Provided legal support.

And then members of our transportation toll facility advisory committee behind me, including our TFAC chair, Mr.

David Schwind, and our T FAC member Dan Rosinski.

Fun fact with Dan, we have to get him home by 7:30.

His wife Karen Farrell is representing the city of Chesapeake tonight on Jeopardy.

So I don't know what's going to happen.

So yeah, this is our agenda for tonight.

So we'll go over the CTS overview and 2025 performance, and then we will uh go through some uh proposed revisions to our toll rate schedules.

And uh we'll we'll jump right in.

So a little bit of background on the CTS.

So the CTS is actually comprised of both the Chesapeake Expressway as well as uh Dominion Boulevard.

So uh the expressway opened uh originally the tolled portion in May of 2001, uh Dominion Boulevard.

Uh we actually had the ribbon cutting on Veterans Day of 2016 and opened for tolling in 2017.

So as hard as it to believe, these two facilities are coming up on their 25th and 10th anniversaries respectively.

And this just graphically shows how the CTS ties to the greater uh transportation network in Hampton Road.

So you can see uh yeah US 17 South shown in brown connecting to Dominion Boulevard and the gold, and then uh 168 uh South and green connecting to the purple section, which uh we know as the Great Bridge Bypass and the Grove Connector as the uh northern portions of that.

So we do have different tolling mechanisms in place on the two different facilities.

Uh the expressway is a hybrid system that has both manual and electronic toll collections.

Uh our EasyPass rates are strong there uh throughout the majority of the year, but we still collect roughly 30 percent of uh our our revenues in cash during the peak summer season.

Uh so that's why we continue to have uh those cash options.

Um and then on Dominion, that is all electronic.

Uh so tolls are collected either through Easy Pass, which accounts for 85 percent of transactions, or through uh toll-by-plate transactions, and that involves uh camera taking a picture of a license plate, a DMB lookup, and then generating a bill on any collections uh that that follow.

So with that, I will turn it over to Mr.

Eckert to walk us through our recent operating results.

Thank you.

And I'm just gonna hit a few of the highlights for the fiscal year uh ended June 30th, 2025, and then some other recent developments.

Uh so for fiscal twenty-five uh toll revenue on the expressway uh was basically break-even from the prior year, very modest decline while toll revenue on Dominion Boulevard increased by twelve percent.

So overall uh toll revenue for uh the entire system was up two million dollars year over year, about five and a half percent.

Uh interestingly, fiscal twenty-five was the first year uh toll revenue from Dominion Boulevard at uh 18.9 million was greater than toll revenue on the Chesapeake Expressway of 18.7 million.

Umperating expenses uh during the year were up 6.7 percent over the prior year.

Uh it was a material increase, but but was below forecast, which uh contributed to uh positive overall results for the system for the year.

Uh net revenues plus investment earnings were sufficient to make all of our required debt service payments and deposits to various uh operating and maintenance funds, as well as to make an additional debt payment on the Virginia Transportation Infrastructure Bank loan of 10 million dollars and deposit uh 10 percent of surplus revenue to the general reserve fund for the system.

So all of the revenues of the system stay committed to CTS, and uh we're now able to use we use 90 percent of any surplus to accelerate debt repayment and 10 percent of any surplus uh goes into reserves.

Um that strong financial performance uh contributed to a credit rating upgrade from Fitch uh last summer.

Uh Fitch raised their rating on the senior bonds for CTS by two notches from a rating of double A minus to a rating of AA plus.

Uh Fitch noted uh several strengths of the system that contributed to the rating upgrade, including uh the uh city council's adopted long-term schedule of future toll rates, uh strong traffic and revenue growth on the aggregate system, uh improved financial performance, the reduction of the debt burden as as additional debt gets paid down, as well as a change to the bond documents that allowed that 10% of surplus to be kept in reserves.

Uh those are the highlights for for the fiscal year uh we presented to the TFAC committee uh uh in the fall uh and made some recommendations uh with respect to uh toll rates and really a couple of key considerations when we consider whether the toll rate schedule needs any adjustments.

Uh there's a rate covenant included within the financing documents for the system's bonds.

Uh the primary covenant that we focus on is that net toll revenue must be at least equal to one times all of the required debt service plus required deposits to the renewal and replacement fund, the operating reserve fund, and any debt service reserve funds.

The minimum requirement is one point zero times those requirements.

We target 1.20, so we have some cushion in our forecast because uh certain events during the year, in particular weather-related events or um global pandemics can have an adverse impact on traffic and revenue that's hard to forecast.

And so we want to make sure uh we're projecting cash flows that that have some some margin for error relative to the requirements.

So we target 1.20 times coverage, and uh there's a little table here on this slide at the top right, shows in uh most of the recent years we've been above that target.

We forecast that we'll stay above that target for the next couple of years, uh, but then when we get into 2028, we're right at that 1.20 target, and then 29 and 30 were forecasting that we will be below that covenant of meeting 1.2 times all requirements.

Um we also you know, we pay attention to the rating agency feedback on the on the bonds.

That's a good external uh uh judge of of how the system is performing.

We've had uh nothing but positive uh feedback from the rating agencies going back to 2020.

We were uh both of our ratings were in the triple B category from from SP and Fitch, we now have both of those ratings uh solidly in the A category from those two rating agencies.

Um in order to continue to uh have positive feedback from the rating agencies and meet our targets on the rate covenant.

We are recommending some changes to the CTS toll schedules that have been in place for uh for a number of years.

So we're gonna dig into that next section and go through some of those proposed changes.

Uh so this first slide is is for the Chesapeake Expressway, and this shows uh historical and then the adopted future toll rates for Chesapeake Expressway going back to when it opened in in 2001.

Uh I'll focus on the two-axle toll rates.

Uh as you'll see, there's different rates for motorcycles and for larger vehicles as well.

You know, when Chesapeake Expressway opened, uh, regular users paid a $2 toll for a two-axle vehicle, and the city established a discount program that uh set toll rates for members of the discount program at 50 cents uh per transaction.

Uh those rates were in place for 10 years.

In 2011, a revised toll schedule was adopted that created a peak season weekend toll rate that is higher than the regular toll rate for the other days of the year.

So for usually 17 weekends a year on Saturdays and Sundays, uh, users who are not enrolled in the discount program pay a higher toll rate than the tolls in place for the rest of the year.

Um you'll see there's a box off to the right that references discount program peak weekend toll rates.

Under the current schedule, the discount program toll rates are no different on peak weekends than they are on on regular days during the year.