Annual Comprehensive Financial Report of the Maryland Transportation Authority – An Enterprise Fund of the State of Maryland For Fiscal Year Ended June 30, 2024
2024
Annual Comprehensive Financial Report of the Maryland Transportation Authority – An Enterprise Fund of the State of Maryland
For Fiscal Year Ended June 30, 2024
2 | Maryland Transportation Authority
Annual Comprehensive Financial Report of the Maryland Transportation Authority – An Enterprise Fund of the State of Maryland For Fiscal Year Ended June 30, 2024
2024
Prepared by the Division of Finance Deborah Sharpless, CPA, Chief Financial Officer Chantelle Green, Director of Finance Kenneth Montgomery, Deputy Director of Finance Allen Garman, Deputy Director of Finance Vicky Dobbins, Director of General Accounting
Annual Comprehensive Financial Report For Fiscal Year Ended June 30, 2024 | 3
Table of Contents
I. Introductory section Certificate of Achievement for Excellence in Financial Reporting...................................................................................................8 Letter of Transmittal.......................................................................................................................................................................................9 Members of the Maryland Transportation Authority..........................................................................................................................24 MDTA Organizational Chart......................................................................................................................................................................25 II. Financial Section Report of Independent Public Accountant.........................................................................................28 Management’s Discussion and Analysis...............................................................................................32 Basic Financial Statements.......................................................................................................................43 Statement of Net Position.........................................................................................................................................................................44 Statement of Revenues, Expenses, and Changes in Net Position................................................................................................46 Statement of Cash Flows...........................................................................................................................................................................47 Notes to the Financial Statements.........................................................................................................................................................49 Required Supplemental Information......................................................................................................81 Schedule of Required Supplemental Information: MDTA’s Proportionate Share of the Net Pension Liability.................82 MDTA Contributions to the Maryland State Retirement and Pension System...........................................................................83 Other Supplemental Information............................................................................................................85 Combined Schedule of Revenue and Expenses – All Facilities....................................................................................................86 Investment of Funds – Master Investment Schedule........................................................................................................................87 Investment of Funds – Transportation Facilities Projects...............................................................................................................88 Investment of Funds – Intercounty Connector...................................................................................................................................89 Investment of Funds – BWI Marshall Airport Consolidated Rental Car Facility........................................................................90 Investment of Funds – BWI Marshall Airport Passenger Facility Charge Projects....................................................................91 Investment of Funds – Calvert Street Parking Garage.....................................................................................................................92 III. Statistical section Statistical Section Index.............................................................................................................................94 Financial Trends.............................................................................................................................................95 Schedule of Net Position...........................................................................................................................................................................95 Schedule of Revenue, Expenses, and Changes in Net Position...................................................................................................96 Revenue Capacity.........................................................................................................................................97 Toll Transactions by Vehicle Class..........................................................................................................................................................97 Toll Revenue by Vehicle Class.................................................................................................................................................................98 Toll Transactions by Facility.....................................................................................................................................................................99 Toll Revenue by Facility............................................................................................................................................................................100 History of Toll Rates by Facility...............................................................................................................................................................101
4 | Maryland Transportation Authority
Debt Capacity................................................................................................................................................102 Debt Service Coverage and Rate Covenant Compliance – Revenue Bonds...........................................................................102 Debt Limitations..........................................................................................................................................................................................103 Non-Recourse Debt Outstanding..........................................................................................................................................................104 Ratio of Outstanding Toll Revenue Debt per Toll Transaction......................................................................................................105 Toll-Backed Debt Outstanding...............................................................................................................................................................106 Demographic and Economic Information..........................................................................................107 Schedule of Demographic Statistics for Maryland...........................................................................................................................107 Maryland’s Ten Largest Private Employers.........................................................................................................................................108 Schedule of Employment by Sector.....................................................................................................................................................109 Operations.......................................................................................................................................................110 Capital Assets..............................................................................................................................................................................................110 Operating Expenses....................................................................................................................................................................................111 Change in Positions....................................................................................................................................................................................112 IV. Traffic and Revenue Section Schedule of Toll Transactions – All Facilities (Unaudited)...............................................................................................................114 Schedule of Toll Revenue – All Facilities..............................................................................................................................................115 Schedule of Toll Transactions – John F. Kennedy Memorial Highway (Unaudited).................................................................116 Schedule of Toll Revenue – John F. Kennedy Memorial Highway................................................................................................117 Schedule of Toll Transactions – I-95 Express Toll Lanes (Unaudited).........................................................................................118 Schedule of Toll Revenue – I-95 Express Toll Lanes........................................................................................................................119 Schedule of Toll Transactions – Thomas J. Hatem Memorial Bridge (Unaudited)..................................................................120 Schedule of Toll Revenue – Thomas J. Hatem Memorial Bridge..................................................................................................121 Schedule of Toll Transactions – Harry W. Nice/Thomas “Mac” Middleton Bridge (Unaudited)......................................... 122 Schedule of Toll Revenue – Harry W. Nice/Thomas “Mac” Middleton Bridge.........................................................................123 Schedule of Toll Transactions – William Preston Lane, Jr. Memorial (Bay) Bridge (Unaudited)..........................................124 Schedule of Toll Revenue – William Preston Lane, Jr. Memorial (Bay) Bridge.........................................................................125 Schedule of Toll Transactions – Baltimore Harbor Tunnel (Unaudited).....................................................................................126 Schedule of Toll Revenue – Baltimore Harbor Tunnel....................................................................................................................127 Schedule of Toll Transactions – Francis Scott Key Bridge (Unaudited)......................................................................................128 Schedule of Toll Revenue – Francis Scott Key Bridge....................................................................................................................129 Schedule of Toll Transactions – Fort McHenry Tunnel (Unaudited)............................................................................................130 Schedule of Toll Revenue – Fort McHenry Tunnel............................................................................................................................131 Schedule of Toll Transactions – Intercounty Connector (Unaudited).........................................................................................132 Schedule of Toll Revenue – Intercounty Connector........................................................................................................................133
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6 | Maryland Transportation Authority | Maryland Transportation Authority | Introductory Section
Introductory Section
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Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting
Presented to Maryland Transportation Authority
For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2023
Executive Director/CEO
8 | Maryland Transportation Authority | Introductory Section
Wes Moore, Governor Aruna Miller, Lt. Governor Paul J. Wiedefeld, Chairman
Board Members: Dontae Carroll William H. Cox, Jr. W. Lee Gaines, Jr. Mario J. Gangemi, P.E.
