Cintra's TTC-35 partner, Price Waterhouse Coopers, provides 'Independent Report' stating Cintra's bid on SH 121 Toll Road is superior
By GORDON DICKSON
Fort Worth Star-Telegram
ARLINGTON -- Building Texas 121 in Denton and Collin counties as a privately funded toll road would be less risky, and in most scenarios a better financial deal, than assigning the task to the public North Texas Tollway Authority, concluded an independent report unveiled Thursday.
The report by Price Waterhouse Coopers was paid for by the Regional Transportation Council, which held a five-hour workshop Thursday to talk about details of two proposals it had received to build the road.
One bidder, Cintra/JPMorgan would pay $2.15 billion upfront and $716 million over 50 years for the right to collect tolls on the road north of Grapevine. The money could be used on other North Texas transportation projects. A second bidder, the tollway authority, offered to pay $2.5 billion upfront and $833 million over 50 years.
The 40-member council is expected to pick a winning bid Monday. Because of the big money involved, the vote may determine whether other toll roads built in the next 50 years will be funded publicly or privately.
The Texas Department of Transportation originally picked Cintra for the project, but Dallas lawmakers intervened, saying they wanted the tollway authority to have another shot -- and it upped the ante with bigger figures.
Pricewaterhouse took it a step further, adjusting dollars to account for taxes and administrative tolling fees paid by either bidder, and concluded that the Cintra proposal had an overall value of $3.8 billion compared to $3.2 billion to $3.4 billion for the tollway authority.
The tollway authority deal would be financially better only if the road far exceeded traffic projections, Pricewaterhouse consultant Arthur Baines said, so one key to the decision is whether the council wants to gamble on that possibility.
Public or private?
Cintra stands to profit -- $700 million by one estimate -- but is a less risky partner, Baines said. If the project busts its budget or fails to draw motorists, Cintra's investors would be responsible for the debt, not Texas commuters. The proposal calls for Cintra to pay its debt to the Metroplex before any other claim.
"If the project comes off the hinges, you're insulated," Baines said.
The tollway authority's bylaws, however, require its bond investors to get paid first, and those bondholders can force the agency to raise rates on the system, he said.
The authority's officials objected to the methodology of the report, saying they were being penalized by questionable calculations. For example, Cintra's proposal was given a $200 million credit based upon the mostly federal taxes that would be paid during the job and a $700 million credit for an obscure "interoperability" fee that agencies charge each other when TollTag customers use out-of-town roads.
Rick Herrington, tollway authority deputy director, said toll agencies make no money on those fees, which were only recently imposed by the state.
The tollway authority needs money from Texas 121 to pay for less lucrative projects, including Southwest Parkway and the Texas 170, authority Executive Director Jerry Hiebert said.
Gordon Dickson, 817-685-3816
© 2007 Fort Worth Star-Telegram:
TTC-35 Toll Corridor Bidding Teams:
Cintra, Concesiones de Infraestructuras de Transporte, S.A. (CINTRA)
Zachry Construction Corporation
Earth Tech, Inc.
Price Waterhouse Coopcrs
JP Morgan Securities
Bracewell & Patterson
Pate Engineers, Inc.
Aguirre & Fields LP
Rodriguez Transportation Group
Railroad Industries Inc.
Public Resources Advisory Group
Southwestern Capital Markets
National Corporate Network
Source: 'Big Money Paves the Way for ther Trans-Texas Corridor'
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