By Scott Miller
smiller@scbiznews.com
Published June 25, 2010
The manager of the Southern Connector toll road is insolvent, losing more than $20 million a year and unable to restructure more than $300 million in debt.
But the 16-mile toll road remains operational, connecting greenfields in southern Greenville County that community leaders once hoped would be developed after the road’s opening in 2001.
Connector 2000 Association Inc. filed for Chapter 9 bankruptcy protection — a class of bankruptcy available only to municipalities — on Thursday.
According to bankruptcy records, the association owes $278 million to the U.S. Bank National Association, $90.9 million to HSBC Bank USA and $8.28 million to the S.C. Department of Transportation.
The nonprofit organization was created in 1996 to help the S.C. DOT finance, construct and operate the Southern Connector. More than $200 million in bonds were sold in 1998 to construct the 16-mile toll road that connects Interstate 85 to the intersection of U.S. Highway 276 and I-385.
That interstate connector provided quick access to the old Donaldson Industrial Center now known as SCTAC. It also spurred development of The Matrix Business and Technology Park on U.S. Highway 25 and made the greenfields of southern Greenville County more attractive for industrial development. While some of that land remains undeveloped, the connector continues to be a selling point in the recruitment of industry to the area.
But the road has been plagued by a lack of traffic since it opened in 2001. Original traffic studies conducted by Wilbur Smith Associates estimated 21,000 toll transactions daily. Actual figures were less than 7,500 that year, according to the bankruptcy filing.
The Connector 2000 Association lost $22.16 million in 2008 and $22.18 million in 2009 and now has a net deficit of $173.3 million, court documents show.
The association estimates that the road will need to be resurfaced within the next seven years at a cost of around $15 million.
According to court documents, the association owes the S.C. DOT more than $775,786 in road maintenance costs and $7.5 million in past-due license fees to operate the road.
The S.C. DOT has not revoked that license. The department will file a response with the bankruptcy court by the end of the summer and will not comment on the case until that time, said spokesman Pete Poore.
Meanwhile, the Southern Connector is expected to remain open, the association said in a prepared statement.
In its bankruptcy filing, the association said many of the bondholders are unknown because the bonds were “book entry” securities without investment certificates. Additionally, the association negotiated confidentiality agreements with some bondholders, including institutional bondholders, court records state.
Debt service on the bonds was about $3.5 million initially but ballooned to $9.7 million in 2008 and is set to increase each year until reaching $59 million in 2038. The association noted that it has negotiated with trustees over a restructuring plan but hasn’t come to terms. Connector 2000 defaulted on the principal and interest payments on some of the bonds in January, the association told the court.
