CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT · 3/5/2020 · CHESAPEAKE BAY BRIDGE AND TUNNEL...

CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT

Quarterly Report for the Period Ending

March 31, 2020

Overview of the Financial Statements

The Chesapeake Bay Bridge and Tunnel District’s (the District) financial report for the quarter ended March 31, 2020 provides long-term and short-term information about the District’s overall financial status. This report consists of two parts: management’s discussion and analysis and the basic financial statements, including notes to the basic financial statements. Management’s discussion and analysis introduces the basic financial statements and provides an analytical overview of the District’s financial activities. The basic financial statements are the statements of net position as of March 31, 2020 and 2019, the related statements of revenues, expenses, and changes in net position and the statements of cash flows for the quarter and year then ended. The notes to the basic financial statements consist of information that is essential to a user’s understanding of the basic financial statements. As it is considered a special-purpose government engaged only in business-type activities, the District follows enterprise fund reporting; accordingly, the basic financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under this basis, revenues are recognized in the period in which they are earned, expenses are recognized in the period in which they are incurred, and depreciation of nonbridge-tunnel infrastructure assets is recognized in the statements of revenues, expenses, and changes in net position. All assets and deferred outflows of resources and liabilities and deferred inflows of resources resulting from the operation of the District are included in the statements of net position.

Financial Highlights for the Quarter

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States. On March 17, 2020, the Governor of Virginia issued a public health emergency order. On March 23, 2020, the Governor issued an order to close all nonessential businesses until further notice and all schools for the remainder of the academic year. Finally, on March 30, 2020, the Governor issued a “Stay at Home” order for citizens of the Commonwealth. As the District is considered critical infrastructure, it has remained open throughout the pandemic. During the month of March 2020, traffic declined by 26.9% and revenues declined by 23.5% from the prior year. Subsequent to the end of the quarter, traffic in April 2020 declined by 66.3% while toll revenues declined by 61.6% versus April 2019. On May 15, 2020, the Governor allowed most of the Commonwealth to proceed into the first phase of the “Forward Virginia” plan to safely and gradually ease public health restrictions while containing the spread of COVID-19. The District’s traffic and revenue results have steadily improved throughout phase one. While the District expects this matter to negatively impact its results of operations, cash flows and financial position, the related long term impact cannot be reasonably estimated at this time.

Gross toll revenues before deductions for the third quarter of fiscal year 2020 (Q3 FY20) were $10,515,258 and were 5.6% less than toll revenues in the third quarter of fiscal year 2019 (Q3 FY19). During Q3 FY20, total revenue vehicles of 671,040 crossed the District’s facility. This represents a decrease in vehicular traffic of 39,870 from Q3 FY19. Other revenues in Q3 FY20 totaled $221,283, which is a decrease of $59,537, or 21.2% less than other revenues in Q3 FY19.

In Q3 FY20, the months of January and February represented all-time highs for toll revenues and traffic volumes.

Operating expenses before District facility expenses in Q3 FY20 totaled $4,349,116, which is an increase in operating expenses of $831,896, or 23.7% from Q3 FY19.

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March 31, 2020

Non-operating revenues/expenses is a net revenue in Q3 FY20 of $7,828,892 compared to a net revenue in Q3 FY19 of $2,543,315. This change is primarily the result of an increase in the change in the Fair Market Value of Investments in the amount of $7,727,809, an increase in Interest Income in the amount of $2,372,762 and an increase in interest expense of $4,814,994 between the two quarters caused by the new Governmental Accounting Standards Board (GASB) Statement No. 89 – Accounting for Interest Cost Incurred before the End of a Construction Period which no longer requires the capitalization of interest during construction projects beginning with this fiscal year.

Total net position at March 31, 2020 was $766,178,492 a 5.8 % increase over total net position at March 31, 2019.

Contacting the District’s Financial Management

This financial report is designed to provide the bondholders, customers, and other interested parties with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have any questions about this report or need additional financial information, address your request to the Executive Director or the Deputy Executive Director of Finance and Operations, 32386 Lankford Highway, Cape Charles, Virginia 23310.

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Chesapeake Bay Bridge and Tunnel DistrictStatements of Net Position

For the Period Ending March 31, 2020 & 2019

2020 2019Assets and Deferred Outflows of Resources

Current assets: Cash $ 1,129,700 1,068,530 Investments 94,674,167 120,766,317 Accounts receivable and accrued interest receivable, net 1,485,640 1,542,737 Prepaid expenses and other assets 1,101,675 130,782

Total current assets 98,391,182 123,508,366

Restricted assets:Cash 39,068 25,326 Investments 498,050,797 150,017,320 Accrued interest receivable 877,310 212,608

Total restricted assets 498,967,175 150,255,254

Investments 165,292,871 103,258,643

Capital assets:Bridge and tunnel facilities, including capitalized interest 422,370,201 422,370,201 Construction in progress - Thimble Shoal Parallel Tunnel 403,145,837 304,316,434 Miscellaneous capital assets, net of accumulated depreciation 9,275,781 9,906,190

Total capital assets 834,791,819 736,592,825

Bond insurance costs, net of accumulated amortization 2,548,281 2,660,574

Deferred outflows of resources:Differences between expected and actual pension experience 347,486 39,650 Differences between expected and actual RHIP OPEB experience 198,816 246,608 Differences between expected and actual GLI OPEB experience 31,000 - RHIP OPEB Contributions 241,979 216,136 Pension contributions 955,139 970,166 GLI OPEB contributions 42,000 42,000 Change in proportionate share - GLI OPEB 3,000 4,000

Total deferred outflows of resources 1,819,420 1,518,560

Total assets and deferred outflows of resources 1,601,810,748 1,117,794,222

Liabilities, Deferred Inflows and Net Position

Current liabilities:Accounts payable & accrued expenses 14,639,451 2,209,685 Accrued interest 8,683,187 3,956,438 Unearned revenue 712,663 692,546

Total current liabilities 24,035,301 6,858,669

Long-term liabilities:Long-term debt, net of current portion 794,005,493 369,171,312 Net pension liability 10,705,534 10,414,363 Net RHIP OPEB Liability 5,195,292 5,148,033 Net GLI OPEB Liability 643,000 637,000

Total long-term liabilities 810,549,319 385,370,708

Deferred inflows of resources:Pension investment experience 271,042 469,713 GLI OPEB investment experience 21,000 24,000 Change in pension assumptions 278,895 453,204 Change in RHIP OPEB assumptions 306,754 380,493 Change in GLI OPEB assumptions 27,000 33,000 Differences between expected and actual pension experience 131,945 262,839 Differences between expected and actual GLI OPEB experience 11,000 14,000

Total deferred inflows of resources 1,047,636 1,637,249

Total liabilities and deferred inflows of resources 835,632,256 393,866,626

Commitments and contingencies

Net position:Net investment in capital assets 410,705,229 467,641,675 Restricted for debt service 113,820,707 48,713,901 Restricted for forfeited property 11,817 11,275 Unrestricted 241,640,739 207,560,745

