Wednesday, March 28, 2007

Sen. Ogden: "It is unnecessary and inappropriate to ask private entities to loan us money to build highways."

Bill Pushes bigger TxDOT Cap

Ex-P3 Booster looks to double limit

March 28, 2007

by Richard Williamson
The Bond Buyer
Copyright 2007

DALLAS — A state senator who won $3 billion of bonding authority for the Texas Department of Transportation in 2003 is seeking to double its bond cap to $6 billion as a way to bypass public-private partnership toll road financing.

Sen. Steve Ogden, R-Bryan, submitted SB 1795 in a package of bills addressing highway finance. Ogden authored the legislation that created Proposition 14, which voters approved in 2003. That allowed TxDOT to issue $3 billion of bonds backed by revenues from the state highway fund.

TxDOT expects to issue $1 billion from that authorization in September. Another $1 billion issue under the Texas Mobility Fund is expected this summer, possibly as early as June. The Mobility Fund debt is backed by the state’s general obligation pledge, as well as revenue from the state fuel tax and other fees.

A former supporter of so-called P3s for highways, Ogden said the financing has spun out of control and should be used only as a last resort.

“I don’t think that four years ago anyone imagined that we could basically sell our roads to the highest bidder,” Ogden said in a hearing on the bill last week in the Senate Transportation and Homeland Security Committee, where the package of bills are awaiting approval.

SB 1795 raises the amount of revenue debt TxDOT can issue each year under the program from the current $1 billion to $1.5 billion.

At the same time, Ogden introduced SB 719 that prohibits the lease or sale of a publicly financed highway to a private entity. That could derail a deal awaiting final approval that allows Spanish developer Cintra Concesiones de Infraestructuras de Transporte to build and operate the State Highway 121 toll road in the Dallas area.

Cintra would pay $2.1 billion upfront and $700 million over its 50-year contract for the right to operate Highway 121 in Collin and Denton counties. Critics say the North Texas Tollway Authority could operate the road at a lower cost because of its ability to issue lower-interest debt.

“When I look at this state’s ability to access capital through bonding, it is unnecessary and inappropriate to ask private entities to loan us money to build highways,” Ogden told the transportation committee last week.

While Ogden’s package is awaiting further consideration, the Transportation Committee recommended a bill that would end an agreement between the NTTA and TxDOT that prevented the tollway authority from bidding on the SH 121 toll road project in Collin and Denton counties. The deal allowed the agency to collect tolls on the road for five years.

Backers of the NTTA said it could have offered twice as much as Cintra offered for the project.

Ogden’s bills provide an alternative to others in the House and Senate that call for a two-year moratorium on private-public toll financed projects such as the SH 121 toll road and a major project in the planning stages called the Trans-Texas Corridor.

Ogden won passage of Proposition 14 two years after voters authorized TxDOT to issue debt for the first time. Before that, the state used pay-as-you-go financing. Ogden and others argued that adding $1 billion dollars of revenue bonds each year would increase new construction spending by 66%.

As the Legislature considers the higher bond cap and the P3 funding issues, TxDOT is grappling with the news that it will have to return $288 million of federal highway funds due to budget constraints in Washington.

A recent resolution for Fiscal 2007 rescinded more than $3.4 billion of previously authorized transportation funds to the states. TxDOT last week held meetings to receive public comment on how to adjust for the lost revenue.

TxDOT officials expect to have less than a month to tell the federal government how the state will respond. Over the last 15 months, Texas has returned $305 million in response to federal funding cuts.

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