OVERVIEW OF TOLL RATE INCREASE
Posted By: Lindsay HodgesRelease Date:3/30/2009
WHO WE ARE:
The Expressway Authority operates more than 100 miles of a transportation network that provides safer, more convenient travel alternatives to help Central Floridians meet the growing needs of their busy daily lives. This network is made up of SR 528 (Martin B. Andersen Beachline), SR 408 (Spessard L. Holland East-West Expressway), SR 417 (Central Florida GreeneWay), SR 429 (Daniel Webster Western Beltway), and the new SR 414 (John Land Apopka Expressway).
The Expressway Authority system is funded by its users. Tolls have not increased in 19 years despite the growing need for transportation solutions in our community. We have been fortunate that, until recently, the area's substantial growth has kept tolls artificially low. This growth has meant more traffic on the system, which allowed us to continue offering significant transportation solutions to Orange County.
THE EFFECT OF THE ECONOMY:
Like most businesses today, the Expressway Authority has found itself having to develop solutions to adapt to these new economic situations. Since the start of the economic downfall, traffic on our system has declined by more than 8% when compared to last year. As we have delved into the downturn in traffic on our system, we have uncovered just how closely we are tied to unemployment in the community. As unemployment has risen, our traffic has declined.
This decrease in traffic and revenues has put pressure on the Authority's debt service coverage ratio, a critical factor in our credit ratings. Risking our credit standings ultimately puts in jeopardy the Authority's operations and financial obligations.
STAYING ON TRACK:
We, as an agency, have looked at many different ways to make cut backs and reduce our operating budget. We have cut our operating budget by over 10%. Unfortunately, this has included reducing the number of toll collectors. In addition, our maintenance budget has been cut significantly, affecting the upkeep of our landscaping throughout our system. While making these tough decisions, our top priorities remain the quality of our roads and the safety of our customers.
In just the past few years alone, we were able to provide SR 429 - an alternative to Interstate 4; SR 414, which provides much relief to US 441; and, the widening of the most commonly used commuter toll road in Orlando, SR 408. We have completed these projects all while continuing to operate with our budget based on the tolls set in 1990.
It is a last resort that we pursued a toll rate increase in such hard times. Unfortunately, we were left without any alternatives. After 11 straight months of substantial declines and with traffic projections showing a continued economic struggle in the near term, the Board approved the first toll increase to our system in 19 years. The Authority's Board was presented several options for how to deal with this economic reality. The Board ultimately approved the option of raising tolls by $.25 at mainline plazas and most ramps (approximately 75% of toll collection sites are impacted), effective April 5, 2009, and implementing a forward looking toll structure that indexes to the Consumer Price Index (CPI) with a 3 percent floor beginning in FY 2012/2013 (and every five years thereafter). When indexing to the CPI, E-PASS customers will pay the exact CPI amount and cash customers will pay the amount rounded up to the nearest quarter.
WHAT THIS MEANS FOR OUR LOCAL ECONOMY:
The Board aimed to address both our financial concerns as well as our ability to operate as an economic engine in Central Florida. Based on the forward looking toll structure passed by the Board, the increase addresses our credit concerns, while also enabling us to accelerate construction projects that are shovel ready. We have highlighted four projects that make needed improvements to the system while injecting $648 million in the local economy and creating over 18,000 jobs.
Further, this also funds our 12-year work program, which makes improvements to all areas of the system, including completing the beltway around Orlando - a project over 30-years in the making - with the addition of the environmentally responsible Wekiva Parkway™. The 12-year workplan is a total investment of over $3.54 billion in the local transportation system and will mean more than 65,000 jobs in Central Florida.
This downturn is not unique to the Orlando-Orange County Expressway Authority. In fact, transportation agencies across the country are in similar situations. The Authority is forced to balance our desire to keep rates attractive to customers while also meeting our financial obligation with bondholders, insurers and other providers. It is our belief that by implementing a forward looking toll program, we can best manage our relationships with our customers and our debt obligations in a manner that allows us to continue as an economic engine in the area.