Monday, November 05, 2007

TxDOT would have to pay Cintra-Zachry for their 'lost profits.'

Slower I-35 part of deal on toll road


Patrick Driscoll
San Antonio Express-News
Copyright 2007

A recent toll road contract that shoehorns market incentives into a government monopoly would reward the state for lowering speed limits on Interstate 35, effectively steering drivers to the toll road.

The privatization contract for Texas 130 from Austin to Seguin, cutting a parallel path east of I-35, was quietly signed in March amid a legislative furor over whether to freeze such agreements. It includes a controversial clause that penalizes the state for widening or building competing roads.

If a project over the next 50 years — with some exceptions — interferes with Texas 130 toll traffic, the Texas Department of Transportation would have to pay Cintra of Spain and Zachry Construction Corp. of San Antonio for their lost profits.

But the state can also get credit, though not payment, for driving traffic to the tollway, including by lowering posted speeds on I-35.

Not that TxDOT would do that, and certainly not for financial gain, spokeswoman Gaby Garcia said.

"We don't expect to be reducing speed limits on I-35," she said. "They are set by traffic engineering studies and not by economic gain."

But toll critics say a gate is open to the manipulation of I-35 traffic to ensure toll profits, and they don't trust TxDOT as the sentry.

"Our highways are being hijacked for private interests," said Terri Hall of Texans United for Reform and Freedom. "Who's going to rein in this agency? It just baffles me."

To change a speed limit on a road, TxDOT usually follows a complex formula based on the fastest pace set by 85 percent of motorists. But conditions such as crash rates could warrant lower speeds.

Laws and policies can also lower speeds, for reasons such as conserving gas.

"Speed limits are not arbitrarily set," Garcia said.

But just as a speed limit giveth, sometimes it taketh away.

If TxDOT raises the speed limit on I-35, it must pay Cintra-Zachry for any toll losses, according to a maze of requirements in the 192-page toll contract and its 476 pages of support documents.

Oddly, any improvements to the freeway are exempt from the competition clause. Also exempt are projects in existing 25-year plans.

The contract doesn't stop there — it also covers speed limits for the 40 miles of Texas 130 that will run from Seguin to south of Austin, where it'll hook up with another segment that now loops around the city.

Cintra-Zachry will pay TxDOT $25 million upfront if the limit is set at 70 mph but will fatten the offer to $92 million for 80 mph and $125 million for 85 mph, which state law allows. The agency could opt instead to take a growing bite of profits.

Under the privatization deal, TxDOT's first, Cintra-Zachry will finance, build and operate the $1.3 billion tollway in the hope of eventually turning a profit.

Motorists in cars will pay about 15 cents a mile, with rate increases capped to the annual growth of state domestic product. There will be no tollbooths — collections will be done with electronic tags and cameras.

Cintra-Zachry recently began a process to buy the land, and it expects to start construction in a year or two and open the roadway in 2012. The state will handle property disputes.

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