The state needs bigger toll increases on the Tacoma Narrows Bridge if it wants to get the best bond rates for the new Highway 520 floating bridge and other megaprojects, according to state Treasurer Jim McIntire.
The bridge’s citizens advisory committee recently recommended to the state Transportation Commission that the electronic toll be kept at $2.75 and the manual rate raised from $4 to $5, beginning July 1. That would leave $4.7 million in reserves at the end of the fiscal year, or about a 9.3 percent more than expenses.
McIntire followed the recommendation with new principles his office is developing for toll projects.
“The Treasurer’s Office said if you take what we’re suggesting for 520 but looked at the Tacoma Narrows bridge instead, then our rates would be raised from $4 to $5 (for manual) and ETC (electronic) from $2.75 to $3.75,” said Alan Weaver, the citizens group chairman.
Weaver called it an “11th-hour” development because the citizens committee had already held three public meetings and made its recommendation to the Transportation Commission before hearing from McIntire. Dan O’Neal, a transportation commissioner from Belfair who sits with the citizens group, had warned them that the Treasurer’s Office was looking at a 10 percent requirement, however. That knowledge helped spur the committee to recommend the toll increase. Without one, there would still be $2.3 million in reserves, but it would only be 4.8 percent more than bridge costs.
State law doesn’t stipulate how much must be kept in reserve, only that it be “sufficient” to pay the bond debt and to operate and maintain the bridge. McIntire said the citizens group and Transportation Commission have struggled with what “sufficient” means, and his office was offering its interpretation.
The treasurer says when investors consider buying bonds for future toll projects, the first thing they’ll ask is how the Tacoma Narrows bridge was handled.
“If we can demonstrate that we understand “sufficient” coverage means having some coverage ratio greater than 1 — which wasn’t what we were seeing with the proposal coming from the citizens group — that helps us as we try to go to the bond market,” McIntire said.
Toll-project bonds around the country typically require 75 percent to 100 percent of annual costs be kept in reserve. Those are revenue bonds, however, and backed solely by tolls. The Tacoma Narrows bridge bonds are guaranteed by tolls, gas taxes and the state’s credit.
“So it’s not risky. There’s no reason to have a big reserve account,” said bridge watchdog Randy Boss.
“Sufficient,” Boss said, is “not more than, not less than, just enough to be able to cover costs.” Anything more would just be taking extra dollars out of the community.
“If they think they’re going to increase the rate of reserves on the Tacoma Narrows bridge over and above what the law requires, they’re inviting a lawsuit,” Boss said.
Several Transportation Commission members also believe that the citizens group’s recommendation is unfair, that the gap is too wide between the $2.75 for electronic tolls and the $5 for manual.
The commission must decide in January whether to accept or change the citizens committee’s recommendation. If it changes it, the citizens group can hold another public hearing, though it’s not required. Rep. Larry Seaquist, D-Gig Harbor, says he’s pushing for public meetings to explain the Treasury Office’s new guidelines.