Hey, Buddy, Wanna Buy a Toll Road?

Link to article in the Statesman here.

Hey, buddy, wanna buy a toll road?
By Ben Wear
Austin American-Statesman
January 23, 2006

Save your pennies, invest in the right companies, and you, too, might someday own a Texas toll road. Or at least a few feet of one.

Adjusting to the idea that in the future most new Texas expressways will be toll roads has been tough enough. Now it appears that a good number of those roads might be in private hands.

The state, as most people know, is working out a deal with the Spanish company Cintra (and its San Antonio minority partner Zachry Construction Corp.) to build a 300-mile alternative to Interstate 35.

But Harris County is listening to companies interested in paying it billions for a long-term lease of the county’s lucrative, 83-mile toll road system. Cintra-Zachry has also made a bid to build and run 47 miles of new toll roads in San Antonio.

Officials here in Austin, including state Rep. Mike Krusee, R-Williamson County, say they are open to the idea of selling the 66 miles of toll roads under construction on Austin’s north and east sides. And, oh yes, the original plan for expanding Capital of Texas Highway (Loop 360) involved a long-term concession agreement with a private operator.

And that’s just what we know of now.

“Texas is open for business,” said the opening slide in a Texas Department of Transportation workshop put on last week for an overflow crowd of industry contractors, including toll road companies. The Texas Transportation Commission makes no bones about it: It wants companies to come to Texas, wallets open, and build or buy toll roads.

“We’re prepared to make sure you’re rewarded for taking on that risk,” commission Chairman Ric Williamson told the crowd.

That potential reward is the nub.

One of the primary sales points for toll roads has been that once the turnpikes are in place, with forevermore toll charges, the profits would be plowed back into the road system. The turnpikes would become unceasing fountains of transportation cash that would allow Texas to close what Williamson says is an $86 billion funding gap over the next quarter-century, and maybe build some passenger rail systems to boot.

So, if we sell the fountains now, we’d be flooded with transportation cash for projects, but we’d lose the future cash flow. The toll road operators, meanwhile — no fools they — would certainly do everything they could to pay Texas less than what those roads will eventually generate in revenue.

That margin, the profit, is money that would go to their stockholders, not Texas roads.

“That could go both ways,” Krusee said, noting that the roads might underperform and thus swing the transactions to Texas’ favor. And if the state gets big money now, Krusee said, more roads could be built faster, and the state would see an economic development benefit from that acceleration.

Maybe so. But there’s also the ticklish question of how much autonomy private operators would have in setting toll rates. Last I checked, Texans don’t get to vote on who serves on the Cintra board of directors.

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