Total net position 766,178,492 723,927,596

Total liabilities, deferred inflows of resources, and net position $ 1,601,810,748 1,117,794,222

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Three Months Ended Nine Months Ended Twelve Months EndedMarch, 2020 March, 2019 March, 2020 March, 2019 March, 2020 March, 2019

Operating revenues: Toll $ 10,239,053 10,868,658 45,312,009 42,002,729 62,780,679 57,122,480 Other 221,283 280,820 830,637 780,679 1,115,580 1,072,300

Total operating revenues 10,460,336 11,149,478 46,142,646 42,783,408 63,896,259 58,194,780

Operating Expenses: Administration 67,395 77,746 253,153 237,496 329,621 308,686 Finance 185,989 207,478 622,986 587,805 837,952 787,778 Operations 1,217,866 1,174,356 3,569,454 3,454,541 4,682,732 4,504,808 Maintenance 1,224,453 909,145 3,203,804 2,716,134 4,240,210 3,701,211 General 1,224,852 884,580 3,117,628 2,623,980 4,119,883 3,493,675 Consultants 171,524 81,031 463,871 295,212 635,283 415,398 Utilities 257,037 182,884 664,092 560,337 854,421 763,856

Total operating expenses before district facility expenses 4,349,116 3,517,220 11,894,988 10,475,505 15,700,102 13,975,412

District Facility Expenses: Insurance 238,158 211,448 758,221 676,156 1,036,145 987,700 Depreciation 178,411 193,587 535,234 580,761 731,405 870,163 Bridge and Tunnel Preservation 2,496,571 170,108 10,489,651 3,535,328 11,585,562 3,977,658 Other 307,096 48,818 766,850 135,559 689,479 (205,931)

Total district facility expenses 3,220,236 623,961 12,549,956 4,927,804 14,042,591 5,629,590

Total operating and district facility expenses 7,569,352 4,141,181 24,444,944 15,403,309 29,742,693 19,605,002

Operating income 2,890,984 7,008,297 21,697,702 27,380,099 34,153,566 38,589,778

Nonoperating revenues (expenses): Change in fair value of investments 9,010,504 1,282,695 9,730,285 2,828,999 11,451,159 2,699,116 Interest income 3,878,508 1,505,746 10,492,358 5,191,731 11,922,888 6,734,106 Interest expense (5,060,120) (245,126) (14,741,524) (1,040,362) (14,741,548) (1,878,773) Bond issuance costs - - (521,667) - (521,668) - Other expenses, net - - (13,500) (13,500) (13,500) (12,521)

Total nonoperating expenses, net 7,828,892 2,543,315 4,945,952 6,966,868 8,097,331 7,541,928

Increase in net position 10,719,876 9,551,612 26,643,654 34,346,967 42,250,897 46,131,706

Total net position, beginning of period 755,458,616 714,375,984 739,534,838 689,580,629 723,927,595 678,153,628

Prior year adjustment of net position - - - - - (357,738)

Total net position, end of period $ 766,178,492 723,927,596 766,178,492 723,927,596 766,178,492 723,927,596

Chesapeake Bay Bridge & Tunnel District

Statement of Revenues, Expenses, and Changes in Net Position

As of March 31, 2020 & 2019

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Statements of Cash Flows

For the period ended March 31, 2020 and 2019

Q3 FY2020 Q3 FY2019 FYTD 2020 FYTD 2019

Cash flows from operating activities:Toll collections from customers $ 10,263,290 10,744,542 45,716,640 41,770,094 Scrip sales 100,868 90,345 282,028 262,221 Leasing revenue 293,241 271,751 859,264 699,119 Payments to employees for services and employee benefits (3,092,150) (3,198,170) (9,771,937) (9,515,717) Payments to suppliers and consultants (2,464,375) (2,582,682) (12,311,346) (5,463,586) Other (83,542) (34,702) (310,621) (316,205)

Net cash provided by operating activities 5,017,332 5,291,084 24,464,028 27,435,926

Cash flows from investing activities:Purchases of investments (295,252,147) (137,428,616) (1,062,297,030) (446,012,950)Interest income 3,704,457 1,403,426 9,153,328 4,702,837 Sales and maturities of investments 318,767,749 150,123,521 687,210,513 476,253,439

Net cash provided by investing activities 27,220,059 14,098,331 (365,933,189) 34,943,326

Cash flows from capital and related financing activities:Capitalized expenditures (17,941,205) (11,968,100) (69,097,882) (56,931,795) Forfeited assets (7,052) 9,375 7,424 9,375 Bond proceeds — — 434,013,966 10,385,296 Bond issuance costs — — (941,795) — Other miscellaneous non-operating expenditures — — (13,500) (13,500) Interest paid (14,425,285) (7,912,875) (22,338,162) (15,825,750)

Net cash provided by (used in) capital and related financing activities (32,373,542) (19,871,600) 341,630,051 (62,376,374)

Net increase (decrease) in cash (136,151) (482,185) 160,890 2,878

Cash, beginning of period 1,304,919 1,576,041 1,007,878 1,090,978

Cash, end of period $ 1,168,768 1,093,856 1,168,768 1,093,856

Cash and restricted cash are presented in the accompanying statements of net assets as follows:Cash $ 1,129,700 1,068,530 1,129,700 1,068,530 Restricted cash 39,068 25,326 39,068 25,326

$ 1,168,768 1,093,856 1,168,768 1,093,856

Reconciliation of operating income to net cash provided by operating activities:

Operating income $ 2,890,984 7,008,297 21,697,702 27,380,099 Adjustments to reconcile operating income to net cash provided by operating activities:

Depreciation 178,411 193,587 535,234 580,761 (Increase) decrease in operating assets:

Accounts receivable 343,043 (23,929) 1,171,229 (127,816) Prepaid expenses and other assets (860,400) 178,417 (476,488) 499,589

Increase (decrease) in operating liabilities:Accounts payable and accrued expenses 2,387,719 (2,060,490) 1,536,066 (812,547) Unearned revenue 77,575 (4,798) 285 (84,160)

Net cash provided by operating activities $ 5,017,332 5,291,084 24,464,028 27,435,926

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Cash Investments TotalsGENERAL REVENUE BOND RESOLUTION FUNDS:

Unrestricted: Revenue Fund 988,998$ 2,259,394 3,248,392 Operations & Maintenance Reserve Fund - 3,987,731 3,987,731 Reserve Maintenance Fund 41,623 19,645,353 19,686,976 General Fund 99,079 234,074,560 234,173,639

Restricted: Parallel Thimble Shoal Tunnel Project Fund - Series 2016 Bonds - 67,348,147 67,348,147 Parallel Thimble Shoal Tunnel Project Fund - VTIB - 1,401,558 1,401,558 Parallel Thimble Shoal Tunnel Project Fund - TIFIA - 9,489,564 9,489,564 Parallel Thimble Shoal Tunnel Project Fund - Series 2019 BANs - 306,421,942 306,421,942 Series 2016 Capitalized Interest Fund - 12,981,020 12,981,020 Series 2016 Interest Fund - 1,977,743 1,977,743 TIFIA Debt Service Reserve Fund - 23,214,380 23,214,380 VTIB Debt Service Reserve Fund - 3,438,284 3,438,284 Series 2019 BANs Capitalized Interest Fund - 71,778,159 71,778,159

