Trans Texas Corridor TTC-69 steams ahead

Link to article below here. Yep, TURF nailed it. Read our analysis earlier this week here. The moratorium bill only specifically prohibits awarding contracts to build and collect tolls. It does nothing to prevent TxDOT from awarding development contracts or what this story refers to as a “design” contract. It also reveals what we tried to sound the siren about years ago…the development rights contract granted to Cintra-Zachry for TTC-35 gave them the right of first refusal on 5-6 segments of that Trans Texas Corridor (verified in Cintra’s own annual report in 2005).

This removes any requirement for competitive bidding, which on it’s face is an absolute failure of the State’s fiduciary duty to protect the taxpayers from monopolistic sweetheart deals and what’s certain to be inflated costs. We must make Legislators pay at the ballot box for their malfeasance in granting the authority for such no-bid contracts and for failing to rein-in TxDOT with a GENUINE moratorium last year BEFORE this next private sweetheart deal got signed (or more appropriately, they should have banned these public-private partnerships, known as CDAs in Texas, altogether!).

TxDOT contract today will push Trans Texas Corridor forward
By MICHAEL LINDENBERGER / The Dallas Morning News
Thursday, June 26, 2008

AUSTIN — The second half of the massive Trans Texas Corridor will take a large step toward reality today, when state transportation officials award a $5 million design contract to a team of private toll road operators. The operators will develop a master plan for the portion of the project that will run from Northeast Texas to Houston and then to Mexico – about 650 miles.

The contract will not directly authorize the winning consortium to build any part of the super highway. But it will give the winning bidder a position of power for winning the much larger construction contracts — almost certainly to be worth billions of dollars – for the toll roads that will make up the super highway. The design contract will give the winning team 12 to 18 months to flesh out a master development plan for the project, which is expected to largely follow the path of the proposed southern extension of Interstate 69.

The two teams competing for the contract are led by subsidiaries of Spanish firms that are among the world’s largest toll road operators.

One, called ZAI ACS TTC-69, is run by Texas construction company Zachry American Infrastructure Inc. and ACS Infrastructure Development Inc., perhaps the world’s largest toll road developer.

The second, Bluebonnet Infrastructure, is led by Cintra, the Spanish firm that is already developing the master plan for the other half of the Trans Texas Corridor. Cintra last year won the design contract for the segment of the corridor that will run north to south, roughly parallel to Interstate 35. It is also the firm that was initially slated to build State Highway 121 in North Texas.

State transportation officials said Wednesday that Cintra’s contract to plan the 600-mile I-35 corridor of the Trans Texas Corridor is a good model for the contract to be announced today. Since winning a $3.5 million design contract for that project last year, Cintra has been working to develop plans for the massive network of toll roads that will stretch from the northern tip of Texas to Laredo.

Although that deal did not authorize the building of any aspect of the road itself, it did allow the firm to fast-track a proposal to build and operate a toll road on one of the most lucrative segments of the project, the State Highway 130 extension outside of Austin.

The extension of SH 130 had long been planned by state transportation officials as a gas-tax road, and then was considered as a publicly operated toll road. But officials of the Texas Department of Transportation said Wednesday that future toll revenues would not have been high enough to allow the state to borrow the full price of the project — well over $1 billion — in order to build it itself. Instead, it would have had to spend $600 million or more of scarce tax dollars on the project, said assistant executive director Phil Russell.

After winning the design contract last year, Cintra focused on that project and offered to pay the state $25 million for the right to build and operate the toll road. It also will cover all construction costs. Private operators are often able to borrow more money against future toll revenues because they accept far more riskier projections than the more conservative projects required by bond markets in which state or other public entities borrow.

Under the terms of its design contract, any proposal to build a toll road that does not require state tax dollars can be negotiated with Texas without competitive bids from other potential toll operators. Mr. Russell said the state accepted the proposal from Cintra because doing so fast-tracked the development of the badly needed toll road and allowed the state to save well over a half billion dollars in tax money.

The same kind of arrangements could flow from the contract announced today. Mr. Russell said, however, that the development agreements do not obligate the state to accept the winning firms’ proposals to build the more profitable aspects of the road. It can still reject those proposals, or require that the firms enter a competitive bidding process.