DALLAS — With its debt already at a record level, the North Texas Tollway Authority waived a $3.2 billion project offered by the Texas Department of Transportation.
The NTTA, which is building an unprecedented network of tollways in the Dallas-Fort Worth area, decided it could not borrow enough money to build the 29-mile Interstate 35E redevelopment between Dallas and Denton to the north. Revenues would not be forthcoming for years, but the project would require major up-front costs.
The authority carries about $7.8 billion of total debt with some maturities reaching as far as 2049. The debt load has grown dramatically since 2008, when the NTTA became the de facto highway builder in the region amid state fiscal constraints.
With the added debt, the NTTA has set a goal of maintaining its first-tier revenue bond ratings of A-minus from Standard & Poor’s and A2 from Moody’s Investors Service.
With the unanimous NTTA board decision Wednesday to pass on the project, TxDOT is now free to solicit offers from private developers who would expand the heavily traveled highway with four tolled and four free lanes in addition to access roads.
Under state law, regional or local toll authorities such as the NTTA have the right of first refusal on tolled projects.
The NTTA is completing a similarly priced project known as the Sam Rayburn Tollway/State Highway 121 north of Dallas that was once awarded to a private developer but was snatched back and awarded to the authority after citizen protests of privately owned tollways.
Opposition to privately funded and operated tollways has died down in Texas since 2007, when Gov. Rick Perry was advocating construction of a massive network of toll roads and railways known as the Trans Texas Corridor. The project has been officially abandoned, though some sections of it are still under construction.
Private Spanish developer Cintra, which lost the Sam Rayburn Tollway to the NTTA after receiving the award, is working on the redevelopment of Interstate 635/LBJ Freeway in north Dallas that connects to I-35E.
Regional transportation officials say that only about $500 million is currently committed to the I-35E project. They hope to attract private investment to get the project started in a few years.
Deirdre Delisi, Perry’s appointee as chairwoman of the Texas Transportation Commission, which oversees TxDOT, urged the NTTA board to step aside from the I-35E project to allow the state to seek private developers, according to reports.
Meanwhile, the authority is shifting its leadership, as chairman Victor Vandergriff of Arlington agreed to step aside in favor of former Fort Worth Mayor Kenneth Barr.
Vandergriff led an effort to loosen the grip of so-called legacy contractors at the NTTA by opening up bidding to other companies. Barr is seen as a stronger advocate of the legacy contractors, which include financial advisor RBC Capital Markets and bond counsel McCall, Parkhurst and Horton.