DALLAS — When the Texas Legislature convenes in January, the top priority is expected to be the estimated $25 billion budget shortfall and ongoing problems with education funding.
But a North Texas coalition plans to lobby for $8.7 billion in transportation funding for the rapidly growing region that has turned increasingly to public-private partnerships.
Among the projects that will need funding, officials say, are the $4.4 billion widening of Interstate 35 between Dallas and Denton, $1.6 billion for renovating Texas 183, and $2.7 billion to complete the North Tarrant Express that is already underway as a P3 project.
In addition to the NTE, work is scheduled to begin next month on the Interstate 635/LBJ Freeway redesign under a P3 partnership called LBJ Infrastructure Group LLC led by the Spanish toll-road developer Cintra. Like the NTE, the LBJ project will combine toll and free lanes.
Among those lobbying for more P3 authority will be the Dallas Regional Mobility Coalition, which represents the eastern half of the Dallas-Fort Worth area, including heavily tolled Collin County, a booming population center north of Dallas. The DRMC will meet with its western counterpart, the Tarrant Regional Mobility Coalition, next month to consider funding options for projects as the Legislature convenes.
Though transportation has been a headline issue in previous sessions, few lawmakers are pitching any proposals so far. Gov. Rick Perry has floated the idea of Texas opting out of the federal Medicaid program, but said little about transportation, once one of his pet issues.
With no prospects for raising fuel taxes that support transportation in the state, P3s have become the dominant theme in North Texas.
The $2.7 billion LBJ Express project is expected to take five years for completion and will tie in with the proposed widening of Interstate 35 northbound to Denton. LBJ Express’s P3 structure was designed to speed construction while minimizing impact on existing traffic, according to the LBJ Infrastructure Group.
The debt used for building the projects is also riskier than that used in the typical tax-backed bond issue.
The NTE, which issued $400 million of private-activity bonds, holds the lowest rung of investment grade.
Fitch Ratings last week affirmed its BBB-minus rating on North Tarrant Express Mobility Partners’ PABs with continuing caveats.
“There is a limited amount of meaningful history for this type of asset class and uncertainty associated with the price sensitivity to toll rates given the highly demand-driven nature of toll rates,” noted analyst Chad Lewis.
The BBB-minus rating also applies to the federal Transportation Infrastructure Finance and Improvement Act loan, Fitch said.
The NTE bonds are secured by net toll revenues generated from the managed lanes project. The proceeds of the senior PABs and TIFIA loan are combined with approximately $570 million in public funds from the Texas Department of Transportation and equity of approximately $420 million from Cintra, Meridiam Infrastructure Finance, and the Dallas Fire and Police Pension System.
