I-95 collapse in Philly not expected to carry credit implications

Federal officials have pledged resources to help Pennsylvania rebuild a busy section of Interstate 95 through Philadelphia that collapsed Sunday after a tanker truck caught fire.

The federal aid will help the Commonwealth manage what’s expected to be months-long repair of what Gov. Josh Shapiro called “just remarkable devastation.”

Federal help will mitigate immediate costs to the Commonwealth, which is responsible for the rebuild, credit analysts said. Diverted traffic may hurt local revenue streams, but drivers taking alternative routes may steer toward the nearby Pennsylvania and New Jersey Turnpikes, which may boost their credits on the margins, analysts said. Philadelphia’s Southeastern Pennsylvania Transportation Authority system is adding extra capacity and service, which may provide a lift for the transit system.

The interstate is the main north-south highway along the East Coast of the U.S., running from Miami to the Canadian border in Maine.

The collapsed section of I-95 was reconstructed four years ago as part of a $212 million project, according to local reports. The first phase of the project, with a price tag of $34 million, was completed in 2012, and the $212 million second phase was completed in 2017, according to PennDOT. A third phase costing $53 million remains under construction. PennDOT did not respond to requests for financing and construction details on the project.

A commercial truck carrying gasoline caught fire under on an exit ramp under an elevated section of the interstate, overheating steel girders holding up the highway and leading to the collapse of a large concrete slab onto the road below and closing the interstate in both directions.

The affected corridor is “likely the busiest interstate in our Commonwealth,” carrying 160,000 vehicles a day, according to Pennsylvania Department of Transportation Secretary Mike Carroll during a press conference Sunday.

Shapiro made a disaster declaration Monday morning, freeing up immediate federal funds to help with the rebuild.

“With regards to the complete rebuild of I-95 roadway, we expect that to take some number of months,” Shapiro said at a press conference Sunday.

U.S. Transportation Secretary Pete Buttigieg “made it clear that whatever resources needed to rebuild I-95, in a safe and expeditious manner, will be provided” to the state, Shapiro said.

The Commonwealth is responsible for repairing and maintaining the interstate, “so a key factor is how quickly they can access federal funds and beginning working on repairs,” said S&P Global Ratings analyst Cora Bruemmer, who covers Philadelphia.

Buttigieg said on Twitter said the closure would carry significant impacts for the region. “Our department will be there with support throughout the process of I-95 returning to normal,” Buttigieg said.

Federal Highway Administrator Shailen Bhatt was expected to travel to Philadelphia Monday.

“The I-95 corridor is a vital connection for people and goods traveling along the East Coast, and FHWA has offered support and assistance to state and local officials to help them safely reopen this section of I-95 as quickly as possible,” a spokesperson for the FHA said in a statement.

Nearby Pennsylvania and New Jersey Turnpikes may see marginal credit benefits from diverted traffic, said Fitch Ratings analyst Anne Tricerri.

“It’s possible there could be diversions around the area that could benefit the Pennsylvania Turnpike and New Jersey Turnpike, but it’s also possible that people will work from home if they can,” Tricerri said, noting that the rebuild will take place during the busy summer travel months when people drive the interstates.

“I could see how the turnpikes would benefit a bit from commercial vehicles trying to find another truck-friendly route, but it does emphasize how important each of these individual interstates is,” she said. “When it comes to our ratings, we do emphasize that if it’s a major thoroughfare, even though there are technically ways to go around, most have monopolistic characteristics.”

Traffic diversions may decrease local economic activity, said Bruemmer.

“If this decreases economic activity in the city, it could negatively affect some revenue streams. Commuter wage taxes were about 10% of general fund revenue in 2022, so it will be worth watching to see how much, if any, of that revenue stream might be affected, as well as sales and amusement taxes.”

These types of accidents often don’t affect the creditworthiness of transportation infrastructure providers, said S&P’s Kurt Forsgren.

“I-95 is un-tolled in Pennsylvania; any impacts to toll collections on the nearby Betsy Ross Bridge (8.6% of tolled transactions for the Delaware River Port Authority) should not be an issue for that credit.”