Published: July 01, 2008 10:56 pm      

Parkways OKs bond refinancing

Moving to counter a revenue loss prompted by a decline in Turnpike traffic and high interest on unpaid bonds, the West Virginia Parkways Authority agreed Tuesday to refinance its outstanding $59.1 million package for a smaller rate. But that doesn’t mean a future toll increase has been forgotten.

Actually, the action to hire Citigroup as its new underwriter merely moves the authority to where it stood before rates soared to 10 percent.

June traffic plummeted by 6 percent, and that meant a 5 percent drop in toll collections, Manager Greg Barr pointed out.

Under its old arrangement with Financial Guaranty Insurance Co., interest rates were climbing because the firm ran into a quagmire in a national sub-prime trauma and its credit rating slipped from the top-ranked AAA to A3. In June, the 88-mile toll road lost some $250,000, as fewer tolls were collected at the tollgates.

“This extra interest has just been an additional burden,” Barr said.

“By eliminating this, it’s not gaining us money from where we were a few months ago. It’s just getting us to back where we were a few months ago. We can’t afford to pay this kind of interest very long.”

Barr projected a monthly savings of $330,000 by switching underwriters.

Authority Chairman Joe Martin said the savings will remain available for routine uses by the Turnpike, and a principle one entails maintenance and working on deferred projects that were shelved by an interruption in the cash flow.

“This is not new cash,” Martin said, when asked if the savings would influence a potential plea for a toll increase.

“It will not push off into the future any further need for an increase (in tolls).”

The authority jacked up tolls two winters ago, prompting an outcry by the trucking industry and among certain lawmakers. A circuit judge in Kanawha County restored the tolls to the 1981 levels in a class action suit brought by truckers. And, the Legislature enacted a law that requires the authority to give ample notice for public hearings before any future toll adjustments.

Last year, the Public Resources Advisory Group issued a lengthy report, suggesting the authority needs to raise tolls 40 percent this year and again in 2013 to stay abreast of road upkeep.

Otherwise, it cautioned, the Turnpike will be forced to postpone millions of dollars worth of road projects.

“This is substantially lower than the Parkways is currently paying,” Ben Asher of PRAG said before the board unanimously made the change to a new underwriter.

“And it’s in line with the rates we would expect to pay for such a structure, given the high ratings we obtained. I recommend you accept the proposal.”

By refinancing the 2003 bonds, which are due to be satisfied in 2019, Barr said the Turnpike merely is reverting to where it was financially a few months ago, before the spike in rates last Valentine’s Day by FGIC.

In May, the last month for which he had hard figures at hand, Barr said passenger traffic dipped 4 percent and truck users were down 8 percent, and the primary reason was the escalation in fuel prices.

“I look at the newspapers,” he said.

“I talk to my wife. Everything is going up. Food prices. Water bills. Sewage bills. Electricity bills. Fuel prices are going up. It’s a combination of higher prices. Just the overall economic situation of the country where things are going up so fast.”

— E-mail: mannix@register-herald.com