Brownsville plans to privatize toll road in rail corridor
NOTE: At least in this project, it's supposed to be 100% financed by revenue bonds, which do NOT put the taxpayer on the hook in case of losses. However, the devil is always in the details. If the deal contains a non-compete that prohibits or penalizes taxpayers if the government builds any free roads surrounding the toll road, Brownsville residents can count on congested free routes for the next 30-40 years! The first two segments of SH 130 are the poster child for FAILED toll roads, and the not only did the taxpayers pay to build it, they are bailing it out every year of the life of the bonds. Segments 5 & 6 of SH 130 were also taxpayer subsidized while Spain-based Cintra gets to walk away with all the profits for 50+ years. It contains a non-compete agreement, too, guaranteeing congestion on free routes for the next 30+ years. Don't expect I-35 to get fixed without tolls anytime soon (since free lanes "compete" with Cintra's profits). This is hardly a project that should be held up as a good example of toll road success or as a model for appropriate private financing.
Private financing, revenue bonds could build toll road
2010-08-29 22:57:09
The only way to pay for building a new road along part of Brownsville’s Union Pacific rail corridor” once the track is out, that is” is to make it a toll road.
That’s according to David Allex, head of the Cameron County Regional Mobility Authority, the agency behind the plan to build the proposed West Parkway tollway on an eight-mile stretch of the Union Pacific corridor.
The city of Brownsville doesn’t have the money, he said, and neither does the Texas Department of Transportation.
"So we looked at various ways of how we might be able to finance this thing without burdening any of our citizens on any taxes” either statewide, locally or individually," Allex said. "The only feasible way that we can do it is to do a toll road. We want to make this the most outstanding parkway in the state of Texas, and we can do that, because we can finance it through the tollway."
The most recent cost estimate on the project is $160 million, according to Richard Ridings, vice president for Austin-based HNTB Corporation, which serves as "general engineering consultant" for CCRMA on the project.
Ridings was CEO of the Oklahoma Turnpike Authority in the early 1990s when the state launched PikePass, the country’s first electronic toll collection system.
HNTB’s conclusion on the West Parkway project is that the toll road would be able to generate enough revenue over the life of the project to pay for operations, maintenance and to service the debt on the revenue bonds that might have to be sold to finance construction.
The CCRMA may look for other sources of funds in addition to revenue bonds, Ridings said.
"On all projects you continually look for ways to minimize the cost," he said. "If you can get some of the project paid for with some other means and methods you certainly try to do that, to minimize the amount of revenue bonds you have to sell. We also look for ways to finance the project strictly from a private-sector standpoint."
David Garcia, Cameron County deputy administrator and CCRMA assistant coordinator, said private investment is the most likely scenario at this point. Waiting for state funding to come along with money for a highway” well, it would be a long wait, he said.
"You’re looking at 10 to 20 years and a minimal amount of funding coming to different parts of the state," Garcia said. "You start asking yourself are we going to wait till that funding comes down, or are we going to try to do something about it and build this project sooner? The role of the (CCRMA) is to try to develop those partnerships through the public private sector” putting packages together."
To date, the CCRMA has lined up no potential private partners, though Allex said it has had interest from investors toward the parkway and other projects on the CCRMA’s to-do list, including construction of a second causeway to South Padre Island.
"We’re out there soliciting the private sector for several reasons," Allex said. "Number one, there is no money. There’s no money available from the city, the county or TxDOT to do things that need to be done to plan out a 30- or -50-year transportation development plan for the county."
Ridings said privately financed toll roads aren’t unusual. State Highway 130 toll road in Central Texas, for example, is a public-private toll project built in response to a surge in traffic on I-35 created by NAFTA.
"That was a very similar situation where the state just could not pull together enough toll revenue bond money to fund it, so they entered into a partnership with a private firm," he said.
Three similar projects are under construction in the Dallas area, Ridings said. In such models, private investors pay much of the up-front cost of building, he said, then share toll revenues with the local mobility authority or department of transportation.
Allex said the CCRMA is determined to make sure any toll road project it pursues in Cameron County will be able to generate enough revenue that some of it can be used for non-toll roads in the county.
"If we had (the West Parkway) in place and ready to go right now, we would already have a financial mechanism in which we could have funded the Morrison Road project rather than the city doing it," he said. "We also have a policy that we will not tax our local citizens for any of our projects. These are supposed to be pay-as-you go type projects, and that’s our philosophy."
Allex said the rumor that Brownsville residents will be taxed to pay for the toll road is a "total lie."
Even if the toll road gets built and traffic revenue projections are way off, taxpayers still won’t be stuck with the bill, Ridings said. If the road is financed by private investors, then those investors are responsible for refinancing if the going gets tough, he said.
If the road is built through toll revenue bonds” a type of municipal bond used for toll projects, such as roads and bridges” then the bondholders are financially liable, Ridings said.
"If the economy goes in the tank and stays there for 10 years it’s going to be tough to meet your projections," he said. "But there have been very few tollways in the United States that have faced that financial dilemma."