Cynthia D. Penny-Ardinger
Jeffrey S. Rosen
Samuel D. Snead, MCP, MA
John F. von Paris
Bruce Gartner, Executive Director
December 31, 2024 To the Chairman, Members of the Maryland Transportation Authority Board and Toll Users of Maryland: We are pleased to respectfully submit the Annual Comprehensive Financial Report (ACFR) for the Maryland Transportation Authority (MDTA) for the fiscal year ended June 30, 2024, which includes the MDTA’s Financial Statements. The MDTA prepared the Financial Statements as required by the Trust Agreement between the MDTA and The Bank of New York Mellon as Trustee. The data as presented consists of management’s representation of its finances. The responsibility for the accuracy, completeness, and fairness of the data rests with management. To the best of our knowledge and belief, this report contains data that is complete and reliable in all material respects. To provide a reasonable basis for making these representations, management of the MDTA has established an internal control structure designed to provide reasonable assurance that assets are safeguarded from loss, theft, or misuse and that adequate and reliable accounting data is compiled to prepare Financial Statements in conformity with accounting principles generally accepted in the United States of America. The cost of internal control should not outweigh their benefits; therefore, the MDTA’s comprehensive framework of internal control has been designed to provide reasonable rather than absolute assurances that the Financial Statements will be free from material misstatements. The MDTA’s Trust Agreement requires an annual audit of its Financial Statements by an independent audit firm. The MDTA’s Financial Statements have been audited by CliftonLarsonAllen LLP, a firm of certified public accountants selected by the MDTA through a competitive process. The goal of the independent audit is to provide reasonable assurance that the financial statements of the MDTA as of and for the fiscal year ended June 30, 2024, are free of material misstatements. The audit was performed in accordance with generally accepted auditing standards and government auditing standards and included tests of the accounting records and other auditing procedures considered necessary during the audit. Based upon the audit, the independent auditors issued an unmodified (“clean”) opinion of the MDTA’s Financial Statements for the fiscal year ended June 30, 2024. The independent auditor’s report is presented in the Financial Section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic Financial Statements. This letter of transmittal complements the MD&A and should be read in conjunction with it.
2310 Broening Highway • Baltimore, MD 21224 • mdta@mdta.maryland.gov • 410.537.1000 • 711 (MD Relay) • mdta.maryland.gov • DriveEzMD.com
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Profile of the MDTA
The MDTA was established in 1971 by the Maryland General Assembly to finance, construct, operate and improve the State’s toll facilities, as well as to finance new revenue-producing transportation projects. The MDTA acts on behalf of, but is separate from, the Maryland Department of Transportation (MDOT). The MDTA helps support MDOT’s mission to be a customer- driven leader that delivers safe, sustainable, intelligent, and exceptional transportation solutions to connect its customers to life’s opportunities. The MDTA’s nine toll facilities – four bridges, two tunnels, two turnpikes, and one express toll lane (ETL) facility — connect Marylanders and visitors to life’s opportunities. The MDTA is a self-sufficient non-budgeted State agency and traditionally receives no money from the State’s General Fund or the Transportation Trust Fund. The MDTA is financed by toll revenues, and such revenues are reinvested in the operation and maintenance of the toll facilities. The MDTA’s Trust Agreement, between the MDTA and its Trustee, is for the benefit of bondholders and outlines how these funds may be used. For more than 50 years, the MDTA has provided Maryland’s citizens and visitors with safe, secure, reliable, and convenient transportation facilities. The MDTA’s finances are accounted for as a proprietary-type enterprise fund using the accrual basis of accounting, similar to a private business entity. Over four-fifths of the MDTA’s revenues originate from toll revenue and related fees collected at its nine toll facilities. Revenues from all facilities
are pooled together to fund operations, capital projects, and debt service on revenue bonds issued by the MDTA to help fund its capital program. ORGANIZATIONAL STRUCTURE The Maryland Transportation Authority Board serves as the policy-setting, decision-making, and governing body responsible for all actions taken by the MDTA. Maryland’s Secretary of Transportation presides as the MDTA’s Chairman. In addition to the Chairman, the Board consists of eight Members, appointed by the Governor with the advice and consent of the Maryland Senate. Per statute, the Board’s composition reflects the racial, gender, and geographic diversity of the State and includes expertise in structural engineering, transportation planning, land use planning, and finance. Each Member serves a four-year term and term expirations are staggered. Board Members are eligible for reappointment to the MDTA, with a limit of three consecutive terms. The day-to-day operations of the MDTA are led by the Executive Director, who is appointed by the Board. The Executive Director is supported by six Chief Officers. The Chief Officers are comprised of the Chief Administrative Officer, Chief Engineer, Chief Financial Officer, Chief Law Enforcement Officer, Chief Operating Officer, and the Chief Strategy Officer. The Executive Director and Chief Officers are supported by Division and Office Directors and Managers.
