NOTE: The Trans Texas Corridor will receive funds from the blank check Prop 1 corporate rail slush fund just like we said it would before the voters of Texas got duped into passing it!

Authorities eye high-speed cross border train from Dallas – Mexico
Robin Brundell
BNamericas.com
Business News Americas (Latin America’s Business Leader)
Friday, March 31, 2006

The Texas Transportation Commission (TTC), part of the US state’s Department of Transportation (TxDOT), has received a proposal from two construction firms to build a high-speed rail route from Dallas into Mexico, said deputy executive director of the TxDOT, Steve Simmons, confirming local news reports.

The railroad, nearly 1,000km long, would be part of the Trans Texas Corridor project, an ambitious plan to combine roads, rail transport, utilities and energy pipelines in a single corridor.

The plan, being worked on by the US construction firm Zachry and its Spanish partner Cintra, would use less land than traditional expansion methods, improving transport efficiency and taking hazardous cargo away from heavily populated areas.

Nearly half of Texas’ population lives within 50 miles (80km) of the I-35 interstate highway, which runs for a total 2,518km, passing through Texas from Duluth in Minnesota, eventually reaching Laredo on the Mexican border.

Because of the high levels of congestion on this highway, Texas authorities have been forced to act and that response has been the basis of the Trans Texas Corridor scheme, which in principle would run parallel to I-35 and would be called the TTC-35.

“We solicited proposals on that and selected [the consortium] Cintra-Zachry… and they teamed together and came up with a proposal,” Simmons told BNamericas.

The contract with the firms is to look the best ways of executing and financing the corridor, said the US official, adding: “We’re looking at this as a public-private venture.”

This corridor, which would cost an estimated total of US$5bn, would be developed over the next 50 years using a market-based toll system to make developments as and when they are needed.

“The Trans Texas Corridor is not just a toll highway as we look at it today. The long range is separate car and truck lanes, plus six rail lines, which would carry high-speed freight and commuter rail services, and a corridor for utilities,” the TxDOT official said.

This cross-border rail line could become attractive to companies moving cargo to and from Mexico, as well as those handling Asian goods arriving through Mexican ports. It may also stimulate the development of dry ports and multi-modal transport terminals along its route.

The rail line would be financed by Cintra and Zachry through quotas paid by rail companies, but it could also be eligible to receive funding from the Texas Rail Relocation and Improvement Fund.

Read the story.

Corridor may be on track for fast freight trains
Web Posted: 03/30/2006 12:00 AM CST
Patrick Driscoll
Express-News Staff Writer

AUSTIN — The Cintra-Zachry consortium has upped its ante on the Trans Texas Corridor, offering Wednesday to develop high-speed freight rail tracks in addition to its standing proposal to build toll lanes for the massive project envisioned by Gov. Rick Perry.

The 600-mile line from Mexico to Oklahoma would be the most miles of railroad track put down in Texas since the early 1900s.

The line could pull a million trucks a year off Interstate 35 with the promise of cutting cross-state trips on rail by up to two hours, Cintra-Zachry said in a letter to the Texas Transportation Commission.

Officials believe railroads would be willing to pay for faster speeds, move some of their hazardous cargo off tracks in urban areas and possibly free up lines for passenger rail, such as a San Antonio-Austin commuter service.

“This confirms Gov. Perry’s vision that once our mobility challenges were open to innovation, the market would respond,” Texas Transportation Commission Chairman Ric Williamson said at a news conference announcing Cintra’s proposal.

The rail line is a major piece of the Trans Texas Corridor puzzle, a 4,000-mile network of toll lanes, freight and passenger rail lines, and utility lines crisscrossing the state. Perry proposed the corridor four years ago.

Cintra-Zachry, which won a bid to develop plans for the corridor segment paralleling I-35, offered to build a toll road from San Antonio to Dallas and pay $1.2 billion to collect fees from it for up to 50 years.

