June 14, 2007

TOLLROADSnews

Just days after Gov Rick Perry signed SB792 imposing a limited moratorium on new concessions Texas DOT has released a list of 87 proposed tollroads in the state it is moving immediately to be advanced under the new law. They have an estimated aggregate cost of about $56 billion.

The plan was formally approved at a meeting of TxDOT's governing Texas Transportation Commission today.

"The Legislature has given us clear direction to solve transportation problems by working with local officials," said Ric Williamson, chair of the Texas Transportation Commission. "That is exactly what we are doing."

40% of the projects by value, 26 in number, worth $22.6b are in the Dallas Ft Worth area, 4 are Trans Texas Corridor (TTC) projects costing $9b, 4 in Houston at $8b, 7 in San Antonio at $5.8b, with Austin, El Paso, Pharr and corpus Christi worth around $2b each.

Under the new law local toll authorities have "primacy" - meaning they always have the first option on toll projects. They also have access to the state highway system, and to right of way at TxDOT's historic cost.

However under SB762 they also cede the right to the project to TxDOT if they don't meet certain legal deadlines for taking up the project and implementing it.

Also the local authorities and TxDOT must engage in a market toll valuation process to establish the project's ability to be financed with tolls.

TxDOT said today they are initiating the toll project development process to consider the list of 87 toll projects and plan to move quickly.  

They will:

Local toll entities will have six months to exercise their option to take on the project, another six months to start environmental permitting and two years to let construction contracts and commit to making agreed payments. TxDOT will have the option to take over the project if local authorities fail to meet the SB792 deadlines for local primacy. They have 2 months to announce a decision.

Under the new law private sector financing is banned for two years with the exception of:

The biggest casualties to the concession program are many tollroads in the Austin area and the Trans Texas Corridors. Only exemptions are for TTC69 in the relatively small tag end segment Laredo to Corpus Christi.

Local toll authorities can still do toll projects in traditional public authority financings with debt, but they obviously cannot tap equity capital markets the way investors can. Their costs are usually higher and they are usually able to only finance the strongest projects.

Williamson, TTC chairman said in a press statement: "It's important to understand that in the absence of substantial new revenue, we will soon have no choice other than to shift tax resources from congestion relief to maintenance of the system, especially in major metropolitan areas and along the states busiest corridors. Evaluating the tolling potential of these projects will help us better understand the choices we all face."

TOLLROADSnews 2007-06-14