All are toll road projects that are currently undergoing or have been through a restructuring – or even bankruptcy.  While traditional restructuring tools are certainly available in restructuring toll road deals, toll road restructurings also present unique considerations that warrant special attention.

Toll road revenues have been adversely affected by the economic recession and  rising gas prices, which drove down traffic overall.  The availability of alternative, free public roads has also dissuaded drivers from using toll roads.  In some instances, toll roads have not achieved revenue projections because they were built in anticipation of new housing and commercial developments that never materialized.

Traditional Restructuring Tools

The traditional tools employed with respect to the restructuring of any project finance deal — such as an amendment to the financing documents and/or a conversion of debt to equity — may also be used for toll road matters. In a restructuring of the finance documents, the key constituencies may agree upon extended maturity dates, revised interest rates and amended financial covenants, for example. In the San Joaquin Hills toll road deal, $2.06 billion in toll revenue bonds were restructured by extending maturity dates, revising the debt-service coverage ratio and reducing annual debt service.  Debt restructurings were also implemented for the Dulles Greenway (VA) and Southern Connector (SC) projects.

As an alternative to or in conjunction with a debt restructuring, lenders may seek to convert their debt, in whole or in part, to an equity stake in the project.  The lenders to the South Bay Expressway project in southern California converted part of their debt into equity following the project’s chapter 11 bankruptcy filing in 2010.  Among the factors that lenders will consider in evaluating whether to convert their debt to equity are: (i) whether they want to be in an ownership position; (ii) whether existing equity holders will agree to part with ownership or control and (iii) whether change of control provisions impact the ability to convert.

If the parties seeking to restructure cannot obtain the requisite consents under the governing agreements, they should explore whether the consent requirements under the Bankruptcy Code would permit the proposed restructuring to be achieved.  Confirmation of a reorganization plan under the Bankruptcy Code requires the consent of one-half in number of creditors and two-thirds in dollar amount of each creditor class voting on the plan.  This threshold may be more lenient than the voting thresholds under the applicable credit agreements or bond documentation.

Unique Challenges in Restructuring Toll Road Projects

To have meaningful restructuring negotiations, the parties must develop a collective view about the stabilized cash flow for the project.  Many toll road projects never achieved initial revenue projections; yet, there are various impediments to increasing toll road revenues.  The ability to raise tolls may be limited by applicable concession agreements (discussed below) or by the need to obtain government or regulatory approval.  Of course, toll road operators must consider elasticity of demand and recognize that raising tolls may cause drivers to use alternate routes.

A concession agreement is a grant by the local authority to the toll road operator to operate the road on certain terms.  The terms of any applicable concession agreement may limit the operator’s ability to increase the toll rate, constrain the ability to extend the final maturity date, and render a debt-to-equity conversion unfeasible.  If a concession agreement confers the right to operate a toll road for period of years, the maturity date of the project’s financing obviously cannot be extended beyond the expiry date of the concession agreement.  The local authority may or may not agree to extend the concession; for example, the concession period for the Dulles Greenway was extended from 2036 to 2056 as part of a debt restructuring.  Change of control provisions may likewise impair the ability of debt holders to control the equity in the public-private partnership.  The concession agreement may present other impediments to a restructuring and, therefore, will need to be reviewed and analyzed carefully.

Bonds issued in connection with toll road projects are frequently insured, or “wrapped,” by monoline bond insurers.  The wrap is only as good as financial strength of the wrap provider.  Also, the wrap agreement may exclude individual creditors from participating in the restructuring process or otherwise taking action unless the wrap provider is in default.  Thus, it is essential that investors also scrutinize the wrap agreement in order to forge a means for participating in the process.

“Completion of what will become the new southbound lanes and bridge on Illinois Route 47 is a great sign of progress for this important interchange project,” said Illinois Tollway Executive Director Kristi Lafleur in a written press statement.. “Not only will this project improve access for Tollway customers traveling to and from Huntley, it will also offer opportunities for new jobs and economic development in the area.”

With completion of the traffic shift from Del Webb Boulevard to Big Timber Road, the Illinois Tollway will be able to begin work this winter to demolish the old bridge and roadway pavement and begin construction of a new bridge that will carry northbound Illinois Route 47 traffic when the new interchange opens in 2013. In addition to building the new bridge structures, the project also includes the reconstruction and widening of 1.5 miles of Illinois Route 47 from Big Timber Road to north of Jim Dhamer Drive and Freeman Road.

