June 20, 2007

TOLLROADSnews

Jose Lopez, president of Cintra USA told us this morning in a telephone interview that he is confident that the Texas Transportation Commission (TTC) will choose his team's CDA or concession proposal over the North Texas Tollway Authority (NTTA) proposal for the SH121 tollroad. Most observers (including us) have assumed that the battle was over and won by NTTA following the 27/10 vote of the Regional Transportation Council on Monday.

Lopez told us he doesn't see it that way.

"We are in the middle of a process which will end with the state's decision, with the Texas Transportation Commission. We respect the vote of the Regional Council but we think it was governed by political considerations, not by the value of the proposal which is what must be the issue."

The Cintra man told us that despite the vote at the end he saw the proceedings of the Regional Council as very favorable to Cintra/JPMorgan's case.

"Everyone saw that independent analysts found that our proposal provided better value. The Regional Transportation Council's independent analysts said ours was much better value. Texas DOT said ours was better value also. Third the staff believe that we are better value. I find it difficult to imagine that the state will disregard this unanimous assessment of what is best value."

Lopez said however: "At the end, it is for the Commission to make the decision and we will respect their decision whatever it is."

The decisive argument for many in the regional council seems to have been that the local toll authority keeps dollars within the region. We asked Lopez how he can counter this argument?

"NTTA proposes to fund SH121 with debt. They will sell bonds to investors outside the region and borrow from banks outside the region and they will have to pay interest to those people whether they are in Canada, or Oklahoma, or New York or London, or Spain," said Lopez.

"We will have to borrow too from the same kind of people, and we will get money from investors, some of whom are in Spain, some in America, some in Texas, some in New York. Whoever raises the capital, they go outside the region to raise the capital so then you have to pay interest or dividends to the people who provided the capital. There is not really much of a difference."

Wagerman demands TxDOT guys sign on for NTTA

At an NTTA board meeting today the hardcharging chairman of the NTTA Paul Wagerman demanded to know of TxDOT officers present what position the Texas Transportation Commission was taking on NTTA versus Cintra for SH121. The Commission is due to meet June 28.

All TxDOT officers can say is that they are studying the various assessments, and the legal implications of different courses, and their impact for the future of the highway program...

We were told today that NTTA chairman Paul Wagerman who assumed the position in January forced the departure of NTTA CEO Alan Rutter soon afterwards in large part because of SH121. Wagerman thought Rutter was insufficiently assertive. Rutter was replaced on a temporary basis by Jerry Hiebert from HNTB.

The Dallas Morning News this morning quoted two of five Texas Transportation Commission members as saying the NTTA proposal is no certainty despite the regional council vote.

Ted Houghton of El Paso said: Cintra's offer was a firm bid, an iron-clad contract that we could have closed on yesterday and they would have handed us a check. NTTA's is not a firm bid; it's merely a proposal. And so now we will have to negotiate."

Hope Andrade a commissioner from San Antonio said to abandon Cintra after it had been selected in a procurement could leave the state "vulnerable". She said that the Commission wants to "work with" the Dallas regional council, but she needs to be persuaded still that the NTTA offer is better value.

"I want to first make sure that we don't place any risks on the state. If there was any negative impact on the state, we would have to bring the region together to tell them we need to figure out how to do this."

Senator Carona who led the push for a competing NTTA proposal to the draft Cintra contract says Texas Transportation Commission chairman Ric Williamson promised him that the regional vote on SH121 will be decisive with the commission.

But, as Yogi Berra said: it ain't over 'til it's over."

TOLLROADSnews 2007-06-20