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Follow TURFOfficials ink LBJ toll deal with Cintra
Link to article here.
Does the state really need Spanish money to rebuild LBJ?
By Rodger Jones / Dallas Morning News
September 8, 2009
The answer is heck yes.
News from Austin may come as a provocation to situational toll-road critics, especially those whose blood last boiled because of Spanish money's interest in the SH 121 project that eventually went to NTTA.
TxDOT signed an agreement last week with a consortium headed by the Spanish company Cintra. It will put up money along with the Paris-based Meridiam Infrastructure Fund. The complete list of the LBJ project's partners includes the probable investment by the Dallas Police and Fire Pension System.
After completion about six years from now, the new LBJ will be part free, part tolled, with the private developers getting tolling rights. The new roadway will have more free lanes, but the three tolled lanes will be VERY expensive -- like maybe 55 cents a mile to start off.
I don't see how this roadway gets built if not for this kind of exotic arrangement and outside capital.
See if you agree:
The project was tentatively awarded to the Spanish-group in February but now the deal is signed and the consortium lines up financing.
Why that outside money is critical: The local share of the state's hard-pressed construction funds have dwindled to the point that the local TxDOT district couldn't reasonably do the $2 billion LBJ project even over time. And under that scenario, no other new projects could go forward.
Financial background information from a district spokesman, Mark Pettit. [Bracketed comments, like this one, are mine.] :
It is our understanding the Dallas District will only have $171M for FY 2010 for new construction (that excludes 14M ARRA [stimulus] and $266M RTR [redistributed 121] funds). This is mostly due to lower than normal gas tax revenues, federal recisions [broken promises] and prop 14 [state borrowing program] debt.
To the point ... so if everything in the universe remained unchanged for the next 20 years, Dallas will have accrued $3.4B. And if it was all put toward the $2B LBJ project it would still not be enough, because we have to account for inflation and construction cost increases. Extremely conservative inflation estimates of %3 raise the project cost to approx. $3.6B.
Meanwhile nothing else gets built (Pegasus I-30 bridge, Loop 9, SH 183, Trinity, SH 175, I-35E ... basically anything in the seven counties not maintenance related).
Not a good picture. If there's a way to keep building major urban roadways short of inviting private money and giving up toll rights, the model hasn't been proposed. Start with the fact that lawmakers have refused to raise the gas tax.
NTTA has said it's not interested in part-toll roads. NTTA's list includes the Trinity and the Loop 9 super-outer-loop. And make no mistake: NTTA doesn't do these projects without a good bit of tax money. The $2 billion LBJ project, for example, includes about a half-billion in tax money.
Meanwhile, the North Central Texas Council of Governments lists tens of billions of dollars in unfunded but needed road projects.
There two other part-toll roads moving ahead in North Texas, both with Cintra-led outside partners. The others are the DFW Connector (led by Kiewit Texas Construction, Fort Worth, and Zachry Construction, San Antonio), and the North Tarrant Express (a Cintra-led project). I-35E will be part-tolled, but there's no money for it yet.
Where does the financing come if not from abroad? Are critics of toll roads willing to press lawmakers for higher fuel taxes? Some of them say the state should start by ending the raids on the highway fund that's made up of fuel taxes. But those so-called "diversions" amount to less than $1.5 billion every two years, and Dallas gets only a fraction of that.
If it was your choice, would you turn to Cintra or higher gas taxes first?