U.S. 301 Middletown project OK’d for federal money

DOVER — On Monday, the Delaware Department of Transportation announced that construction of the U.S. 301 toll road in the Middletown area is now eligible to receive federal financial assistance.

The U.S. Department of Transportation informed DelDOT that the agreed upon terms include a low-interest, direct loan not to exceed $211.35 million, under the Transportation Infrastructure Finance and Innovation Act for construction of the U.S. 301 Mainline project.

When constructed, the toll road will stretch from the Maryland/Delaware line to Del. 1.

According to DelDOT, the USDOT loan provides Delaware with several advantages crucial to the project’s success, including:

• Below market interest rates

• Deferral of interest (five years) and principal payments (10 years) to meet increasing debt service payments as traffic and revenue accelerates

• The deferrals allow the creation of a reserve fund during the first five years of toll operation to create an additional financial margin of safety between the US 301 repayment obligations and the state’s Transportation Trust Fund, which is securing the repayment.

• Reduces cost of capital, increases debt service coverage, and reduces amount of toll revenue bonds required to fund construction.

Federal approval of TIFIA assistance for construction of the project is one of several final steps necessary for the project to continue toward the start of construction in early 2016, DelDOT said.

jennifer_newWith the federal loan commitment now in hand, DelDOT said it will move this month to verify construction cost estimates through a formal competitive bidding process. Assuming these numbers meet project assumptions, additional financing then will be sought through the sale of toll revenue bonds later this year.

The total estimated funding needed to construct the U.S. 301 Mainline is $470 million.

“Financial assistance from the US Department of Transportation means two important things for the U.S. 301 toll project,” said DelDOT Secretary Jennifer Cohan.

“The first is that the financial and traffic assumptions that underlie the cost recovery aspects of the toll road are workable and sound. The second is the project will receive the benefit of low cost financing and a deferred repayment schedule giving the road the time it needs to begin generating significant revenue,” she said.

“Receiving approval from the U.S. DOT gives DelDOT great confidence in pursuing this important project.”

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