This is the official Texas Department of Transportation Trans-Texas
Corridor Plan, adopted June 2002
Crossroads of the Americas:
Trans Texas Corridor Plan
Looking Down the Road -
Executive Summary -
Right of Way -
Toll - Rail -
Dedicated Utility Zone -
In 2001, the 77th Legislature provided several new financial
tools to help Texas meet its transportation demands. Legislation enabling toll equity,
regional mobility authorities and the
Texas Mobility Fund will help TxDOT continue its efforts to enhance the existing transportation system. These tools also can be used
in developing the Trans Texas Corridor.
Other potential corridor funding methods include concessions,
the federal Transportation Infrastructure Finance and Innovation Act of 1998, assorted other federal programs and leasing right of
way. Some of these methods would require further legislative action.
With loans and grants, TxDOT can participate in the acquisition, construction, maintenance, or operation of a public or private
toll facility. The primary purpose of department financial
participation is to make the most efficient use of limited funds by leveraging other sources of project funds, particularly proceeds from
bonds. This enables toll facilities to be built more quickly.
A public or private entity authorized by state law to construct
or maintain a toll facility is eligible to request financing under
this new subchapter. A public entity may apply for either a loan or a grant, while a private entity may only request a loan.
Toll equity offers two significant benefits:
accelerate completion of a project that would have taken much longer to develop.
It can be
used to encourage entities such as regional mobility authorities to issue debt to finance the remaining cost of the project. As a result, the department will save funding equal to the amount of debt issued by the public or private entity. The unspent funds could then be used for other needed projects.
Regional mobility authorities
The 77th Legislature also authorized creation of a regional
mobility authority to construct, maintain and operate a turnpike project in a region of the state. The law maximizes local control in the development and operation of regional transportation facilities
and provides a financing tool for new transportation projects.
Through a request to the Texas Transportation Commission, one or more counties may create a regional mobility authority.
Generally, approval will be based on sufficient public support and an
assessment of how a turnpike project could improve mobility in the region. Another factor is whether a project would benefit local
and state governments, and the traveling public.
These regional mobility authorities, with the consent of the
commission, have the same power as TxDOT. Counties may either join or withdraw from an authority with approval of the
commission. Conversely, the commission may dissolve a regional mobility authority.
Proceeds from bonds are expected to be the primary funding source for regional mobility authority projects. However, to
assist in the development of worthwhile transportation projects, these authorities may seek from TxDOT a loan or grant as outlined in the toll equity section of this report.
Surplus revenue generated by a regional mobility authority
project can be used for various purposes. These include reducing tolls, enhancing the Texas Mobility Fund or funding other regional transportation projects. Projects eligible for funding are
commercial airports, public transit facilities, the Gulf Intracoastal Waterway, planned state highway projects, passenger and freight rail facilities and pedestrian and bicycle facilities. Use of
surplus revenue for construction of local roads, rural minor collectors
or converted state highways is not allowed.
Surplus revenue from former state system roads that have been converted to a regional mobility authority project can only be
used for improvements to the state highway system until total
expenditures have equaled the asset value of the transferred facility. However, the commission has authority to waive this requirement.
Creation of regional mobility authorities can accelerate a
project by providing resources not previously available. From a financial standpoint, a regional mobility authority would be the most
efficient use of limited available funds since it would leverage other funding sources. It also would reduce TxDOTís maintenance and operation costs while giving local governments more control over highway facilities within their jurisdictions.
A regional mobility authority project will only be viable if
there is sufficient traffic to generate revenue. By itself, a loan or
grant from TxDOT will not be enough to support a project. Because of this, some counties participating in an authority might be reluctant
to assume the obligation connected to a large-scale project such as the corridor.
Concessions are long-term contractual arrangements between
government and private or quasi-private companies. With a general lifespan ranging from 10 to 35 years, concessions can be used to build and operate highways and bridges.
In Europe, the concession model has been an effective
alternative to conventional contracting techniques for several decades. Concessions were used in France from 1960 and 1997 to build a 6,500-kilometer expressway network. Portugal is using 16
concessions to complete its primary national transportation network. Concessions have been used extensively in Mexico and South America to construct and operate toll roads, bridges and
Companies receiving a concession agree to perform one or more components (designing, building, operating, financing or
maintaining) on a given project over the term of the contract. At the end of
that term, the contract is either extended or the underlying
transportation facility is turned over to the government. Concessionaires bear project risks, including those inherent in construction and
traffic projection. Payments to concessionaires are based on either
facility usage/availability or on a negotiated payment schedule.
Concessions offer several advantages over traditional contracts
for construction and operation of transportation facilities:
project completion dates.
assume project risks.
benefits from private-sector efficiencies, innovation and expertise.
financing augments capital available to government.
