The Battle for 121

June 18, 2007

Editorial, DALLAS MORNING NEWS

The Regional Transportation Council has a multibillion-dollar decision today that's not unlike choices that many small investors face.

In awarding a contract for the State Highway 121 tollway, members must decide between a sure payoff and a potentially more lucrative option that comes with more risk.

Prudence would ordinarily demand the more secure option, a binding contract offer from a private consortium headed by the Spanish company Cintra.

That would mean rejecting a tantalizing bid from the North Texas Tollway Authority to complete and operate the State Highway 121 project across Denton and Collin counties for the next 50 years.

But the 39 members of the regional board first must be satisfied that they have received reliable and unbiased counsel from outside analysts hired to compare the two proposals. Questions have been raised about whether Cintra's history with the analysts, Price Waterhouse Coopers, should disqualify the firm's comparison of the Highway 121 proposals.

If the choice of Price Waterhouse withstands scrutiny, RTC members are justified in making the unprecedented choice of an outside company to operate a local tollway.

It could be a politically perilous decision for RTC members, most of whom are elected officials. But their responsibility is to carefully weigh the facts and look out for North Texas' larger transportation needs.

Both Cintra and NTTA pledge billions in upfront money and more over time. Price Waterhouse suggests that the competition is "a horse race" under expected traffic patterns but Cintra provides a guaranteed payoff if traffic volume falls short of projections.

The proposed contract with Cintra offers three other ingredients NTTA can't match: It is legally enforceable, is ready to sign and caps toll increases. It also would mean a significant investment of the company's money.

NTTA, on the other hand, would need to take the unfamiliar step of borrowing entirely against itself to make the upfront payment. NTTA says Highway 121 revenue will ultimately strengthen it financially and help it take on many other projects, another speculative scenario. Under either deal, upfront money will finance other badly needed road projects. The state's 20-cent gas tax is not producing near enough to pay for the tens of billions of dollars' worth of projects on North Texas' 30-year transportation blueprint.

Private capital is suddenly a tool of necessity if cash-starved North Texas has any hope of unsnarling traffic congestion and improving air quality. And competition from private investment has brought NTTA to the table for the first time with money that can be shared across the region.

The process has been bruising and uneven.

NTTA would be a solid builder-operator of Highway 121 if selected; if Cintra is deemed the better value for the region, North Texas will need today's more aggressive NTTA to tackle the region's many other challenges.