Comprehensive Annual Financial Report Fiscal Year Ended December 31, 2017 Providing a Better “Mobile” Customer Experience NORTH TEXAS TOLLWAY SYSTEM (An Enterprise Fund of the North Texas Tollway Authority) Our Mission KENNETH BARR Chairman Fort Worth Tarrant County To provide a safe Appointee and reliable toll road BOARD OF DIRECTORS system, increase value and mobility BILL MOORE WILLIAM D. ELLIOTT Vice Chairman Director Plano Ravenna options for our Collin County Gubernatorial Appointee Appointee customers, MOJY HADDAD JOHN MAHALIK operate the Authority Director Director Arlington Carrollton Tarrant County Denton County in a businesslike Appointee Appointee manner, protect our bondholders, and MICHAEL NOWELS GEORGE (TEX) Director QUESADA Lewisville Director partner to meet Denton County Dallas Appointee Dallas County Appointee our region’s growing need for future CARL O. SHERMAN JANE WILLARD Director Director Dallas Celina transportation Dallas County Collin County Appointee Appointee infrastructure. GERALD CARRIGAN Executive Director HORATIO PORTER Chief Financial Officer STATISTISTICAL SECTION INTRODUCTORY & SUMMARY (continued) SECTION 75 Debt Service Coverage Ratio i Letter from Horatio Porter, CFO 76 Demographic and Economical Statistical Data 79 North Texas Four County Region's Top Ten v GFOA Certificate of Achievement Employers vi Organizational Chart 80 Contribution to Infrastructure Assets S1 Summary of Progress 81 Toll Collection Variance S3 NTTA Snapshot of 2017 82 Total Lane Miles Operating and NTTA Employee Data S5 Capacity and Maintenance Improvement Projects CONTINUING FINANCIAL DISCLOSURE SCHEDULES FINANCIAL SECTION SECTION (Unaudited) 1 Independent Auditors’ Report 83 Schedule 2 – Consolidating Schedule for Capital 4 Management’s Discussion and Analysis (MD&A) Improvement Fund Basic Financial Statements 84 Schedule 3 – Schedule of Budget and Actual 14 Statement of Net Position Revenues and Expenses on Trust Agreement Basis 16 Statement of Revenues, Expenses 85 Schedule 4 – Schedule of Changes in Net Position by and Changes in Net Position Trust Account 17 Statement of Cash Flows 87 Schedule 5 – Schedule of Toll Revenue and Traffic 19 Notes to Basic Financial Statements Analysis 88 Schedule 6 – Schedule of Toll Rates Required Supplementary Information 55 Modified Approach-Infrastructure 89 Schedule 7– Schedule of Historic Traffic, Toll 57 Schedule of Changes in Net Pension Liability Revenues and Net Revenues (Asset) and Related Ratios 90 Schedule 8 – Schedule of Capitalized Costs by Project 58 Schedule of Employer Contributions 92 Schedule 9 – Schedule of Deferred Study Costs – 59 Schedule of Funding Progress Other AUTHORITY TOLLWAY TEXAS NORTH Postemployment Benefits Feasibility Study Fund 60 Schedule 1 – Schedule of Net Position by Trust Account STATISTICAL SECTION (Unaudited) 63 Introduction to Statistical Section 64 Net Position by Component 65 Statement of Revenues & Expenses and Changes in Net Position 66 Traffic and Toll Revenue 67 Toll Rates (by Toll Plaza and Class of Vehicle) FINANCIAL REPORT ANNUAL 2017 COMPREHENSIVE 72 Ratio of Outstanding Debt by Type 73 Ratio of Revenue-backed Debt Outstanding 74 Schedule of Pro Forma Debt Service Requirements i | LETTER FROM THE CFO “The Authority is committed to being a careful steward of all resources placed in its care...” Horatio Porter, CFO NTTA CFO Horatio Porter showcases the 2016 Transparency Stars Award in the area of Traditional Finances with Board member John Mahalik. LETTER FROM THE CFO ii Chairman Kenneth Barr, And the Board of Directors North Texas Tollway Authority The Finance Department of the North Texas Tollway Authority (the Authority or NTTA) is pleased to submit the Comprehensive Annual Financial Report (CAFR) for the year ended December 31, 2017 in compliance with Section 711 of the Amended and Restated Trust Agreement. The CAFR is intended to provide detailed information on the financial condition of the North Texas Tollway System (the System), an enterprise fund of the Authority at December 31, 2017, including the North Texas Tollway System and the Non-Major Enterprise Fund. On November 1, 2017 in conjunction with the issuance of the Series 2017A and Series 2017B Revenue Refunding Bonds and applications of the proceeds thereof the Special Projects System (SPS) debt was defeased and all liabilities of the SPS were paid. Additionally, the President George Bush Turnpike Western Extension (PGBT WE) and the Chisholm Trail Parkway (CTP) were transferred to and became part of the NTTA System. Following the SPS combination, the System consists of the Dallas North Tollway (DNT), President