Sunday, July 20, 2008

"If this uncertainty hangs over Loop 820, what will bigger, more complicated toll projects face?"

Toll trouble

July 20, 2008

Editorials & Opinions
Fort Worth Star-Telegram
Copyright 2008

Toll roads and toll lanes built by private interests may be the future of the Texas highway system. With a step back for every two steps forward, the state has been headed that way for about six years.

Plenty of Texans don’t want to go there. The Legislature paused all but a few proposed toll projects last year.

Now something else is becoming clear: Even the people who want to go the privately built toll route don’t know how to get there. All of this is new, and they’re feeling their way — in the dark.

Uncertainty about the proposed expansion of Northeast Loop 820 in Tarrant County, one of the few projects that the Legislature allowed to proceed, illustrates the point.

The project is on life support, with some potential investors backing out and public agencies scrambling to save it before an Aug. 15 deadline. It may not survive.

Ironically, disagreements among toll road supporters might kill the project.

What’s happening?

The Texas Department of Transportation proposes expanding the heavily traveled highway from four lanes to 10, with four new privately built toll lanes, between Interstate 35W and North East Mall. Five of the 10 worst traffic bottlenecks in the Dallas-Fort Worth area are along that stretch of Loop 820, including the top three.

The project will get about $600 million in public money, but it is expected to cost at least $2 billion.

What’s wrong?

Four international investment groups were interested in building the toll lanes. The winning bidder would stand to make money by receiving tolls for 52 years. The North Texas Tollway Authority, a public agency that builds and operates toll roads in Dallas-Fort Worth, said it wasn’t interested in doing the Loop 820 expansion.

A London group backed out, saying that the project was not viable (it wasn’t confident that it could make enough money). Another group, based in Spain, said it couldn’t meet the Aug. 15 deadline for bids. That leaves two potential bidders, both also based in Spain.

The Legislature has decided that NTTA will collect tolls and regularly forward the money, minus a transaction fee, to the winning bidder on any privately built toll lanes or toll roads in Dallas-Fort Worth.

The remaining bidders wanted assurance that they would get paid. NTTA offered a promise, but it wasn’t willing to put up any money to serve as a financial guarantee. Bidders worried about that because, as a public agency, NTTA is immune from lawsuits that might claim it had failed to keep its promise.

Does that kill the deal?

It could, but NTTA and the state Transportation Department have been working to keep the project alive.

Historically, the two agencies have had a stormy relationship, including a dispute over NTTA’s contract to build the planned Texas 121 toll road north of Grapevine. The Transportation Department says NTTA still owes it $52 million on that contract. NTTA says it doesn’t. They’ve decided to split the difference. NTTA has agreed to set aside $26 million in an irrevocable trust to guarantee its performance in collecting and forwarding tolls on Loop 820 and any other privately built toll roads in Dallas-Fort Worth.

Does that save Loop 820?

Maybe not. The terms of the Transportation Department-NTTA agreement have not been put in writing or signed. There is reason to worry that things could go wrong between now and Aug. 15.

For instance, the $26 million figure was reached solely to settle a matter unrelated to Loop 820. It was not based on any calculation of how much money would be at risk if NTTA failed to perform its duties in collecting and forwarding toll revenue.

Public discussion has indicated that the real risk, even years from now after all planned toll roads and toll lanes in the region are built, will be significantly less than that.

How long will it be before NTTA decides that it would not be smart to park that much money in a place where it can’t be touched and much of it serves no real need? Which agency — NTTA or the Transportation Department — has the right to the interest earned on that $26 million over the years?

Would anything else work?

The Regional Transportation Council, the planning body for transportation projects in the counties surrounding Dallas and Fort Worth, has offered to set aside $1 million from federal grants to guarantee NTTA’s performance on Loop 820 and keep the project on track. But why should yet another public agency play such a role? Even that probably won’t work unless the RTC actually sends the cash to the Transportation Department.

Where do we go from here?

We wait. Meanwhile, we have to wonder: If this uncertainty hangs over Loop 820, what will bigger, more complicated toll projects face?

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