A work zone will be put in place on Illinois Route 47 and local traffic will continue to have one lane open in both directions on the new southbound bridge during construction. Existing ramps providing access for drivers traveling to and from the east on I-90 will remain open to provide access throughout the project.

About the Illinois Route 47 Interchange Project
The Illinois Route 47 Interchange Project includes construction of six new ramps with all-electronic toll plazas, reconstruction of the bridge carrying Illinois Route 47 over I-90, as well as local traffic signal installation and lighting improvements to provide full access between I-90 and Illinois Route 47.

The $61 million project is being built in partnership with the Village of Huntley, Kane County, McHenry County and the Illinois Department of Transportation (IDOT) as part of the Tollway’s 15-year, $12 billion capital program, Move Illinois: The Illinois Tollway Driving the Future. The interchange is scheduled to be completed in 2013.

Building Green
The project features several new green construction initiatives, including a geothermal water piping system that makes use of the earth’s natural heating and cooling abilities to help heat and cool nearby plaza buildings in a more cost-effective and sustainable manner, reflective roofs and trellised vegetation for plaza buildings to further reduce heating and cooling costs, as well as ramp shoulder pavement that will allow water to seep through and reduce stormwater runoffstormwater runoff.

Getting Tollway Construction Information
The Illinois Tollway has a variety of ways customers can get the latest construction and roadway information, including:

• www.illinoistollway.com – Construction/Planning section and Tollway Trip Calculator
• 1-800-TOLL-FYI – Daily lane closure information
• www.travelmidwest.com – Real-time travel times
• www.nbcchicago.com – Up-to-the-minute traffic by roadway
• www.twitter.com – Real-time roadway incident information at Tollway Trip 90, Tollway Trip 88, Tollway Trip 355 and Tollway Trip 94/294

Like RoadSafe, LyndCo is a full-service provider of temporary traffic control and pavement marking services. LyndCo uses its state-of-the-art equipment combined with expert crews to service its customers in the heavy highway and gas exploration industries. This strategic acquisition allows RoadSafe to continue its expansion into key geographic regions and end markets.

Image courtesy of the Ohio Department of Transportation, http://www.ohturnpikeanalysis.com

Wow. No layoffs and a solid plan to generate funds. Imagine that!

Public-private partnerships have become all the rage and are an excellent, sound opportunity to generate funding to accomplish transportation projects. They are becoming the new norm (outside of the transportation realm as well).

However, I must say, it’s refreshing to hear that the Ohio Department of Transportation (ODOT) has found a way to generate nearly $3 billion for highway and road construction without leasing the Ohio Turnpike – and without laying off Turnpike employees.

The Ohio Jobs and Transportation Plan would generate $1.5 billion in new funds for Ohio highways from bonds issued by the Ohio Turnpike Commission and backed by future toll revenues, according to ODOT. Up to an additional $1.5 billion could be generated from matching local and federal funds coming to a combined total of about $3 billion for Ohio’s major highway construction projects, ODOT says. (To see the complete study, click here for a downloadable PDF.)

Ohio Department of Transportation (ODOT) Director Jerry Wray notes that bonding against future Turnpike revenue generates enough money to erase Ohio’s highway budget.

ODOT has cut the agency’s $1.6 billion highway budget deficit by $400 million, but the agent contends that more money and more innovation is needed. Money generated from the Ohio Jobs and Transportation Plan will help fill budget gap. The launch of the new plan concludes a year-long study of options for the revenue generated by the Ohio Turnpike.

ODOT tells Better Roads that the agency looked at forming a public-private partnership. However, after the results came in from an Ohio Turnpike study ODOT determined that bonding was the best way to generate funds for the overall transportation system in Ohio.  (Look for coverage of the study results in an upcoming blog post on BetterRoads.com and via our social media platforms.)

“This plan just makes sense as we continue Ohio’s economic resurgence, grow jobs and make our state prosperous once again,” Ohio Gov. John R. Kasich said in a written press statement. “Billions of dollars in new highway funds further strengthens Ohio’s jobs-friendly climate and keeps our state moving by delivering more projects faster.”