These advantages have been documented. In Portugal, the national concession program allowed the government to complete its
primary national transportation system up to eight years faster than would have been possible if conventional processes had been
Concessions have been successful in Europe because
private-sector firms can borrow at low interest rates similar to those rates
paid by governments. A challenge in implementing a concession program in the United States is the gap between the cost of public and
private financing. For example, in mid-2001, states could issue bonds with 10 to 12-year maturity rates of four percent or less,
depending on their overall credit rating and collateral. Private-sector
borrowing, however, carried substantially higher rates. In mid-2001, private-sector borrowers often paid seven percent or more for
the same 10 to 12-year instrument.
A way to bridge this interest-rate gap and marry the
efficiencies of concessions to the benefits of tax-exempt, low-interest rate
borrowing would be to have the financing phase of the corridor project undertaken by an entity authorized to issue tax-exempt debt. However, all other project elements could be the
concessionaireís responsibility. This differs from the European model, where
concessionaires typically agree to finance all or part of a project. Also, it would not provide needed additional private-sector funding
for the corridor.
In 1995, the Commonwealth of Virginia General Assembly enacted the Public-Private Transportation Act to allow public entities such as the Virginia Department of Transportation to authorize private entities to acquire, construct, improve, operate and
maintain qualifying transportation facilities. One of the goals of the Virginia legislation was accelerating the delivery of needed
transportation facilities by providing new sources of capital.
To finance the Pocahontas Parkway, a not-for-profit corporation known as the Pocahontas Parkway Association was established. The association attracted investors for a $354 million bond, to
be repaid solely by tolls from parkway users. More project funding was provided through a state infrastructure bank loan ($18
million) along with federal funding for roadway design ($9 million).
Transportation Infrastructure Finance and Innovation Act of 1998
Under the Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA) the U.S. Department of Transportation may provide three forms of credit assistanceódirect loans, loan
guarantees and standby lines of creditófor surface transportation projects of national or regional significance. The programís goal is to
leverage federal funds by attracting substantial private and other
nonfederal co-investment in critical improvements to the nationís surface transportation system. Project sponsors may include state departments of transportation, transit operators, special
authorities, local governments and private entities. Eligible projects
include highways and bridges, intelligent transportation systems,
intermodal connectors, transit vehicles and facilities, intercity buses and facilities, freight transfer facilities and passenger rail
vehicles and facilities.
The act may provide up to a third of eligible project costs,
with no ceiling per project. Six requirements must be met:
cost at least $100 million (or 50 percent of the stateís annual federal-aid highway funding, whichever is less).
transportation system projects must be at least $30 million.
must be investment grade.
comply with National Environmental Policy Act, Title VI of the Civil Rights Act, Uniform Relocation Assistance and Real Property Acquisition Policies Act, Titles 23 and 49 and all other applicable federal statutes.
receive the necessary state/local approvals (transportation plans and policies).
revenue streams must support the projects.
One major Texas project already benefiting from this act is the Central Texas Turnpike. With an estimated cost of $3.2 billion,
the turnpike project has been approved for a $916 million TIFIA
Using this financial tool has several benefits. It accelerates
projects, avoids future increases in right of way and construction costs,
promotes economic growth and takes advantage of economies of scale in construction.
Challenges include the additional cost of interest payments, an extended application and evaluation process and significant
issuance costs. Some capacity constraints also may exist, such as the
ability of public agencies to manage additional projects, availability
of contractors and consultants, and availability of construction
materials and labor.
Other federal funds
Transportation Equity Act for the 21st Century
When Congress reauthorizes the act in 2003, several changes could benefit Texas in the execution of the corridor plan. These include:
20 percent state match for federally funded projects. Permit "donor" states (those that contribute more money to the Highway Trust Fund than is returned) to receive 100 percent reimbursement for project expenditures.
credits to be derived from projects that include federal funds. This can be accomplished on a pro rata basis gauged by the amount of federal dollars apportioned to a
High-speed rail grants
The Federal Railroad Administration, U.S. Department of Transportation, could help finance the rail portion of the
corridor. For fiscal 2002, nearly $20 million will be obligated nationally
in project grants to stimulate high-speed passenger rail systems. Grants in fiscal 2000 ranged from $100,000 to $6 million and averaged $250,000.
Grants for public works and economic development (Economic Development Administration, U.S. Department of Commerce)
Project grants are available to promote long-term economic
development and assist in the construction of public works and facilities to support the creation or retention of permanent private sector jobs in areas experiencing substantial economic distress.
For fiscal 2002, an estimated $250 million is available. Average grant is $904,920.
Railroad Rehabilitation and Improvement Financing
The Railroad Rehabilitation and Improvement Financing program is intended to provide funding for railroad capital improvements through loans and loan guarantees.
