Commentary

Foreign Bidders on Highway 121 Project Would “Buy American”

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

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 Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.

The project aims to promote solvent, sustainable retirement systems that provide retirement security for government workers while reducing taxpayer and pension system exposure to financial risk and reducing long-term costs for employers/taxpayers and employees. The project team provides education, reform policy options, and actuarial analysis for policymakers and stakeholders to help them design reform proposals that are practical and viable.

In 2016 and 2017, Reason's Pension Integrity Project helped design, negotiate and draft pension reforms for the state of Arizona's Public Safety Personnel Retirement System and Corrections Officer Retirement Plan, which both passed with overwhelming bipartisan support in the state legislature and were signed into law by Gov. Doug Ducey.

Gilroy is also the Director of Government Reform at Reason Foundation, researching privatization, public-private partnerships, infrastructure and urban policy issues.

Gilroy has a diversified background in policy research and implementation, with particular emphases on competition, government efficiency, transparency, accountability, and government performance. Gilroy has worked closely with legislators and elected officials in Texas, Arizona, Louisiana, New Jersey, Utah, Virginia, California and several other states and local governments in efforts to design and implement market-based policy approaches, improve government performance, enhance accountability in government programs, and reduce government spending.

In 2010 and 2011, Gilroy served as a gubernatorial appointee to the Arizona Commission on Privatization and Efficiency, and in 2010 he served as an advisor to the New Jersey Privatization Task Force, created by Gov. Chris Christie.

Gilroy is the editor of the widely-read Annual Privatization Report, which examines trends and chronicles the experiences of local, state, and federal governments in bringing competition to public services. Gilroy also edits Reason's Innovators in Action interview series, which profiles public sector innovators in their own words, including former U.S. Transportation Secretary Mary Peters, former Florida Gov. Jeb Bush, former Indiana Gov. Mitch Daniels, former New York City Mayor Rudy Guiliani and more.

Gilroy's articles have been featured in such leading publications as The Wall Street Journal, Los Angeles Times, New York Post, The Weekly Standard, Washington Times, Houston Chronicle, Atlanta Journal-Constitution, Arizona Republic, San Francisco Examiner, San Diego Union-Tribune, Philadelphia Inquirer, Sacramento Bee and The Salt Lake Tribune. He has also appeared on CNN, Fox News Channel, Fox Business, CNBC, National Public Radio and other media outlets.

Prior to joining Reason, Gilroy was a senior planner at a Louisiana-based urban planning consulting firm. He also worked as a research assistant at the Virginia Center for Coal and Energy Research at Virginia Tech. Gilroy earned a B.A. and M.A. in Urban and Regional Planning from Virginia Tech.