OTHER RESTRICTED ASSETS:

Restricted Asset Forfeited Property Account 39,068 - 39,068

Totals 1,168,768$ 758,017,835 759,186,603

As of March 31, 2020

Chesapeake Bay Bridge and Tunnel DistrictStatement of Cash & Investments

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BB&TCoupon Maturity Purchase Maturity Market Value

Description Rate Date Date Value 3/31/2020Revenue Bond - Revenue Fund

BB&T Trust Deposit Variable Not Fixed 2,259,394 2,259,394 $ 2,259,394 2,259,394

General Revenue Bond - Operations & Maintenance Reserve Fund US Treasury Notes 2.750% 11/30/20 12/15/19 3,880,000 3,945,475

BB&T Trust Deposit Variable Not Fixed 42,256 42,256 3,922,256 3,987,731

General Revenue Bond - TIFIA Debt Service Reserve Fund FNMA Benchmark Notes 1.875% 12/18/20 07/07/17 11,360,000 11,485,846 US Treasury Notes 2.000% 12/31/21 12/31/19 11,285,000 11,618,260


General Revenue Bond - VTIB Debt Service Reserve Fund FNMA Benchmark Notes 1.875% 12/28/20 07/07/17 1,680,000 1,698,611 US Treasury Notes 2.000% 12/31/21 12/31/19 1,670,000 1,719,317


General Revenue Bond - Series 2016 Interest Fund US Treasury Notes 2.500% 06/30/20 01/24/20 655,000 658,684 US Treasury Notes 2.500% 06/30/20 02/25/20 654,000 657,679


2016 Thimble Shoal Project Fund Local Government Investment Pool SNAP Variable Not Fixed 67,352,060 67,342,060 BB&T Trust Deposit Variable Not Fixed 6,087 6,087

67,358,147 67,348,147

2016 Thimble Shoal Project Fund - TIFIA US Treasury Notes 1.250% 02/28/21 02/07/20 4,565,000 4,604,231 US Treasury Notes 1.875% 01/31/22 02/07/20 4,525,000 4,653,680


2016 Thimble Shoal Project Fund - VTIB US Treasury Notes 1.125% 02/28/21 02/10/20 670,000 675,758 US Treasury Notes 1.125% 01/31/22 02/10/20 670,000 689,053


2016 Capitalized Interest Fund US Treasury Notes 1.625% 06/30/20 11/10/16 3,865,000 3,878,890 US Treasury Notes 1.750% 12/31/20 11/10/16 3,900,000 3,945,094 US Treasury Notes 1.125% 06/30/21 11/10/16 4,900,000 4,955,125


2019 BANsCapitalized Interest Fund US Treasury Notes 1.125% 06/30/21 08/27/19 8,976,000 9,076,980 US Treasury Notes 2.125% 12/31/21 08/27/19 9,027,000 9,310,504 US Treasury Notes 1.750% 06/30/22 08/27/19 9,123,000 9,419,497 US Treasury Notes 2.125% 12/31/22 08/27/19 9,202,000 9,653,473 US Treasury Notes 1.375% 06/30/23 08/27/19 9,300,000 9,602,250 US Treasury Notes 2.875% 10/31/23 08/27/19 6,213,000 6,768,287 Local Government Investment Pool SNAP Variable Not Fixed 17,944,594 17,944,594


2019 BANs Thimble Shoal Tunnel Project Fund US Treasury Notes 1.375% 01/31/21 01/03/20 10,565,000 10,669,000 US Treasury Notes 2.375% 03/15/21 08/27/19 13,565,000 13,844,778 US Treasury Notes 2.625% 05/15/21 08/27/19 11,539,000 11,850,913 US Treasury Notes 1.125% 06/30/21 08/27/19 5,599,000 5,661,989 US Treasury Notes 2.000% 08/31/21 08/27/19 13,270,000 13,581,016 US Treasury Notes 2.000% 10/31/21 08/27/19 7,452,000 7,646,452 US Treasury Notes 2.125% 12/31/21 08/27/19 22,256,000 22,954,976 US Treasury Notes 1.875% 02/28/22 08/27/19 30,362,000 31,282,348

Local Government Investment Pool SNAP Variable Not Fixed 188,862,363 188,862,363 BB&T Trust Deposit Variable Not Fixed 68,107 68,107

303,538,470 306,421,942

GR Reserve Maintenance Fund US Treasury Notes 2.375% 04/30/20 10/31/19 2,990,000 2,993,737 US Treasury Notes 3.500% 05/15/20 05/15/19 2,965,000 2,976,582 Credit Agricole NY Commercial Paper Variable 06/30/20 12/30/19 6,055,000 6,029,611 US Treasury Notes 2.875% 10/31/20 10/31/19 2,720,000 2,761,225 BB&T Trust Deposit Variable Not Fixed 4,884,198 4,884,198

19,614,198 19,645,353

Statement of Investments

As of March 31, 2020

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BB&TCoupon Maturity Purchase Maturity Market Value

