Texas Pushing Toll Road Projects, With Help From New Authorities
by Elizabeth Albanese
The Bond Buyer
DALLAS - A $2.2 billion toll road construction plan for the area near Austin in central Texas cleared a major hurdle last week with approval by a state planning organization
, and similar proposals for other areas of the state continue to make progress.
Officials say Texas has fallen behind in keeping up with demand for highways. Part of the problem has been funding - lawmakers have been unwilling to hike the state's 20- cents-per-gallon gasoline tax, which historically has funded highway projects. In addition, population booms in major urban centers around Austin, San Antonio, Dallas, Fort Worth, and Houston have outpaced funding available for those areas.
Unable to rely solely on state funding, counties in those areas are working on plans to fund highways themselves, including formation of regional mobility authorities armed with legislative authority to plan, fund, and build mass transit systems, highways, and toll roads.
Although the state has had toll road authorities in place in some areas -the North Texas Tollway Authority near Dallas, the Fort Bend Toll Road Authority near Houston, and the Harris County Toll Road Authority in Houston - other areas had no authority to create such entities until 2001.The Central Texas Regional Mobility Authority was the first regional mobility authority created and is one of several that have been set up since legislation permitting the authorities was passed.In 2001, the state Legislature approved the creation of regional mobility authorities for the purpose of building roads and other transportation projects," said Brian Cassidy, a partner with Locke Liddell & Sapp. The firm serves as general counsel to the CTRMA
, which will oversee the $2.2 billion plan approved last week. "However, they inadvertently left out two critical pieces - the ability to issue bonds and the ability to condemn land."
The flaws in the enabling legislation were resolved during the regular 2003 legislative session, when HB 3588 gave those powers to the regional mobility authorities.
But unlike the stand-alone toll road authorities, regional mobility authorities must get approval from state transportation officials before embarking on a project.
With the passage of that bill, the CTRMA
now had the tools to do the $2.2 billion program," Cassidy said, adding that the new legislation is a standalone chapter in the state's transportation code. "And we work very closely with [the Texas Department of Transportation] - in effect, we are partnering with TexDOT to develop these projects."
The timing of discussions of the plan is geared to meet 2004 deadlines to qualify for debt service assistance through the Texas Mobility Fund, which was created by the Legislature in 2001 to back highway bond issues."Everybody wants a piece of the Mobility Fund pie," Cassidy said. "If we didn't get our plan in on time, we'd miss a chance at some of that money."He said that the central Texas authority would be eligible for about $161 million of assistance on its $2.2 billion financing plan.
The $2.2 billion proposal approved last week by the Capital Area Metropolitan Planning Organization
could help create as many as 11 toll roads or toll road segments in Travis and Williamson counties in the next decade.CAMPO, a unit of the TexDOT
, is a regional planning group responsible for working with transportation providers in Williamson, Travis, and Hays counties to ensure that the Austin metropolitan area's planning process is "cooperative, continuing, and comprehensive," according to its mission statement.The organization's approval was necessary before the CTRMA, which will oversee financing, construction, and operation of the mammoth slate of projects, can move forward to determine the final details of the $2.2 billion plan. The plan will likely include an as-yet-undetermined amount of bonds in addition to other funding."There are nine projects that are encompassed within the plan that were slated as necessary improvements by CAMPO," Cassidy said. "However, CAMPO has no funding mechanism. That's where TexDOT and the CTRMA come in. We can use tolling to build these projects and to add new capacity to existing highways with the addition of toll lanes."
The Harris County Toll Road Authority last year embarked on a plan to expand the capacity of the Katy Freeway - a stretch of Interstate 10 from Houston north to the city of Katy - by adding toll lanes alongside non-toll lanes. Without funding provided by tolls, the project could have been delayed as long as 10 years, officials have said. However, by partnering with TexDOT, Harris County officials were able to jump-start construction.
That project has served as a model for other Texas projects in the works. The $1 billion price tag is covered by a combination of toll revenues, state funding, and federal money.
The central Texas project would not involve expansion of existing highways into toll roads.
"Unlike the Katy project, the highways that would be expanded under the CTRMA plan are not really highways - right now, people are traveling on what are basically frontage roads, with street lights," Cassidy said. "This plan doesn't add any more street lights on those sections of road, but it doesn't take out any, either."
Authority officials hope that, given the choice, drivers would choose to pay tolls during peak travel hours to avoid heavy traffic. Tolls would be in the 50-cent to 75- cent range.
Although revenue bonds backed by toll revenues will finance part of the project's cost, federal and state money is also expected to finance part of the project.
"At least two and possibly three of the projects included in this plan will intersect with projects included in the Central Texas Turnpike Project," Cassidy said, referring to a project begun in 2002 by the Texas Turnpike Authority, a division of TexDOT.
The financing of that project - which was the 2002 Southwest regional winner in The Bond Buyer's annual Deal of the Year competition - included multi-tiered toll revenue bonds, notes, cash funding, and $900 million of debt backed by a loan authorized by the federal Transportation Infrastructure Finance and Innovation Act of 1998, or TIFIA.That deal marked the first issuance of state toll debt since the 1950s.
The CTRMA will help finance a portion of a project separate from the toll road project approved last week when it sells its first-ever bond issue this fall. It also will be the first issue ever sold by a regional mobility authority.
"The CTRMA's plan also includes a project along U.S. 183A
that was deleted from the CTTP when they went to market," Cassidy said.The central Texas authority is slated to go to market this fall with approximately $200 million of toll revenue bonds to finance the project, a 12-mile stretch of road built parallel to U.S. 183 east of the fast-growing Texas towns of Cedar Park and Leander.
The authority has already put in a request for a TIFIA loan worth $66 million to help finance the project.
"We have submitted that application, and, in conjunction with that request, we have also talked to the rating agencies about that project," Cassidy said, adding that rating analyses were a mandatory precursor of a TIFIA loan application.The CTRMA has also hired a bond team to oversee the issue to finance the U.S. 183A project. First Southwest Co. and Ladd Patillo & Associates are the authority's co- financial advisers, and its bond counsel is Vinson & Elkins. UBS Financial Services Inc. will be the lead manager for the deal.
Cassidy said that the CTRMA was the first regional mobility authority created in Texas, but by no means the only one working on large-scale projects.
"This is a structure you will see in other areas of the state," he said.
© 2004 The Bond Buyer: www.bondbuyer.com