Tuesday, May 08, 2007

"Legislature’s change of heart on private toll financing led to the current scramble to get NTTA back into the SH 121 bidding."

NTTA Bids $3.3B for Toll Road

Agency’s Plan May Freeze Out Cintra


by Richard Williamson
The Bond Buyer
Copyright 2007

DALLAS – The North Texas Tollway Authority yesterday outlined a $3.3 billion bid to build and manage a State Highway 121 toll project near Dallas that was previously believed to have been all but sewn up by Spanish developer Cintra, Concesiones de Infraestructuras de Transporte last February.

The NTTA, a division of the state that operates toll highways in North Texas, plans to pay $2.5 billion up front for the project, about $400 million more than Cintra offered. Over the proposed 40-year financing period, the authority’s additional annual payments would total $833 million in 2007 dollars.

“I think it’s a compelling proposal,” said NTTA board chairman Paul Wageman. “We want to get moving on this project.”

At a special meeting yesterday, the board voted unanimously in favor of the proposal that was put together in less than a month at the request of the North Texas Regional Transportation Council.

The council, a consortium of governments in North Texas that manages state and federal highway funds, awarded top bidder status to Cintra in February. However, state lawmakers opposed to private financing schemes known as comprehensive development agreements pushed to get the NTTA into the bidding.

Cintra’s selection in February included a “protocol agreement” that designated NTTA as the toll collector on SH 121 in exchange for sitting out the project bidding. Wageman and others have explained the original plan as one that was favored by previous state Legislatures. The current legislature’s change of heart on private toll financing led to the current scramble to get NTTA back into the SH 121 bidding.

Before the NTTA can deliver its detailed proposal to the Regional Transportation Council, it must get TxDOT’s waiver of the protocol agreement, Wageman said. That step is considered a formality. Approval or rejection of the NTTA proposal by the Texas Transportation Commission is likely by the end of June, Wageman said.

To create a viable bid, the NTTA staff endured long hours to make the deadline, Wageman said.

Rebecca Heflin, the NTTA’s financial adviser from RBC Capital Markets worked with the staff to detail the financing.

“NTTA has been working on this project for years, so it was well positioned to submit a proposal,” Heflin said. “However, the three-week time frame gave us a huge challenge.”

Key bankers on the deal include Citigroup Investment Banking, Lehman Brothers, and Bear, Stearns & Co., Wageman said, though the underwriters will be specified once a deal is actually authorized. The financing plan envisions setting up bank commitments and an escrow fund upon TxDOT’s acceptance of the proposal. A month later, the NTTA would issue bond anticipation notes and commercial paper that would be taken out by long-term bonds 60 days later.

Annual payments under the authority’s proposal would surpass Cintra’s by $133 million per year and would keep $1.3 billion in the regional economy, according to the proposal.

When complete, SH 121 will be a 25.9-mile, all electronic, toll road in Collin, Dallas and Denton counties. The highway will intersect with the President George Bush Turnpike that was built and operated by NTTA.

“SH 121 is a critical, direct link to the economic vitality of North Texas and will further enhance the $28 billion of valuation that has already been added to the Collin, Dallas, and Denton County tax rolls as a result of the Dallas North Tollway and the President George Bush Turnpike,” Wageman said.

Cintra, which is based in Madrid, could not be reached for comment on the new developments. Wageman said he did not know if the company would be allowed to produce a counter-offer.

Cintra is also working with San Antonio-based Zachry Construction on sections of the Trans-Texas Corridor, which is envisioned as a $150 billion network of roadways and rail lines running parallel to Interstate 35 from the Mexican border to Oklahoma. The Trans Texas Corridor will face delays under a two-year moratorium passed by the Texas House and Senate but not yet sent to the governor.

The moratorium, which exempts the Dallas-Fort Worth area along with El Paso and sections of the TTC, has created confusion among transportation authorities who advanced privately financed projects authorized under previous legislation.

© 2007 The Bond Buyer: www.bondbuyer.com

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