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Commercial Close Reached on I-635 Managed Lanes Project in Metroplex

Leonard Gilroy
September 25, 2009, 7:20pm

In case you missed it, there was some good news recently for Metroplex drivers. Earlier this month, the Texas Department of Transportation reached commercial close with the LBJ Infrastructure Group on the $4 billion New LBJ/I-635 managed lanes project. This is the second of two major toll concessions worth over $6 billion to reach commercial close this year in the Metroplex, and private sector is bringing over 80 percent of the financing to the table to advance these congestion-busting, cutting-edge megaprojects. Using a very simple analogy, for the price of a can, the state is getting the equivalent of a whole six-pack.

More details from the Infra Insight blog:

Texas Department of Transportation (TxDOT) officials executed a comprehensive development agreement (CDA) with the LBJ Infrastructure Group to design, construct, finance, operate and maintain the 13-mile LBJ-635 corridor in Dallas County. Following the North Tarrant Express (June 2009), the LBJ-635 is TxDOT’s second toll concession to reach commercial close this year.

Construction is expected to begin by mid-2011 and open to traffic in late 2016. Motorists will have a choice of either using the managed toll lanes or remaining on the improved and rebuilt free main lanes. The new LBJ highway will feature the following improvements:
- 8 rebuilt free main lanes (a foot wider than they are now)
- Additional shoulders on the outside of the main lanes
- Continuous frontage roads (two or three lanes wide)
- 6 barrier-separated managed toll lanes located between or below all frontage roads

For a state investment of approximately $445 million, these improvements will provide $4 billion of needed infrastructure to the Dallas area, as well as operations and maintenance over the next 52 years. [...]

The financing plan for the project through project completion includes a combination fo senior bank debt, private activity bonds, a subordinated TIFIA loan and a sizeable equity contribution.

With federal and state highway funds increasingly spread thin, justified aversion to fuel tax hikes, and the limitations of public finance, private-sector financing offered the only realistic way to deliver these projects. It would be an understatement to say that this paradigm shift in highway finance has had it's share of controversy in Texas. But Rodger Jones at the Dallas Morning News recently asked a helpful question—"Does the state really need Spanish money to rebuild LBJ?"—and his answer is spot on:

The answer is heck yes. [...]

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.

I've written extensively regarding the need to preserve this valuable procurement tool, given Texas' massive infrastructure needs.

» Reason Foundation's Transportation Research and Commentary


Leonard Gilroy is Director of Government Reform


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