Description Rate Date Date Value 3/31/2020GR General Fund Toyota Motor Credit Corp. 1.950% 04/17/20 04/11/17 1,020,000 1,020,007 Federal Home Loan Mortgage Corp. Notes 1.375% 04/20/20 04/20/17 1,995,000 1,995,758 Federal Home Loan Mortgage Corp. Notes 1.375% 04/20/20 05/31/17 9,000,000 9,003,420 Federal Home Loan Mortgage Corp. Notes 1.375% 04/20/20 06/29/17 2,200,000 2,200,836 Federal Home Loan Mortgage Corp. Notes 1.375% 04/20/20 06/05/17 4,365,000 4,366,659 Federal Home Loan Mortgage Corp. Notes 1.375% 04/20/20 06/26/17 3,000,000 3,001,140 Federal Home Loan Mortgage Corp. Notes 1.375% 04/20/20 11/13/17 1,570,000 1,570,597 FNMA Notes 1.500% 07/30/20 08/31/17 3,750,000 3,763,166 US Treasury Notes 1.625% 07/31/20 09/26/18 2,035,000 2,044,539 MUFG Bank LTD NY Commercial Paper Variable 08/25/20 02/24/20 5,650,000 5,621,451 International Bank of Recon & Dev Global 1.561% 09/12/20 09/19/17 3,355,000 3,367,783 Federal Home Loan Bank Notes 1.375% 09/28/20 09/07/17 2,325,000 2,335,604 Federal Home Loan Bank Notes 2.625% 10/01/20 12/31/18 770,000 778,296 HSBC Bank Certificate of Deposit 2.700% 10/02/20 04/04/19 2,915,000 2,938,136 Proctor & Gamble Co. Corp. Notes 1.900% 10/23/20 10/25/17 730,000 730,410 US Treasury Notes 2.625% 11/15/20 10/28/19 3,515,000 3,566,627 Swedbank New York CD 2.270% 11/16/20 11/17/17 2,655,000 2,673,195 Johnson & Johnson Corp. Notes 1.950% 11/10/20 11/10/17 755,000 755,217 Federal Home Loan Mortgage Corp. Notes 1.875% 11/17/20 12/06/17 2,045,000 2,064,311 Walmart Stores Inc. Corp. Notes 1.900% 12/15/20 10/20/17 3,400,000 3,410,588 Asian Development Bank Note 2.250% 01/20/21 01/19/18 1,730,000 1,752,810 Freddie Mac Notes 2.375% 02/16/21 07/05/18 2,455,000 2,496,924 Freddie Mac Notes 2.375% 02/16/21 08/03/18 3,000,000 3,051,231 Berkshire Hathaway Inc. 2.200% 03/15/21 03/05/18 2,525,000 2,532,075 African Development Bank Note 2.625% 03/22/21 03/14/18 1,295,000 1,320,603 Toyota Motor Credit Corp. Notes 2.950% 04/13/21 04/10/18 2,090,000 2,097,254 Federal Home Loan Mortgage Corp. Notes 6.000% 06/01/21 06/22/06 16,629 16,937 US Treasury Notes 2.125% 06/30/21 03/15/19 17,007,000 17,402,943 International Bank of Recon & Dev Global 2.750% 07/23/21 07/25/18 2,635,000 2,711,802 US Treasury Notes 2.875% 10/15/21 10/01/19 2,900,000 3,015,094 US Treasury Notes 2.000% 10/31/21 03/01/18 2,835,000 2,908,976 Federal National Mortgage Assn. 5.500% 11/01/21 11/16/06 12,080 12,222 Federal Home Loan Bank Notes 2.625% 10/12/21 03/27/19 1,685,000 1,750,006 US Treasury Notes 2.875% 11/15/21 01/07/19 4,900,000 5,105,188 Fannie Mae Notes 2.625% 01/11/22 01/29/19 1,915,000 1,988,059 Fannie Mae Notes 2.625% 01/11/22 02/26/19 2,070,000 2,148,973 US Treasury Notes 2.500% 01/15/22 04/04/19 2,365,000 2,458,122 US Treasury Notes 1.875% 01/31/22 08/27/19 2,920,000 3,003,038 Freddie Mac Global Notes 2.375% 01/13/22 10/24/19 3,830,000 3,959,592 Federal Home Loan Mortgage Corp. Notes 5.500% 02/01/22 04/10/07 26,969 27,593 Apple Inc. Bonds 2.500% 02/09/22 01/09/19 2,945,000 3,025,611 US Treasury Notes 2.500% 02/15/22 05/01/19 5,350,000 5,569,016 Fannie Mae Notes 1.875% 04/05/22 06/24/19 4,850,000 4,984,524 Fannie Mae Notes 1.875% 04/05/22 07/17/19 920,000 945,518 US Treasury Notes 1.875% 04/30/22 05/30/19 2,820,000 2,910,328 US Treasury Notes 1.875% 04/30/22 05/30/19 3,700,000 3,818,515 US Treasury Notes 1.750% 05/31/22 06/05/19 2,415,000 2,487,450 Fannie Mae Pool 3.000% 06/01/22 08/17/12 119,718 124,999 Blackrock Inc. Corporate Notes 3.375% 06/01/22 08/14/19 1,200,000 1,238,245 Blackrock Inc. Corporate Notes 3.375% 06/01/22 07/29/19 1,250,000 1,289,839 US Treasury Notes 2.125% 06/30/22 08/01/19 2,415,000 2,511,600 Federal Home Loan Mortgage Corp. Notes 6.000% 07/01/22 07/17/07 22,203 22,624 US Treasury Notes 1.750% 07/15/22 10/04/19 1,670,000 1,724,014 US Treasury Notes 1.750% 07/15/22 07/24/19 4,740,000 4,893,310 US Treasury Notes 1.750% 07/15/22 09/05/19 610,000 629,730 US Treasury Notes 2.000% 07/31/22 08/05/19 3,680,000 3,822,600 US Treasury Notes 1.500% 08/15/22 08/14/19 1,395,000 1,434,670 Exxon Mobil Corporation 1.902% 08/16/22 08/16/19 650,000 652,620 Nordea Bank CD 1.850% 08/26/22 08/27/19 2,690,000 2,733,075 US Treasury Notes 1.625% 08/31/22 08/27/19 3,000,000 3,093,281 US Treasury Notes 1.625% 08/31/22 09/30/19 3,735,000 3,851,135 Fannie Mae Notes 1.375% 09/06/22 09/13/19 5,550,000 5,667,527 Fannie Mae Notes 1.375% 09/06/22 10/24/19 3,930,000 4,013,222 US Treasury Notes 1.375% 10/15/22 10/29/19 1,190,000 1,221,795 US Treasury Notes 1.625% 11/15/22 12/02/19 3,850,000 3,981,141 US Treasury Notes 1.750% 01/31/23 01/07/20 2,180,000 2,266,519 Federal Home Loan Bank Notes 1.375% 02/17/23 02/25/20 1,920,000 1,968,292 Federal Home Loan Bank Notes 1.375% 02/17/23 02/25/20 2,300,000 2,357,850 Federal Home Loan Bank Notes 1.375% 02/17/23 02/25/20 3,030,000 3,106,211 FNMA Notes 1.700% 02/21/23 02/26/20 3,015,000 3,026,442 US Treasury Notes 2.750% 04/30/23 11/25/19 1,890,000 2,029,683 US Treasury Notes 2.250% 04/30/24 11/25/19 1,910,000 2,055,041 US Treasury Notes 2.875% 10/31/23 11/05/19 2,460,000 2,679,863 US Treasury Notes 2.875% 11/30/23 12/02/19 2,900,000 3,165,531 US Treasury Notes 2.500% 01/31/24 11/25/19 1,925,000 2,081,106 US Treasury Notes 2.500% 01/31/24 01/03/20 2,130,000 2,302,730 US Treasury Notes 2.500% 01/31/24 01/24/20 3,500,000 3,783,828 Fanne Mae Notes 1.625% 10/15/24 02/10/20 3,200,000 3,343,181 US Treasury Notes 2.250% 10/31/24 11/01/19 2,510,000 2,720,605 US Treasury Notes 2.125% 11/30/24 12/31/19 1,040,000 1,122,388 Fannie Mae Notes 1.625% 01/07/25 01/27/20 3,260,000 3,406,905 Fannie Mae Notes 1.625% 01/07/25 03/03/20 2,705,000 2,826,895 Freddie Mac Notes 1.500% 02/12/25 02/13/20 1,470,000 1,528,794 Freddie Mac Notes 1.500% 02/12/25 02/13/20 2,290,000 2,381,591 GNMA Pool #5276 3.000% 01/01/27 04/16/13 334,296 350,405 GNMA Pool #794283 3.500% 03/01/27 04/16/13 198,826 209,446 GNMA Pool #MA0007 3.000% 04/01/27 06/18/12 568,922 596,269 Fannie Mae Pool #1084 3.500% 06/01/32 07/17/12 687,781 731,115 BB&T Trust Deposit Variable Not Fixed 420,306 420,306 Money Rate Savings Account Variable Not Fixed

