion of construction.
The purpose of the CIMs will be to keep the public informed about the construction including any events that might impact the community. The CIMs will provide the following:
- Construction update on what has transpired since the last CIM
- Preview construction activities that will take place between the current CIM and the next CIM
- Notice of detours or other activities that may impact the public
- Opportunity for the public to ask questions or seek additional information
The CIMs will complement other public outreach initiatives, including website updates, press releases, etc.