No direct federal funding is authorized in the Transportation Equity Act for the 21st Century (TEA-21). However, the Secretary of Transportation may accept a commitment from a
nonfederal source to fund the required credit risk premium. The aggregate unpaid principal amounts of obligations for direct loans and loan guarantees cannot exceed $3.5 billion at any one time. Of that, not less than $1 billion must be available solely for
other than Class I (major) carriers.
Funds made available through this program may be used for direct loans and loan guarantees to state and local governments,
government-sponsored authorities, corporations, railroads, and joint
ventures that include at least one railroad. Loans, which may not exceed 25 years, are to be used to acquire, improve, develop or rehabilitate intermodal or rail equipment or facilities,
including track, bridges, yards and shops.
Priority is given to projects that would enhance public safety
and the environment, promote economic development, or enable
companies to be more competitive in international markets. Projects endorsed in state and local transportation plans, or projects
that would preserve or enhance rail or intermodal service to small
communities or rural areas also receive priority.
At current funding levels, any assistance from these federal
programs would be minimal.
Leasing right of way
Leasing TxDOT right of way to local governments or private businesses for utilities or concessions is another revenue
Several states use various forms of these options to generate
revenue. Most states consulted for this report have statutory authority to use these options only on toll roads or turnpikes.
Selected innovations in right of way leasing
stateís toll authority leases fiber optic space along the five-mile-long Delaware Memorial Bridge for public agency use at $1 a year. However, future utility leases are anticipated
to produce an estimated $200,000 in annual revenue.
state turnpike authority has established concession areas along toll roads such as the 88-mile Turner Turnpike. Most of these areas were built and leased 20 years ago. Two gasoline companies and a fast-food chain currently have leases. The state offers one-directional and bi-directional concession areas but believes that bi-directional areas maximize service. The intent in creating these areas was for the safety and
convenience of the traveling public, not profit. In fiscal 2000, gross income off the leases was $1.3 million. That dropped slightly in fiscal 2001 to $1.1 million. Aside from utility costs and
parking lot maintenance, few expenses are associated with these
concessions. Most leases are for 20 years with a 3-5 year renewal option. However, the state has decided that any new leases will be for shorter terms.
Interested service providers are asked to bid on the basis of
the design of their proposed facility and other factors. Oklahoma uses what it calls a triple net lease, where the turnpike
authority owns the concession area and pays taxes on it, but gets
reimbursed. The agreement with the concessionaire determines building design and the food/gas providers. The lessee also agrees to manage the facility, and maintain the property except for minor utilities and parking lot maintenance.
state transportation department builds the concession facilities in its right of way. The agency currently maintains six service areas containing convenience store and restaurants
on turnpikes. Convenience stores have five-year leases; restaurants operate under 15-year leases. Kansas also has a few right of way leases for fiber optics. Gross income for 2001 was $2.1 million for all service areas. Yearly expenses are minimal since
everything has been paid up front and the maintenance area is held to a minimum. Kansas will be opening four new facilities this year. An additional source of revenue associated with right of way is light-box advertising. Light boxes are 2 by 3-foot
illuminated commercial signs. These boxes cost $600 per box to make, and $1,000 per year is charged to advertise. Current annual
revenue from this program is $15,000.
Maryland Toll Authority was granted a waiver by its legislature to lease space at rest stops to generate
revenue. Leases have been signed with gasoline companies, hotels and restaurants. The state plays a very active part in the
administration of these facilities, including input on gasoline pricing. The authority gets a percentage of the income from products sold. The contracts, awarded on the basis of competitive bids, are
very specific regarding the qualifications of the lessees and the
management. In the past, contracts have been for five years, but the authority is looking at 10-year leases. Average annual revenue during the last five years has been $6.9 million.
Leasing right of way to utilities and other concerns would
require new legislation to revise the Texas Transportation Code.
Currently Chapter 181 of the Utilities Code provides only municipal
utilities permission to be in TxDOT right of way. However, the
transportation code does allow TxDOT to lease right of way not needed for transportation or "during the term of lease."
Texas Mobility Fund
The 77th Legislature established the framework for the Texas Mobility Fund. Voters approved the necessary constitutional amendment in November 2001. The amendment allows the state to issue bonds to accelerate construction of major
While the mobility fund will be a valuable tool, at this time it
is only a financing mechanism. Legislative action is still required
to put money into the fund. A number of revenue options exist, but constitutionally dedicated funds such as motor-fuel tax revenue and vehicle-inspection fees cannot be used. However, several
existing transportation fees not used to fund transportation at present could be dedicated to the Texas Mobility Fund.
These fees, and the annual amount generated in millions of dollars, include:
- Motor Vehicle
- Driver Record
- Motor Vehicle
- Motor Vehicle
Sales and Use Tax
Looking Down the Road -
Executive Summary -
Design - Environmental -
Right of Way -
Toll - Rail -
Dedicated Utility Zone -
This Page Last
Sunday December 31, 2006