Fitch: Toll Roads Largely Unaffected by Floods

NEW YORK--()--Last week's flash floods that occurred across Texas and Oklahoma had little effect on Fitch-rated toll road operations, according to Fitch Ratings. The floods, declared a disaster in 70 counties by Texas governor Greg Abbott, caused significant loss of life as well as damage to property across the state, particularly in Houston and San Marcos. The floods were caused by heavy rainstorms, coming after several weeks of persistent precipitation that had already left the ground in large parts of the region saturated.

Despite the severity of these weather conditions, Fitch-rated toll road systems across the region experienced no material effect on operations.

Gulf Region

In the case of Harris County Toll Road Authority (HCTRA), although some frontage road sections and entry/exit ramps were closed during certain periods of flooding, the mainline itself remained open throughout, with traffic and revenue levels back up to normal daily rates within one day, with no damage reported on any of the authority's infrastructure or equipment. The areas of Houston that were worst affected by floods were closer to downtown Houston than any of HCTRA's roads, in relatively low-lying neighborhoods near and around bayous that burst their banks. Fort Bend County Toll Road Authority's facilities were unaffected by the floods, despite the county experiencing a Emergency Management System Level 2 alert, primarily because of the distance from them to affected rivers such as the River Brazos - overall, the authority expects minimal financial impact as a result of the floods. Grand Parkway Transportation Corporation, which is currently constructing segments F-1, F-2 and G of the Grand Parkway outer ring road around Houston, did see some of its construction site flooded. While work was held back until surface water dissipated, float in the schedule for these types of issues means that the overall project schedule is unaffected by the flooding.

Central Texas

Similarly, Central Texas Turnpike System (CTTS), located in Austin, experienced virtually no effects of the flooding, with all sections remaining open throughout and no damage reported. Much of CTTS' network is elevated, partly explaining this resilient performance through the storms.

North Texas

Dramatic flooding did not occur on the North Tarrant Express LLC or LBJ Infrastructure LLC managed lanes facilities in the Dallas-Fort Worth metro area, with the respective facilities' state of the art drainage systems helping quick dissipation of any surface water.

Mexican Border

The three Rio Grande international Mexico-US crossings in Cameron County, McAllen and Laredo respectively all escaped the harshest weather conditions and remained fully operational throughout the period.

Oklahoma

Although Oklahoma Department of Transportation needed to close down some of its highways as a result of flooding, Oklahoma Turnpike Authority's facilities remained open throughout, with minimal operating impact. No structural damage is believed to have resulted from the floods, although a more detailed assessment will be made when certain rivers that run under the turnpike see their water levels recede.

Although difficult to say exactly what would have happened in different circumstances, Fitch generally takes the view that the various rated toll roads in the region are well managed, with operators sufficiently well experienced to be able to respond to any such emergency in an appropriate fashion. Furthermore, to the extent significant damage had been sustained, the various toll road operators - particularly public sector authorities and enterprises - all have significant balance sheet liquidity and cash flow coverage that would allow them to respond to most reasonable scenarios.

Private sector concessionaires may have significantly less cash flow coverage and balance sheet liquidity than their public sector counterparts, however their highly nimble operations departments should allow them to respond to any emergency situation very quickly; furthermore, in the case of an extreme weather event, Fitch believes that some combination of insurance and grantor assistance would likely help affected concessionaires weather the storm.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Rating Criteria for Infrastructure and Project Finance [682867 - 12-JUL-2012] (pub. 12 Jul 2012)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682867

Rating Criteria for Toll Roads, Bridges and Tunnels [758708 - 20-AUG-2014] (pub. 20 Aug 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=758708

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Contacts

Fitch Ratings
Saavan Gatfield
Senior Director
+1-212-908-0542
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY, 10004
or
Tanya Langman
Director
+1-212-908-0716
or
Raymond Wu
Associate Director
+1-212-908-0845
or
Media Relations
Elizabeth Fogerty, +1 212-908 0526
elizabeth.fogerty@fitchratings.com
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Saavan Gatfield
Senior Director
+1-212-908-0542
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY, 10004
or
Tanya Langman
Director
+1-212-908-0716
or
Raymond Wu
Associate Director
+1-212-908-0845
or
Media Relations
Elizabeth Fogerty, +1 212-908 0526
elizabeth.fogerty@fitchratings.com
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com