227,804,730 234,074,560 Total All Investments $ 745,946,685 758,017,835

Statement of InvestmentsAs of March 31, 2020

8

DESCRIPTION/CLASS CURRENT YEAR

3 Months 9 Months 12 MonthsJanuary February March Ended Ended Ended

Cars/Light Trucks: 2020 2020 2020 03/31/20 03/31/20 03/31/20

Class 1 163,136 155,027 129,255 447,418 2,132,197 2,949,953 Class 1 Round Trip 30,703 28,103 23,633 82,439 290,838 393,967 Class 1 Commuter 15,263 16,137 14,696 46,096 144,180 192,805 Class 2 1,375 1,077 1,502 3,954 22,374 32,562 Class 2 Round Trip 255 187 275 717 2,711 3,974 Class 3 2,023 1,864 2,320 6,207 31,604 45,756 Class 3 Round Trip 311 314 355 980 3,268 4,555 Class 4 194 182 244 620 2,194 3,115 Class 4 Round Trip 19 15 22 56 188 269 Sub Total 213,279 202,906 172,302 588,487 2,629,554 3,626,956

Heavy Trucks:

Class 9 3,863 3,695 4,011 11,569 41,864 58,251 Class 10 1,157 1,054 1,191 3,402 12,283 16,588 Class 11 863 788 1,126 2,777 9,639 13,757 Class 12 20,788 19,420 21,076 61,284 197,666 270,870 Class 13 361 368 529 1,258 3,354 4,419 Class 16 35 20 25 80 299 400 Sub Total 27,067 25,345 27,958 80,370 265,105 364,285

Buses:

Class 8 167 146 38 351 1,043 1,494 Class 14 29 25 28 82 418 591 Class 15 641 654 455 1,750 6,483 9,163 Sub Total 837 825 521 2,183 7,944 11,248

Totals 241,183 229,076 200,781 671,040 2,902,603 4,002,489

DESCRIPTION/CLASS PRIOR YEAR

3 Months 9 Months 12 MonthsJanuary February March Ended Ended Ended

Cars/Light Trucks: 2019 2019 2019 03/31/19 03/31/19 03/31/19

Class 1 150,420 143,088 192,497 486,005 2,153,301 2,939,858 Class 1 Round Trip 27,832 25,230 29,994 83,056 278,803 375,957 Class 1 Commuter 13,525 14,593 16,984 45,102 130,213 176,321 Class 2 1,118 923 1,571 3,612 21,773 31,769 Class 2 Round Trip 245 151 264 660 2,677 3,781 Class 3 1,766 1,615 2,473 5,854 30,711 43,853 Class 3 Round Trip 300 247 313 860 3,235 4,419 Class 4 162 166 173 501 1,767 2,472 Class 4 Round Trip 23 19 25 67 206 258 Sub Total 195,391 186,032 244,294 625,717 2,622,686 3,578,688

Heavy Trucks:

Class 9 3,819 3,681 4,308 11,808 41,146 57,303 Class 10 1,140 946 1,092 3,178 12,329 17,581 Class 11 729 700 920 2,349 8,863 12,816 Class 12 21,421 20,473 22,554 64,448 205,342 277,445 Class 13 212 162 222 596 1,857 2,847 Class 16 32 22 22 76 414 671 Sub Total 27,353 25,984 29,118 82,455 269,951 368,663

Buses:

Class 8 145 144 174 463 1,150 1,610 Class 14 26 22 50 98 538 701 Class 15 630 686 861 2,177 7,486 10,542 Sub Total 801 852 1,085 2,738 9,174 12,853

Totals 223,545 212,868 274,497 710,910 2,901,811 3,960,204

CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICTVehicular Traffic Statistics

9



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(1) Organization and Summary of Operations

The Chesapeake Bay Bridge and Tunnel District (the District) was created as a political subdivision of the Commonwealth of Virginia by Chapter 693 of the Acts of Virginia of 1954. Chapter 693 was subsequently amended by the following Chapters of the Acts of Virginia: Chapters 462 and 714 of the 1956 Session, Chapter 24 of the 1959 Extra Session, Chapters 228 and 605 of the 1962 Session, Chapter 348 of the 1964 Session, Chapter 203 of the 1990 Session, Chapter 548 of the 1998 Session, Chapters 238 and 705 of the 2000 Session, and Chapters 270 and 297 of the 2005 Session, (collectively, the Acts). All such Acts have been codified into Title 33.2 Code of Virginia, Chapter 22. The District comprises the area, all within the Commonwealth of Virginia, in Accomack and Northampton Counties, the Cities of Virginia Beach, Hampton, Newport News, Chesapeake, Norfolk, and Portsmouth, and the area of the Chesapeake Bay between these subdivisions.

By the Acts, the Chesapeake Bay Bridge and Tunnel Commission (the Commission) was created as the governing body of the District. These Acts authorized the Commission to acquire, establish, construct, maintain, repair, and operate a project comprising public ferry service over and across the waters between any two points within the boundaries of the District, where such public ferry services would form a connecting link in the system of state highways.

Under the Acts, the Commission was also authorized to establish, construct, maintain, repair, and operate a bridge or tunnel or a bridge and tunnel project from any point within the boundaries of the District to a point in the County of Northampton, including such approaches and approach highways as the Commission deemed necessary to facilitate the flow of traffic in the vicinity of such project or to connect such project with the highway system or other facilities in the state.

The Chesapeake Bay Bridge and Tunnel (the Bridge-Tunnel) is a 20-mile, four-lane trestle and bridge and two-lane tunnel crossing at the mouth of the Chesapeake Bay between the City of Virginia Beach and Northampton County on the Eastern Shore of Virginia. The Bridge-Tunnel consists principally of low-level trestles, four bridges, two tunnels, approach highways, and an earth-fill causeway. The Bridge-Tunnel is designated as part of U.S. Route 13, the main north-south highway on Virginia’s Eastern Shore and the only direct link between Virginia’s Eastern Shore and the metropolitan area of south Hampton Roads, Virginia.

The District sold a revenue bond issue of $200,000,000 (1960 Bonds) under a Trust Indenture dated July 1, 1960, and constructed the two-lane bridge and tunnel project. The project was opened to traffic on April 15, 1964. The Commission discontinued ferry service following the opening of the two-lane bridge and tunnel project.

On April 15, 1964, the Bridge-Tunnel opened as a two-lane facility. A three-staged parallel crossing project began in 1995. Stage 1 of this project was completed in April 1999. This stage included construction of parallel trestles, bridges, roadways, and rehabilitation of the original two-lane facility. Stage 2 is ongoing and will consist of construction of an additional two-lane tunnel under Thimble Shoal Channel. Stage 3 will complete the parallel crossing with construction of an additional two-lane tunnel under Chesapeake Channel.



