“If the bondholders are getting both the yield of a private sale and the tax breaks of a public sale, that implies the deal is high-risk.”
County says project funding hinges on cities’ endorsement
By Peggy Heinkel-Wolfe / Staff Writer
CORINTH — Denton County leaders have asked the Corinth City Council to join other Denton-area cities along Interstate 35E in endorsing a plan that would bring in a private developer to widen the highway from the Bush Turnpike to U.S. Highway 380.
County transportation consultant John Polster told the City Council that even if the Texas Department of Transportation devoted all the funding it had for the next decade, it would not be enough to pay for the nearly $5 billion project.
For TxDOT’s entire Dallas District, only about $800,000 is available to build new roads or widen existing ones, Polster said. Denton County has about $500,000 available from its own bonds and the tolling of State Highway 121 for the project, he said.
Even though the county and the state don’t have the money to widen the road, developers such as the Spanish toll firm Cintra consider the project lucrative, he said.
A private developer could charge anywhere from 15 cents to 80 cents per mile in privately managed lanes to recover its investment in the project.
People could still drive in one of the four free lanes, or on the frontage road, but if they wanted to get to their destination faster, they could pay the variable toll to travel in the managed lanes.
“They [the managed lanes] guarantee a travel speed of 50 mph,” Polster said.
In other words, the more congestion there is, the higher the variable toll to guarantee the free flow of traffic in the managed lanes.
Polster also told the council that, while the toll lanes would run the entire length of the expansion, the majority of the revenue from the managed lanes would be expected between the turnpike and State Highway 121.
But the kind of project Denton County is proposing — a public-private partnership — got kicked to the curb by the Texas Legislature in 2009. A few projects in the Dallas-Fort Worth area were grandfathered in, including the reconstruction of Interstate 635, the North Tarrant Express and the DFW Connector, popularly known as the Grapevine Funnel.
In order for the Legislature to revisit the funding mechanism for Denton County, state representatives are looking for endorsements, such as city council resolutions, of the concept, Polster told the council.
Council member John Booher questioned why — funding model aside — Corinth should endorse a project that would change the exit ramps and make it difficult to stop in the city.
Polster told him that the design for the managed lanes would require that drivers travel certain lengths uninterrupted for safety and mobility, but he would look into the design changes and report back.
Booher questioned whether public officials could make an informed decision about the deal, since some of the funding assumptions are private. Toll road developers conduct the research on the profitability of variable tolls but consider their research methodology proprietary, Polster said.
In an interview Friday, Booher said he felt the council wasn’t given enough information about the way the bond package would be set up.
“If the bondholders are getting both the yield of a private sale and the tax breaks of a public sale, that implies the deal is high-risk,” Booher said.
He questioned whether the county would really be protected if the bondholder couldn’t make the payments, even though county leaders have said they could sell the road to another investor.
“If the business model fails, why would someone else buy it, without the county taking more of the risk?” Booher said.
The Corinth council is expected to take up the matter at its regular meeting Thursday.
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