DRPA learns of consequences of delaying toll hikes
CAMDEN, N.J. - December 1, 2010 -- The Delaware River Port Authority on Wednesday decided to scrub its 2011 budget even further to see if it's possible to delay bridge toll and train fare increases, but its financial advisers warned that the delays could have major consequences.
Delaying the increases could lead bond rating agencies to lower their assessment of the DRPA, the advisers said, which could make it harder to raise money for projects or lead a bank to demand the agency put up $220 million in collateral.
One adviser, Barbara Bisgaeir, warned that even discussing putting off the hikes could lead to a lower outlook from one agency.
The board of the Philadelphia-area bridge and train agency has been trying to refocus on its basic mission after outrage erupted earlier this year over employees' free tolls. Since then, the board has tightened ethics laws and renewed its pledge to get out of its often-criticized role as an economic development agency.
On Wednesday, the board agreed to stop operating a cruise-ship terminal in Philadelphia. Business was down from three dozen launches per year to just a few, and closing the terminal could allow for Urban Outfitters to expand its headquarters in the area at the Philadelphia Naval Yard.
Despite the changes, the toll and fare increases looked to deliver another major public-relations hit to the agency. The hikes, the second of two planned increases, are to pay for $1 billion in major capital projects planned over the next several years.
In 2008, PATCO train fares went up by 10 percent and bridge tolls on the Betsy Ross, Ben Franklin, Walt Whitman and Commodore Barry Bridges were raised to $4 from $3 for cars.
The second round of hikes were scheduled for this year, but already have been pushed back to 2011. As it stands now, train rides will cost 10 percent more on Jan. 1, and bridge tolls will rise to $5 on July 1.
There's a move among some members of the politically connected board to delay the increases again.
"If you think bankers and millionaires are feeling it," said commissioner John Dougherty, "imagine how the people crossing the bridge are feeling it."
Dougherty wants to use money once earmarked for projects like building an aerial tram to connect Philadelphia and Camden to be put back into the agency's operating budget and other costs to be cut.
But three financial advisers warned that even measures like those might not be enough to keep the ratings agencies Moody's and Standard and Poor's from downgrading the DRPA. The issue, they said, isn't whether the DRPA can cover its costs this year; it's the long-term bond payments.
They said if the worst happens and the DRPA is required to post $220 million, tolls might have to be raised even higher.
After hearing that on Wednesday, the board directed its staff and the advisers to get a better grasp of the consequences of delaying the increases. A vote on whether to press ahead with them is expected on Dec. 8.
In the meantime, the staff will reassess the 2011 budget that it was planning to present on Wednesday. If tolls and train fares aren't raised as currently scheduled, cuts deeper than the already planned 2 percent would have to be made.
DRPA, travel, new jersey, pennsylvania, philadelphia, local/state
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