Friday, January 02, 2009

"We were very lucky with our timing."

Kickoff close for first (and only?) private tollway

Extension of Texas 130, to be built and run by a Cintra-led consortium, should kick off this summer and be open by 2012.


By Ben Wear
Austin American-Statesman
Copyright 2008

Based on the years-long furor over privatized tollways and the Trans-Texas Corridor, Texans could be forgiven for thinking the state is crisscrossed with thousand-foot-wide, foreign-run toll roads.

In fact, there aren't any. None are even under construction.

That will begin to change this summer, however, when a Spanish - Australian - American consortium breaks ground on a 40-mile extension of the Texas 130 tollway southeast of Austin. Once the SH 130 Concession Co. completes the four-lane toll road, probably by sometime in 2012, the 50-year clock on its lease with the Texas Department of Transportation will begin.

At that point, Gov. Rick Perry — or perhaps ex-Gov. Perry by then — will have his first public-private toll road, culminating a political push Perry began in 2004 that in many ways has come to define his long tenure in office. But it might well be the last such tollway for a while.

Environmental clearance on the Interstate 35 portion of Perry's Trans-Texas Corridor plan is still several years away, and a second corridor project called I-69, running from the Rio Grande Valley to Texarkana, is even earlier in the development process.

So the Central Texas tollway, which will extend the 49-mile stretch of Texas 130 built east of Austin and operated by TxDOT, will stand for a while as a singular experiment.

The privatized part of the road (TxDOT determined in 2002 it could not afford to build the southern 40 miles) will begin near Mustang Ridge, overlay U.S. 183 to the north side of Lockhart, loop west around Lockhart and then run south until intersecting Interstate 10 east of Seguin. Although toll rates won't be set until shortly before the road opens, based on the state's contract with the concession company, the trip should cost about $6 per car.

Driving the entire 89-mile length of Texas 130, including the TxDOT-run section, by then would cost about $12.

"We are very excited about it," said Lockhart Mayor James "Jimmy" Bertram. "We think it's going to be great for economic development for us. ... Whenever you can get public and private together, it's a good deal."

That the almost 1,100-page Texas 130 agreement between the partnership and TxDOT is a good deal is not a universal opinion. That contract — and state Sen. Robert Nichols' concerns about certain provisions of it — were the matches that lit the legislative fire last session about private toll road leases and led to a partial ban on them. Nichols, a Jacksonville Republican, served on the Texas Transportation Commission when TxDOT first agreed in 2004 to let Spanish tollway builder Cintra and its partners build a tollway twin to I-35 from San Antonio to Oklahoma.

The separate Texas 130 contract, completed after Nichols left the commission, was birthed by that umbrella Trans-Texas Corridor agreement between TxDOT and Cintra, and so far it is the only piece of the proposed 300-mile corridor tollway to come close to fruition.

Nichols' view of the contract hasn't changed; he still says he doesn't like that the state might have to pay millions if it wants to buy out the Cintra consortium to prematurely end the lease, and that expanding other nearby state roads might trigger payments to the company. But he said he's happy construction will begin in a few months.

"I'm glad the road is going to be built, and it's going to be good for drivers," Nichols said. "I wish them well."

Good timing

Engineers for SH 130 Concession Co., a partnership between Cintra, Zachry Construction from San Antonio and Hastings Funds Management of Australia, have been busy planning the road in a North Austin office complex for the past couple of years. Jose Labarra, the company's chief executive officer, said final designs are almost done. The company has already bought about 15 percent of the 322 parcels of land it needs (1 percent of that through the state's condemnation powers) and has offers out on an additional 70 percent. About 9 percent is going through condemnation.

The state, which will hold title on the land the company is buying, will own a swath ranging from 350 feet wide to as much as 500 feet on Texas 130, Labarra said.

The company, getting in ahead of the credit crunch that has gripped the worldwide economy since early fall, nailed down financing for the $1.35 billion project in March. It will invest $210 million of its own money, borrow $686 million from banks and get a $476 million loan from the U.S. Department of Transportation.

"We were very lucky with our timing," Labarra said.

The company's contract with TxDOT requires it to break ground on the road by August. Given the fragmented situation with right of way, the typical approach for construction is to begin work on "usable segments" where significant, continuous stretches of land are secured. Labarra said the company is still deciding on a construction plan.

"We are pushing very hard to be able to do it before the spring," Labarra said.

So what can drivers expect?

The tollway will have two lanes on each side, with room to expand to three on each side in the years to come, and free frontage roads for the northern 15 miles or so. There will be major interchanges, with flyover bridges, at each end and near Lockhart.

Like most toll roads built from now on, Texas 130 will be "all-electronic," meaning there will be no way to pay with cash. The toll rate would probably be about 15 cents a mile for two-axle vehicles, more for multi-axle trucks. And the speed limit could be 80 mph or more, a departure from most state highways that could boost traffic and the state's take.

Gentle windfall

Perry and the late Ric Williamson, who Perry made chairman of the Texas Transportation Commission, in pushing for public-private toll roads, had emphasized the idea that such long-term leases could mean upfront bonanzas for the state. That won't be the case with this section of Texas 130 — the initial payment to TxDOT was just $25 million — and cash flow to the state is likely to be modest for the foreseeable future.

The contract stipulates that if the speed limit stays at 70 mph, the state will get 4.65 percent of revenue up to certain thresholds, which increase yearly. That percentage for the state doubles to 9.3 percent if revenue tops that threshold, and goes to 50 percent if the road does really big business. An 80 mph speed limit would double those first two percentages for the state to about 9 percent and 18 percent.

At the beginning, that first threshold (which rises quickly as the years go by) is about $20 million of total toll revenue, which is about what the northern 49 miles of Texas 130 will make this year. Based on that volume of traffic, and the 70 mph speed limit, TxDOT would make about $1 million a year from the road initially.

At current construction prices, that much money would build about a thousand feet of one highway lane, or cover at most 10 percent of the cost of a single flyover bridge., 445-3698

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