Tuesday, November 20, 2007

Fort Worth Startlegram advocates toll road conversion Ponzi scheme

How's the traffic looking on Texas 161?

Nov. 20, 2007

Fort Worth Star-Telegram
Copyright 2007

Look at it as the latest skirmish in the Texas toll road wars:

Negotiators for the Texas Department of Transportation and the North Texas Tollway Authority sat down Monday in an Arlington conference room, trying to reach agreement on extending Texas 161 as a toll road between Texas 183 in Irving and Interstate 20 in Grand Prairie.

The project is buried in tension. It's a test of whether the Texas Transportation Commission can make progress on its strategy of using toll road revenue to finance construction of other highways. It's also a test of whether NTTA, as a public body, can maintain its role as the region's primary toll road agency -- and whether it can even afford to do so.

Anyone who has trouble seeing the impact of this road on Tarrant County should think again. Texas 161 would take pressure off of congested Texas 360, now the primary north-south route in the middle of the Metroplex. It must be started soon if it is to be completed for the 2009 opening of the Dallas Cowboys stadium in Arlington and the 2011 Super Bowl. And regional and state transportation officials must get over the Texas 161 hurdle before they can turn their attention to other crucial projects, such as the Southwest Parkway and its extension into Johnson County.

At a meeting last week, Commission Chairman Ric Williamson of Weatherford set a deadline of Dec. 21 for a basic agreement on business assumptions for the Texas 161 project. That deadline adds more tension, but it can be met. The two parties must get this project moving.

Many other tasks must be accomplished before construction can start, but Williamson is right to press for speed in these initial negotiations. It is not yet certain whether NTTA will take on the project or whether the right to build it will be sold to a private company. Or the road could be built with state, regional and federal funds and operated as a non-toll highway.

The current negotiations focus on basic business terms -- things such as how many drivers would be expected to use the road at different toll rates, how much those rates could be increased over time and how much revenue the toll road builder/operator would share. Williamson says he wants those questions answered by Dec. 21.

Still to come would be decisions on how to combine those factors into a model that would be used to establish the road's market value. Then NTTA has to decide whether to build the project or pass on it.

It's easy to say that drivers would prefer a free road to a toll road. But if, as Williamson insists, the state needs the revenue from toll roads so that it can afford to build more highways, current projections show that Texas 161 is a good candidate for tolls.
Let's get it started, ASAP.
Political tension

For NTTA: Powerful area legislators went to bat for NTTA earlier this year, forcing the Transportation Department to reopen bidding for the Texas 121 toll road project in Denton and Collin counties so that NTTA could take part. That intervention, primarily by state Sens. Florence Shapiro of Plano and John Carona of Dallas, eventually allowed NTTA to win the project. Although all parties publicly put on a happy face, it was a considerable embarrassment for Williamson and department officials, who had said that the project should be awarded to Cintra, a Spanish company.

Spending political capital on power plays like that always comes at a cost. If NTTA can't successfully negotiate for Texas 161, it could embarrass Shapiro and Carona. For the Transportation Department: The Legislature is breathing down Williamson's neck -- and by proxy the neck of the man who appointed him, Gov. Rick Perry -- on the toll road issue. Everybody agrees that the state must build more highways to reduce traffic congestion and improve air quality. But numerous lawmakers don't buy the argument that the only way to get the money to do that is to sell off some projects as toll roads.

In this year's session, legislators put a two-year moratorium on new toll road agreements, with exceptions that included Texas 161.

In the 2009 session, the Transportation Department will undergo "sunset review," a process by which the Legislature examines state agencies in great depth and decides whether to continue them or make fundamental changes.

Williamson and his fellow commissioners will be far better off going into that review with some toll road success stories under their belts. A failure on Texas 161 could hurt them.
Financial tension

For NTTA: The authority has just completed its financing plan for the Texas 121 project, for which it borrowed $3.75 billion. It must pay $3.3 billion of that to the state for the right to build the road. Yes, that's billion, with a b.

The elephant in the corner of the room during the Texas 161 negotiations will be how much more NTTA can afford to pay. Will financial markets be willing to back it on yet another huge project? NTTA officials say yes, no problem.

Still, NTTA has to be pushing for the lowest cost it can get.

For the Transportation Department: Texas 161 is a valuable project, and the state needs highway money desperately. By law, any gains from this project must be used for others in the North Texas region, and some of those roads won't pay their way even as toll roads. That includes an extension of Texas 170 near Fort Worth Alliance Airport and a southern extension of Texas 360.

The Transportation Department has to be pushing for as much money from Texas 161 as it can get.

Worst-case scenario?

If the current negotiations fall apart and NTTA and the Transportation Department can't agree on basic business terms or the market value for Texas 161, current law would block the state from building the highway as a toll road. That would mean the loss of the $1 billion or more that state officials believe they could get for the road, and that other dollars used for it would not be available for other roads.

Texas 160 would end up being a free road, but other parts of the region would still suffer traffic congestion.

Out-of-the-box outcome?

There's an outside chance that these negotiations could produce a result other than the black-or-white, free-or-toll, NTTA-or-not choice. For example, the state or the Regional Transportation Commission, the planning body for local highway and transit projects, could become a partner in a Texas 161 toll road. That would enable NTTA to participate at a lower cost while sharing the revenue.

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