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Reason Foundation

Foreign Bidders on Highway 121 Project Would "Buy American"

Texans should welcome new jobs and other benefits of "reverse outsourcing"

Leonard Gilroy
June 26, 2007

Letter to the Editor at the McKinney Courier-Gazette

Collin County commissioner Phyllis Cole's recent opinion piece ("NTTA is the best choice for 121 construction," June 23) suggests that granting the Highway 121 toll road contract to the NTTA equates to "buying American." The irony is that is exactly what Cintra, the Spanish firm that originally won the competitively bid 121 contract, would be doing if it wins the contract.

Shouldn't we welcome the investment of billions of dollars in global capital in the state and region rather than shun it? Under Cintra's proposal, the bulk of the jobs and services needed for the 121 project would come from within the state and region, not from overseas. This is exactly the kind of "reverse outsourcing" that Texans should welcome.

Cole also completely ignores the findings of the RTC's financial experts who concluded that the NTTA proposal is far riskier to the region than Cintra's and is hardly the "best financial deal" for the Metroplex, as she claims. Stretching its bond capacity now increases the risk that NTTA won't be able to generate the financing needed in the future to get its already-planned projects built.

Lastly, to make the financing work, NTTA would have to commit to regular toll increases upfront to keep pace with inflation, just as Cintra would. If revenues don't live up to expectations, Cintra would absorb any financial losses and would be locked in to legally-enforceable contractual caps on toll rate increases. However, if NTTA faced the same situation, there are no guarantees. Its bond covenants could require it to raise tolls on all of its roads as much as necessary to cover its debt obligations.

When you add it all up, it's clear that NTTA's proposal entails far more risk to Metroplex commuters and businesses than Cintra's, and it's not the best solution for meeting the region's mobility needs.


Leonard Gilroy is Director of Government Reform


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