10 | Maryland Transportation Authority | Introductory Section
MAJOR DIVISIONS OF THE MDTA The work of the MDTA is handled by its 1,697 dedicated employees. Employees work in the following functional areas, with the largest number of employees serving in the Division of Operations and the Maryland Transportation Authority Police. Audits: Responsible for providing independent and objective approaches to improving the effectiveness of the MDTA’s management and internal controls. Asset Management and Support Services: Responsible for planning, procuring, and managing various Preventative Maintenance and ancillary contracts and services; develops, implements, and ensures Preventative Maintenance and Warranty Programs compliance for all facility assets; and oversees the day-to-day operations of the MDTA’s Enterprise Asset Management System. Civil Rights and Fair Practices: Responsible for the development, oversight, and administration of the Minority Business Enterprise, Small Business Reserve, Veteran Small Business Enterprise, and the Equal Employment Opportunity & Diversity Programs. The section is also responsible for the implementation of the Title VI Program at the MDTA. Communications and Marketing: Serves as the official voice of the MDTA for the media and the public and manages the MDTA communications, outreach, and education efforts. Customer Experience: Responsible for the strategic planning and direction of the MDTA customer experience to ensure exceptional customer service is delivered to the MDTA’s customer base; develops and sustains a premier customer service culture; manages frontline customer service positions and the MDTA’s reoccurring customer service training programs; collects customer data and analytics to holistically evaluate customer service; and establishes control systems, standards, and processes that ensure exceptional customer service. Electronic Toll Collection Program (3G ETC): Responsible for the development, implementation, and transition of the MDTA’s next generation toll collection system and the ongoing planning and maintenance of the electronic toll collection system.
Engineering and Construction: Provides stra- tegic direction and coordination of asset resourc- es as well as direction and management of the design, construction, and contract maintenance of the MDTA’s facilities. Environment, Safety, and Risk Management: Responsible for employee safety, risk management, and environmental compliance programs; managing the tracking, inventory, safeguarding, and disposal of MDTA property and equipment; and providing oversight of the collection of monies owed to the MDTA from responsible parties who damage MDTA facilities. E-ZPass® Operations: Responsible for over- seeing electronic toll operation contract vendors, E-ZPass customer service operations, and electronic toll collection quality assurance. Facility Operations: Oversees all bridges, tun- nels, turnpikes, and buildings under the jurisdic- tion of the MDTA. Its functions include the opera- tion, management, and maintenance of the MDTA’s facilities. Finance: Responsible for all financial and accounting services for the MDTA. This includes overseeing the investment of funds; developing and managing the operating budget; issuing debt; analyzing and reporting toll revenues; reviewing and processing the payment of all expenses; preparing and maintaining all financial records, financial forecasts, reports, and statistics; and establishing procedures and methods for monitoring the collection, reconciliation, safeguarding, and deposit of all toll revenue. External and Government Affairs: Responsible for coordinating with federal, state and local elected officials regarding MDTA projects. The office initiates departmental legislation and coordinates the MDTA’s responses to all legislation introduced during the State legislative session that impacts the MDTA. The section also assists elected officials with information and constituent inquiries that relate to the MDTA. Human Resources and Workforce Develop- ment: Responsible for employee relations, recruit- ment, compensation, and training.
