2021 WSTC Tolling Report and Tacoma Narrows Bridge Loan Update
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2021 WSTC TOLLING REPORT & TACOMA NARROWS BRIDGE LOAN UPDATE January 2021 2021 WSTC TOLLING REPORT & TACOMA NARROWS BRIDGE LOAN UPDATE TABLE OF CONTENTS Introduction 4 SR 16 Tacoma Narrows Bridge 7 2020 Commission Action 7 2021 Anticipated Commission Action 7 SR 99 Tunnel 8 2020 Commission Action 8 2021 Anticipated Commission Action 8 SR 520 Bridge 9 2020 Commission Action 9 2021 Anticipated Commission Action 9 I-405 Express Toll Lanes & SR 167 HOT Lanes 10 2020 Commission Action 10 2021 Anticipated Commission Action 11 I-405 Express Toll Lanes & SR 167 HOT Lanes Low Income Tolling Program Study 11 Toll Policy & Planning 12 Toll Policy Consistency 12 Planning for Future Performance & Operations 12 Looking Forward To Future Tolled Facilities 13 2021 Tolling Recommendations 14 Summary of Current Toll Rates and Revenues by Facility 16 2021 Tacoma Narrows Bridge Loan Update 17 2019-21 Biennium Loan Estimates 17 2021-23 Biennium Loan Estimates 18 Comparison of Total Loan Estimates: FY 2019 – FY 2030 18 TNB Loan Repayment Estimates 19 2021 Loan Update: Details & Assumptions 20 Factors Contributing to Loan Estimate Analysis 20 Financial Model Assumptions 21 P age 3 2021 WSTC TOLLING REPORT & TACOMA NARROWS BRIDGE LOAN UPDATE INTRODUCTION As the State Tolling Authority, the Washington State Transportation Commission (Commission) sets toll rates and polices for all tolled facilities statewide, which currently include: the SR 520 Bridge, the SR 16 Tacoma Narrows Bridge, the I-405 express toll lanes (ETLs), the SR 167 HOT lanes, and the SR 99 Tunnel. Washington State Tolling Roles & Responsibilities Washington State Transportation Department of Office of the Legislature Commission Transportation State Treasurer (OST) Responsibility Establish tolling, designate Set toll rates and related Plan, analyze and construct • Responsible for the toll corridors and use of fees facilities, collect tolls, build issuance of toll debt toll revenues and operate toll collection systems Roles • Establish legal toll • Set toll rates within • Develop toll collection • Conducts all financings framework funding requirements systems and procedures for the State of • Authorize tolling in • Set toll exemptions • Collect tolls Washington designated corridors • Establish advisory • Finance improvements • Approve financing plans committees • Operate tolled corridors • Enable tolling practices • Assess financial • Appropriate toll feasibility of toll projects operation budget In determining the need to adjust toll rates, on 2020 Commission Tolling an ongoing basis the Commission monitors the performance of each tolled facility, reviews traffic Activities and revenue data as well as operational cost data, In 2020, the Commission did not increase nor adjust considers projections for future performance, and toll rates on any of the tolled facilities in Washington serves as a public forum in which all this information State. However, the Commission worked closely with can be obtained and which the public can utilize in the Washington State Department of Transportation, offering input for the Commission’s consideration. the Office of the State Treasurer, the Legislature, and As tolling advances and expands in Washington State, the Governor’s Office to monitor changes in traffic the importance of oversight and reporting is critical to and revenue, and to identify options for addressing achieving a transparent and efficient system. To this shortfalls for the current fiscal year (through June 30, end, this report provides an update to the Legislature 2021) and beyond. The Commission also continued to on the Commission’s toll setting activities and findings engage with planning processes for future toll facilities over the past year and sets forth expectations for the and advanced the legislatively directed I-405 Express year ahead. Toll Lanes / SR 167 HOT Lanes Low-Income Toll Study. This report also includes the results of the Commission’s annual assessment of loan amounts necessary to keep Tacoma Narrows Bridge (TNB) toll rates at current levels through the life of the TNB debt service, assuming a 25 cent rate increase in July 2021 or later. The TNB loan program is the result of 2018 legislation establishing the intent to provide loans over the life of the TNB debt, to keep TNB toll rates stable. The Legislation also directed the Commission to report annually on the status of the TNB loans and amounts needed going forward. Tolling gantry P age 4 2021 WSTC TOLLING REPORT & TACOMA NARROWS BRIDGE LOAN UPDATE Washington State has seen a significant decline in traffic remained 15-55% below 2019 levels in the Fall travel across all modes of transportation since mid- of 2020. March 2020, a result of changes to travel behavior Total toll revenue collections for all five tolled facilities from the COVID-19 pandemic and related measures is projected to generate just over $325 million during to reduce