Case Studies

  • North Carolina Turnpike Authority (NCTA)

    The PFM Transportation Group serves as financial advisor to the North Carolina Turnpike Authority (“NCTA” or “Authority”), a separate business unit of the North Carolina Department of Transportation (“NCDOT”).  We also provide state transportation planning services to NCDOT.  NCTA was created in 2002 as a start-up organization to study, plan, develop, construct, operate, and maintain the state’s first toll roads. PFM was retained by the Authority in early 2006 to develop and implement financing plans for each of the Authority’s five toll projects.  In 2010, NCTA was merged into NCDOT as a special unit of NCDOT, while retaining the same tolling powers and mission.  PFM has assisted both NCTA and NCDOT in executing several new liens, programs and innovative financings.

    PFM has performed extensive technical analysis and due diligence for NCTA/NCDOT, with the objective of developing financial feasibility plans for its toll projects.  In 2009, NCTA reached a financial close on the $1 billion Triangle Expressway project, the state’s first toll road, which is located in the Raleigh-Durham area.  This groundbreaking project was the first start-up toll road project to close after the financial crisis and consisted of a bi-furcated lien, made up of state highway annual appropriations bonds and toll revenue bonds, as well as a TIFIA loan, a structure that was originally conceived by PFM and accepted by the market and rating agencies.  NCTA also issued the State Appropriation Bonds for the Monroe Connector project in October of 2011 as Build America Bonds (BABs), ahead of the toll revenue financing, to take advantage of the BABs window. 

    General Transportation Revenue Bonds.  Several NCTA projects will receive annual state appropriation funds in addition to the toll revenues generated by each project.  The state appropriation funds are allocated from NCDOT’s Highway Trust Fund, which consists of various transportation-oriented tax and non-tax pledges.  PFM evaluated the benefits of issuing a combined credit backed by state appropriation revenues and toll revenues for Triangle Expressway and ultimately recommended a bi-furcated lien to take advantage of the State’s high credit rating and improve the plan of finance with a lower overall cost of funds.  PFM was instrumental in helping craft the indenture and in recommending the use of BABs, which further enhanced the project’s cash flow. 

    Toll Revenue Financings.  Generally, NCTA’s financing plans use tax-exempt toll revenue bonds as the primary method of financing and are designed to meet the standards of the ratings and investment communities.  PFM also helped to craft several NCDOT guaranties to strengthen the toll revenue credit such as O&M, R&R and construction completion guaranties, and worked closely with the project engineers to develop design/build contract documents that would support investment grade credit ratings for the all of NCTA’s projects As a result, NCTA/NCDOT achieved investment grade ratings for the first project, the Triangle Expressway.  We also reviewed and commented on all aspects of the traffic and revenue forecast, including sensitivity analyses designed to satisfy credit markets. Triangle Expressway received investment-grade ratings from all three rating agencies and PFM is currently working on financing for three additional new toll roads including the Monroe Connector, Gaston Parkway and Cape Fear Skyway, as well as one P3 financing for a new toll bridge across the Mid-Currituck Sound.

    TIFIA.  PFM assisted with obtaining the State’s only TIFIA loan, a low-cost, subordinate, flexible financing tool for Triangle Expressway. PFM assisted with the original application, negotiations and closing of the TIFIA loan with the U.S. DOT. PFM is also responsible for annual updates to the plan of finance to meet TIFIA requirements. 

    Public-Private Partnerships (P3s).  P3s can include structures ranging from incorporating fixed design/build private sector contracts to long-term concessions.  While NCTA’s toll road projects are being contemplated as tax-exempt municipal financings, each is being developed with attributes of public-private partnerships, including fixed-price design/build construction contracts and privatized toll collections, operations and maintenance.  In addition, PFM is advisor on the state’s first anticipated long-term concession for a new toll bridge over the Mid-Currituck Sound leading to the Outer Banks.  This is being done with an innovative pre-development agreement (PDA), in which a concessionaire partner (ACS Dragados) was selected after an RFP process that PFM helped structure and manage.  PFM and NCTA are working with the private partner to develop tasks, cost sharing and risk sharing. PFM assisted with the bridge design, tolling regime, traffic and revenue study and P3 financial modeling.  The project has achieved several milestones including, most recently, a determination of financial feasibility. It is proceeding forward with negotiations of the business terms. 

    Comprehensive Transportation Planning.  As part of a multi-disciplinary team, PFM is working with NCDOT on its 2040 transportation plan update.  PFM’s tasks include transportation revenue projection and development of a statewide transportation funding model.  This model will incorporate not just baseline revenue estimates and project needs but also tolling opportunities, GARVEE Bonds, P3s initiatives and NCDOT’s Mobility Fund, which is envisioned to function as a revolving loan fund. 




    These materials are based on factual information from actual projects that The PFM Group of companies has engaged in for a client. They are for general information purposes only and are not intended to provide specific advice or a specific recommendation. The results of individual projects will vary significantly depending upon the size and structure of each transaction, permitted investments, prevailing market conditions at the time of the transaction, and other events or circumstances beyond our control. Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in these case studies is not an offer to purchase or sell any securities.