Published: December 11, 2008 10:26 pm      

Legislature could float new bond to ease toll hike

’Pike manager explains options as $238 million in deferred repairs faces board

Faced with $238 million in deferred maintenance spread over a five-year span, turnpike manager Greg Barr suggested Thursday the Legislature could float a new bond to finance upkeep in a timely manner and avert a sharp increase in tolls.

Barr emphasized at a monthly meeting of the toll road’s governing board, the West Virginia Parkways Authority, he wasn’t recommending a new bond.

Yet, afterward, the turnpike manager said a fresh bond could help soften the blow of an anticipated hike in tolls — the first one since 1981.

Last week, the authority’s main committees learned from maintenance supervisor Ron Hamilton that the 88-mile roll road is looking at $238 million in deferred repairs the next five years, about $60 million of which could be financed with existing tolls.

“That’s a lot of money,” Barr said.

Barr likened the idea of a bond to a young family investing in a new house without the ready cash to pay off the entire dwelling at once and assumes a long-term mortgage.

“Do you finance it over 10 to 15 years, and then tolls don’t have to be raised as much, because you’re making monthly payments on the bonds?” he asked.

“That’s an option. Whatever financial decision is arrived at, the Legislature would have to approve it. I’m not saying that’s going to be done. I’m just saying if you’re going to buy a house, you’re going to put all your savings and all your money up front. I don’t have that much, but I need a house. Or just not make the repairs and limp along.”

Board member Vic Grigoraci raised the prospect of repercussions from the bond holders if repairs are on the shelf too long.

Barr acknowledged that Grigoraci raised a valid and frightening point, as the board member pointed out that, contrasted with a year ago, the turnpike has absorbed a net revenue loss of $5.5 million.

Bonds are written to include a coverage test, so that once the needed maintenance, renewal and replacements are made, as specified by the consulting engineer, the question arises, is there sufficient money to satisfy the debt service on them, Barr pointed out.

“That’s the predicament you get into if things go too far along — the cost of repairs or maintenance may exceed your ability to still pay the debt service and still have enough liquidity to satisfy the bond markets,” Barr said.

As far as issuing a new bond, Barr added, “That’s up to the Legislature. They could do it.”

Just recently, Parkways Chairman Joe Martin erased any doubts that a new toll schedule is imminent, telling the board it has become inevitable, what with growing needs and diminished revenues.

One was imposed almost three years ago without public notice but it was quickly reversed by a circuit judge in Kanawha County in a class-action lawsuit by trucking outfits. Barr has said the next increase likely would take six months to become effective, since the short-lived one of 2006 prompted the Legislature to insist on public hearings in the four counties touching the Princeton-to-Charleston road — Mercer, Raleigh, Fayette and Kanawha.

“If it involves tolls, it will definitely be no surprise to anyone,” Barr said. “There will be a lot of transparency.”

Over the past 12 months, the turnpike has been witnessing an average loss of 5 percent in tolls contrasted with the same months a year ago, but in November, it shot up to an all-time reduction of 8.9 percent, even with the surge of holiday travelers during Thanksgiving week.

With the Federal Highway Fund nearly bankrupt, Barr said he hopes President-elect Obama follows through on a pledge to revamp infrastructure needs across the country.

“Just where the money will come from is the question,” he said.