Thursday, March 13, 2008

"Federal dollars are used to subsidize private investors."

Spanish firm using loan from U.S. to build segments of Texas toll road


By David Tanner, staff writer
Land Line Magazine
Copyright 2008

Officials with the Spanish toll road operator Cintra have announced that the company has secured $430 million in loans from the U.S. government to build and operate two segments of a toll road in central Texas.

Cintra officials announced the company’s financial plan for the $1.36 billion Highway 130 segments on Monday, March 10.

OOIDA Senior Government Affairs Representative Mike Joyce told Land Line that the Association does raise red flags when federal dollars are used to subsidize private investors. Officials with the Owner-Operator Independent Drivers Association are not, however, categorically opposed to a state using future toll revenue to pay off bonds.

“I’m skeptical of any funding schemes that involve the private sector,” Joyce said.

Truck tolls on Segment 5 and Segment 6 of Highway 130 are contracted to be 50 cents per mile when the road opens. The 50-year contract includes a formula for increases. Tolls for cars will start at 12.5 cents per mile.

Cintra and its partner in the project, Texas-based Zachry American Infrastructure, signed a contract a year ago to design and build a 40-mile portion of Texas Highway 130, a tolled bypass of Austin running parallel to Interstate 35 in the Austin-San Antonio corridor.

The first four segments of the Highway 130 project, totaling about 50 miles, are part of the Central Texas Turnpike System constructed from 2002 through early 2008 with bonds issued through the Texas Transportation Commission. Tolls on those sections are being used to pay the bonds on the first four segments.

The Cintry-Zachry consortium, formed in 2005, expects to begin construction next year on Segment 5 and Segment 6 of Highway 130 on rights of way leased from the Texas Department of Transportation. The 40-mile section is scheduled to open in 2012.

A similar Cintra-Zachry partnership is designing the first leg of the Trans-Texas Corridor, a proposed 4,000-mile network of toll roads and railway lines to increase the flow of freight and people from South Texas to the U.S. heartland.

Cintra also has a 55-percent share of the lease for the Indiana Toll Road and a 50-percent share of the Chicago Skyway lease. The company partnered with companies affiliated with Macquarie Bank of Australia for those deals.

For the Highway 130 segments being built by Cintra-Zachry, TxDOT has agreed to provide and pay for “back office” functions including toll collectors, other staff, call center, equipment, transponders and maintenance for the roadway.

Cintra’s financing will come from a 35-year, $430 million loan from the Transportation Infrastructure Finance and Innovation Act of 1998 – a U.S. Department of Transportation program for jump-starting construction – along with a $686 million private bank loan and $197 million in shareholder equity. Cintra will also draw on other equity accounts, officials stated in a press release.

The TIFI Act program is designed to match a certain percentage of the cost for a road built using private sector money. U.S. Transportation Secretary Mary Peters stated in a press release that the TIFI Act loan will give Highway 130 “the push it needs.”

OOIDA’s Joyce points to the comparison between Cintra’s 35-year loan from the federal TIFI Act program and the 50-year concession agreement for Segments 5 and 6.

“We know that they’re looking to turn a profit,” he said.

Click here to read some quick facts and figures posted by Cintra about Highway 130.

Click here to read contractual documents on the project posted by the Texas Department of Transportation.

© 2008, Land Line Magazine:

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