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(2) Summary of Significant Accounting Policies

The District is accounted for under the economic resources measurement focus and the accrual basis of accounting as a special-purpose government engaged in business-type activities, which follows enterprise fund reporting. Special-purpose governments engaged in business-type activities are used to account for the ongoing activities that are financed and operated similar to those often found in the private sector. Accordingly, revenues are recognized in the period earned and expenses are recognized when they are incurred. The District distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from the District’s ongoing operations. Operating revenues include revenue from toll collection, recognized when travelers cross the bridge and tunnel, and lease income. Operating expenses include District facility and administrative expenses. All revenues and expenses not meeting these definitions are reported as nonoperating revenues and expenses.

The statements of net position reports all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and the residual net position of the District. Deferred outflows of resources are defined as a consumption of net position by the District that is applicable to a future reporting period. Similarly, deferred inflows of resources are defined as an acquisition of net position by the District that is applicable to a future reporting period.

(a) Cash and Investments

Cash includes cash on hand and various checking accounts.

In accordance with GAAP, the District reports its investment securities at fair market value. Fair market value is determined as of the statements of net position date. The fair value is based on either quotations obtained from national security exchanges or on the basis of quotations provided by a pricing service, which uses information with respect to transactions on bonds, quotations from bond dealers, market transactions in comparable securities, and various relationships between securities.

(b) Restricted Assets

In accordance with applicable covenants of certain bond issues, cash, investments, and accrued interest receivables have been appropriately restricted. When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, and then unrestricted resources, as they are needed.

(c) Capital Assets

The bridge and tunnel assets are stated at cost and include capitalized interest. No provision for depreciation or obsolescence of the Bridge-Tunnel facilities is provided as the District has adopted the modified approach to account for these assets. Nonbridge and tunnel assets are being depreciated over their estimated useful lives of 3 years up to 50 years.

(d) Restricted Net Position

Restricted net position, as defined by GAAP, is reported when constraints are placed on the use of assets either externally by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling



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legislations. At March 31, 2020 and 2019, the District had net position restricted for debt service of $113,820,707 and $48,713,901, respectively.

(e) Management’s Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and deferred outflows and liabilities and deferred inflows and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(f) Revenue Recognition

Toll revenues represent the tolls collected, net of any deductions such as credit card fees, EZ Pass fees and medical and educational toll discounts. Revenues are recognized when earned.

(g) Pensions

For purposes of measuring net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the District’s Retirement Plan and the additions to/deductions from the District’s Retirement Plan’s net fiduciary position have been determined on the same basis as they were reported by the Virginia Retirement System (VRS). For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

(h) Postemployment benefits other than pensions (OPEB)

District employees participate in two postemployment benefits other than pensions (other postemployment benefits or OPEB) plans:

The Chesapeake Bay Bridge and Tunnel District Retiree Health Insurance Plan (RHIP) is a single employer, defined benefit plan that provides health, vision and dental benefit plans for eligible members through a self-funded plan administered by the District. For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the RHIP and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis as they are reported by the RHIP. For this purpose, the RHIP recognizes benefit payments when due and payable in accordance with the benefit terms.

The Virginia Retirement System (VRS) Group Life Insurance Program is a multiple employer, cost sharing plan. It provides coverage to state employees, teachers, and employees of participating political subdivisions. The Group Life Insurance Program was established pursuant to §51.1-500 et seq. of the Code of Virginia, as amended, and which provides the authority under which benefit terms are established or may be amended. The Group Life Insurance Program is a defined benefit plan that provides a basic group life insurance benefit for employees of participating employers. For purposes of measuring the net Group Life Insurance Program OPEB liability, deferred outflows of resources and deferred inflows of resources related to the Group Life Insurance Program OPEB, and Group Life



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Insurance Program OPEB expense, information about the fiduciary net position of the Virginia Retirement System (VRS) Group Life Insurance program OPEB and the additions to/deductions from the VRS Group Life Insurance Program OPEB’s net fiduciary position have been determined on the same basis as they were reported by VRS. In addition, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

(3) Cash Deposits and Investments.

(a) Deposits

The carrying value of the District’s deposits (unrestricted and restricted) was $1,168,767 and $1,093,766 at March 31, 2020 and 2019, respectively. The bank balance of these deposits was $936,315 and $1,143,781 at March 31, 2020 and 2019, respectively. The entire bank balance was covered for both fiscal years by federal depository insurance or collateralized in accordance with the Virginia Security for Public Deposits Act (VSPD Act). In accordance with the VSPD Act, the District’s depository institution pledged collateral in the form of federal agency obligations with a market value equal to 110% of the District’s deposits with a fourth-party trustee in the name of the Treasurer of the Commonwealth of Virginia. In the event that the banking institution fails, the Treasurer will take possession of the collateral, liquidate it, and reimburse the District up to the value of its deposits. The State Treasury Board is responsible for monitoring compliance with the collateralization and reporting requirements of the VSPD Act and for notifying local governments of compliance by banks.

(b) Investments

The District is authorized to invest in obligations of the United States or agencies thereof; obligations of any state or territory of the United States and any political subdivision thereof; obligations permitted by the laws of the Commonwealth of Virginia; repurchase agreements with respect to the foregoing obligations; certificates of deposit, time deposits, or interest in money market portfolios issued by any bank, banking association, savings and loan association, or trust company insured by the FDIC or Federal Savings and Loan Insurance Corporation; commercial paper, shares in one or more open-ended investment funds provided that the funds are registered under the State Securities Act or the Federal Investment Company Act; bankers’ acceptances; and units representing beneficial interests in investment pools created pursuant to the Government Non-Arbitrage Investment Act of the Commonwealth of Virginia.

(c) Credit Risk

Credit risk is defined as the risk that an issuer or other counterparty to an investment will not fulfill its obligations. As required by state statute, the policy requires that commercial paper have a short-term debt rating of no less than “A-1” (or its equivalent) from at least two of the following: Moody’s Investors Service, Standard & Poor’s, Fitch Investors Service, and Duff and Phelps. Corporate notes, negotiable certificates of deposit, and bank deposit, notes maturing in less than one year must have a short-term debt rating of at least “A-1” by Standard & Poor’s and “P-1” by Moody’s Investors Service. Notes having a maturity of greater than one year must be rated “AA” by Standard & Poor’s and “Aa” by Moody’s Investors Service.