George Bush Turnpike (PGBT), President George Bush Turnpike Eastern Extension (PGBT EE), President George Bush Turnpike Western Extension (PGBT WE), Sam Rayburn Tollway (SRT) previously known as State Highway 121, Mountain Creek Lake Bridge (MCLB), Addison Airport Toll Tunnel (AATT), Lewisville Lake Toll Bridge (LLTB), and the Chisholm Trail Parkway (CTP). The Non-Major Enterprise Fund is a fund for Tolling Services Agreements (TSAs). The following represent the three type of TSAs: (1) Developer TSAs, where NTTA has collection exposure and is paid a fee to process each transaction (2) Developer TSAs where NTTA remits only amounts collected and is paid a fee to process each transaction and (3) Regional TSAs facilities where NTTA remits only amounts collected and is reimbursed for operating expenses from the Texas Department of Transportation (TxDOT). Developer TSA (type 1) facilities presently consist of Interstate Highway 635 (LBJ) and North Tarrant Express 1&2 (NTE 1&2). Developer TSA (type 2) facilities presently consist of North Tarrant Express 3B (NTE 3B). Regional TSA (type 3) facilities presently consist of DFW Connector (DFWC), I-30, I-35E, SH-114 and I-635 (LBJ East). Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that has been established for this purpose. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute assurance that the financial statements are free of any material misstatements. Crowe Horwath LLP, an independent audit firm, has issued an unmodified (“clean”) opinion on the North Texas Tollway System’s financial statements for the year ended December 31, 2017. This independent auditors’ report is located at the front of the financial section of this report. Management’s discussion and analysis (MD&A), immediately follows the independent auditors’ report and provides a narrative introduction, overview and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. NORTH TEXAS TOLLWAY AUTHORITY 2017 COMPREHENSIVE ANNUAL FINANCIAL REPORT iii | LETTER FROM THE CFO Profile of the North Texas Tollway Authority The Turnpike Act of 1953 was passed by the legislature and signed into law by Governor Allan Shivers on June 9, 1953 creating the Texas Turnpike Authority for the purpose of building and managing an expressway between Dallas and Fort Worth. After the initial design was completed in December 1954, $58,000,000 of bonds were sold to construct the expressway called the Dallas-Fort Worth Turnpike. The turnpike was dedicated on September 5, 1957 and by November 8, 1957 had already served one million patrons. In 1962, the Dallas Central Business District Association petitioned the Turnpike Authority to investigate the feasibility of a turnpike linking the central business district with north central Dallas. In June 1965, bonds were sold and the Dallas North Tollway was in business. The first segment of the tollway from downtown to Mockingbird Lane opened to traffic on February 11, 1968 and the next segment to Royal Lane, was opened to traffic on June 30, 1968. In 1997, the Texas Legislature created regional tollway authorities and the current North Texas Tollway Authority was born. The Authority is committed to being a careful steward of all resources placed in its care – financial, physical and environmental. The Authority is a public organization chartered by the state of Texas and every toll collected is reinvested in the region. Toll revenues, in 2017, net of bad debt expense were $722,357,187, representing an increase of 7.0% over 2016 toll revenues of $675,005,210, net of bad debt expense. This increased revenue will allow the Authority to preserve current assets, fund capital improvement projects, satisfy debt service obligations and invest in safety and technology to provide our patrons world-class service. The operations of the System are accounted for as an enterprise fund in accordance with United States generally accepted accounting principles (GAAP). Management takes responsibility for the accuracy of the data and the completeness and fairness of the presentation, including all disclosures. In keeping with that responsibility, these statements are presented on a consolidated basis and include the NTTA System and the Non-Major Enterprise Fund for Tolling Services Agreements (TSAs). Management confirms that the financial statements are presented fairly and in all material respects, represent the financial position of the System as of December 31, 2017. Please refer to the MD&A on pages 4-13 of this report for a detailed discussion of the System’s financial performance. Economic Development Dallas-Fort Worth (DFW) is one of the top regions in the nation