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Follow TURFThough Vic Suhm of the Tarrant Regional Transportation Coalition claims there's no public money in these privatized toll deals called public private partnerships (PPPs), there most certainly is -- they use BILLIONS in public money. See how the North Tarrant Express (I-820) and LBJ private toll deals are financed here (See page 2).
Texas likely to expand authority to lease highways to developers
Posted Friday, Apr. 22, 2011
By Gordon Dickson, Ft. Worth Star Telegram
AUSTIN -- Lawmakers expect to expand the state's authority to lease out highways to developers -- often foreign companies -- for up to 52 years, despite lingering opposition from some Texans.
A handful of bills on the subject could have huge implications for Dallas-Fort Worth, where some of the first such development deals in the U.S. were signed for projects like the $2.5 billion North Tarrant Express, which will overhaul Northeast Loop 820 and Texas 121/183 in Northeast Tarrant County. Now, Metroplex officials want to expand that project to include Interstate 35W in Fort Worth.
Developers have also been awarded the $2.7 billion project known as LBJ Express -- the construction of toll lanes under Interstate 635 in Dallas. It's a trend that worries residents who object to corporations controlling roads and keeping the tolls from them.
"Here in a session where we have a committee on state sovereignty talking about how we're going to throw off the federal government and exercise state rights, we're at the same time losing our sovereignty over public infrastructure, handing over highways to foreign contractors and handing Texas back to Spain," said Terri Hall, founder of Texans Uniting for Reform and Freedom.
Hall's group rose to prominence several years ago as Texans rejected Gov. Rick Perry's plan to build a $178 billion toll road network known as the Trans Texas Corridor.
But among lawmakers, the vitriolic opposition to privatization that dominated previous sessions seems to have calmed.
Immersed in attempts to fix the state's budget crisis, elected leaders say that they realize that where local support is broad, it's appropriate to allow the Texas Department of Transportation to turn over projects to outsiders in the form of comprehensive development agreements.
"We're going to get some authorization for CDAs," Lt. Gov. David Dewhurst told the Star-Telegram this week. "Texas has done CDAs, and by and large these have been well-received."
Other candidates for development: Interstate 35E in Denton County and Texas 183 in Irving.
Reluctant support
Sen. Wendy Davis, D-Fort Worth, authored a bill that would expand North Tarrant Express to include I-35W, Texas 183 from Texas 121 in Bedford to Texas 161 in Irving, and East Loop 820 from North East Mall to Randol Mill Road.
"They [lawmakers] are resigned to the fact that at this point a funding mechanism for transportation has not been created, and in limited instances they're willing to accept comprehensive development agreements," Davis said.
Long-term, lawmakers are realizing that once they've solved the budget crisis and settled the redistricting issue, a conundrum is looming over how to pay for the next generation of Texas roads, Dewhurst said.
"For 2014 and 2015, I want to work to increase the different sources of funding so we can continue to build the roads we need to reduce congestion," he said. "No one wants to see free roads tolled, and we're not going to do that. They want to see us fund the essential services."
For 2012-13, he said, the plan is to allow a small number of development agreements and make available $8.1 billion for new road work, construction, maintenance and right of way -- including gas taxes, vehicle registration fees and the remaining $3 billion in Proposition 12 funding approved by voters in 2007. Proposition 12 allows the state to issue debt and repay it over the long term with general revenue.
Several other senators have filed separate bills for each project they wish to build with a development agreement, with most of the projects in North Texas and Houston. Rep. Larry Phillips, R-Sherman, the House Transportation Committee chairman, has filed a single bill with multiple projects -- setting the stage for a debate in the next few weeks.
Some lawmakers are expressing concerns about a lack of competitive bidding for privatized projects. Once a developer is selected as the "best value," the developer has the latitude to hire and make purchases beyond what's normally allowed in bidding laws.
Foreign roots
The team of companies building the North Tarrant Express project is known as NTE Mobility Partners. It includes: Cintra U.S., a huge toll road development corporation from Spain; Meridiam Infrastructure, an investment firm from France; and the Dallas Police and Fire Pension System, which represents 8,500 public safety employees.
The Transportation Department contributed $573 million in public dollars to the project. Cintra is putting in $427 million of its own equity, $400 million in federally backed private activity bonds and $650 million from a federal transportation infrastructure loan.
The four-year job began late last year. Construction should be in full swing by summer in Bedford, Haltom City and other cities along the 13-mile corridor.
In return for its investment, NTE Mobility Partners keeps tolls collected on the new lanes through 2061.
The project will rebuild existing lanes and add toll lanes so motorists can choose to stay on the main lanes for free or pay to go faster on toll lanes. Tolls will range from $1.20 to $6.50 for the length of the project, fluctuating depending upon traffic conditions.
While most of the companies in NTE Mobility Partners are behind the scenes, the on-site construction leader is Bluebonnet Contractors. Although it has a nice, Texas-sounding name, Bluebonnet is actually made up of Spaniards, including Cintra's parent company, Ferrovial; a U.S. subsidiary known as Ferrovial-Agroman; and Webber Llc.
Webber has four decades of engineering and construction roots in Houston, but it's now a foreign company, too, having been bought by Ferrovial Group in 2005.
That arrangement bothers critics such as Hall, who got involved in transportation issues while fighting a toll project in San Antonio.
"I don't think our legislators have a clue that all these companies are front companies for Cintra," she said.
Supporters of North Tarrant Express say they're comfortable with the arrangement. Many critics don't live near the project and don't fully realize how sorely traffic relief is needed, they say.
"They view it as a situation in which public money is subsidizing private interests, when in fact it's the exact opposite," said Vic Suhm, executive director of the Tarrant Regional Transportation Coalition. "These private investors are walking in with money to finance a project, and they get paid back through toll revenue. In fact, the private people are subsidizing us."