2004.12.24

The Cintra-led group has been chosen by the Texas Transportation Commission as providing the "best value" proposal in the Trans Texas Corridor-35 bidding. Cintra proposes paying $1.2b in concession fees to the state and commits to building 509km (316mi) of 4-lane tollway - $6b worth - in the north-south "TTC-35" corridor in return for a 50-year toll concession.

This by far the largest private sector investment in US surface transportation in the automobile era, and even discounting for inflation projects like the 19th century railroads and New York City subways, it is probably one of the largest in US history. The sheer scale of the TTC-35 proposal makes monkeys out of the roadbuilder lobbyists (at ARTBA and AASHTO) in Washington DC who have belittled the potential for toll financing, claiming it is only capable of providing marginal additions to tax-based grants. Coming on top of the $1.82b being paid by investors to the City of Chicago for Skyway, and the multi-billion proposals in Virginia, gas taxes look like the difficult way to raise serious money for roads.

Gov Perry delighted

Texas Governor Rick Perry was reported "stunned" by the size of the investor offers for TTC-35. In a formal statement he said:

"Today's action by the Texas Transportation Commission will go down as one of the most significant days in the history of transportation. Three years ago next month, I presented the most visionary transportation plans this state has ever seen. Not only will the proposal presented by Cintra move the Trans Texas Corridor from concept to reality, it likely will forever change the way we build roads in Texas."

In a press release Ric Williamson, chairman of the Texas Transportation Commission said of the Cintra bid: "This is an historic change in the way major transportation assets are built and paid for in Texas. Private investment, not taxpayer dollars, will be where we look first for funding... The private sector is willing and able to invest in transportation improvements to reduce congestion, improve safety, provide economic development, and protect our quality of life.. Without a doubt, the private sector is knocking at our door with a nearly incredible opportunity for Texas."

The Cintra proposal builds on the TX130 tollroad presently in the middle of construction by TxDOT along the eastern fringe of the greater Austin area, extending that south to San Antonio and north to, and past, the Dallas area. Later spurs would be built to the Rio Grande, connections made to Fort Worth, truckways could be added to the tollroad, freight railroads relocated from their central city alignments, and highspeed rail Dallas-Austin-San Antonio added - but outside the core 509km (316mi) $6.4b-worth of tollroads to which Cintra and partners would commit.

Schedule

According to a powerpoint presentation to the Commission the provisional schedule proposed by Cintra is:

1. South of Austin (TX130) to San Antonio, $710m, construction 2007-2009, fee $37m

2. South of Dallas to east of Dallas, $1793m, 2009 to 2013, fee $580m

3. East of Dallas to north of Dallas, $775m, 2009 to 2012, fee $408m

4. Georgetown (TX130) to Temple, $986m, 2010 to 2013, fee $116m

5. Temple to south of Dallas, $1694m, 2010 to 2013, fee $32m

6. South of San Antonio to east of San Antonio, $489m, 2010 to 2014, no fee

7. UP railroad relocation Central Texas, $852m, 2011 to 2014, no fee

Clearly the big money spinners for Cintra are the two pikes (2 and 3 above) constituting a half loop proposed around the east of side of Dallas.

The six tollroads sum in cost to $6447m and with the railroad relocation to $7269. These are total costs including right of way. At 2,035 lane-km (1264 lane-miles) Cintra costs the roadways at $3.2m/lane-km ($5.1m/lane-mile).

An important aspect of the proposal is that the state's concession fee must be spent on projects "within the corridor" and be supportive of it. Cintra seems to have included the railroad relocation and the southeast loop around San Antonio ($489m) as a use of concession fees. Apparently the San Antonio bypass and the railroad relocation are proposed as use of fees since neither is a paying project in its own right. The railroad runs right down the center of the Austin metro area and with scores of grade crossings it is becoming a major local nuisance as freight trains increase in length and frequency. Its removal to the outskirts in the TTC-35 corridor would be popular with local residents. That would conclude what Cintra terms near-term facilities - to be agreed in some detail at the beginning of the concession.

