House set to sell Texas highways to foreign corporations, end private toll moratorium
Bill would go to Governor's desk and become law
(Austin, TX – May 19, 2009) The Texas House is set to vote on whether to end the moratorium on private toll contracts and vote to re-authorize them for another 4 years. Comprehensive Development Agreements, called CDAs in Texas (also known as public private partnerships or PPPs), would hand over an untold number of our PUBLIC highways to PRIVATE, mostly foreign, corporations for a half century at a time. Senator John Carona’s bill, SB 404, is eligible to be taken up by the full House tomorrow.
“Texans don’t want their PUBLIC highway system sold to the highest bidder, nor do they want corporate-run toll roads that cost commuters 75 cents a mile to get to work,” said Terri Hall, Founder of Texas TURF.
Private toll road contracts are due to sunset this fall. In 2007, Texans stood-up and demanded a moratorium on CDAs and sent a bill to the Governor with a combined vote of 169-5.
“The public is largely unaware of what our politicians are about to ram through. They think they took care of it two years ago only to wake-up to find the nightmare continues unabated,” Hall notes.
These deals cost taxpayers 50% more, are failing all over the country, and result in extremely high tolls, like the DFW contracts just signed with Spain-based Cintra that will charge commuters 75 cents a mile to get to work. That’s $3,000 a year in new toll taxes.
In fact, just days ago, Florida’s “Alligator Alley” couldn’t get a single bidder to privatize that tollway. TURF thinks lawmakers need to wake-up to the economic realities that selling our highways to the highest bidder, and relying on rosy traffic counts that amount to pure speculation to make these multi-billion dollar boondoggles work will fall flat, leaving the taxpayers to bailout yet more corporations.
“Public infrastructure that Texans depend on for daily living shouldn’t be under the control of private companies whose primary motive, naturally, is profit, not the public interest,” states Hall.
TURF believes that especially in these economic times, the higher toll rates charged by these foreign toll operators are completely unsustainable. CDAs also eat-up our existing gas tax and other public funds to privatize and toll our public roads, taking away virtually ALL of our available funding for non-toll roads.
CDAs are the most risky and most expensive method of delivering toll projects. Testimony from Dennis Enright of Northwest Financial in New Jersey before the Senate Transportation Committee March 1, 2007, seems to have been quickly forgotten by the Legislature. Mr. Enright said there is no risk transfer to the private entity and that CDAs cost the taxpayers of a minimum of 50% more than public toll roads. Mr. Enright rightly called toll roads monopolies by their very nature. He also said it’s always best to keep these projects in the public NOT private sector.
A second bill, SB 17 authored by Senator Robert Nichols, is tied to Carona’s SB 404. If the House votes to re-authorize CDAs, it’s contingent upon SB 17 passing as well. SB 17 purports to protect the public from private toll contracts and make CDAs only a last resort. However, the way the current bill, SB 17, is structured, if the public toll entity cannot get the financing together to do a public toll road, they'd have to pass the project to TxDOT who would hand it to the private developer.
“The bill doesn't give the public any protection, but shows TxDOT how it can just wait it out and then hand projects to the private companies,” Hall points out.
The bill also allows the whole evaluation process to be waived and TxDOT and public tolling entities can jump precipitously into CDAs.
“So what’s the point of the bill, if they can waive the requirements and get a free pass?” asks Hall.
The recent I-820 deal in Tarrant County uses a host of public money (gas taxes, federal TIFIA loans, private activity bonds or PABs) to subsidize this PRIVATE toll contract, yet Cintra gets the right to toll Texans for 50 years and take all the profits out of state. In fact, TxDOT plunked down more cash for the project than did Cintra! (Read it here.)
The LBJ freeway CDA project to toll I-635 uses public employee pension funds to invest in the deal, with toll rates of 75 cents a mile and can rise monthly. TxDOT will even pay Cintra for the loss of the "prevailing toll" revenues due to HOV users and Cintra is guaranteed 12% to 23% PROFIT! (Read more here.)
Their models show only 10 & 11% of all traffic will be able to afford to take these billion-dollar toll lanes. The congestion, or variable, tolling actually jacks-up the toll rates to guarantee certain speeds or pay TxDOT a penalty for slower travel times. This means they purposely price cars off the toll lanes as a financial incentive.
“So what's the point of all this risky, multi-generational leveraged debt? Mobility or making money? We’re headed for an infrastructure bubble that is destined to fail, which is likely to ensure massive taxpayer bailouts when they do. All those cars not on the toll road will be sitting in traffic, contributing to our air quality issues and being late to work while still paying taxes for highways (gas tax) and not getting a thing for it,” Hall observes.
TURF is urging Texans to call their State Representative and tell them not to let private corporations takeover our public highways. Tell them “NO” to SB 404 and SB 17, and “NO” to more sweetheart deals.
Read how CDAs are failing all over the world on our CDA Fact Sheet here.
Terri Hall is the Founder of Texas TURF. TURF is a non-partisan grassroots group of citizens concerned about toll road policy and the Trans Texas Corridor. TURF promotes non-toll transportation solutions. For more information, please visit their web site at: www.TexasTURF.org.