Texas' flagship toll road faces financial problems
By David Tanner
Land Line senior editor
July 17, 2014
Since 2006, the state of Texas has put a ton of trust in private companies to build and operate toll roads in exchange for a cut of the profits. Just eight years in, the state’s flagship public-private toll road, the SH 130 that connects Austin and San Antonio, is facing financial difficulties, low traffic volumes and a “junk bond” rating from financial analysts.
Moody’s Investor Service, which twice downgraded the SH 130’s bond rating in 2013, announced this month that the SH 130 Concession Co. had failed to make a full debt-service payment to lenders on the money it borrowed to build Segments 5 and 6 of the roadway. According to the 50-year contract between the SH 130 Concession Co. and the Texas Department of Transportation, the builder-operator carries the financial risk while the roadway itself remains owned by the state of Texas.
An actual default could lead to a termination of the contract and leave TxDOT with a decision to operate the roadway “in house” or farm it out to another operator. A spokeswoman for the SH 130 Concession Co. says the company has negotiated some new terms with its lenders.
“The SH 130 is not in default,” spokeswoman Megan Compton told Land Line. “It has reached an agreement with lenders that modifies the payment date such that no failure to pay occurred. A portion of the payment was made recently and the remainder is due in the future. As a result of the modification, as a matter of fact and as a matter of law, there is no default.”
The SH 130 Concession Co. is owned by Spain-based Cintra and Texas-based Zachry American Infrastructure. Segments 5 and 6 of the 130-mile toll road opened in 2012 at a cost of $1.36 billion, financed in part by the Federal Highway Administration’s TIFIA program, the Transportation Infrastructure Finance and Innovation Act.
Truckers continue to question the business model of public-private toll roads, especially when the SH 130 charges $29 for a tractor-trailer as an alternative to Interstate 35. Toll-road operator Cintra grabbed headlines in 2005 when it partnered with Macquarie, an Australian investment bank, to lease the Chicago Skyway toll road for 99 years at a cost of $1.83 billion.
The following year, a Cintra-Macquarie consortium paid $3.85 billion to lease the Indiana Toll Road for 75 years. Tolls for five-axle trucks have more than doubled on the Indiana Toll Road since the lease was signed.
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