Kasich, Wray and Ohio Turnpike Director Rick Hodges have started a two-day state tour to unveil what ODOT is  calling its “first-of-its-kind plan” to generate the nearly $3 billion.

“Bonding against future Turnpike revenue generates enough money to erase our highway budget deficit,” Wray said in a press statement. “Combined with ODOT’s work to reduce our cost of doing business and improve service to the state’s motoring public, this plan puts the resources we need into our major construction budget.”

ODOT has cut the agency’s $1.6 billion highway budget deficit by $400 million thanks to new savings and operational efficiencies, but more money and more innovation is needed.  Money generated from the Ohio Jobs and Transportation Plan will help fill budget deficit without raising taxes that would kill jobs. The launch of the new plan concludes a year-long study of options for better using the revenue generated by the Ohio Turnpike.

Phillip L. Parker, president & CEO of the Dayton (Ohio) Area Chamber of Commerce says he commends ODOT “for identifying new revenue opportunities to advance statewide infrastructure projects.” Parker notes that “it is critical that we have an efficient highway system. ODOT has proven that [it is] committed to identifying new and innovative revenue generating opportunities for statewide projects that do not over burden the Ohio business community.”

The proposal by Gov. Kasich’s Administration to keep the Ohio Turnpike in state control while issuing bonds to raise $1.5 billion to fund critical new construction is the kind of innovative thinking that will continue moving Ohio forward, said Chris Runyan, president of the Ohio Contractors Association.

“The governor listened to the people of Ohio,” Runyan said. “He did what he said he would do at the beginning of this process – gather as much data as possible, study it carefully, and reach decisions that are best for all Ohioans.”

Runyan says that  having the Ohio Turnpike Commission (OTC) and ODOT work collectively to address transportation issues “is a huge step forward for the state.”

Under the governor’s plan, the OTC will remain an independent agency, but the two agencies have pledged to work collaboratively on projects outside the OTC’s traditional role, according to the Ohio Contractor’s Association.

The Ohio Jobs and Transportation Plan at a Glance

• No long-term, private lease;
• A continued public, independent Turnpike with expanded authority and renamed the “Ohio Turnpike and Infrastructure Commission”;
• More than 90 percent of new bond money will go directly to northern Ohio highway projects, including the Turnpike itself;
• Rebuilding the Ohio Turnpike will occur decades sooner than planned;
• Tolls for local trips paid with an EZ Pass are frozen for 10 years;
• All other toll rates are capped at inflation, which is significantly less than historic toll increases;
• No Turnpike employee lay-offs are anticipated.

Published by the Federal Highway Administration (FHWA), the MUTCD defines the standards by which public and private transportation professionals install and maintain traffic control devices on all public streets, highways and bikeways, providing guidance on the types of shapes, colors, and fonts, and installation methods that should be used in road markings and signs, as well as standards by which all U.S. traffic control devices must conform.

Steve McGough, chairman of ARTBA’s Transportation Design Construction & Management Innovation Council, and the chief operating officer of Sugarland, Texas-based HCSS, says the e-book will allow road managers nationwide to access critical safety information via their smart phones or tablets right on the job site, or in the office. “This is the latest in an ongoing series of ARTBA innovations that are designed to help industry firms and public agencies operate more efficiently,” McGough explained in a press release.

ARTBA’s MUTCD e-book, available for $29.99 through the www.artbastore.org, is formatted for users to electronically search, find, copy, paste, print, and save both text and graphics by navigating hyperlinks and bookmarking information about traffic control rules and regulations.

Apple’s iBookstore version is viewable from devices such as iPhones, iPads, iPods, and Kindles. Any mobile device can also download the MUTCD through Amazon’s Bookstore.

Last issued in 2009 and containing updates through 2012, the MUTCD is updated periodically to accommodate the nation’s changing transportation needs and address new safety technologies and control tools.

This $134 million design-build project encompasses the widening of 12 miles of I-4 from four to six lanes between SR 44 and I-95, from Deland to Daytona Beach. The existing asphalt pavement will be removed and replaced with concrete pavement.  The bridge over the Tomoka River will be replaced along with the interchange at I-4 and US 92, which will be reconstructed.  As the project is in a wildlife corridor, three new bridges will be installed for large animal crossings in addition to crossings for small animals every half mile.