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The District’s investment securities using the Standard & Poor’s credit quality ratings scale are presented below:

(d) Concentration of Credit Risk

The District’s investment policy establishes guidelines on portfolio composition by investment type in order to control concentration of credit risk. As of March 31, 2020, the District’s portfolio was invested as follows:

2020 PercentageInvestment type Fair value of portfolio

U.S. Treasuries $ 327,715,654 43.23%U.S. Agencies 99,215,980 13.09Federal Agency Mortgage-

Backed 2,091,609 0.28Supra-National Agency 9,152,998 1.21Certificate of Deposit 8,344,406 1.10Money Market Funds 283,094,261 37.35Commercial Paper 11,651,062 1.54Corporate Notes 16,751,865 2.21

$ 758,017,835 100.0%

(e) Interest Rate Risk

Interest rate risk is defined as the risk that changes in interest rates will adversely affect the fair value of an investment. The District’s investment policy limits the investment of funds as a means of limiting exposure to fair value losses. Investments in the General Resolution General Fund are limited to investments with maturities that are consistent with the schedule of planning, development, and construction of parallel tunnels that would complete the parallel crossing. Investments are selected based on the current perception of the direction of interest rates with a greater emphasis on yield and a lesser emphasis on liquidity.

Standard & Poor's credit ratingInvestment type AAA AA+ AA AA- A-1+ A-1 Total

U.S. treasuries $ - 327,715,654 - - - - 327,715,654 Supra-national agency 9,152,998 - - - - - 9,152,998 US agencies - 99,215,980 - - - - 99,215,980 Federal agency

mortgage-backed - 2,091,608 - - - - 2,091,608 Certificate of deposit - - - 2,733,075 5,611,331 - 8,344,406 Corporate notes 755,217 3,678,230 5,942,663 6,375,755 - - 16,751,865 Commercial Paper - - - - - 11,651,062 11,651,062

$ 9,908,216 432,701,472 5,942,663 9,108,830 5,611,331 11,651,062 474,923,574



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Proceeds from the sale of bonds issued by the District are invested in compliance with the specific requirements of the bond covenants without further restriction as to the maximum term of securities purchased.

As of March 31, 2020, the District had the following investments and maturities:

(f) Summary of Changes in Fair Value of Investments

The calculation of realized gains and losses is independent of the calculation of the change in fair value (including purchases and sales) that occurred during the year. Realized gains and losses on investments that were held by the District during previous years, but sold during the current year, were used to compute the change in fair value of investments for the previous year as well as the current year. The change in fair value of investments for the quarter ended March 31, 2020 is calculated as follows:

Q3 FY20

Fair value of investments at end of quarter $ 758,017,835 Add:

Proceeds from sales and maturities during the quarter 318,767,749

Less:Cost of investments purchased during the quarter (295,252,147) Fair value of investments at beginning of quarter (772,522,933)

Change in fair value of investments $ 9,010,504

Investment maturities (in years) Less than Between Greater than Not

Fair Value 1 Year 1 to 3 Years 3 Years FixedU.S. treasuries 327,715,654 57,222,298 232,182,046 38,311,310 -

Supra-national agency 9,152,998 6,441,196 2,711,802 - -

US agencies 99,215,980 49,812,399 35,916,214 13,487,367 -

Federal agency

mortgage-backed 2,091,608 - 204,375 1,887,234 -

Certificate of deposit 8,344,406 5,611,331 2,733,075 - -

Corporate notes 16,751,865 8,448,297 8,303,568 - -

Commercial Paper 11,651,062 11,651,062 - - -

Money market funds 283,094,261 - - - 283,094,261 758,017,835 139,186,583 282,051,081 53,685,910 283,094,261



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(4) Capital Assets

Capital assets include bridge and tunnel assets, capitalized interest and financing expenses, and other capital assets. The bridges, trestles, approach roads, Fisherman Island Causeway, tunnels, portal islands with all attached improvements, toll plaza infrastructure and the rest area facility, and site-wide utilities are classified as bridge and tunnel assets. Capitalized interest and financing expenses include the amount of money that was funded from the 1960 Bonds issued for debt service and associated costs of the bonds during construction until the opening of the Bridge-Tunnel in 1964. Miscellaneous capital assets include all other assets that the District has capitalized such as land, buildings, fleet vehicles, and equipment.

The District utilizes the modified approach to infrastructure reporting on bridge and tunnel assets and capitalized interest and financing expenses. In lieu of reporting depreciation on bridge and tunnel assets, the costs incurred for maintaining bridge and tunnel assets at the condition level that is specified by Commission policy are reported as preservation expenses on the accompanying statements of revenues, expenses, and changes in net position.

The District has elected to continue to use the traditional approach or depreciation method for buildings, fleet vehicles, and equipment that are depreciable, as stipulated in the District’s Capital Asset Policy.

U.S. generally accepted accounting principles (GAAP) requires that governmental entities that utilize the modified approach for infrastructure reporting must have their governing board set a policy for the condition levels at which modified approach assets will be maintained. GAAP also requires that a fourth party perform condition level assessments of the modified approach assets annually and that the condition levels for the current and prior two fiscal years be disclosed in the notes to the financial statements.

The Commission’s preservation policy is to maintain 90% of the bridge and tunnel assets at a maintenance rating program (MRP) condition level of “good” or better.



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Jacob’s Engineering, Inc., the District’s consulting engineer, has inspected the District’s bridge and tunnel assets. Jacob’s Engineering, Inc. determines the MRP condition level for the bridge and tunnel assets as a numeric scaled rating. The numeric scaled rating is based on a condition index utilized by the Virginia Department of Transportation whereby 0 is a failed condition level and 9 is an excellent condition level. The table below defines the numeric scaled ratings assigned by Jacob’s Engineering, Inc.:

MRP Numeric code scaleNumeric Narrative

code code Definition

9 ExcellentComponent/Element has been recently put in service or remains in new condition

8 Very Good No problems noted, potential exists for minor preventative maintenance

7 Good Potential exists for minor maintenance

6 Satisfactory Potential exists for major maintenance

5 Fair Potential exists for minor repair or rehabilitation

4 Poor Potential exists for major repair or rehabilitation

3 Serious Major repair or rehabilitation required

2 CriticalThe need for repair or rehabilitation is urgent. Component/Element should be taken out of service until indicated repair is complete.

1 Imminent Failure Component is out of service; study feasibility for repair or rehabilitation

0 Failed Component is out of service and beyond repair, replacement required

The following two tables derive percentages in different ways. Trestles and bridges that have an MRP numeric condition level are described as a percentage of lane miles. All other bridge and tunnel assets that have an MRP numeric condition level are described as a percentage of that specific bridge and tunnel asset.

The following tables detail the MRP condition level of bridge and tunnel assets for the last three years:

Percentage of capital assets at an MRP condition Level 7 or betterBridge and tunnel assets 2020 2019 2018

Approach roads 100% 100% 100%Fisherman Island Causeway 100 100 100Tunnels 88 87 87Portal islands 86 85 90Toll plaza infrastructure 100 100 96Site-wide utilities 100 100 100



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Percentage of land miles at an MRP condition Level 7 or betterBridge and tunnel assets 2020 2019 2018

Original bridges 100% 100% 100%Parallel crossing bridges 100 100 100Original trestles 100 100 100Parallel crossing trestles 100 100 100

(5) General Resolution Revenue Bonds

Bond activity for Q3 FY20 was as follows:

In July 2016, the Commission awarded a contract to Chesapeake Tunnel Joint Venture to design and build the Parallel Thimble Shoal Tunnel Project (the “Project”). On October 24, 2016, to finance the costs of the Project, the Commission adopted and approved a new General Revenue Bond Resolution (the “2016 Resolution”) along with three Supplemental Resolutions authorizing the issuance of $321,515,000 First Tier General Resolution Revenue Bonds, Series 2016 (the “Series 2016 Bonds”), a loan from the United States Department of Transportation under the TIFIA program (the “TIFIA Loan”) in the amount of up to $338,528,672, plus capitalized interest and a loan from the Virginia Transportation Infrastructure Bank (the “VTIB Loan”) in the amount of up to $50,000,000, plus capitalized interest.

