Under Federal law, a project is permitted to use certain toll revenue expenditures
as a credit toward the local matching share of federally eligible highway and transit
projects. This concept is frequently referred
to as toll credits.
Toll credits are earned when a state or toll authority funds an eligible capital
investment with toll revenues from an existing facility. Project sponsors may use
toll credits as local match on a Federal project. By using a sufficient amount of
toll credits, the federal funding for a project can be increased to 100 percent.
Fares paid by ferry riders, in places where ferry routes are considered part of the
highway systems (such as the Washington State Ferry System), can earn toll credits
in the same manner as a tolled highway. WSDOT has earned toll credits through this
mechanism, and may provide an allocation of toll credits to the CRC project.
In this assessment, up to $750 million in New Starts funds are assumed to be available
to the high-capacity transit project. With toll credits, alternatives costing $750
million or less can be funded with New Starts funds, provided a sufficient amount
of toll credits are applied to meet the local match requirement. Project alternatives
costing more than $750 million must incorporate sufficient local cash match to cover
the difference between the project cost and the assumed $750 million New Starts grant.
There can be alternatives in which a portion of the local match requirement is met
by toll credits and a portion met with local funds or in-kind match.
Some issues arise with the use of toll credits. First, the project staff must work
with FTA to ensure that the use of toll credits does not negatively affect FTA’s
New Starts rating of the project. Second, as part of any Full Funding Grant Agreement,
FTA will establish a maximum amount of New Starts funds available to the project,
and will obligate the project sponsors to cover any cost overruns with non-New Starts
funds. During the rating of the financial plan, FTA will complete a financial capacity
review to determine the ability of the project sponsors to meet this obligation.
Thus, even when they can be used, toll credits do not entirely eliminate the need
for local capital funding capacity. Lastly, in order to use toll credits, WSDOT must
provide a letter committing the necessary amount of toll credits to the CRC project.
How Does Light Rail Affect Bridge Tolls?
We believe that a low cost bridge project (like the I-205 bridge - which did not
require tolls) was expanded into a mega-project in order to require tolls so that
tolls could be used as a credit to get the Federal Government to pay for ALL of the
cost of light rail construction (instead of the normal 50%). This use of tolls is
described in an official document for this project - the CRC DEIS as follows: