County pays $1 million to banks for toll road study

Jan. 24, 2006

By BILL MURPHY, Houston Chronicle

The county agreed today to pay investment banks $1 million to study the toll road system, including a plan to privatize it.

Commissioners Court voted to study three possible scenarios for the Harris County Toll Road Authority: keeping the 83-mile system as is; selling it outright; and leasing the long-term rights to operate it.

Commissioners Court is expected to name JP Morgan Securities to lead the study of an outright sale.

Goldman Sachs & Co. will head the study of a long-term lease. Citigroup will look at keeping the toll road as is.

The studies will be completed by late spring. Commissioners Court will decide whether it wants to pursue one of the options in June, but would make no final decision until next year.

Financiers worldwide have begun viewing busy toll roads that draw hundreds of thousands of daily users as investment opportunities.

Investment houses and private toll-road operators have inquired whether the county is interested in privatizing, saying it might be able to lease its system for $2 billion to $7 billion.

An outright sale might net $2.7 billion to $4.4 billion, concluded First Southwest Co., the county's financial adviser.

But First Southwest and the investment banks have provided only preliminary estimates of how much the county could make. The studies will try to determine more exactly how much the county could reap by selling or leasing.