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NTTA's 121 toll road win hits snag
with federal funding

Agency weighs requiring return of spent money after extended bidding

August 8, 2007

By MICHAEL A. LINDENBERGER / The Dallas Morning News

State transportation officials are still awaiting word from Washington on whether letting the North Texas Tollway Authority build the State Highway 121 toll road will result in forfeiture of hundreds of millions of dollars in federal funds.

With an Aug. 27 deadline looming to sign the Highway 121 contract, the Federal Highway Administration's seeming displeasure casts another shadow over the already-contentious process to get the toll road built and running.

The FHA's problem centers on the Highway 121 bidding process. The Spanish company Cintra won preliminary approval to build and operate the road. But the Legislature pressured the Texas Department of Transportation to reopen the bidding.

NTTA stepped in and took the contract away from Cintra by convincing the Regional Transportation Council that its bid was better for North Texas.

As a result, the federal government told Texas it could be asked to return federal funds spent on already-completed portions of the road.

State officials immediately sought reassurances from the U.S. Department of Transportation that the funds would not have to be returned, but no official response has been received.

On Tuesday, Michael Morris, transportation director for the North Central Texas Council of Governments, said the delayed response could complicate closing the deal with NTTA.

"We're reluctant to sign a deal before we know how much it is going to cost us," Mr. Morris said.

On June 28, the Texas Transportation Commission, the final word on transportation issues in the state, ordered that the Regional Transportation Council and NTTA reach an agreement on the Highway 121 contract before Aug. 27 or else the contract would go to Cintra.

NTTA optimistic

North Texas Tollway Authority officials remain optimistic that the federal funds issue won't derail its deal to build and operate the 26-mile toll road, said deputy executive director Rick Herrington. He said Mr. Morris and Transportation Department officials have told him they do not expect the federal government to demand that the federal funds be returned.

But Mr. Herrington said Tuesday that the authority has not developed a "Plan B" in case the federal funding issue interferes with its ability to reach final contract agreement with the Regional Transportation Council.

The lingering uncertainty comes as NTTA and the Regional Transportation Council have agreed on all but the most minute details of the Highway 121 contract, both sides said Tuesday.

The project agreement is under review by attorneys and should be ready for signatures by early next week – two weeks ahead of the deadline. Once that is done, the NTTA will have 45 days to close its financing.

Sen. John Carona, R-Dallas, chairs the state Senate Transportation and Homeland Security Committee and has been a strong proponent of awarding the deal to NTTA. He said Tuesday that he remains optimistic the deal will be signed with NTTA but that he is concerned over the slow response by the federal government.

"The only hoop left to clear, the only unresolved issue in this deal is the federal funds question," Mr. Carona said. "No transportation deal is a done deal until Washington signs off on it, and so I am concerned about this. But if Washington does insert itself here, and goes against the local recommendation to go with NTTA, then all hell's going to break loose."

He said he expects to discuss the matter today with U.S. Transportation Secretary Mary Peters.

A spokesman for the Federal Highway Administration in Washington said Tuesday that the government's response to Texas' request for clarification on the funding issue is under review.

"We are very sensitive to the time pressures felt by the parties in Texas," said spokesman Ian Grossman. Mr. Grossman stressed that no decision about whether the federal government will demand a return of the federal funds has been made.

NTTA won the contract by promising to pay the state $3.35 billion in return for the right to collect tolls on the 26-mile road for the next 50 years. The Regional Transportation Council will be free to spend that money as it sees fit, without the usual interference from Washington, and exclusively on transportation projects in North Texas.

In what Mr. Morris described as the largest call for projects in North Texas history, hundreds of proposals for spending that money have been submitted from cities and counties. The proposals range from highway expansions to transit initiatives to expanded bike trails, Mr. Morris said.

The upfront money was made possible because NTTA has agreed to set toll rates higher than normal on the Highway 121 toll road. Toll rates will begin at 14 cents a mile, and will be raised regularly throughout the lifetime of the agreement.

Texas Department of Transportation officials had initially supported giving the contract to a private company, arguing that only by bringing in private capital will the state ever find sufficient funds to pay for its many transportation needs.

But under pressure from legislators like Mr. Carona, the Texas Transportation Commission eventually gave way and let NTTA make a bid, even though Cintra had already beaten out two private companies for the contract. Commission Chairman Ric Williamson and others have credited Cintra's involvement for boosting the amount NTTA was eventually willing to pay for the contract.

Mr. Carona said he remains optimistic that the deal will go to NTTA. But he said the U.S. transportation secretary's support for private investment like that promised by Cintra is well-known.

"Mary Peters is probably the nation's strongest advocate for public-private partnerships and private investment in transportation," Mr. Carona said. "That said, I believe DOT will listen to what our local concerns are."