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Information Technology: Responsible for the planning, implementation, and support of the MDTA’s computer and electronic information and tolling system infrastructure. Legal: The Maryland Office of the Attorney General assigns staff to provide legal counsel and representation for the MDTA. Partnerships and Tolling Finance: Directs and manages all MDTA public-private partnership agreements, including the concession agreement for the travel plazas and for the MDTA’s responsibilities related to the I-495/I-270 Traffic Relief Plan (i.e., OpLanes); negotiates and executes applicable Trust Agreement(s) and toll service agreements; develops tolling technical provisions and conducts contract administration activities related to tolling during operations and maintenance execution; and represents the MDTA’s interests as part of the E-ZPass Interagency Group for the development of tolling resolutions and business rules for tolling under the E-ZPass umbrella. Planning and Program Development: Develops and continually assesses short- and long-term capital planning activities, develops funding strategies for the capital program, coordinates public outreach activities, and manages the MDTA’s real estate holdings. Police: Responsible for overseeing security services and law enforcement activities at MDTA facilities. The Police also provide law enforcement services at the Baltimore/Washington International Thurgood Marshall Airport and at the Port of Baltimore. Since 2012, the Police have held the Tri- Arc Award from the Commission on Law Enforcement Accreditation for having concurrent accreditation for its law enforcement, communications, and training units.
Office of Strategy and Employee Engagement: Responsible for the implementation of the MDTA’s Strategic and Business Plans and the assessment of the MDTA’s internal administrative policies that support its strategic plan. The section is also responsible for ensuring that the MDTA complies with government-required reporting requirements and support and coordinate MDTA initiatives to foster employee engagement, improve performance, and promote innovation and process improvement. Procurement: Responsible for the development, oversight, and administration of all MDTA procure- ments. The section oversees contractual agree- ments related to architectural and engineering, commodity, construction, fleet, information tech- nology, maintenance, small procurement, and other related services. Traffic Management and Technology: Over- sees the MDTA’s asset management, mainte- nance, and inventory system; manages the MDTA’s Operations Center, intelligent transportation systems infrastructure, fleet, and telecommunications and public safety radio systems and equipment; main- tains and monitors the MDTA’s facility security systems; and provides support for MDTA office ren- ovations. Strategy and Employee Engagement: Respon- sible for the implementation of the MDTA’s Strate- gic and Business Plans and the assessment of the MDTA’s internal administrative policies that support its strategic plan. The section is also responsible for ensuring that the MDTA complies with govern- ment-required reporting requirements and support and coordinate MDTA initiatives to foster employee engagement, improve performance, and promote innovation and process improvement.”
12 | Maryland Transportation Authority | Introductory Section
The MDTA’S Toll Facilities
1
2
I-695
3
I-70
4
5 6
I-95
I-270
I-895
7
MD-200
8
FACILITIES Thomas J. Hatem Memorial Bridge (US 40) John F. Kennedy Memorial Highway (I-95) I-95 Express Toll Lanes
I-495
US 50/301
1 2 3 4 5 6 7 8 9
Fort McHenry Tunnel (I-95, I-395) Baltimore Harbor Tunnel (I-895) Francis Scott Key Bridge (I-695) Intercounty Connector (ICC)/MD 200
US 301
9
William Preston Lane Jr. Memorial (Bay) Bridge (US 50/301) Governor Harry W. Nice / Senator Thomas “Mac” Middleton Bridge (US 301)
Thomas J. Hatem Memorial Bridge (US 40) The oldest of MDTA’s facilities, this 1.4-mile, four- lane bridge opened in August 1940. It spans the Susquehanna River on US 40 between Havre de Grace and Perryville in northeast Maryland. Tolls are collected in the eastbound direction only. • FY 2024 toll transactions, eastbound: 4.7 million • FY 2024 toll revenue: $16.4 million • FY 2024 revenue as a percentage of total toll revenue: 2.2% • Change in revenue from FY 2023: $1.2 million
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I-95 Express Toll Lanes Maryland’s second all-electronic toll road opened along the Kennedy Highway in December 2014. The I-95 Express Toll Lanes provide eight miles, seven tolled, of free-flowing traffic between I-895 and just north of MD 43 in Baltimore. The I-95 Express Toll Lanes are part of the larger John F. Kennedy Memorial Highway facility but are shown as a separate facility for reporting purposes. • FY 2024 toll transactions: 9.3 million • FY 2024 toll revenue: $14.6 million • FY 2024 revenue as a percentage of total toll revenue: 1.9% • Change in revenue from FY 2023: $0.7 million John F. Kennedy Memorial Highway (I-95) Opened in November 1963, the John F. Kennedy Memorial Highway is a 50-mile section of I-95 from the northern Baltimore City line to Delaware. Tolls are collected in the northbound direction only at the toll plaza located one mile north of the Millard E. Tydings Memorial Bridge over the Susquehanna River in northeast Maryland. • FY 2024 toll transactions, northbound: 15.3 million • FY 2024 toll revenue: $193.1 million • FY 2024 revenue as a percentage of total toll revenue: 25.4% • Change in revenue from FY 2023: ($2.1 million) Baltimore Harbor Tunnel (I-895) The 1.4 mile, four-lane tunnel opened in November 1957. Designated I-895, the facility crosses under the Patapsco River and connects major north/south highways and many arterial routes in Baltimore City’s industrial sections. Including the tunnel and approach roadways, the facility is approximately 17 miles in length. • FY 2024 toll transactions: 29.1 million • FY 2024 toll revenue: $107.6 million • FY 2024 revenue as a percentage of total toll revenue: 14.1% • Change in revenue from FY 2023: $0.4 million
