Texas’ first public-private toll road goes bankrupt
By Terri Hall
March 2, 2016
It's appropriate that on Texas Independence Day, March 2, Texans got to formally declare independence from its bondage to a tremendously unpopular, anti-liberty public private partnership (P3) contract as a result of Cintra's bankruptcy on SH 130 (segments 5 & 6, the southern 41 miles of the 86-mile tollway). It's been just over three years since former Governor Rick Perry's grand toll road experiment began on this stretch of highway.
Anti-toll group Texans Uniting for Reform and Freedom (TURF) called for a boycott of Texas' first foreign-owned toll road when it opened back in 2012. SH 130 has long been the poster child of Rick Perry's failed toll road policies. At one point, the state-operated part of the tollway was so empty a distressed plane landed on it during peak hours. Many citizens expressed relief and a desire to move on and get this phase of Texas highway history behind them. Governor Greg Abbott's new vision and his new leadership at the helm of the Texas Department of Transportation (TxDOT) promises to usher in a new pro-liberty, pro-taxpayer mobility plan that benefits and is accessible to ALL Texans.
Cronyism and corruption
The SH 130 project, the first and only leg of the Trans Texas Corridor to ever be built, was shrouded in cronyism and corruption from the very start. Dan Shelley, lobbyist for Cintra, landed a job in Perry's office as his legislative liaison in 2003, got his former employer, Cintra, the development rights to the Trans Texas Corridor contract, then went back to work for Cintra after doing the dirty deed.
Texans should celebrate being released from this bad deal and breathe a breath of fresh air now that we're under new leadership with Governor Abbott having campaigned against toll roads and who continues to make a concerted effort to start eliminating toll roads across Texas.
Melissa Cubria, Director of Texas Public Interest Research Group (TexPIRG) and early critic of private toll road deals, echoes TURF’s sentiments, ”It is important to note. All private toll arrangements absent public safeguards - and not a single deal inked in this state contains a meaningful public safeguard - are nothing more than budget gimmicks that enable lawmakers to claim they've balanced the budget without raising taxes.
"In reality, lawmakers saddled Texas taxpayers with billions in debt and they hid it from the normal, open, public budgetary process. In other words, Texas lawmakers have balanced the budget, in part, because they have issued billions of taxpayer backed subsidies for private toll road companies while hiding the costs from taxpayers and increasing costs and risks for taxpayers in the long term.
"It's really hard not to say we told y'all so.”
Some of the most anti-taxpayer provisions in the contract or as a result of the contract include:
* Taxpayer-backed loan guarantees and state funds ($438 million federal TIFIA loan and other state funds).
* Non-compete agreement prohibiting the expansion of free routes in the entire counties of Caldwell and Guadalupe for 50 years (see Exhibit 17 here).
* A guaranteed 12% annual profit, courtesy of Texas taxpayers.
* Manipulation of speed limits on free routes in order to force drivers onto Cintra's tollway. This included increasing the speed limit on SH 130 to 85 MPH while simultaneously lowering the speed limit on the adjacent Highway 183 from 65 MPH down to 55 MPH for which TxDOT was paid $100 million concession fee by Cintra for the privilege (see Exhibit 7 here). This required a change in state law to allow the maximum speed limit to rise to the fastest in the country to 85 MPH, a speed forbidden by many trucking companies.
* Provisions that put Texas taxpayers on the hook for any uncollectable tolls, including those unpaid tolls by Mexican drivers.
* Dual designation of I-410, I-10, and Loop 1604 in Bexar County as SH 130 to entrap the motorists using those freeways into using Cintra's tollway once they're out in the middle of a rural area with no way north except the expensive SH 130 toll road.
* Tens of millions in taxpayer subsidies that make all Texas taxpayers pay to reduce the truck toll rates on SH 130 to incentivize truckers to divert from the heavily congested I-35 over to SH 130 (at a cost of $20 million per year).
* Fueled talk of swapping I-35 with SH 130 making I-35 a tollway and SH 130 in order to get more cars off of I-35.
* Cost Texas taxpayers $210,000 in advertising for the foreign-operated tollway, and a good portion of the $19 million in legal fees to negotiate the contract with Cintra as part of the controversial Trans Texas Corridor.
Will SH 130 become free?
TURF and its sister organization Texans for Toll-free Highways pushed to have tolls come off the road once it's paid for three legislative sessions. Last year, the concept finally managed to take a step forward with passage of HB 2612 that commissioned a study to eliminate tolls from state-funded toll projects. House Transportation Committee Chair Joe Pickett strongly advocated removing tolls from the state-operated northern segment of SH 130 in order to immediately get some traffic relief on I-35 through downtown Austin, persistently one of the state’s most congested roadways. Cintra filing for Chapter 11 bankruptcy may just hasten that plan.