further spread of the disease. The length the current biennium (July 1, 2019 – June 30, 2021), of time we will be battling the pandemic remains down by 28% from pre-pandemic projections, or $128 unknown, as do the longevity of changes impacting million less than expected. This decline in revenue travel behavior such as the growth of teleworking, is about 20-80% below forecasted levels between reduction in business travel, and further use of March – October 2020, depending on the facility. delivery services. These impacts have severely stressed the capacity This decline in traffic has greatly reduced toll revenues of toll facilities to meet financial requirements. Initial for each toll facility, with the largest impacts on steps to address these requirements began in 2020 facilities in the urban core of central Puget Sound. and additional steps will be necessary in 2021, and While performance has incrementally improved, possibly beyond. compared to initial declines in March – April 2020, Average daily trips on all toll facilities. Compared to 2019* Source: WSDOT P age 5 2021 WSTC TOLLING REPORT & TACOMA NARROWS BRIDGE LOAN UPDATE Anticipated 2021 Tolling Activities Looking ahead to 2021, based on current forecasts, the Commission anticipates changes to toll rates for the SR 520 Bridge, SR 99 Tunnel, and the TNB. This is subject to on-going monitoring of actual traffic and revenue performance throughout the year, and the possibility of legislative action to address financial commitments. The Commission will continue to engage on toll facility planning in 2021. It will also complete the I-405 Express Toll Lanes / SR 167 HOT Lanes Low-Income Toll Study by June 2021 as required in law. 2021 Tolling Recommendations This report includes Commission recommendations intended to inform legislative options that mitigate financial requirement shortfalls resulting from the unforeseen traffic and revenue impacts of COVID-19, and address options to reduce future financial risks made more evident by COVID-19 impacts. The Commission recognizes that implementing these recommended options may not eliminate the need for toll rate increases in 2021 and possibly beyond, and continues to prepare for such possibilities. Washington State Tolling Facilities P age 6 2021 WSTC TOLLING REPORT & TACOMA NARROWS BRIDGE LOAN UPDATE SR 16 TACOMA NARROWS BRIDGE Scheduled increases in debt service payments require the Commission to regularly review traffic volumes and revenue collections on the SR 16 Tacoma Narrows Bridge (TNB). For example, debt service payments in the 2019-21 biennium increased by nearly 2.5% over the prior biennium ($3.5 million increase) and will increase by 7.6% in the 2021-23 biennium ($11 million increase). These reviews ensure TNB tolls generate adequate revenue to make debt service payments, and to maintain and operate the facility as required in law. Below are the current toll rates. These rates have been TNB Loan Update in effect since July 1, 2015. In 2018, legislation was passed establishing intent to Payment Method Toll Rate provide up to $85 million in loans to keep toll rates Good To Go! pass $5.00 at current levels for the remaining life of the debt service through 2030, with one assumed rate increase Cash at tollbooth $6.00 of 25 cents as soon as July 1, 2021 (FY 2022). To this Pay By Mail $7.0 0 end, in spring 2019 the Legislature provided a loan of For all payment methods, the toll rate increases with each additional axle. $12.543 million which enabled toll rates to remain at current levels for the 2019-21 biennium. Because of COVID-19 impacts TNB toll revenues, from March through October 2020, were 18% below The Commission is required to provide an annual forecasted levels in November 2019. This decline will update on the TNB loan amounts needed to meet require additional revenues for FY 2022 (beginning July the legislative intent. The 2021 TNB loan update is 1, 2021) to ensure financial commitments are met. included on page 17 of this report. At the current loan amount of $12.543 million for 2020 Commission Action the 2019-21 biennium, the TNB Account is projected to have an ending fund balance of $5.1 million at the The Commission did not make any toll rate end of FY 2021 (June 30, 2021). Also, the account’s adjustments for the TNB in 2020. fund balance will not be in compliance with the Commission’s Sufficient Minimum Balance (SMB) 2021 Anticipated Commission policy, from April – June 2021.1 Action The SMB policy requires the Commission to consider The $12.543 million loan provided by the Legislature adjusting toll rates if the TNB Account is projected for the current 2019-21 biennium is expected to to not maintain a retrospective three month rolling remain sufficient for keeping toll rates at their current average fund balance of $10 million. The Commission levels through the end of FY 2021 (June 30, 2021). will work with the Legislature and WSDOT on measures However, for the 2021-23 biennium, to ensure the to address the shortfall in the 2021-23 biennium.