US Department of Transportation signed off on a financial package that could lead to construction of the long-planned US 301 toll road in southern New Castle County from the Maryland/Delaware Line to Route 1 .
The timing of the project now hinges on whether construction bids will come in near projections.
The agreed upon terms include a low-interest, direct loan not to exceed $211.35 million, under the Transportation Infrastructure Finance and Innovation Act (TIFIA) for construction of the US 301 Mainline project. Approval of toll road projects are not automatic. The USDOT loan provides Delaware with several advantage, according to the Delaware Department of Transportation:
– Below market interest rates
– Deferral of interest (five years) and principal payments (10 years) to meet increasing debt service payments as traffic and revenue accelerates
– The deferrals allow the creation of a reserve fund during the first five years of toll operation to create an more financial margin of safety between the US 301 repayment obligations and the state’s Transportation Trust Fund (TTF), which is securing the repayment.
– Reduces cost of capital, increases debt service coverage, and reduces amount of toll revenue bonds required to fund construction. (Click on map below for further details).
Federal approval of TIFIA assistance for construction of the project is one of several final steps necessary for the project to continue toward the start of construction in early 2016.
With the Federal loan commitment now in hand; DelDOT will move this month to verify construction cost estimates through a formal competitive bidding process, a DelDOT release stated.
Assuming these numbers meet project assumptions, additional financing will then be sought through the sale of toll revenue bonds later this year, a DelDOT release stated. The total estimated funding needed to construct the US 301 Mainline is $470 million
“Financial assistance from the US Department of Transportation means two important things for the US 301 toll project,” said DelDOT Secretary Jennifer Cohan. “The first is that the financial and traffic assumptions that underlie the cost recovery aspects of the toll road are workable and sound. The second is the project will receive the benefit of low-cost financing and a deferred repayment schedule giving the road the time it needs to begin generating significant revenue. Receiving approval from the US DOT gives DelDOT great confidence in pursuing this important project.”
The state is decades behind in moving forward on the project. By contrast, neighboring Maryland, long ago, expanded Route 301 to four lanes.
Delaware, meanwhile, has wrestled with a bypass route as population and business activity exploded in Middletown.
Of late the state has struggled with limited revenues for transportation work, thanks in part to the lack of a gas tax increase as gas prices plunge. Legislators, fearing a voter backlash, have continued to look for ways to increase fees and tolls as an alternative.
