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Follow TURFLoop 1604 could be handed to private toll operator for 50 years
A common myth believed by elected officials who foist these bad deals on taxpayers comes from the idea that the private entity brings all the money to the table for the project and hence takes on the risk if the project fails. That would be how a true private road project would be financed. However, that's NOT the case with public private partnerships (P3s) or CDAs as they're known in Texas.
Here's what the excerpt from the article says:
Hall suggested Loop 1604 isn't even toll viable, and no for-profit company would want to take that risk.
As an example, in its initial months of operation, the Texas 130 extension, which at 85 mph has the highest speed limit in the nation, drew only half the number of drivers originally expected on the toll road.
But Judge Wolff said, so what?
“That's what a concession agreement does, it puts the risk on the concessionaire,” Wolff said. “Seems like the state was pretty smart.”
Here's the reality:
Bexar County Judge Nelson Wolff brings up the risk transfer, but that's precisely why it's a bad deal for taxpayers. The private entities don't take the risk, they use mostly public money to build the project and arrange for other taxpayer guarantees to ensure they don't fail, even when it's not toll viable. So in the end, his quote leaves the impression the state is making wise choices and getting a good deal if the toll road fails. This is the BIG myth about P3s - that the state gets to just takeover the asset if the private guys fail. It's simply not true.
Every one of these deals uses considerable taxpayer-backed public money and even tax revenues (see p. 2 here). Cintra's SH 130 is struggling (50% less traffic than projected), but $430 million in federal TIFIA loans are on the hook in that deal (backed by the full faith and credit of the U.S. taxpayer). If the road fails, taxpayers go down with the ship - who will pay that money back? Not Cintra. That's why these deals rip-off taxpayers and our elected officials never seem to care about these details and only care about the road getting built.
We contend why build a road no one can use and that still puts the taxpayers on the hook for the losses? It doesn't solve the problem, just like SH 130 hasn't solved the I-35 congestion problem. Stop ALL P3s and if a road gets tolled, keep it PUBLIC.
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Bill would open Loop 1604 to private company
By Vianna Davila, Staff Writer
San Antonio Express-News
Updated 2:46 am, Wednesday, May 1, 2013
The Texas House of Representatives passed a bill Tuesday that would open the door to a private developer one day building a toll road project on Loop 1604.
If the bill becomes law, state or local transportation officials would have the option to partner with a company or other private entity that could front the money to develop, finance, build, maintain and operate the toll road.
The northern half of Loop 1604 would be the first Bexar County highway eligible for what's called a “concession comprehensive development agreement.”
A concession CDA in Bexar County might operate much like the new section of the Texas 130 toll road that runs from just south of Austin to Seguin at Interstate 10.
The state owns the road but a private consortium, made up of Spanish-based Cintra and San Antonio-based Zachry American Infrastructure, built and maintains it. The consortium shares toll revenues with the state for the duration of a five-decade lease.
Read the rest of the story here.