As the CE&I consultant, Parsons Brinckerhoff is responsible for administration of the design-build contract as well as coordination with all stakeholders. Services to be provided include inspection of construction operations for specification compliance, documentation and resolution of issues, public information, materials testing, schedule reviews, and environmental compliance inspection.

Construction will be completed in December 2014.

If so, you are eligible to participate in the New Product Showcase at Traffic Expo 2013. You will receive signage to be placed on your booth indicating that you have a product that was introduced after the 2012 convention. Also, your product will be considered for the Innovation Awards.

In addition to the product focus on the trade show floor, ATSSA has devoted a section in the Convention Program and Exhibit Guide to include a listing of your product name, product description and booth number. This promotion provides the opportunity to “showcase” your new products, but it also allows attendees to view the most current and innovative technology in the industry.

The following guidelines apply:

• Only exhibiting companies will be allowed to participate.
• The product must have been introduced to the market after Feb. 13, 2012.
• More than one product per company is allowed to be included in the New Product Showcase (maximum of five entries).

If you’d like to be a part of this showcase contained in the official Convention Program and Exhibit Guide, fill out the attached New Product Showcase Form and fax or email it to Catherine Saunders at 540-368-1717 or catherine.saunders@atssa.com by Nov. 9, 2012.

California would have been found in violation of federal highway advertising rules and could have lost as much as 10 percent of its federal highway dollars if Caltrans had lost the appeal.

Caltrans was chomping at the bit on this decision.

Caltrans Director Malcolm Dougherty flat out said, “Losing was not an option on this one. The risk wasn’t just financial. This was a safety issue. L.A. drivers have enough distractions to contend with already.”

Building owners West Washington Properties, LLC had sought $12 million in damages they believed they suffered from being forced to reduce the massive “wallscape” from the side of a building along the Santa Monica (I-10) Freeway at Washington Boulevard, according to Caltrans. The Appellate Court judges unanimously ruled in favor of Caltrans on that point, as well as various other legal challenges including interpretations of the Outdoor Advertising Act.

Caltrans said it had earlier required that the sign be reduced to about a sixth of its original size. What was once an 8,000-square-foot image had become about 1,200 square feet. This provision is included in the state’s Outdoor Advertising Act as well as the 1965 federal Highway Beautification Act that it mirrors.

The matter had previously been heard in a state administrative hearing, Superior Court proceedings and an earlier challenge in the Appellate Court, according to Caltrans.

The wallscape was already on the building when West Washington Partners, LLC purchased it, and the partners apparently believed its long existence would exempt it from enforcement of law. The Department issues valid permits to almost 10,000 displays annually and several hundred notices of violation every year, Caltans says.

But texting while driving can not only cause you to get into an accident, you can hurt or kill others. Now I’m trying to set a good example for my little boys, too. Children DO learn what they live!

Take the pledge: No Texting While on Board!

To like this or tell us you took the pledge, go to the Better Roads magazine’s Facebook Fan Page (You do not have to have a Facebook account to access the page!).

Winning firms were the top honorees of the ARTBA Foundation’s “Contractor Safety Awards,” a program developed to promote worker safety and health as core values of the transportation design and construction industry. Award winners demonstrated a low “OSHA Recordable Rate” as measured against benchmark metrics established by the Bureau of Labor Statistics

Five finalists were selected based on their achievements as evidenced by recordable rates below the industry average and low workers’ compensation experience modifier rates. Representatives from each company were invited to make a presentation before a panel of industry professionals during the ARTBA convention. Judges evaluated the entries based on corporate safety culture, operational safety plans and worker training programs. Awards were presented in three categories, based on the number of employee hours worked during the previous year:

• 500,000 or fewer hours: Sharpe Bros., Greensboro, N.C.
• 500,001 to 1,000,000 hours: Herzog Contracting Corp., St. Joseph, Mo.
• More than 1 million hours: CH2M Hill, Englewood, Colo.

“Safety on the job site is an essential element in long-term business success—especially in the transportation construction industry,” Brad Sant, ARTBA senior vice president for safety and education, said in a press release. “This award honors those firms who have demonstrated industry-leading programs as evidence of their commitment to employee and workplace safety.”