NTTA's proposed toll road binge chokes on Wall Street credit crunch
By MICHAEL A. LINDENBERGER
The Dallas Morning News
After nearly a year of debate over the State Highway 161 toll road, area residents may soon learn who is going to build the thing.
Paul Wageman has been re-elected chairman of the North Texas Tollway Authority, surviving a leadership test created by a recently enlarged board that now includes nine members.
Mr. Wageman, a Plano attorney, has led the agency during a period dominated by enormous change, hard-fought and public clashes with the state department of transportation and huge expansion. He's been credited as a fierce trench fighter and criticized by some as reluctant to compromise.
In selecting Mr. Wageman, the board signaled its desire to keep a strong fighting stance as the agency considers its involvement on some of the most controversial toll projects in North Texas.
Wednesday's meeting, held at 9 a.m at NTTA headquarters in Plano, provides a good window into the enormously expanded role NTTA now plays in the region's transportation solutions. The board will debate whether to build the state Highway 161 tollway, whether to step aside on an enormous $3.2 billion Denton HOV project along 28 miles of IH 35E and whether to accept a request by regional planners who want NTTA to add a managed HOV lane to its toll road. In addition, The agency will award its largest contract in its history - a $220 million design contract for Phase 4 of State Highway 121 toll road.
After a contentious series of negotiations that began last fall, the North Texas Tollway Authority won the right earlier this year to build the road — but only if it wants to. It has the right to pass on the project, and instead let state transportation officials seek a private company to build and operate the toll road.
When competing for the right of first refusal for the job, NTTA promised it would make a speedy decision — initially promised by early summer — but continued problems in the credit market have made securing financing for the approximately $1.1 billion project difficult.
Today’s meeting includes an agenda item for the board to discuss, and vote, on whether it will build the road, but some board members who spoke in advance of the meeting say it’s just as likely the NTTA will put off the decision to next month. Just this week, the financial markets took another spin with the collapse of the Lehman Brothers investment firm.
Victor Vandergriff, a relatively new member of the now-nine-member board of directors, said whether the board votes to accept the project today or decides to delay the decision, the issue will get a full hearing at the meeting.
The stakes are high for NTTA, and for the region. When the tollway authority paid $3.2 billion for the rights to State Highway 121, many critics questioned whether it would be left in a position to build the many other high-priority toll roads the region wants to see on the ground by 2015.
In response, NTTA and its chairman, Paul Wageman, repeatedly assured members of the Regional Transportation Council that the agency would not be over-extended as a result of the Highway 121 payment. In fact, Mr. Wageman and others have argued, that only by giving the NTTA the lucrative toll contracts for high-volume roads like Highway 121 and Highway 161, would the agency be able to generate sufficient revenue to be able to afford the heavy borrowing that will be required for it to build the other, less lucrative toll roads. Those roads include the costly Trinity Parkway.
But promises made in the summer of 2007 looked a lot different then than they do now, in the midst of one of the worst credit crunches in contemporary Wall Street history. Hanging above all these decisions is a starkly changed financial world, where even the most basic assumptions about the availability and cost of credit have been upended as Wall Street undergoes historic shifts. Some of the very financial tools NTTA has relied on in the past — certain types of deferred-payment loans, for example — have simply evaporated with the rapidly changing world of municipal finance.
Meanwhile, the importance of toll roads has only increased as gas tax funds traditionally used to pay for roads has dried up. Now, to finance the construction and other costs for the first couple of years of the Highway 161 project, years when revenues will either be zero or just starting to grow, the authority will likely have to borrow some $400 million against its own reserve funds, a costly choice that had not been part of its financial modeling for the project.
If the authority decides against building the road, the project should remain on schedule. Construction crews are already at work on the highway. But those workers are being paid by money fronted by the Regional Transportation Council, and the funds are loans only. Whoever gets the ultimate contract to finish building and operating the toll road will have to repay those upfront construction costs. But while TxDOT has long preferred a private firm to build Highway 161, it’s by no means clear that private companies remain as interested as they were just months ago in investing their own money in road projects. The private credit market has been turned at least as upside down as the public market.
© 2008 Dallas Morning News:www.dallasnews.com
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