DALLAS -- The Transportation Department will provide a $357 million low-interest loan to a public-private partnership that will build tolled express lanes to relieve a congested Houston highway.
Transportation Secretary Anthony Foxx said Friday that the Transportation Infrastructure Finance and Innovation Loan Act allocation will help project sponsors fund the construction of four new toll lanes on heavily traveled State Highway 288.
"The TIFIA loan program is designed to help communities like Houston begin projects like this -- a project that they would have otherwise had to wait years to start," Foxx said. "The new toll lanes will provide a more reliable commute in one of America's most congested metro areas and improve access to jobs and community services in neighborhoods there."
The $815 million project will be accomplished with only $17 million of state funds, said Jeff Mosely, vice chairman of the Texas Transportation Commission.
"This is a first for the Houston region and will bring much-needed congestion relief to the SH 288 corridor years ahead of what could have traditionally been accomplished," Mosely added.
The 60-mile highway connects Houston with Freeport, just inland from the Gulf of Mexico. It is a major north-south transportation corridor for the Houston metro region, which includes Harris and Brazoria counties.
The P3 project involves the construction of two tolled lanes and a conventional lane along 10 miles in both directions within the median of SH 288, from U.S. Highway 59 in downtown Houston to the Harris County line.
The toll lanes will be built by Blueridge Transportation Group LLC, which is made up of Israeli and Spanish engineering and finance firms. Blueridge has a concession agreement with the Texas Department of Transportation to operate the toll lanes. That agreement was executed in early March.
The Blueridge partners include ACS Servicios y Concesiones SL, InfraRed Capital Partners Ltd., Shikun & Binui Concessions USA Inc. and several Texas and national construction and engineering firms.
The private partners have pledged a total of $386 million to the project.
The concessionaire will operate and maintain the lanes through 2068.
The P3 project also includes direct ramps from the toll lanes to the Texas Medical Center, a new interchange with the Sam Houston Tollway, and upgrades to interchanges with Loop 610 that encircles the city.
State and local officials hope to eventually extend the SH 288 toll lanes into Brazoria County at a projected cost of $2.1 billion.
Gridlock-busting improvements along the congested SH 288 corridor have been needed for many years, said Gregory Nadeau, administrator of the Federal Highway Administration.
"Critical infrastructure projects like this one depend on innovative new approaches, and the Lone Star State has been a leader in using such creative solutions," he said.
The TIFIA loan will be supported by tolls on the managed express lanes.
The recently enacted Fixing America's Surface Transportation (FAST) Act provides $1.4 billion for the TIFIA loan program through fiscal 2020. Tolls will initially be capped at 75 cents per mile, although operators will be able to increase the rate during rush hours if needed to maintain speeds at or above 45 miles per hour for traffic using the express lanes.
Work is expected to get underway later this year with completion in 2019.
The SH 288 project also has an allocation of up to $600 million of transportation-dedicated private-activity bonds. The transportation bonds do not count against the state's annual volume cap for PABs.
The bonds will be issued by the Texas Private-Activity Bond Surface Transportation Corp., which was created by the concession agreement with TexDOT.
The PAB bonds carry provisional ratings of Baa3 from Moody's Investors Service and BBB-minus from Fitch.
