NTTA says moving to financial close on SH121 concession with TxDOT - bridge financing needed

The North Texas Tollway Authority (NTTA) say they are moving toward a scheduled financial close on the SH121 toll concession with TxDOT which requires a $2.5b upfront payment to the state. The deadline precludes the traditional public authority method of putting in place permanent longterm bonds so NTTA is issuing Bond Anticipation Notes (BANs). These are bridge financing between the deadline for payment to TxDOT and their ability to sell longterm bonds.

Under their contract with TxDOT the Dallas region public toll authority will finance, develop, operate and toll the all electronic 42km (26 mile) tollroad in the northern part of the region for 50 years. State legislation passed this summer gives public toll authorities and local governments a right of first refusal on toll concessions, but requires them to go through a market valuation process similar to that required for the private sector.

SR121 is the first of these public authority concessions in Texas in which an upfront concession fee is required.

BANs will be sold in the week of Nov 19, NTTA says, so that $2.5b can be delivered to the state DOT by the Dec 1 deadline in the concession contract. TxDOT in turn is obligated to devote the proceeds to free road projects in the Dallas region.

NTTA used political muscle to elbow out Cintra, a private concessionaire chosen by TxDOT earlier this year for SH121, claiming to have a better deal for the region which they call the "Metroplex."

LINGUISTIC NOTE: Texan officials tend to wrap their concession granting processes in bland bureaucratese like 'comprehensive development agreement' or 'government to government agreement', which throws a fog of confusion and ignorance over the essence of what is happening.

A reporter's job is to deobfuscate, so we try to find language which explains.

A toll concession is where a right to toll is granted ("conceded") by the controlling government to another entity, public or private, for a term, under stipulated conditions and in return for financial commitments - either cash or the spending of cash on agreed improvements. A key part of the concession is usually a longterm lease of the facility, though it is a lease with so many other conditions that lease alone does not capture the sense of the arrangements fully.

The term concession has usually been used in relation to a government granting private sector investors the right to toll, but if the controlling government writes a similar contract with another government authority then it too is logically described as a concession arrangement.

Similarly to NTTA and SH121, the Pennsylvania Turnpike Commission has obtained a toll concession for tolling I-80 from the state DOT. Indeed the PTC has started its bond sales and is already making 9-digit $ concession payments to the state, although its ability to actually collect tolls is in serious question, but that's another story...

TOLLROADSnews 2007-11-08