The proposed rail line, which likely would be double-tracked and designed for double- and triple-stacked containers going 70 mph, could cost up to $6 billion to build, Texas Transportation Commissioner Ted Houghton said. Tracks would be separated from roads by bridges and underpasses.

The line could be a magnet to handle trade to and from Mexico and China and could be a boost for Texas ports such as KellyUSA, Houghton said.

“The opportunities we have are absolutely enormous,” he said. “It should have been built years ago.”

Construction could start in two or three years, probably beginning with a project to solve congestion in Fort Worth. Nobody took at stab at how long it would take to get anything completed.

Spain-based Cintra and San Antonio partner Zachry Construction Corp. expect to finance the line through charges to shippers but might ask for money from the Texas Rail Relocation Fund or federal and state programs.

If public funds are sought, the state will want concessions such as use of the tracks for passenger rail or allowing a third track with passenger train speeds of 120 mph or more, Transportation Commission chairman Williamson said.

“Passenger rail in this country is only affordable if you can do it in conjunction with the construction of other assets,” he said.

Carole Keeton Strayhorn, who’s challenging Perry for the governor’s seat, renewed criticisms about letting foreign companies control public infrastructure and allowing secrecy on such deals.

“Whether it is a foreign company running our roads, our rails or operating our ports, it’s wrong,” she said in a statement. “This deal just adds to the land grab.”

San Antonio officials say new tracks could remove many of the 70 trains going through the city every day, but they don’t know how Cintra-Zachry’s proposal might work.

Bruce Flohr, president of the Bexar County Rail District and chairman of a rail relocation study, said similar ideas have been discussed in other states, though not for a project this big, and none ever was implemented.

“Lots of details,” Flohr said. “Most of the times these things fall apart, primarily on the fees being charged.”

And the players that need to be on board to make it happen, large railroads such as Union Pacific and BNSF Railway Co., hadn’t heard of the track proposal until Wednesday, spokesmen said.

UP and BNSF signed an agreement with Perry last year that called for sharing costs of relocating rail traffic around cities.

“We’re just trying to figure out how this will fit into that agreement,” UP spokesman Joe Arbona said.

Link to Slate.com article here.

Note to Joe Krier: Here’s another article showing at least a 12% return on investment in these sweetheart monopolies you’re giving foreign companies!

Lost Highway
The foolish plan to sell American toll roads to foreign companies.
By Daniel Gross
Slate.com
Posted Wednesday, March 29, 2006

If a governor told you there were a way to spread pork, raise funds for infrastructure investment, promote jobs, avoid raising taxes, and put a dent in the trade deficit—all in one fell swoop—you might think he had a bridge to sell you. And you’d be right. Only in this case, it’s a toll road. And instead of a sale, how about a long-term lease?

Earlier this month, in a triumph for Gov. Mitch Daniels, Indiana’s House narrowly approved his proposal to lease the 157-mile Indiana Toll Road, which spans the northern part of the state, for $3.85 billion to a joint venture of Cintra, a Spanish company, and Australia’s Macquarie Bank. The two companies have been active in the U.S. road business. In 2004, the two inked a 99-year lease for the 7.8-mile elevated Chicago Skyway. Last year, Macquarie completed its acquisition of the Dulles Greenway outside Washington, D.C. And Cintra, which manages toll roads in Europe and the Americas, is a strategic partner to the Texas state government in the planned Trans-Texas Corridor. There are likely more such deals to come.

For Daniels—who failed to live up to his nickname (“The Blade”) when he served as director of the Office of Management and Budget in the first Bush administration—the 75-year lease is an elegant solution. The state needs billions of dollars to invest in new roads. Getting the cash upfront will allow Daniels to speed up construction on needed infrastructure projects, create new jobs, and fund his Clintonian Major Moves initiative. (Here’s a list of projects to be funded and a fact sheet on the deal.) And by raising the cash from foreigners, he’s doing his part to rein in the pernicious current-account deficit. “Too often in Indiana, we see Hoosier dollars and jobs leaving the state. Major Moves is an exciting opportunity to recapture U.S. dollars by attracting foreign investment, and use them to create jobs for Hoosiers,” he said.

