"There was great concern expressed by the public ... about the proliferation of highly lucrative toll road deals and the long terms."
Apr 27, 2007
By Joan Gralla
NEW YORK - The Texas Legislature on Friday approved a two-year moratorium on privatizing toll roads after a public outcry over whether private companies are reaping overly generous profits from some recent deals.
Fast-growing Texas has the biggest U.S. privatization program and credit analysts say its decision to slow down might prompt other states to proceed more cautiously, if at all.
"There was great concern expressed by the public ... about the proliferation of highly lucrative toll road deals and the long terms," Steven Polunsky, an aide to Republican state Sen. John Carona of Dallas, told Reuters by telephone.
Texas' new bill also lets local agencies compete for these multibillion-dollar deals, the aide said.
Any new deals were limited to 40 years instead of the 100-year period sought by the Texas Department of Transportation, Polunsky said. Other measures will make any new deals' terms more transparent, he added.
A spokesman for Republican Texas Gov. Rick Perry, who opposes the moratorium, was not available to say whether he will veto it or offer further details about his statement.
Saying it failed to "address the serious concerns raised by the Federal Highway Administration earlier this week," he added:
"I will review this bill carefully because we cannot have public policy in this state that shuts down road construction, kills jobs, harms air quality, prevents access to federal highway dollars and creates an environment within local government that is ripe for corruption."
Polunsky said the bill was approved by a veto-proof majority.
LEASING NOT YET THE NORM HERE
Though road privatization's are common in Europe and Latin America, they have not gained much traction yet in the United States.
Two years ago, Chicago got $1.83 billion for leasing its Skyway commuter bridge, which caught the attention of cities and states around the nation as well as investment banks eager to earn rich underwriting fees.
But fiscal monitors have criticized Chicago's deal with MIG, run by Australian bank Macquarie Bank Ltd. and Cintra, part of Spain's Ferrovial. The 99-year pact failed to give taxpayers the extra toll revenue the companies can get, according to Fitch Ratings.
The Texas moratorium follows Perry's selection of Cintra in February for a $5 billion deal to overhaul State Highway 121, which runs through the road-hungry Fort Worth-Dallas area.
Lawmakers questioned the deal's 50-year term, non-compete clauses and other aspects. The local North Texas Tollway Authority said it could pay the state $2.3 billion in lease payments -- much more than the $700 million Cintra will pay.
The authority later got the go-ahead to draft a competing proposal.
The Texas bill will not affect some projects, in Harris and Tarrant Counties, for example, which say they are starved for transportation dollars, Polunsky said. Other projects in San Antonio and El Paso also will not be affected, he added.
© 2007 Reuters:
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