Toll hearing focused on private turnpike deals
Senator calls for moratorium on 50-year tollway
March 02, 2007
By Ben Wear, Laylan Copelin, AMERICAN-STATESMAN STAFF
Texas senators on Thursday peppered state
transportation officials with questions about
whether their turn to private toll roads is really
the best route around the state's growing traffic
In an all-day hearing attended by hundreds of
irate Texans, members of the Senate Transportation
and Homeland Security Committee questioned officials
about upfront fees and back-end profits for the
state's private partners, as well as whether the job
could be done better with public financing and more
oversight by elected officials
rather than solely by the governor's
appointees on the Texas Transportation
In short, the senators
wanted to know: Are private toll roads a good deal?
The Transportation Commission's response: With the
Legislature having saddled it with a frozen gasoline
tax ever diminished by inflation, private financing
was practically the only deal left to them.
At times, Thursday's hearing resembled the noisy
backlash at toll road hearings around the state for
the past several years.
But it veered on to a less emotional path when
the senators and transportation officials began
discussing how best to mitigate the looming gridlock
spreading throughout the eastern third of Texas and
how to pay for the next generation of
Senators made it clear, however, that they think
it's time to put on the brakes.
In particular, members of the transportation
panel worry that private toll roads inevitably mean
higher tolls for drivers — that is, voters — and
that profits from toll roads that could have been
spent on still more highways will instead go to
"I would like to see (the Texas Department of
Transportation) slow down considerably to let us vet
this more," said state Sen. John Carona, R-Dallas,
the committee chairman and of late a caustic critic
of the Transportation Commission and its toll road
As for so-called comprehensive development
agreements, leases that give private companies
control and the proceeds from tollways for up to 50
years, Carona said, "My hope is that TxDOT will
agree to a moratorium."
In an interview, Carona acknowledged that the
Legislature itself, by failing to raise the state
gas tax since 1991 even as construction costs have
skyrocketed, helped create what has become a
mountainous backlog of needed highway projects
around the state.
And it was lawmakers, after all, who passed a
huge transportation bill in 2003 that gave the
Transportation Commission the very policy tools that
senators now find over the top.
"Every one of us, myself included, are to blame"
for a transportation funding shortfall estimated to
be about $80 billion over the next generation,
Carona said. Carona has filed a bill that would
allow the gas tax to float upward based on an index
of highway construction cost increases.
Carona and other legislators, most of them in the
Senate so far, also think that the Transportation
Department and the five commissioners who run it
have taken a heavy-handed approach on the toll
issue. Thursday's hearing, fully four years into
what has been a historic change in how the state
pays for major highway projects, was one of the few
where people on both sides of the issue were given
an orderly and complete opportunity to present their
Members of the public were given the chance, as
they were last summer in more than 50 hearings
around the state on the proposed Trans-Texas
Corridor, to have their say on the subject, and
about a hundred people signed up to speak to the
committee. Those three-minute presentations
overwhelmingly focused on Gov. Rick Perry's
Trans-Texas Corridor plan of cross-state tollways
and rail lines and chiefly disparaged the plan.
Many of the speakers live on land that could be
taken for either the twin road to Interstate 35 or a
new route called TTC-69 from the Rio Grande Valley
to Northeast Texas.
But the bulk of the eight-hour hearing involved
presentations by people close to the issue — bond
financiers, Transportation Department staffers and
commissioners — and the dialogue carried more light
Jere Thompson Jr., a Dallas businessman and scion
of the family that owned 7-Eleven, served on toll
road authorities for Republican Govs. Bill Clements
and George W. Bush.
Thompson criticized the long-term leases with
private toll road operators as "a rush to sell the
crown jewels of the state."
The Transportation Department has reached two
such deals so far, both with Spanish company Cintra
and minority partners. The company will build the
southerly 40 miles of Texas 130 from Mustang Ridge
to Seguin, giving the state $25 million and a cut of
the toll revenue for the next half-century.
Tuesday, Gov. Rick Perry and Dallas-Fort Worth
officials announced that a Cintra-led partnership
had beat out two competitors to build Texas 121
north of Dallas by pledging to pay the state $2.1
billion up front and at least $800 million more in
the coming decades.
Thompson argued that public toll road
authorities, such as the North Texas Toll Road
Authority, could build and finance toll roads
cheaper than private investors, a contention
disputed by state transportation officials.
He said the state had flip-flopped its priorities
for paying for roads — gasoline tax, tolls and
private financing — to put private equity investors
as the first option.
In an interview after the hearing, Ric
Williamson, chairman of the Transportation
Commission, disputed some of what Thompson had to
While public entities may get cheaper financing
upfront, Williamson said, private investors can make
a better offer to the state because of tax
consequences of writing off depreciation, for
More important, Williamson said, the state didn't
have the cash necessary to get public financing in
the bond market, or at least the copious amounts
that private companies are likely to bring to the
table for almost 30 projects similar to Texas 121.
Think of it as a person buying a house,
Williamson said: The State of Texas didn't have the
down payment to get a loan. Private companies such
as Cintra have that equity.
Dennis Enright, a financial analyst with NW
Financial Group LLC invited to testify by Carona,
said putting private companies in charge of toll
roads, and getting a big bonus on the front end from
them, inevitably leads to higher tolls for drivers.
"Without the upfront money, the tolls would be a
fraction," Enright said.
He said drivers on the Texas 121 toll road would,
in effect, be subsidizing roads for other drivers.
"Is a toll a toll, or is it allowed to be a tax?"
Carona said. "Today's tolls are just disguised