What’s in it for the foreign companies? Huge potential profits. Gigantic, steady profits. Toll roads are an incredible asset class. They’re often monopolies. They can support debt, since they provide a recurring guaranteed revenue stream that is likely to rise over time, as more people take to the roads and tolls increase. According to Cintra, the Indiana Toll Road generated $96 million in revenues in 2005, and Cintra expects a 12.5 percent internal rate of return on its investment. The heavy lifting has already been done: The state or federal governments have acquired the land and rights of way, built the roads and maintained them for years, and enacted toll increases. All the private companies have to do is deliver cash upfront, maintain the roads, and collect the windfall. The buyers can also increase their profits by making toll roads run more efficiently with technology. After assuming control of the Chicago Skyway, the Cintra-Macquarie consortium installed electronic toll equipment on some lanes. And by refinancing nimbly, companies can cash out. Last year—just seven months into its 99-year lease— Cintra announced that it had recovered 44 percent of its initial investment in the Chicago road through refinancing.

(So, why aren’t American companies buying up our toll roads? Here’s a theory.)

This easy money for foreigners makes the locals uneasy. In mid-March, the Indiana House approved the deal by a surprisingly slim margin. The Indiana scheme continues to engender local opposition. Last week, while participating in a panel discussion in South Bend, Ind., I got the sense that the toll lease made Hoosiers uneasy for reasons they couldn’t quite articulate. It’s not like the buyers could uproot the concrete and move it to Queensland, Australia, or Seville, Spain. The 400-page contract spells out in detail obligations of the consortium to invest in maintenance and safety and to keep a lid on toll rates. And unlike the Dubai ports case, it’s hard to see how management of the toll road by a foreign entity could raise security threats.

I think the uneasiness has more to do with what it says about the peculiar fiscal climate in the United States. How is it that in the richest nation on the earth, localities simply don’t have the cash to do necessary maintenance on basic infrastructure, the political will to raise such funds, or the competence to run such easily profitable operations? Why are they being forced to sell off long-term cash cows for short-term cash?

Leasing or selling a public asset is a classic one-shot—a short-term measure that bolsters the balance sheet today but that can’t be repeated. While politicians like Daniels focus on getting through the next few fiscal years with minimum pain, foreign companies are thinking about how to get rich off of tolls for the next three-quarters of a century. From Gov. Daniels to his former boss, President Bush, there’s a troubling unwillingness to align governmental resources with the express goals and responsibilities of government. At the federal level, we rely on China’s central bank to buy our bonds and fund basic operations. As a result, our tax revenues wind up in Beijing—as interest payments. At the state level, Indiana is relying on foreign companies to lease public infrastructure like toll roads. And under these arrangements, tolls—taxes people pay for driving—are being paid to foreign shareholders of foreign companies.

Of course, by selling public infrastructure at high prices, state governments could be taking foreigners for a ride. The Japanese famously overpaid for Rockefeller Center, after all. It’s possible that Indiana just ripped off the Spaniards and Aussies. But I doubt it.

Why aren’t American companies buying the roads and making the profits that are going to Cintra and Macquarie? Oddly, it may be because the toll roads are good investments—but not great ones. The long-term economics of these sweetheart deals don’t appeal enough to today’s quick-buck American investors. Big private-equity firms are sitting on piles of cash, and money is cheap. And yet they’re not bidding seriously on these lease deals. Ironically, the very factors that make the United States an appealing market for foreign investors—its size and stability, the security afforded by the rule of law—make it comparatively unappealing for some local investors. Macquairie and Cintra might be perfectly happy with 12 percent internal rates of return. But many big U.S. investors are seeking returns at twice that rate, which they believe can be found more easily in riskier markets like India and China.

Daniel Gross (www.danielgross.net) writes Slate’s “Moneybox” column. You can e-mail him at moneybox@slate.com.

Copyright 2006 Washingtonpost.Newsweek Interactive Co. LLC