I-95 Express Toll Lanes
John F. Kennedy Memorial Highway (I-95)
Baltimore Harbor Tunnel (I-895)
14 | Maryland Transportation Authority | Introductory Section
Fort McHenry Tunnel (I-95, I-395) One of the world’s widest underwater highway vehicular tunnels ever built by the immersed-tube method, the Fort McHenry Tunnel opened to traffic in November 1985. The eight-lane tunnel is nearly 1.4-miles long and connects the Locust Point and Canton areas of Baltimore. The tunnel is a vital link in I-95, the East Coast’s most important interstate route. Including the tunnel and approach roadways, the facility is approximately 10.3 miles in length. • FY 2024 toll transactions: 45.1 million • FY 2024 toll revenue: $231.5 million • FY 2024 revenue as a percentage of total toll revenue: 30.4% • Change in revenue from FY 2023: $11.9 million Francis Scott Key Bridge (I-695) This outer crossing of the Baltimore Harbor opened in March 1977 as the final link in I-695 (the Baltimore Beltway). The 1.7-mile Key Bridge crosses over the Patapsco River where Francis Scott Key was inspired to write the words of the “Star Spangled Banner.” This facility also includes the Bear Creek Bridges and the Curtis Creek Drawbridge. Including the bridge and approach roadways, the facility is 10.9 miles in length. On March 26, 2024, the main spans and three approach spans of the Key Bridge collapsed after a container ship struck one of the piers. • FY 2024 toll transactions: 9.1 million • FY 2024 toll revenue: $44.8 million • FY 2024 revenue as a percentage of total toll revenue: 5.9% • Change in revenue from FY 2023: ($11.3 million) Intercounty Connector (ICC/MD 200) The Intercounty Connector (ICC/MD 200) links I-270/ I-370 in Montgomery County and I-95 in Prince George’s County. The ICC/MD 200 is the MDTA’s first all-electronic, variably-priced toll facility. The majority of the roadway, from I-370 to I-95, opened to traffic in 2011 and the final segment, connecting I-95 to US 1, opened in 2014. • FY 2024 toll transactions: 35.7 million constructed trips • FY 2024 toll revenue: $73.4 million • FY 2024 revenue as a percentage of total toll revenue: 9.6% • Change in revenue from FY 2023: $3.8 million
Fort McHenry Tunnel (I-95, I-395)
Francis Scott Key Bridge (I-695)
Intercounty Connector (ICC/MD 200)
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Governor Harry W. Nice / Senator Thomas “Mac” Middleton Bridge (US 301) The Nice/Middleton Bridge is located on US 301 and spans the Potomac River from Newburg, MD to Dahlgren, VA. The new four-lane replacement bridge opened to the public on October 12, 2022. The original 1.9-mile, two-lane bridge opened in December 1940. Tolls are collected in the southbound direction only. • FY 2024 toll transactions, southbound: 3.3 million • FY 2024 toll revenue: $23.1 million • FY 2024 revenue as a percentage of total toll revenue: 3.0% • Change in revenue from FY 2023: ($.4 million) The Bay Bridge crosses the Chesapeake Bay along US 50/301. Its dual spans provide a direct connection between recreational and ocean regions on Maryland’s Eastern Shore and the metropolitan areas of Baltimore, Annapolis and Washington, D.C. At four miles, the spans are among the world’s longest and most scenic over- water structures. The original span opened in July 1952 and provides a two-lane roadway for eastbound traffic. The parallel structure opened in June 1973 and has three lanes for westbound travelers. During periods of heavy eastbound traffic, one lane of the westbound bridge is “reversed” to carry eastbound travelers (“two- way” traffic operations). Tolls are collected in the eastbound direction only. • FY 2024 toll transactions, eastbound: 13.6 million • FY 2024 toll revenue: $56.6 million • FY 2024 revenue as a percentage of total toll revenue: 7.4% • Change in revenue from FY 2023: $0.4 million William Preston Lane, Jr. Memorial (Bay) Bridge (US 50/301)
Governor Harry W. Nice / Senator Thomas “Mac”
William Preston Lane, Jr. Memorial (Bay) Bridge (US 50/301)
16 | Maryland Transportation Authority | Introductory Section
Long-Term Financial Planning The MDTA’s dynamic financial forecasting model produces strong debt service coverage and is seen as a strength by the credit rating agencies, thereby resulting in favorable credit ratings of AA and Aa2 from Fitch Ratings and Moody’s Investors Service, respectively. Traffic and revenue forecasts are produced annually by an independent consultant covering a ten-year period utilizing conservative elasticity factors and limited long-term growth on existing facilities to reflect recent experience and changing demographics.
