Monday, August 13, 2007

"Legislators are wary of this new animal. They fear that 'availability payments' might just be concessions with rouge and lipstick."

Transportation panel finds another way to skin toll cat

'Availability payments' are TxDOT's newest idea for bringing the private sector into the toll road game.

August 13, 2007

Ben Wear
Austin American-Statesman
Copyright 2007

The folks at the Texas Department of Transportation, and their friends in the Worldwide Tolloplex, are nothing if not resourceful.

Witness their newest invention for slow dancing with the private sector on toll roads: availability payments.

Haven't heard of this creature? Consider yourself in good company with about 99.999 percent of all Texans. But the Texas Transportation Commission has been talking about using them for a couple of months, at least publicly, which coincides with the interval since the Legislature passed a bill restricting private toll roads and then went home for awhile.

Availability payments — you gotta love the perfect bureaucratic inscrutability of that name — are an attempt to split the difference between government-run tollways and the privately financed and operated toll roads that had the public and Legislature steamed up earlier this year. In theory, it would be a best-of-both-worlds thing, tapping the private investment sector's purportedly bounteous piggy bank while leaving full ownership and operation of tollways in public hands.

In theory, this would stand in contrast to concessions. With those, a private entity (like Cintra-Zachry, which is building the next 40 miles of the Texas 130 tollway) gets a long-term lease from the government to finance, build and operate a tollway, including the right to set the tolls (within contractual limitations). Concessions can be accompanied by upfront payments to the government, money that can be used for other transportation projects.

The Legislature said it didn't like concessions and put a two-year moratorium on them, although the promise of those upfront payments and quickly getting critically needed roads built moved lawmakers to allow about a dozen exceptions across the state.

How would availability payments work? The private entity (probably some sort of consortium) would use its own money to design, build and maybe even maintain the road. In return, its contract with the state or a local toll authority might guarantee minimum and maximum payments.

The size of those periodic payments would be based on how well the toll road performs, fluctuating based on the money "available." Thus, the name.

There could, of course, be endless variations on this theme, limited only by the seemingly limitless capacity of financial experts to structure deals. The private entity, for instance, could instead get a percentage of toll revenue, Transportation Commission Chairman Ric Williamson said last week. But that starts to look uncomfortably similar to a concession, and one imagines that a percentage partner would want some contractual say in toll rates.

Williamson said an availability payment scenario could even include the beloved upfront payments.

This might be relevant in Central Texas. The Capital Area Metropolitan Planning Organization board in October probably will vote on a second wave of tollways for the Austin area, and the five-road plan is said to be at least a half-billion dollars short of state and local tax money. Availability payments, and tolls to generate the money for them, could fill in that hole. Or the Central Texas Regional Mobility Authority, which probably will operate the roads, could go the traditional route and just borrow money on the bond market.

Availability payments, some argue, offer a lower financing cost. One would hope the mobility authority would do whatever it takes to make a gimlet-eyed comparison of the two approaches.

Given the raw feelings generated by the Perry administration's tollway and concession push, legislators are wary of this new animal. They fear that availability payments might just be concessions with rouge and lipstick.

"On first blush, it appears this is an attempt to get around what the Legislature did in Senate Bill 792," state Sen. John Carona, R-Dallas, chairman of the Senate Transportation and Homeland Security, said last week.

Williamson would say this is an attempt to pay for needed highways, after lawmakers diverted more road money to other stuff and failed to raise the gas tax.

Carona opposes those diversions and supports raising the gas tax. But until the Legislature actually agrees with Carona and addresses the problem, it's hard to blame Williamson too much for using what's, eh, available.

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