Governor Kevin Stitt, Dana Weber, David A. Burrage G. Carl Gibson
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Governor Kevin Stitt, Member Ex-Officio Dana Weber, Chairwoman David A. Burrage Vice-Chairman G. Carl Gibson, Secretary & Treasurer Kenneth Adams, Member Guy Berry, Member Gene Love, Member Tim J. Gatz, Secretary of Transportation Oklahoma Turnpike Authority Report to Bondholders Fourth Quarter 2018 Tim J. Gatz Secretary of Transportation and Executive Director Prepared by the Controller Division 3500 Martin Luther King Ave. •P.O. Box 11357 •Oklahoma City, OK 73136-0357 • 405/425-3600 • Fax: 405/427-8246 • www.pikepass.com Dear Oklahoma Turnpike Authority Bondholders: On October 31, 2018, the OTA closed on the delivery of $344.3 million in Series 2018A Second Senior Revenue Bonds. The Series 2018A Bonds were issued for the purpose of financing a portion of the capital costs of certain Turnpike projects and improvements. These bonds were structured as tax-exempt fixed rate “AA-” bonds. The OTA’s total all-in-cost of capital for this transaction was just over 4.15%. With two System-wide toll increases that became effective March 1, 2017, and January 3, 2018, respectively, net toll revenues for the fourth quarter of 2018 reported at $80.2 million, an increase of 3.2% when compared to the same period last year. These toll increases were approved for the purpose of funding the Driving Forward program. Year-to-date net toll revenues surpassed $317.7 million and exceeded budgeted projections. Overall, toll transactions for the fourth quarter remained flat at approximately 46.2 million. Passenger traffic remained consistent while heavy truck traffic reflected a 2.0% increase over the same period last year. Year-to-date revenue fund operating expenses reported at $86.4 million, operating at 9.0% under the 2018 operating budget. Senior and total debt service ratios remain in compliance with the minimum trust requirements. Total debt service coverage exceeds minimum trust requirements on a rolling twelve-month basis by approximately 41%. Chart 1: Two-Year Comparison of Toll Revenues Chart 2: 2018 Revenues - Actual vs. Projections (Cumulative) Millions Millions $30 $350 $25 $300 $250 $20 $200 $15 $150 $10 $100 $5 $50 $0 $0 Jul Jul Jan Jun Oct Jan Apr Feb Sep Jun Dec Oct Aug Apr Feb Sep Nov Dec Mar Aug Nov May Mar May 2017 2018 2018 Projections 2018 2018 Projections Report to Bondholders - Quarter ending December 31, 2018 – Page II Chart 3: 2018 Operating Expenses – Actual vs. Budget Chart 4: Operating Expenses by Division-All Funds Revenue Fund Only (cumulative) For the 12 Months Ended December 31, 2018 Maintenance, Administrative Actual Budget Engineering & Services 100,000,000 Construction $1,866,825 $24,047,437 1.7% 90,000,000 22.4% 80,000,000 Toll & Information PIKEPASS 70,000,000 Technology Operations 60,000,000 $8,759,912 $41,818,290 50,000,000 8.2% 38.9% 40,000,000 30,000,000 20,000,000 Highway Other Patrol 10,000,000 $9,103,302 $21,787,399 8.5% 0 20.3% Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec Fourth Quarter Highlights: • The Authority adopted the calendar year 2019 Annual Budget in December. The 2019 Annual Budget includes a total of $101.0 million for the Operating and Maintenance Budget. Consistent with the current and prior years, division managers will monitor spending levels and make necessary efforts to keep costs at or below budgeted levels. The 2019 Annual Budget also includes estimated expenditures of $43.1 million for the Reserve Maintenance Budget and $77.3 million for the General Fund Budget. The amounts budgeted with the Reserve Maintenance and General Fund Budgets finance the maintenance, rehabilitation and improvements included in the 2019 portion of the OTA’s five-year Capital Plan for the System. • The Driving Forward program continued to progress, with numerous projects now in construction and design. The first eight miles of the 22-mile Turner Turnpike lane expansion between west Tulsa and Bristow was completed during the fourth quarter of 2018. This project expands Interstate 44 from four lanes to six and adds lighting between west Tulsa and Bristow; completion is anticipated in mid-2019. Construction activities also continued on both the John Kilpatrick and Eastern Oklahoma County Turnpikes. • During the fourth quarter, the Engineering Division progressed on the 2018-2022 Capital Plan projects; numerous Capital Plan projects are in the 50% plan development stage. Also, staff began preparing the solicitation process for the next Capital Plan projects. • The Information Technology (IT) Division worked closely with the IT Security Branch of the Executive Division to ensure the OTA’s data and assets are protected. In addition, during the fourth quarter, the IT Division completed the annual Payment Card Industry (PCI) Report on Compliance (ROC). • Interoperability advanced as OTA continued collaborating with agencies nationwide to finalize the National Interoperability (NIOP) business rules and create industry standards. Additionally, OTA became interoperable with the Central Texas Regional Mobility Authority and the Ft. Bend County Toll Road Authority agencies. Also, the testing process continued related to the expansion of interoperability. • The Toll Operations Division continued with the upgrades for the violation enforcement cameras throughout the system. Report to Bondholders - Quarter ending December 31, 2018 – Page III • In the fourth quarter, maintenance crews responded to hazardous winter conditions by sanding and treating approximately 13,000 lane miles. In addition, the Maintenance Division, supplementing labor through supervised inmates and contractors, completed various System repairs. With combined efforts, approximately 762,000 linear feet of joints and cracks were sealed and 12,000 square yards of drainage repairs were completed. The Maintenance Division also performed brush and weed control and maintained approximately 12,000 acres of vegetation management. • As of December 31, 2018, the total number of active PIKEPASS tags exceeded 1.8 million, an increase of 5.4% when compared to the same time last year. PIKEPASS patrons continued to take advantage of the PIKEPASS volume discount program with approximately $1.3 million in discounts issued to frequent patrons of the System during the fourth quarter of 2018. The PIKEPASS Division continued to assist customers with questions regarding NTTA and KTA interoperable transactions, PlatePay issues and other general information. • The OHP troopers continued their efforts to achieve safe patron travel through several enforcement programs. In the fourth quarter of 2018, OHP troopers made approximately 26,700 violator contacts and assisted over 4,500 motorists. Respectfully, Dana S. Weber Chairwoman of the Authority Tim J. Gatz Secretary of Transportation and Executive Director of the Authority Report to Bondholders - Quarter ending December 31, 2018 - Page IV OKLAHOMA TURNPIKE AUTHORITY TABLE OF CONTENTS December 31, 2018 Schedule Page Statements of Net Position 1 Schedule of Deposits and Withdrawals 2 Statements of Revenues, Expenses and Changes in Net Position 3 Statement of Revenues - Total All Turnpikes 4 Statement of Revenues - Turner Turnpike 5 Statement of Revenues - Will Rogers Turnpike 6 Statement of Revenues - H. E. Bailey Turnpike 7 Statement of Revenues - Muskogee Turnpike 8 Statement of Revenues - Indian Nation Turnpike 9 Statement of Revenues - Cimarron Turnpike 10 Statement of Revenues - John Kilpatrick Turnpike 11 Statement of Revenues - Cherokee Turnpike 12 Statement of Revenues - Chickasaw Turnpike 13 Statement of Revenues - Creek Turnpike 14 Schedule of Cash, Cash Equivalents and Investments 15 Schedule of Bonds Issued, Retired, Defeased and Outstanding 18 Schedule of Sales of Surplus Property 18 Prepared by the Controller Division Report to Bondholders - Quarter ending December 31, 2018 - Page 1 ***PRELIMINARY AND UNAUDITED*** Oklahoma Turnpike Authority Statements of Net Position December 31, 2018 and 2017 2018 2017 Assets: Current assets: Cash and cash equivalents-unrestricted $ 151,572,839 $ 98,422,132 Investments-unrestricted 9,411,703 11,947,420 Cash and cash equivalents - restricted 797,139,390 720,910,996 Investments-restricted 50,569,337 59,717,475 Accounts receivable 15,222,143 7,912,029 Accrued interest receivable-unrestricted 36,570 46,875 Accrued interest receivable-restricted 1,827,854 238,526 Tag inventory 3,090,569 2,945,346 Materials inventory 5,694,046 5,687,091 Prepaid expenses 314,689 331,614 Total current assets 1,034,879,140 908,159,504 Noncurrent assets: Cash and cash equivalents - restricted 74,337,450 53,374,767 Investments-restricted 116,477,287 119,988,595 Total noncurrent cash, cash equivalents and investments 190,814,737 173,363,362 Capital assets: Depreciable, net 914,712,735 887,741,183 Land 273,749,863 221,993,945 Construction work in progress 550,878,274 308,200,056 Net capital assets 1,739,340,872 1,417,935,184 Total noncurrent assets 1,930,155,609 1,591,298,546 Total assets 2,965,034,749 2,499,458,050 Deferred Outflows of Resources: Unamortized net deferred debit on refunding 86,491,258 97,209,151 Related to pensions 4,753,522 4,753,522 Total deferred outflows of resources 91,244,780 101,962,673 Liabilities: Current liabilities: Accounts payable and accrued expenses 31,365,831 15,561,938 Payable from restricted assets: Accounts payable and accrued expenses 43,003,984 15,556,294 Accrued interest payable 37,382,394 21,154,834 Unearned revenue 34,619,996 32,193,665 Current notes payable and long-term debt 71,644,991 73,039,991 Total current liabilities 218,017,196 157,506,722 Noncurrent liabilities: