Saturday, June 10, 2006

"They're going to want to move as quickly as possible."

Private firm likely to build last part of Texas 130

Cintra-Zachry and state working on $1 billion deal to extend tollway to Seguin.

June 10, 2006

By Ben Wear
Austin American-Statesman
Copyright 2006

The Texas 130 toll road, already nearing completion from Georgetown to south of the Austin airport, would be extended 40 miles to Seguin by the Spanish-American partnership Cintra-Zachry LP under a more than $1 billion tentative agreement reached with the state.

The 50-year deal, likely to be approved by the Texas Transportation Commission at its June 29 meeting, would mark the first time that the state has handed over construction and operation of a state highway to a private company.

But almost surely, it won't be the last.

Cintra-Zachry, under an umbrella agreement with the state reached last year, will have the right to make a similar first offer for various pieces of a proposed 315-mile tollway parallel to Interstate 35 from San Antonio to north of Dallas.

And the Texas Department of Transportation has made it clear it wants to attract private investors to build and run major new roads all over the state.

The agreement in principle on Texas 130 was announced Monday in New York by Texas Transportation Commissioner Ted Houghton at a seminar for investors put on by the agency, declaring that it was "open for business."

The out-of-the-way venue for such a major announcement — the agency did not follow up with a press release — was a signal from the Transportation Department to the toll road investment community that it is serious about making such deals, officials said.

"If the lawyers don't wander off the reservation, we'll ink this thing pretty quick," Houghton said Friday.

Had the state built the rest of Texas 130 on its own, officials said, the agency would have had to borrow money and divert gas tax money from other projects. Instead, under this proposal, all the money will come from the private sector, and the state will get a cut of the toll revenue.

A route for Texas 130 south of the Austin segments being completed by Lone Star Infrastructure LLC was set several years ago, although an ongoing environmental reassessment might cause minor changes.

But, in general, the four-lane tollway would overlay U.S. 183 from Mustang Ridge to north of Lockhart (with four frontage lanes alongside that would be free and replace the existing highway), then jog west of Lockhart before running south to Interstate 10 at Seguin.

The 30 or so miles after the road leaves U.S. 183 would not have continuous frontage roads.

Given that the agreement is still being committed to paper, and that commissioners have not voted on it, Transportation Department officials Friday were willing to release only a mixture of specifics and generalities.
  • Cintra-Zachry would spend more than $1 billion doing the road's final design, negotiating with and paying private land owners for right of way (although the state would get title to the land), moving utilities and constructing the roads and toll facilities. It would then pay for operations and maintenance for the next five decades.
  • Cintra-Zachry, in its initial proposal for the umbrella agreement on the entire 315 miles of what would be called TTC-35, had said it would pay the state an upfront concession fee of $36.7 million for this section. There would still be a payment to the state, officials said Friday, but for now, they would not specify the amount.
Amadeo Saenz, the Transportation Department's engineering director, said the agency's general policy on such concession agreements is going to be to get an upfront payment as well as an immediate and escalating portion of all toll revenue.

Saenz outlined a three-tier scenario in which the state would get a certain percentage of tolls immediately, then more once the private road operator had made a certain rate of return on its investment, then finally a 50-50 split after yet another threshold rate of return occurs.
  • The agreement will set out a base toll rate, then allow it to increase by an index tied to inflation. Details of that toll regime, as well as the concession and revenue-sharing, will be released just before or at the June 29 commission meeting.
  • The 40 miles, unlike the northerly 49 miles under construction by another contractor, would have no cash toll collection facilities. Instead, motorists would need an electronic toll tag to use the turnpike.
  • The state, through Cintra-Zachry, would buy about 400 feet of right-of-way width along the route, Saenz said.
  • A new freight rail line, long discussed as an alternative to the Union Pacific tracks running from Round Rock to San Antonio, would run in a separate and as yet undetermined path. Officials in the past had indicated that such a rail line might be installed in the median of Texas 130 south of Austin.
  • Cintra-Zachry, in its larger 2004 proposal, had contemplated construction beginning in 2007.
The revised environmental analysis should be done by year's end, Saenz said, and that would free Cintra-Zachry to begin acquiring right of way.

Saenz and other officials declined to predict a groundbreaking date but said that Cintra-Zachry, assuming it borrows money to build the road, would surely make it sooner than later.

"The interest clock will be ticking," Saenz said, "so they're going to want to move as quickly as possible."; 445-3698

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