State agrees to sell SH 121 to Spanish company Cintras – Maso in opposition

Deal for 121 toll road announced; other projects to benefit, but critics question 50-year contract

By Tony Hartzel / The Dallas Morning News,

ARLINGTON. Officials announced a nearly $3 billion deal Tuesday to make State Highway 121 North Texas’ first privately operated toll road – a contract that will give other area transportation projects an immediate financial boost and free up state money to maintain roads.

When the toll road is complete in 2010, a motorist traveling from Central Expressway in Collin County to Coppell in Denton County would pay about $3 for a one-way trip.

The Spanish company Cintra Concesiones de Infraestructuras de Transporte SA will pay $2.1 billion in cash for the rights to operate the lucrative toll project through 2057. It also has agreed to give the state an estimated $700 million in toll revenue over the life of the contract.

“What a great day,” said Gov. Rick Perry, who led Tuesday’s event at the North Central Texas Council of Governments office in Arlington.

“Today, we’re going to see Texas take a giant step forward in combating congestion.”

A portion of the road has opened in Denton County, but major segments in Collin County must be built.

State officials tout the deal as the first in Texasin which a single company will design, build and operate a substantial portion of the 24-mile road. But some state and local leaders question the wisdom of turning over roads to private companies and handing out 50-year deals.

The $2.1 billion initial payment from Cintra is expected to jump-start a multitude of transportation projects in Collin, Dallas, Denton and Tarrant counties. They include traffic bottlenecks along Central Expressway and the Bush Turnpike in Collin County, LBJ Freeway, Interstate 35E from LBJ Freeway to the city of Denton, and the Grapevine Funnel north of Dallas/Fort Worth International Airport.

The benefits of the road could reach $5 billion, state officials say. In addition to the $2.8 billion in payments, the deal also calls for Cintra to pay the $560 million needed to finish construction of the toll road and several major interchanges. The deal also includes an estimated $1.7 billion that Cintra will spend to operate and maintain the road over the life of the contract.

The deal must be ratified by the Texas Transportation Commission. Texas Department of Transportation officials will recommend today that the commission approve the deal, but the proposal still must clear financial and environmental reviews before it can be formally approved.

Cintra won’t have any comment until after the commission meeting, said Rossanna Salazar, a Cintra spokeswoman.

With lawmakers reluctant to raise the state’s 20-cents-per-gallon tax on gasoline, local officials view the Highway 121 deal as a partial solution to their funding concerns.

“Austin, we have a solution,” said Michael Morris the director of transportation for the council of governments. “This represents the largest single financial impact to transportation in the history of the state of Texas.”

That solution comes with a catch – tolls that start out in 2010 at about 14.5 cents a mile. That compares with 10 cents a mile now on the Dallas North Tollway and the Bush Turnpike.

On Highway 121, tolls will be adjusted every two years based on the rate of inflation. The increase is expected to be about 3 percent a year. Increases will be capped or eliminated in years of high inflation, Mr. Morris said.

The Highway 121 toll road has been described as one of the most lucrative toll projects in the nation, one that was enhanced by the automatic toll increases that eliminate the politically risky question of raising tolls.

The deal reverberated from Frisco to Austinon Tuesday.

Senate Transportation Committee Chairman John Carona, R-Dallas, a frequent critic of the agreements, said that while tolls may start out reasonable, the rates “begin to skyrocket” when the contract reaches 22 years.

“Roads are built sooner, and there are substantial front-end funds that must remain in the region. That is the good news. What we won’t hear talked about is that toll rates will eventually be at numbers unlike anything we have ever seen.” That means about halfway through a contract, he said, “We either have to buy back projects at billions of dollars, or we’ll have to be ready to accept very high toll rates for a very long time.”

While state transportation officials praised the contract, Lt. Gov. David Dewhurst and other Senate leaders said the increasing number of such agreements to build highways may not be such a good deal on closer inspection.

“This may appear to be good news, but what I’m concerned about is there are some 12 to 21 different comprehensive development agreements that are in line to be signed, and the Legislature has no idea what those agreements are,” Mr. Dewhurst said.

When he recently asked Transportation Department officials what tolls would be required to amortize the payments under the contracts, he said, the figures were “astronomical.”

Mr. Dewhurst also said that transportation commissioners assured the Senate in 2003 – when legislation was passed allowing the agreements with private contractors – that “this would be only a pilot program.”

Now, he noted, “We are all surprised by the magnitude of what happened.”

Tolls on Highway 121 have left behind sore feelings in Frisco, where City Council members discussed a possible lawsuit during executive session last week. On Tuesday, Frisco officials said no lawsuit had been filed or authorized by council members.

Maher Maso, Frisco’s mayor pro tem, said the state has largely ignored the will of the cities that surround the toll road.

“It’s bad for Texas; it’s bad for our region,” said Mr. Maso, who stressed that his comments reflected only his personal opinions.

Denton County Judge Mary Horn said she was very disappointed with Frisco’s continued criticism of the deal. “If someone has a better method of funding transportation, we’re waiting to hear it,” she said.

Tuesday’s agreement further solidifies Cintra’s presence in Texas’ growing toll road network. The company in late 2004 won the development contract for the Trans-Texas Corridor. It also has the rights to build and operate a segment of the State Highway 130 toll road from Austin to Seguin.

Staff writers Jake Batsell in Plano and Terrence Stutz in Austin contributed to this report.

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