DALLAS - The Texas Senate has joined the House in approving a two-year moratorium on private toll-road financing. But the overall plan for how the state will fund its growing highway demand remains unresolved.
The moratorium won unanimous approval in the Senate last week after near-unanimous support in the House, but lawmakers still need to iron out differences between the two bills before sending the legislation to Gov. Rick Perry.
Meanwhile, development of nearly $7 billion of privately financed toll highways continues amid doubts about the projects' futures.
Perry, a strong backer of privately financed toll projects, has not said whether he will veto a moratorium bill. The House and Senate each have more than enough votes to override a Perry veto.
The moratorium legislation excludes projects already in the works in the Dallas-Fort Worth, El Paso, and Austin-San Antonio areas.
The biggest exempt project is state Highway 121 in Collin and Denton counties north of Dallas.
Spanish toll-road developer Cintra agreed to pay $2.1 billion to finance the SH 121 project in exchange for the right to collect toll revenue over 50 years. But the deal was questioned earlier this month when the North Texas Regional Transportation Authority, a coalition of local governments, allowed the publicly financed North Texas Tollway Authority to reenter a bid after Cintra was named top bidder.
A Cintra spokesperson last week declined comment on the 121 project and the moratorium. But sources indicated that the company is not planning to withdraw from the project.
The moratorium would most affect the Trans-Texas Corridor, a $184 billion network of roads and railways that would run from Mexico to the Oklahoma border. The project, designed as an alterative to Interstate 35, would be financed by Cintra-Zachary, a partnership of Cintra, San Antonio-based Zachry Construction, and Australian investment firm Hastings Funds Management.
Cintra-Zachry has already signed contracts with the Texas Department of Transportation for two segments of the Trans-Texas Corridor that would stretch 60 miles from the eastern outskirts of Austin to San Antonio at a cost of $1.3 billion. The Senate version of the moratorium won't affect that segment because the state and the developer inked their contract last month.
Cintra-Zachry this summer expects to begin buying rights of way along a 41-mile route. The private developer will pay for the land, as well as design and construction costs, while the state retains actual ownership of the land. The tollway is expected to open by late 2011 and link to a 49-mile section developed by the state.
Cintra-Zachry is also under contract to build another $1 billion segment 200 miles to the north that could become part of the Trans-Texas Corridor. Loop 9 is designed to ultimately loop around the entire Dallas-Fort Worth Metroplex.
Loop 9 would also serve the so-called Dallas Logistics Hub, a $2.4 billion project whose inaugural phase -- funded by $33 million of Dallas bond money -- broke ground earlier this month south of the city.
Ultimately, the Trans-Texas Corridor would speed commercial transportation from Mexico to Oklahoma, reducing congestion on the parallel I-35. The corridor would run to the east of I-35, eliminating the need to widen the existing highway.
According to a recent study by HNTB Corp., engineering consultant to the Texas Department of Transportation, 300 miles of new, four-lane corridor through farmland east of I-35 would be half as expensive as a four-lane I-35 expansion over the same distance.
Expanding the interstate would also threaten $566 million of tax-producing property, the study said.
As the studies and debates continue, lawmakers continue laying the groundwork for the corridor.
Under SB 1688, which the Senate passed last week, "transportation infrastructure districts" would be created along the Austin-San Antonio section of the TTC, known as Texas 130. The new districts would be able to issue bonds with voter approval to finance roadways, utility lines, and other improvements to service the toll road.
The Austin City Council would have to create the infrastructure districts, according to the legislation sponsored by former Mayor Kirk Watson. The bill now goes to the House, where passage is expected. Politically, the bill is expected to ease tensions between the cities along I-35 and the rural communities that would be affected by the new corridor. In the House, Republican Rep. Mike Krusee of Williamson County, north of Austin, sponsored an identical bill.
Another bill sponsored by Sen. John Carona, R-Dallas, seeks to connect the disparate pieces of legislation affecting privately financed toll projects, including the moratorium.
Although he voted for the moratorium, Carona declared that "it fixes nothing." Over the next 20 years, Texas will need $80 billion to fund highways, he said.
Carona's bill would index the gas tax to the highway cost index, or the cost of highway construction over time. By 2030 would the measure would generate about $16 billion in gas tax revenue, nearly four times current gas tax revenue.
Under the indexing proposal, the average driver would pay $21 more per month in 2030. That is nearly $80 less than the anticipated monthly toll cost if the privatization pace continues, Carona's office estimates.
In Texas, the gas tax has remained at 18.4 cents per gallon in federal taxes and 20 cents in state taxes since 1991.
The Texas Transportation Institute at Texas A&M University has reported that boosting the gasoline tax by eight cents per gallon and indexing the tax to inflation in the highway construction would produce sufficient revenue to back bonds for transportation needs over the next 25 years.
In another conflict with the moratorium, Carona's comprehensive bill allows $10 billion per year of private financing for toll roads.
Carona's voluminous bill got a chilly reception before his own Senate Transportation and Homeland Security Committee last week. One local official said he wished he owned a boat so that he could use the bill as an anchor.
Like Carona, other lawmakers who authored legislation allowing private financing of toll roads in previous legislatures have also reversed position and now support a ban.
Sen. Robert Nichols, R-Jacksonville, the Senate moratorium's sponsor, backed the Trans-Texas Corridor when he was a member of the Texas Transportation Commission, testifying in 2005 that private financing was the best way to solve the state's transportation problems.
But Nichols said he later realized that the financing was problematic because of the long-term ownership of roads by private investors.
"We must closely evaluate private toll contracts before we sign away half a century of control of our transportation system," Nichols said. "Many provisions in recent toll contracts are alarming."
Operating under previously approved legislation, the private developers are in limbo as the current bills make their way through the Legislature.
"We have expended huge sums of money on proposals submitted to TxDOT and we're waiting to hear from TxDOT on how to proceed," said Vicky Waddy, a lobbyist and spokeswoman for Cintra-Zachry. "We have cautioned many legislators, including [Carona], that if the two-year moratorium is enacted, these private equity investors may go elsewhere and never go back to Texas." (c) 2007 The Bond Buyer and SourceMedia, Inc. All rights reserved. http://www.bondbuyer.com http://www.sourcemedia.com
