June 26, 2008

Developer selected for TxDOT contract that will push Trans Texas Corridor forward

Document: Map of proposed route of Interstate 69

Link: Details on the winning bid

The Dallas Morning News
Copyright 2008

AUSTIN — The Transportation Commission has selected a master developer of the Interstate 69 segment of the Trans Texas Corridor. The winning bid was submitted by a team consisting of a Texas-based construction company, Zachry American Infrastructure, and ACS Infrastructure, a subsidiary of a Spanish firm that is one of the largest toll road operators in the world.

The action allows TxDOT staff to negotiate a $5 million development contract with the team that will lead the way building the 650-mile network of super-highways.

"This proposal gives us the best path to developing the long-awaited upgrades to U.S. 77 in South Texas and ultimately the I-69/TTC project," said TxDOT executive director Amadeo Saenz. "The ZAI/ACS team's proposal would use existing road alignments and engage local leaders to help direct this project with minimal cost to the state."

The other bidder was led in part by Cintra, the Spanish firm that is developing the other segment of the Trans Texas Corridor, running the length of Texas roughly parallel to Interstate 35.

The contract approved today does not directly authorize the winning consortium to build any part of the super highway. But it gives the group 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 contract gives 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.

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.

Since winning a $3.5 million design contract, 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.


© 2008, The Dallas Morning News: www.dallasnews.com

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