Friday, October 10, 2008

Austin toll road schemes paved with bad projections

Fitch has “negative outlook” on Austin toll bonds


Ben Wear
Austin American-Statesman
Copyright 2008

Fitch Ratings is not bullish on TxDOT’s three Austin toll roads.

The rating agency’s outlook on bonds sold by TxDOT for the roads — Texas 130, Texas 45 North and the Loop 1 extension — is “negative,” according to a release from Fitch earlier this week. The problem is that the traffic on the three roads, while it started fast, shows signs of falling short of longer-term growth projections.

“The Negative Rating Outlook reflects the strong possibility for traffic growth to be significantly less than originally forecasted … ,” the release said.

The roads, or part of them, first opened Oct. 31, 2006, which was actually ahead of schedule. Actual toll collections began in January 2007, so the money started rolling in early. And both Texas 45 North and Loop 1 had good traffic immediately, much higher than projections. Texas 130, meanwhile, mostly still goes through cow country and the 49-mile Austin segment wasn’t completely finished until this spring. It’s performance has only in the last few months reached original projections.

The problem for Fitch is the trend. Growth in traffic even on Loop 1 and Texas 45 North has not been what TxDOT was hoping for.

“The 2005 forecast assumes traffic growth at 89 percent and corresponding revenue growth of 97 percent over the fiscal 2008 to fiscal 2011 time period,” Fitch says. “While the project is starting at a higher base, given current trends it is Fitch’s assessment that this growth appears less likely on the more developed SH45/Loop 1 segments.”

Fitch does go on to say that Texas 130 might benefit next year when the Texas 45 Southeast toll road opens. That 7.1 mile-long tollway will connect the south end of Texas 130 to Interstate 35. Then there’s the coming southerly 40 miles of Texas 130, from Mustang Ridge near Austin down to Interstate 10 at Seguin. And over time, there will be more development along Texas 130 and that will make traffic and revenue increase.

But all three of those things were anticipated when the projections for the three-road project were made in 2002. That forecast showed that the project would continue to be in the red for decades and would need TxDOT to cover most of operations and maintenance costs. And we all know the financial strains that TxDOT is facing.

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