The Series 2016 Bonds are term bonds maturing from July 1, 2041 through July 1, 2055 with coupon interest rate of 4.0% to 5.0%. The proceeds from the Series 2016 Bonds, along with the proceeds of the TIFIA Loan and VTIB Loan and cash contributed by the District will be utilized to finance the develoment and construction of the Parallel Thimble Shoal Tunnel Project. The remaining portion of the proceeds from the Series 2016 Bonds will be utilized to (i) pay capitalized interest on a portion of the Series 2016 Bonds to and including July 1, 2021, (ii) to obtain a municipal bond debt service reserve insurance policy for the Series 2016 Bonds, and (iii) to pay the related issuance expenses, including bond insurance premiums.

AmortizationBalance, of costs, Balance, Amounts due

December 31, Bond premiums, Capitalized March 31, within2019 proceeds discounts, net Interest 2020 one year

First Tier General Resolution Series 2016 Bonds 321,515,000 - - - 321,515,000 - Series 2016 Issuance Premiums 35,931,392 - (383,939) - 35,547,453 - Series 2019 BANs 378,140,000 - - - 378,140,000 - Series 2019 Issuance Premiums 51,267,336 - (3,343,521) - 47,923,815 - Subordinate Tier General Resolution TIFIA Series 2016 9,412,340 - - 66,436 9,478,776 - VTIB Series 2016 1,390,565 - - 9,884 1,400,449 -

$ 797,656,633 - (3,727,460) 76,320 794,005,493 -



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The Series 2016 Bonds are subject to optional redemption prior to maturity by the District on or after July 1, 2026, in whole or in part, at par plus accrued interest. The Series 2016 Bonds are subject to mandatory sinking fund redemption in part prior to maturity on July 1 of each year starting in 2035.

The 2041 Term Bond and the 2055 Term Bond are insured by Assured Guaranty Municipal Corporation. The Series 2016 Bonds Debt Service Reserve Fund Requirement of $24,774,566 is secured by a debt service reserve fund policy also issued by Assured Guaranty Municipal Corporation.

The TIFIA Loan and the VTIB Loan are issued on the Subordinate Lein of the 2016 Resolution and bear interest rates of 2.88% and 2.90%, respectively. The loans do not incur interest until drawn which is in the Fall of 2018. Both loans have first semi-annual interest repayments commencing January 1, 2021 and first annual principal repayments commencing on July 1, 2025. Final repayment on both loans is July 1, 2054.

On August 13, 2019, the District issued First Tier General Resolution Revenue Bond Anticipation Notes, Series 2019 in the aggregate principal amount of $378,140,000 pursuant to its General Revenue Bond Resolution, adopted by the Commission on October 24, 2016 (the “General Resolution”) and its Fourth Supplemental Resolution, adopted by the Commission on July 9, 2019 (the “Fourth Supplemental Resolution”). The Series 2019 BANs will mature on November 1, 2023. The proceeds of the Series 2019 BANs will be used to provide funds to pay capitalized interest on the Series 2019 BANs, finance a portion of the costs of the Parallel Thimble Shoal Tunnel Project, and pay certain costs of issuing the Series 2019 BANs. The Series 2019 BANs are being issued in anticipation of the proceeds to be received by the District from disbursements requisitioned by the District in accordance with the terms of the TIFIA Loan Agreement and the VTIB Loan Agreement. The issuance by the District of the Series 2019 BANs as interim financing in anticipation of the receipt of the TIFIA Loan and VTIB Loan proceeds is expected to provide substantial interest cost savings for the District.

The underlying credit rating on the Series 2016 Bonds and the Series 2019 BANs are Baa2 and BBB by Moody’s Investors Service and S&P Global Ratings, respectively. The TIFIA Loan is also rated Baa2 and BBB by Moody’s Investors Service and S&P Global Ratings, respectively. The VTIB Loan is unrated.

The bond premiums for General Resolution Revenue Bonds are being accreted using the straight-line method, which is not materially different from using the effective-interest method, over the period the bonds will be outstanding.

Tolls and other revenues derived from the operation of the Bridge-Tunnel are pledged as security for the General Resolution Revenue Bonds. The General Revenue Bond Resolution includes covenants such as minimum toll rate covenant ratios and minimum debt service reserve requirements.



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(6) Fair Value Measurements

The District utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The District determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at measurement date.

Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantively the full term of the asset or liability.

Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identified assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements).

The level in the fair value hierarchy within which a fair value measurement, in its entirety falls in, is based on the lowest level input that is significant to the fair value measurement in its entirety.

Portfolio investments are assigned a level based upon the observability of the inputs which are significant to the overall valuation. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

All of the District’s investments in debt securities are in one of the four categories below and therefore the entire portfolio of debt securities is Level 2.

Debt securities classified in Level 2 are valued using the following approaches:

U.S. Treasuries, U.S. Agencies, and Supra-Nationals: quoted prices for similar securities in the market are used to draw appropriate correlations;

Corporate Notes and Municipal Bonds: relevant trade data, benchmark quotes and surveys of the dealer community are incorporated into the evaluation process;

Certificates of Deposit: matrix pricing based on various market makers and dealers;

Federal Agency Mortgage-Backed: solicited prices from market buy and sell side sources, including primary and secondary dealers, portfolio managers and research analysts are used.



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The fair value of investments in money market funds is based on the published net asset values per share of those funds. The District has the following recurring fair value measurements as of March 31, 2020:

Fair value measurements usingQuoted

prices inactive Significant

markets for other SignificantFair identical observable unobservable

value assets inputs inputs2020 (Level 1) (Level 2) (Level 3)

Investments by fair value level:U.S. Treasuries $ 327,715,654 — 327,715,654 — Supra-National Agency 9,152,998 — 9,152,998 — U.S. Agencies 99,215,980 — 99,215,980 — Federal agency mortgage-backed 2,091,609 — 2,091,609 — Certificate of Deposit 8,344,406 — 8,344,406 — Commercial Paper 11,651,062 — 11,651,062 — Corporate notes 16,751,865 — 16,751,865 —

Total investments by fairvalue level 474,923,574 — 474,923,574 —

Investments measured at the net assetvalue (NAV):

Money market funds 283,094,261

Total investments measuredat the NAV 283,094,261

Total investments measuredat fair value $ 758,017,835

CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT · 3/5/2020 · CHESAPEAKE BAY BRIDGE AND TUNNEL...

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