Good afternoon.

Welcome everyone to our April Ninth Council work session.

Mr.

Manager, we have a couple of issues, if you please.

Thank you, Mr.

Mayor.

First up is our annual update from Chesapeake Transportation System, and I'll invite Earl Sorry, Director of Public Works to the podium to introduce our guests.

He is our finance consultant for this effort, and then Dave Cunho of Steer, he is our traffic and revenue consultant.

Hi, good afternoon.

So we'll just take you through some updates with a focus on the performance of the system during the fiscal year ended June 2023, as well as some more recent uh updates and activity on the system and then talk a little bit about uh forecasts and recommendations going forward.

So just some highlights of the operating results from fiscal 23 uh expressway revenue.

The revenue toll revenue on the expressway was down slightly in fiscal twenty-three from the prior year, but uh the prior year had been significantly above forecast during fiscal twenty-two, and fiscal twenty-three revenue on the expressway remained above the forecast.

Uh toll revenue on Dominion Boulevard increased 4.3 percent in fiscal twenty-three from the prior year, which was just slightly above the forecast.

Also for fiscal twenty-three, the total operating expenses of the system were about two million dollars below forecast.

Um of note in fiscal twenty-three investment income from the cash and reserves held by the transportation system uh increased substantially as interest rates increased uh so uh investment income was about two million dollars more than the prior year.

Um so overall net revenues in fiscal twenty-three were sufficient to make all of the required payments and deposits of the system, uh, as well as make an additional debt payment on the Virginia Transportation Infrastructure Bank debt of $6.2 million from the surplus revenue.

So strong financial performance for the year.

Uh just a couple of other updates since we last made this presentation to you a year ago.

Um the credit ratings for the CTS uh senior bonds remained unchanged.

Those bonds are rated triple B by SP and A- by Fitch.

Uh Dominion Boulevard has a schedule that includes an annual uh toll increase each July 1st, and that was implemented last year.

Uh system toll revenues for this current fiscal year, so the first eight months of fiscal 24 toll revenues were higher by 3.8 percent over the same period in fiscal 23, so we continue to see revenue growth.

Uh conditions have improved, and we are working with uh staff presently in the hopes of refinancing some of the CTS revenue bonds to lower interest rates that would uh allow for some reduced debt service expenditures.

We hope to get that done market conditions willing by the end of this fiscal year.

And uh Steer and Dave's firm are currently working on a traffic and revenue forecast update for us looking looking forward.

Uh and with that, I'm gonna turn it over to Dave, who will pick it up on slide three uh with some information on traffic and revenue performance.

Thank you, Sean.

Um so picking up on slide three.

This slide shows uh the traffic performance for each facility relative to the corresponding week in 2019.

Uh so on the top for the Chesapeake Expressway, on the bottom for Dominion Boulevard.

And what it shows is for the uh for the expressway, there was the initial um deep decrease in in the most restrictive travel period of COVID, but then quickly um conditions recovered, and uh the expressway was was higher than 2019 levels quite quickly within the industry.

We look at a lot of toll roads, it it performed as well as any that we saw during COVID.

It did quite well.

Um this sort of contrasts with Dominion Boulevard, which had its uh decrease and then gradually uh recovered to the 2019 levels and has continued to see traffic growth throughout the the most recent months as well.

So it's it's continuing to grow uh into the future.

Um if we move on to slide four, uh this slide looks at the revenue trends.

So uh showing the uh monthly revenue for for each facility uh with a line for each of the the last fiscal years.

So on the top looking at the expressway, um what you could see is um you know what what's clear is the seasonal nature of the expressway, the high levels of revenue that are realized in the summer weekend months, um, uh July, August, June, they provide much higher revenue.

The other notable feature is that the revenue levels have been pretty consistent over the last few years, looking year to year.

It differs a little bit from Dominion Boulevard, where the revenues are flatter throughout the course of the year.

But you could see the successive increase year over year in the revenues through the combination of the 5% annual toll increase on Dominion Boulevard combined with some of the growth in traffic levels.

And so the fiscal year 24 to date there, you could see is above the prior years.

Moving on to slide five.

So the expressway is performing its intended function of providing that high speed route to keep the traffic away from Battlefield Boulevard and making its way to the to the outer banks.

Moving on slide seven, looking at Dominion Boulevard, so this figure shows the annual transaction levels with the figure on the left and revenues figure on the right.

Um in 2020, due to COVID, it it dipped below the forecast, uh, but then the recovery has been uh sort as we anticipated for uh for Dominion Boulevard with in the near future uh a modest increased forecast for for transaction growth.

Um this this differs from the revenue thanks to the five percent annual toll increase.

Uh the revenues have been growing coming out of COVID.

Um, and you could see the the forecast continuing of the revenue growth and on Dominion Boulevard.

Uh so with that, I'll I'll turn it back to Sean to talk about some of the financial situation.

Yeah, thank you, Dave.

Um, so so this next slide, slide eight um is intended to show how all of the revenue that comes in from the system is applied.

Uh so the the yellow line across the top, and we've got five years of historical data and five years of projections in this chart.

The the yellow line across the top represents the total toll revenue from the system, and and where that goes is represented by the different colors of the stacked bars.

So working our way up from the bottom, the the red bar represents the operating expenses of the system.

That's the cost of collecting the tolls and of the employees of the system, et cetera.

Then there's uh a couple of shades of dark blue there that represent required debt service payments.

That's the minimum amount of debt service that we have to pay each year that uh is established at uh when we issued the bonds for uh for the project.

The orange bar there represents deposits to the renewal and replacement fund for the major maintenance of the system.

Um for example, if you've been out on the expressway in the evenings lately, there's uh uh repaving is is underway and and other uh project improvements and or or enhancements that need to be made, those are funded from those orange deposits.