July 1, of each year and with the submission of the MDTA’s annual update to its six-year capital program in January. For internal financial planning purposes, additional forecasts are developed for varying planning horizons and testing alternative sensitivity cases. The toll rates for the additional sensitivity cases remain unchanged as a means of accurately reflecting the effects of each stress test on the system; however, if such unexpected circumstances were to occur, the MDTA would adjust its budgets and use its independent toll rate-setting power to take mitigating action to the extent necessary. The MDTA develops an annual operating budget and is required by the Trust Agreement to approve it by July 1, of each fiscal year. Each of the MDTA’s division/office directors and managers contribute to the development of the operating budget based on the expected staffing and funding level necessary to operate the MDTA’s facilities and departments. On a quarterly basis, the budget is reviewed by division/ office and by budget category for any significant variances from targeted spending levels. The MDTA may at any time adopt an amended or supplemental budget for the remainder of the then-current fiscal year. The operating budget is provided to the legislature annually for informational purposes but does not require legislative approval. The annual capital budget is developed as part of a six-year capital program. The capital program includes both major and minor projects in varying stages of development. Projects are moved from the Development & Evaluation Program to the Construction Program as funding becomes available and as design work is significantly advanced. Inspections of the MDTA’s facilities by a nationally accredited engineering firm are required by the Trust Agreement and help to identify needed improvements and prioritize projects. The FY 2025-2030 capital program provides a $5.1 billion investment in the MDTA’s facilities, with the majority of this funding focused on system preservation and the replacement and expansion of existing facilities.
These realistic traffic and revenue forecasts are utilized in the development of the MDTA’s financial forecast. Conservatism is built into the financial forecast by assuming that the operating and capital budgets will be fully spent and the use of assumed interest rates on future borrowings at rates that are typically higher than current market trends. The financial forecast is used to determine whether the MDTA will meet all financial goals and legal requirements throughout the forecast period, helps to determine the appropriate mix of current year funding and bond proceeds to fund the capital program, and identifies the potential need for future toll rate adjustments. As required by statute, the MDTA’s six-year financial forecast is provided to the legislature twice per year for informational purposes. The timing coincides with the development of the annual operating budget by
Curtis Creek Drawbridge (I-695)
Annual Comprehensive Financial Report For Fiscal Year Ended June 30, 2024 | 17
Relevant Financial Policies The MDTA may issue revenue bonds backed by its toll revenues. Per Maryland statute, debt outstanding for toll-revenue backed debt is limited to $4.0 billion. All toll-backed debt must comply with the Rate Covenant contained in the Trust Agreement. The Rate Covenant requires the MDTA to fix, revise, charge and collect rentals, rates, fees, tolls and other charges and revenues for the use or services of its facilities to produce in each bond year net revenues in an amount not less than the sum of: (a) 120% of the Debt Service Requirement for outstanding bonds; and (b) 100% of the amount budgeted for deposit to the Maintenance and Operations Reserve Account. Failure to maintain a Rate Covenant of greater than or equal to 1.0 annually would contractually result in the Trustee stepping in and taking control of setting toll rates sufficient to adhere to this requirement. The MDTA’s historical Rate Covenant has shown strong coverage with operating results well above the 1.0 times minimum coverage level. As part of its Additional Bonds Test, prior to issuing any new debt, the MDTA must certify that this Rate Covenant has been met in the 12 consecutive months of the preceding 18-month period. In addition, the MDTA must certify on a prospective basis that the Rate Covenant will be met in the current bond year, and in the fifth complete bond year following the completion date of a bond-financed additional project or project improvement. The MDTA Board has adopted several financial management policies for guidance to address the key aspects of fiscal planning, issuing debt, approving bond sales, conducting bond closings and investment strategies. These policies require the MDTA’s strict adherence to prudent financial management, compliance with the Rate Covenant, the setting of liquidity standards, and debt affordability tests. The policies are reviewed periodically and modified as appropriate. These include Board Policies on Debt Management, Revenue Bonds, Preparation of Financial Forecasts, Investment Management, and Revenue. The Debt Management Board Policy provides an administrative policy goal which presents a higher and more stringent test of adequacy of revenues than the Rate Covenant. Per the Debt Service Coverage Policy, net revenues cannot be less than 2.0 times the Debt Service Requirement of current and
Overhead Lane Use Signals at the Bay Bridge
projected outstanding debt. In addition, to ensure that adequate liquidity is available, the Policy requires that the MDTA maintain a minimum unrestricted cash balance of $400 million The financial investments of the MDTA are substantially controlled by provisions of the Trust Agreement. Investments are purchased in accordance with bond indenture and Investment Policy limitations. As required by the bond indenture, the investment portfolio is managed by MDTA Finance staff with oversight by the Investment and Finance Committees. The Investment Committee consists of the Executive Director, Chief Financial Officer, Director of Finance, and Deputy Directors of Finance as voting members with the Director of Treasury and Debt Management and financial advisors serving as non-voting members. The Finance and Administration Committee is composed of four members of the MDTA Board that review the Investment Policy annually and the investment strategy, practices, and portfolio performance quarterly. The MDTA’s funds are primarily held in trust accounts created under the bond indenture, including various debt service accounts, debt service reserves, a capital account, an operating and maintenance reserve, and a general account. Available funds are conservatively invested in a variety of instruments including money market mutual funds, U.S. Government and Agency debentures, municipal bonds, Tier-1 rated corporate commercial paper, Supranationals, and the Maryland Local Government Investment Pool. Certain accounts are invested on a matched-funding basis, with maturities matched to known or projected spending for debt service and capital accounts. Unrestricted funds and reserves are managed for total return.
18 | Maryland Transportation Authority | Introductory Section
Major Initiatives During fiscal year 2024, the MDTA focused on core operations while embracing its role in preparing the State’s infrastructure for the future, including the reconstruction of the Francis Scott Key Bridge after the allision that triggered the bridge collapse. Core operations include financial health, ongoing system preservation and expansion, and enhancing the customer experience (Drive Ez MD). Financial Health The MDTA takes very seriously its commitment to be financial stewards of dedicated toll revenues that provide vital transportation links to move people and commerce across the State. Long-term financial planning, conservative forecasting, and Board-adopted financial policies are key to the MDTA’s financial health. Following the upgrade of the MDTA’s credit ratings by one notch in 2018 by Fitch Ratings and Moody’s Investor Service, the MDTA continued to maintain its credit ratings of AA and Aa2 from Fitch Ratings and Moody’s Investors Service, respectively. With the collapse of the Francis Scott Key Bridge, Moody’s Investors Service updated MDTA’s outlook from stable to negative. The MDTA continues to provide updates to the rating agencies that demonstrates its ability to manage the additional uncertainties and risks created by the bridge collapse. Revenues from the operation of toll facilities (includes both toll collection and enforcement efforts) totaled $841 million, an increase of $44 million, or 6%, from the prior year. The increase is largely attributed to the increase in traffic volume and the processing of backlogged transactions. The MDTA’s in-lane toll revenue performance, financial strength, and flexibility allowed the agency to maintain its capital program and fund multiple system preservation and improvement projects. System Preservation & Improvement The MDTA’s six-year capital program for FY 2024- 2029 totals $3.1 billion and includes a hybrid of system preservation and improvement projects ranging from minor renovations to large-scale construction projects designed to secure, preserve, and enhance the MDTA’s facilities for years to come. Independent, certified, and nationally experienced engineering
firms inspect the MDTA’s bridges, tunnels, storm water management structures, waterfront structures, radio control tower, walls, roadways, lighting, and signage annually. All facilities were found to be maintained in good repair, working order, and condition. The MDTA inspected 324 bridges in accordance with the latest National Bridge Inspection Standards, and all bridges allow for legally loaded vehicles, emergency vehicles, and school buses to traverse safely. I-95 Express Toll Lanes Northbound Extension and I-695 Ramps The $1.1 billion expansion of the Northbound I-95 Express Toll Lanes (ETL) will provide two ETL for more than 10 miles from north of MD 43 in Baltimore County to north of MD 24 in Harford County — expanding the Northbound lanes to 18 miles. The project includes the reconstruction of two interchanges, replacement of five overpasses benefiting the northbound extension and future southbound lanes, construction of two park and ride lots to benefit commuters and provide transit connections, the construction of several environmental mitigation projects to address impacts along the corridor, and the construction of two ramps that connect I-695 to the northbound ETL. This traffic relief initiative will benefit Marylanders throughout the Baltimore region by giving drivers a safer, more reliable, and efficient commute with multi-modal connections. Additionally, 11 noise walls will improve the quality of life for adjacent residents. The project includes 23 separate projects to be delivered in two phases. To date, 17 projects have been completed, 4 projects are under construction, and 2 projects are in design or procurement. The first segment of the extension from MD 43 to MD 152 opened to traffic on December 16, 2024. The full extension to north of MD 24 is expected to open to traffic by the end of 2027. Chesapeake Bay Crossing Tier 2 Study The MDTA is following the well-established tiered National Environmental Policy Act (NEPA) process to address existing and future capacity needs and access across the Chesapeake Bay and along the U.S. 50/301 approaches to the Chesapeake Bay Bridge from the MD 2/MD 450 Interchange near Arnold to the
Annual Comprehensive Financial Report For Fiscal Year Ended June 30, 2024 | 19
U.S. 50/301 split near Grasonville. The Tier 2 Study is evaluating measures to reduce congestion; improve travel times and reliability, mobility, and roadway deficiencies; and accommodate maintenance activities and navigation, while minimizing impacts to local communities and the environment. The MDTA is developing and analyzing multiple alternatives within study limits that extend from the MD 2/ MD 450 interchange in Anne Arundel County to the U.S. 50/U.S. 301 split in Queen Anne’s County. These alternatives include the No Build Alternative and a range of build alternatives involving various lane configurations, alignments, and modal and operational alternatives. Eastbound Bay Bridge Deck Replacement The $140 million Eastbound Bay Bridge Deck Replacement project began major construction in 2023 and is ongoing and more than 50% of the deck panels have been replaced. The MDTA has designed the project, often referred to as a re-decking, to ensure minimal traffic impacts for residents and motorists. The eastbound re-decking project will include replacement of the deck floor system, barrier upgrades, major structural rehabilitation of the truss superstructure, lane use signal gantry replacements and utility relocations, as well as off-site storm water management work. Francis Scott Key Bridge On March 26, 2024, the main spans and three approach spans of the Key Bridge (I-695) collapsed after a container ship struck one of the Key Bridge piers. Since that time, the MDTA has made significant strides toward the reconstruction of the bridge. This includes but is not limited to obtaining a Categorical Exclusion classification and National Environmental Policy Act approval for the I-695 Francis Scott Key Bridge Rebuild Project and awarding a $73 million contract (Phase 1) to the Progressive Design-Builder responsible for undertaking the complete design and construction of the I-695 Francis Scott Key Bridge replacement.
