Managed Lanes: The Fitch...

Managed Lanes: The Fitch Approach

Saavan Gatfield, Senior Director

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www.fitchratings.com 7/2/14

HOT Lanes Getting Hotter

As of 4/27/14 Sources: HNTB Corporation; GAO analysis of USDOT, state departments of transportation; and local authorities’ information

Priced Managed Lanes Across the United States

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Policies Matter

7/2/14

$0$5

$10$15$20$25$30$35$40$45

I-35WMinneapolis,

MN

I-394Minneapolis,

MN

I-25 Denver,CO

I-15 SanDiego, CA

I-10 Houston,TX

I-95 Miami,FL

SR-91Orange

County, CA

Operating Managed Lanes

Annual Toll Revenue and Operating Cost

Annual Revenues (Millions) Annual Operating Costs (Millions)

Hov 3+

Hov 2+

Source: FHWA Managed Lanes Handbook

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Low Average Time Savings Observed

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$0

$1

$2

$3

$4

0

1

2

3

4

12:00:00 AM 6:00:00 AM 12:00:00 PM 6:00:00 PM

Minutes Saved

I-95 Northbound Travel Time and Tolls (2012)

Minute Saved Typical Price

Source: FDOT

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ML Volume Volatile, Even in Congested Corridor

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-20%

-10%

0%

10%

20%

30%

1998 2000 2002 2004 2006 2008 2010 2012

Percentage Change Global ADT General Purpose ADT SR 91 ADT

91 Express Lanes Average Daily Traffic

Source: OCTA

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Evolution of ML Traffic

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0200400600800

1,0001,2001,4001,600

12:00:00 AM 6:00:00 AM 12:00:00 PM 6:00:00 PM

Average Vehicles Per Lane Per Hour (VPLPH) 2009 2010 2011 2012 1H 2013

Source: FDOT

95 Express Lanes – Northbound Annual ML Traffic by Hour

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Change in Toll Rates

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$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

12:00:00 AM 6:00:00 AM 12:00:00 PM 6:00:00 PM

Typical Toll Rate 2009 2010 2011 2012 1H 2013

95 Express – Northbound Annual Typical Toll Rate by Hour

Source: FDOT

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Volume to Capacity and Toll Price Affect Capture Rate

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95 Express Lanes (FL) Northbound –2012

Source: FDOT

$0.00

$0.10

$0.20

$0.30

$0.40

0%

20%

40%

60%

80%

100%

120%

140%

12:00:00 AM 6:00:00 AM 12:00:00 PM 6:00:00 PM

Volume/ GP Capacity Capture Rate Typical Toll/ Mile

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Understanding the Project

What? Why?

Where? When?

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* Strength of service area

* Competing facilities?

* Connected locations

* Radial v circumferential?

* One/two directional traffic?

* Regional travel patterns

* Ingress / egress

* Lane barriers

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Where does it fit in the system? Who uses it? Why? When is it busy?

How Often? Who? What For?

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* 2012 data based on U.S. Department of Transportation’s (U.S. DOT) Traffic Volume Trends report. Previous years based on U.S. DOT Highway Statistics series of reports Source: US Department of Transportation

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0

12,000

10,000

8,000

6,000

4,000

2,000

0

1946

19

48

1950

19

52

1954

19

56

1958

19

60

1962

19

64

1966

19

68

1970

19

72

1974

19

76

1978

19

80

1982

19

84

1986

19

88

1990

19

92

1994

19

96

1998

20

00

2002

20

04

2006

20

08

2010

20

12*

Vehicle Miles Traveled (VMT)

VMT per capita Vehi

cle-

Mile

s Tr

avel

ed, U

.S. (

mill

ions

)

VM

T P

er C

apita

National Declining Per-Capita Driving Trend

7/2/14

Population Growth Critical

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States with Highest Forecast Population Growth

Pop Increase

2000–2030 (mm) 2030

Pop (mm)

Annual Pop

Growth Rate 2000–2030

2030 Rank

1 Florida 12.7 28.7 2.0% 3 2 California 12.6 46.4 1.1% 1 3 Texas 12.5 33.3 1.6% 2 4 Arizona 5.6 10.7 2.5% 10 5 North Carolina 4.2 12.2 1.4% 7 6 Georgia 3.8 12.0 1.3% 8 7 Virginia 2.7 9.8 1.1% 12 8 Washington 2.7 8.6 1.3% 14 9 Nevada 2.3 4.3 2.6% 28

10 Maryland 1.7 7.0 0.9% 16 United States 82.2 363.6 0.9%

Source: United States Census Bureau, Fitch

Forecast Growth Focused in Few States

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Growth Rank MSA

Employment (000s)

CAGR % 2013 2019 1 Orlando, FL 1,065 1,255 2.77%

2 Houston, TX 2,788 3,278 2.74%

3 Riverside-San Bernardino, CA 1,226 1,431 2.60%

4 Dallas-Fort Worth-Arlington, TX 3,090 3,602 2.58%

5 Phoenix, AZ 1,813 2,112 2.58%

6 Denver, CO 1,294 1,499 2.48% 7 Miami-Fort Lauderdale, FL 2,349 2,666 2.13% 8 Portland, OR-WA 1,037 1,174 2.09%

9 Atlanta, GA 2,405 2,722 2.09%

10 Tampa- St. Petersburg, FL 1,177 1,331 2.07%

Top 10 MSAs by Employment Growth Forecast 2012–18

Source: Global Insights Note: Data has been sorted to exclude MSAs with total employment less than 1 million 2012

7/2/14

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Benchmarking & Stress Testing

Is Traffic Forecasting Rocket Science? Source: NASA

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All Models Are Different!

Source: NASA Source: NASA

7/2/14

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$0.40–$0.70 — Strong $0.30–$0.50 — Moderate $0.20–$0.40 — Weak

Service Area

Peak Toll: Opening Year (Average per Mile, 2014$)

Indicative Sensitivities

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Revenue CAGR

5.0–7.0% — Strong 4.0–6.0% — Moderate 3.0–5.0% — Weak

Service Area

Indicative Sensitivities

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People in pursuit of answers

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Disclaimer

Fitch Ratings’ credit ratings rely on factual information received from issuers and other sources. Fitch Ratings cannot ensure that all such information will be accurate and complete. Further, ratings are inherently forward-looking, embody assumptions and predictions that by their nature cannot be verified as facts, and can be affected by future events or conditions that were not anticipated at the time a rating was issued or affirmed.

The information in this presentation is provided “as is” without any representation or warranty. A Fitch Ratings credit rating is an opinion as to the creditworthiness of a security and does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. A Fitch Ratings report is not a substitute for information provided to investors by the issuer and its agents in connection with a sale of securities.

Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch Ratings. The agency does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security.

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Managed Lanes: The Fitch...

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