NEW YORK (Standard & Poor's) Jan. 17, 2014--Standard & Poor's Ratings Services said today that its rating on U.S. toll road and tunnel project Elizabeth River Crossing LLC's debt is unaffected following the approval of a reduction in toll rates to start on Feb 1, 2014 on the Midtown and Downtown Tunnels in the Hampton Roads region. The project will receive $82.5 million from Virginia Dept. of Transportation (VDOT) to offset the projected toll revenues. The payments will begin in February 2014 and continue through to the opening of the new Midtown Tunnel and Martin Luther King Freeway Extension, expected no later than Dec. 31, 2016.
The tolls will be 45% and 52% lower in the peak and off-peak periods, with the light vehicles peak period toll at $1.00, down from $1.84. Toll rates will then revert to the original toll schedule once the new tunnel is open. The toll revenues now account for $164 million, or 8%, of total construction costs. The sponsor's $50 million letter of credit remains in place as support for the tolling revenues, which we believe is adequate if there is a construction delay. We believe the VDOT funds are more predictable than toll revenues, and increase cash flow certainty until 2016. Ramp-up and motorists' willingness to pay tolls still remain key project risks.