For this critical project, the MDTA is using a Progressive Design-Build process, which brings on board a project delivery team under one entity and a single contract to provide both design and construction services. The two-phase Progressive Design-Build process emphasizes cooperation and flexibility to adapt to emerging needs and changes. Phase 1 of the project involves the development of the project scope and preliminary engineering. Phase 2 of the project will involve project final design/ engineering and construction after the MDTA and the Progressive Design-Builder negotiate a guaranteed maximum price for all remaining work. The Key Bridge is part of the MDTA’s multi-facility tolling system, representing 7.4% of toll revenues in fiscal year 2023 (last full year of operations). Given its close proximity to the Fort McHenry (I-95) and Baltimore Harbor (I-895) tunnels, which serve as the two other Baltimore Harbor crossings, a portion of traffic has diverted to the two facilities. The Fort McHenry and Baltimore Harbor tunnels are also owned and tolled by the MDTA, and toll revenues are expected to continue to support operations through estimated bridge reconstruction in fiscal 2029. The MDTA is partnering with State, local, and federal agencies in funding the reconstruction of the bridge and recently secured federal authorization for 100 percent of the replacement cost of the bridge to be funded through the federal Emergency Relief (ER) program. Drive Ez MD The MDTA continues to make significant strides toward enhancing the customer experience via Drive Ez MD. Drive Ez MD is the home for all things tolling in Maryland. Designed to “Keep Maryland Moving,” Drive Ez MD is an example of the MDTA’s commitment to being a leader in shaping and enhancing the delivery of tolling services. Drive Ez MD makes it more convenient to travel the State’s toll facilities with a new website, web chat, mobile app, expanded customer call center, new toll payment choices, audio alerts, text notifications, and more.
20 | Maryland Transportation Authority | Introductory Section
Economic Outlook The MDTA owns and operates a large and well- diversified system that provides essential transportation infrastructure links in a high-volume market with limited competing facilities. The MDTA’s facilities include commuter travel routes and a portion of Interstate 95. The toll facilities have historically demonstrated low elasticity and are in affluent service areas that include the Baltimore and Washington D.C. metropolitan statistical areas. The facilities serve a varied mix of passenger and commercial traffic that pay tolls using E-ZPass, Pay-by-Plate, and Video Tolling. Ten-year traffic and revenue forecasts are prepared annually by independent consultants and are available on the MDTA’s website. Separate traffic and revenue forecasts are prepared for all legacy facilities, the Intercounty Connector, and the I-95 Express Toll Lanes. The following information on economic performance and the outlook is derived from the most recent reports. The forecasts rely on historical toll transaction and revenue trend information by vehicle classification, payment method, and facility, as well as socioeconomic and demographic trends locally, regionally, and nationally. Socioeconomic and demographic data that impact the forecast includes population, employment, income, gross regional product, inflation, and gasoline prices. Population: Since 2013, Maryland has exhibited stable population growth of 0.4 percent annually, which lags slightly behind the national average of 0.6 percent annually over the same time period. Within Maryland, population growth rates range from -0.1 percent in Western Maryland to 0.8 percent in Southern Maryland. Projected regional population growth is expected to follow similar trends over the next 10 years, with expected growth of 0.5 percent annually statewide.
Employment: Since 2013, nonfarm civilian employment growth in Maryland has exceeded total population growth and has trailed slightly behind the nation as a whole. Statewide employment changes have averaged 1.3 percent per year during this timeframe and is expected to grow an average of 1.2 percent annually through 2028, and 1.0 percent through 2033. Income: Median incomes in many of the counties containing toll facilities tend to be higher than the State as a whole and higher than the national average. Nationwide, per capita income in 2023 was $70,172, reflecting an average annual growth of 2.3 percent over the last decade. Historic per capita income in Maryland was $75,461 in 2023, with the Washington Suburban region enjoying the highest per capita incomes in the State and throughout much of the country, at $79,465. The Intercounty Connector is primarily located in Montgomery County, which is among the nation’s wealthiest counties. Per capita income in Maryland is forecasted to increase annually by about 1.5 percent through 2033. Gross Regional Product: Another fundamental economic indicator that has bearing on traffic demand is gross regional product (or gross domestic product/ gross state product, depending on the geographic focus). Since 2013, gross domestic product has averaged 2.3 percent growth annually nationwide. Growth rates in Maryland, both statewide and for all six major planning regions, have generally been lower than nationwide growth rates. Statewide average annual growth from 2013 to 2023 was 1.4 percent. The average annual growth rate is expected to be approximately 2.1 percent through 2028, and 1.9 percent through 2033.
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