For those eagerly watching toll road developments in Texas, yesterday brought a significant announcementâ€”the winning bidder was announced for the first of several large-scale PPP toll concessions in the Metroplex. This also happens to be the first Texas toll concession to be advanced in the wake of a partial moratorium on CDAs (Texas-speak for PPP toll concessions) enacted by the Texas legislature in 2007 (SB 792). First, the Texas Transportation Commission announcement:
Today, the Texas Transportation Commission conditionally awarded the private sector team’s proposal by NTE Mobility Partners to plan, finance, design, construct, operate and maintain 13 miles of Northeast Loop Interstate 820 and SH 121/183 (Airport Freeway) from Interstate 35W to the SH 121 split in Tarrant County. In addition, NTE Mobility Partners will provide financial and development plans to improve the rest of the corridor. Mobility and air quality in North Texas will greatly improve as this partnership leverages limited gas-tax dollars for an estimated $2 billion initial investment that nearly doubles the existing number of lanes and provides long-term maintenance. Construction on the 13-mile North Tarrant Express corridor would begin in 2010 after financial close on the contract later this year. The project will rebuild the existing I-820 and SH 121/ 183 highways, add two toll-managed “express” lanes in each direction, improve frontage roads and add auxiliary lanes along the corridor. Direct connection, managed lane ramps from north and southbound I-35W to I-820 will also provide mobility improvements to that interchange’s bottleneck. […] The award is conditional until the team’s successful financial close which is expected by the end of 2009. In 2010, right of way acquisition and construction will begin. I-820 received environmental clearance from the Federal Highway Administration in December. A public hearing for SH 121/183 is expected for this spring with environmental clearance soon after. […] NTE Mobility Partners has proposed improvements and long-term operations and maintenance estimated at $2 billion by leveraging up to $600 million in available gas tax dollars. As I-820 and SH 121/183 are the most congested roadways in North Texas, this public-private partnership nearly doubles the capacity and provides seamless mobility from I-35W to the SH 121 split. This is years ahead what limited gas tax dollars could provide. “The North Tarrant Express is a high priority project for the region’s mobility and air quality conformity plans. Along with the LBJ Project and DFW Connector, these projects will provide a framework of key transportation improvements for North Texas’ drivers in the coming years,” said Dallas City Councilwoman Linda Koop, chairwoman of the North Central Texas Council of Governments Regional Transportation Council. TxDOT will retain ownership of these state roadways and will conduct regular reviews/audits to ensure a quality project and operations. Through the development of this comprehensive development agreement (CDA), the local cities, Tarrant County and the North Central Texas Council of Governments (NCTCOG’s) Regional Transportation Council gave significant input on the North Tarrant Express and on many of the agreement’s details, such as the managed lane toll policy. The importance of local involvement will continue to be vital as the rest of the corridor is planned for development.
More details, along with project maps and more, in this TollRoadsNews.com piece. What I see as perhaps the most notable aspects of the North Tarrant Express concession, at least from my initial read:
- This is a complicated project, involving the addition of new managed lanesâ€”as well as rebuilding/reengineering existing Interstate & state highwaysâ€” to some of the most congested chokepoints in the Metroplex. Put simply, projects like these are why you want to have PPPs in your toolbox.
- Like the similar I-495 Beltway HOT lanes project underway in Northern Virginia, this is a complex, tricky project with costs that exceed what would be feasible through 100% private financing. Of the $2.0 billion total project, $600 million (roughly 30%) is derived from TXDOT funds. This is a great example of leveraging limited public funds to achieve some major metropolitan mobility goals.
- This project will create about 2,000 jobs over the next 6 years, all facilitated by a blend of public, private, and institutional capital in a PPP. Our leaders on Capitol Hill knee-deep in stimulus talk should take note of what can happen when you leverage public dollars, as opposed to traditional PAYGO type spending.
- This project represents a key step in rolling out the Metroplex’s extensive planned managed lanes network.
- The announcement is more proof that PPPs are alive and well both nationally and in Texas. Of course, this deal still has to reach financial close later this year amid tough economic conditions. But I think it still seems fairly significant that the first quarter of 2009 is going to see winning bidders announced on not one, not two, but three major toll concession projects in north Texas.
- One of the equity partners in the deal is the Dallas Police and Fire Pension System, who’ll invest up to $50 million in the project. (see article here)
I’d highly recommend taking a read through this blog post by the Dallas Morning News‘ transportation writer Michael Lindenberger, in which he responds to some common reader questions. Here’s a sample:
Q: Why can’t Texas just build these roads itself, using tax dollars? A: Texas doesn’t charge high enough taxes to collect nearly enough money to do so. The LBJ Freeway and North Tarrant Express will together cost about $3 billion to construct, and hundreds of millions more to maintain. Tax dollars are covering about $1.3 billion of the total. TxDOT usually builds about $3 billion a year in construction projects for the whole state. Q: Well, okay, if you have to have tolls, why must a private company be used? Why can’t TxDOT collect the tolls, and the profits, itself? A. TxDOT could do that, but it has chosen not to tie up its funds in that way. Consider this: It took a constitutional amendment, plus an all-out press in the Legislature this term, to authorize $5 billion in additional debt. That amount of money would build maybe three or four major highways in Texas.