MOBILE, Ala. — Alabama transportation officials and local leaders have promised for years that tolls on a new bridge over the Mobile River would never rise.
Documents submitted in support of the sale of revenue bonds, though, lay out a schedule of automatic yearly increases. Tolls “shall be automatically adjusted annually on January 1 of each year,” those documents state.
Tony Harris, a spokesman for the Alabama Department of Transportation, confirmed that the tolling plan had changed. He said it is the only way the state can pay back the money it is borrowing for what will be the most expensive infrastructure project in the state’s history.
A Local Official Caught Off Guard
The provision took Eastern Shore Metropolitan Planning Organization Chairman Jack Burrell by surprise.
“I was not aware of any escalation clauses,” he said. “You know, maybe in their defense, that’s the only way they can make the numbers work. … I was a little disappointed to see those escalators — did not know they were gonna be in there. And I’ll just have to say we have to trust them to do, you know, ALDOT to do the best job they can for the citizens.”
Burrell chairs the metropolitan planning organization for the Eastern Shore — the body responsible for regional transportation planning on the Baldwin County side of the bay. That a chairman in that position learned of the escalation provision from bond documents rather than from the project’s sponsor is itself a substantive point about how the financing came together.
Why the Escalators Exist
Alabama this week finalized a complex agreement with the federal government for low-interest, federally backed loans providing $2.52 billion to the project. The state also closed on the sale of revenue bonds to private investors.
ALDOT officials said the federal loan will be held until close to the end of the five-year construction period and then used to pay off private borrowing — essentially swapping a higher interest rate for a lower one.
The bond market is where the escalation clause originates. Investors buying revenue bonds are lending against a future stream of toll income, and they price that risk based on whether the revenue can keep pace with cost over a repayment period measured in decades.
A toll fixed in nominal dollars loses purchasing power every year to inflation. Over a 30-year repayment horizon, a $3 toll that never changes is worth substantially less in real terms at the end than at the beginning, while the debt service obligation does not shrink. Bond purchasers price that gap, and the alternatives to an escalation clause are a higher initial toll, a higher interest rate, or both.
That is the mechanism behind Harris’s statement that it is the only way the state can repay what it is borrowing.
The Project
The $3.2 billion project includes construction of a six-lane cable-stayed bridge connecting Interstate 10 in Mobile to the Bayway. That span will be reconfigured to remove the shoulders and allow for three lanes of travel in both directions.
The History That Makes This Sensitive
A previous plan to build a bridge and new bayway in 2019 collapsed amid a revolt over tolls. When elected leaders in Mobile and Baldwin counties resurrected the idea in 2021, they set a framework for tolls at no more than $2.50.
That history is why the escalation question carries weight beyond its arithmetic. The 2019 collapse was not caused by the existence of tolls but by public reaction to their size and to the sense that the terms were settled without adequate public involvement. The 2021 framework’s toll cap was the commitment that made the project politically viable the second time.
The announced rates for the new financing put ALGO Pass holders at $3 per trip and drivers with interoperable transponders at $7.70. Drivers will not pay tolls until the bridge is complete, likely in 2031.
The causeway, Wallace Tunnel, Bankhead Tunnel and Africatown Bridge remain toll-free alternatives.
What Is Not Yet Known
The bond documents establish that an annual adjustment will occur each Jan. 1. The size of the annual adjustment, the index it is tied to and whether any ceiling applies are the details that determine what the toll actually costs a commuter in 2041 rather than 2031.
Residents who cross Mobile Bay daily have a direct interest in those specifics, and they are the natural subject of follow-up questions to ALDOT and to the Alabama Toll Road, Bridge and Tunnel Authority.