Other aspects of the corridor development would be detailed later.

Named as mid-term 2010 to 2025 might be:

8. I-10 east of San Antonio to south of San Antonio

9. TX130 an additional 4 car-only lanes allowing the initial TX130 to become 2x2 truckway lanes

Named as possible longterm projects after 2025 are:

10. Dallas to Austin freight rail

11. Dallas to Austin highspeed rail

12. Austin to San Antonio highspeed rail

13. TTC-35 Fort Worth southwest and northwest connectors

14. TTC-35 San Antonio to Rio Grande Valley suggesting the McAllen border town as the terminus

TxDOT suggests potential other uses of concession fees as:

• passenger rail DFW airport to the TTC-35

• rail relocation Dallas-Fort Worth

• truckway TTC-35 to port of Corpus Christi

• truckway Laredo to port of Corpus Christi

• truckway San Antonio to Rio Grande in the McAllen-Brownsville area

• Alliance airport Fort Worth

• Rail freight switching yard southeast fringe of Dallas

The TxDOT presentation argues that the TTC approach is the most economical way of getting new capacity built, the alternatives being:

• widening the footprint of existing urban expressways: $60m/mile

• double-decking urban expressways: $25m/mile

• constructing loops around cities but leaving 'rural' roads as-is: $10m/mile

• new cross state corridors as in the TTC model: $5m/mile

Cintra's selection was unanimous at the Commission meeting. It followed a scoring of the proposals by a panel which included senior officials of TxDOT who relied on input from four subcommittees and a selection advisory committee. They rated the three final bids according to the development offered (41% weighting), financial plan and proposer financial strength (40% weight), project management plan (10% weight), quality management plan (5%) and price (4%). The scores for the three contenders have not been revealed.

TxDOT expects to conclude a concession contract ("comprehensive development agreement" or CDA in TxDOT jargon) with Cintra in a 30 to 60 day period. If that proves impossible it moves to #2 rated bid, and if that defaults, to #3.

Cintra proposes that after the concession is signed there would be a 12 to 15 month period to refine the development and financial plan, an effort to be capped at a cost of $3.5m. TxDOT has environmental permitting already under way and will complete that as part of the project.

The Cintra team includes as managing partners the prominent Texas construction company Zachary, and Ferrovial-Agroman, also of Spain. The other two final bids came from a Fluor group and a Skanska group.

TxDOT in its presentation says the population of the TTC-35 corridor in 2000 was 10.9m or 52% the state's 23.4m pop and projects growth in the corridor to 20.9m or 57% of the state's 41m in 2050. I-35 traffic volumes, presumably in the absence of the TTC-35 as a relief route, would grow from the current 223k to 320k in Austin, from 211k to 350k in Dallas, from 170k to 290k in San Antonio, from 70k to 175k in Temple, and from 86k to 170k in Waco.

TxDOT say the Cintra proposal maximizes private investment, minimizes use of public funds, and accelerates projects. TxDOT officials are already responding to complaints about areas neglected with new roads by saying the staging and selection of corridor development will be "business driven."

ARTBA and AASHTO becoming irrelevant

Continued success with TTC-35 is likely to lead to a call for investor bids for the I-69 corridor which runs somewhat parallel with TTC-35 but to the east and closer to the coast and centering on Houston. Commissioner John W. Johnson said after the Cintra selection Dec 17 that TTC-35 provides a "blueprint" for developing I-69 - a project which has languished as a Congressional High Priority Corridor so-called, getting dribs and drabs of token grants supporting endless small studies over 15 to 20 years - a long-standing advertisement of the absurdity of relying on the gas tax funding approach.

Of course lobbyists want continued lobbying work more than they want real road funding and real road construction, so the ARTBAs and AASHTOs have a vested interest in the discredited tax-pork system. Investor funding like the Skyway and TTC-35 threatens these DC lobbyists with irrelevance.

TOLLROADSnews 2004-12-23