TxDOT backs down accepting NTTA's low bid on TX161 concession

After months of rancorous arguments TxDOT has backed down agreeing to NTTA terms, reaching a kind of agreement on the value of the toll concession on State Highway 161 (TX161) in the south central part of the Dallas-Ft Worth metro area. Agreement on the "market valuation" of the concession with NTTA allowed construction of the road to begin today.

TxDOT had contractors selected and ready to begin construction last week but the difficulty in negotiating a "market valuation" as required by last summer's SB792 law was preventing a start.

NTTA managed to get TxDOT to agree to valuing the concession at $1,100m although TxDOT estimated the private sector would pay $1,700m.

Cintra publicly said that they would pay that.

However under the 2007 law NTTA as the recognized local toll authority had the exclusive right to negotiate a so-called "market valuation" in the absence of any market bids while threatening a veto of the project as a toll project.

NTTA has only agreed to the valuation $600m below the estimated market price. NTTA's actual commitment to the project is subject to the results of an investment grade traffic and revenue study, bond study ratings, and further financial analysis approved by its board of directors.

NTTA can either take up the project as a public toll project on the terms just agreed, or relinquish the project to TxDOT for real concessioning by competitive bids.

Under the terms of the agreement reached on Sunday TX161 will be held by NTTA in perpetuity, but after 53 years NTTA and TxDOT will share net toll revenues equally, as well as responsibility for capital improvement costs.

Hatchets buried

Officials in Dallas today were full of praise for one another, relieved that the so-called market valuation process was ended, and declining to comment on the $600m "left on the table."

Bill Hale, district engineer for the Dallas district of TxDOT: "Yesterday's agreement between NTTA and TxDOT is another milestone that benefits the drivers of the North Texas region. As a result of the cooperation between TxDOT, the NTTA and the RTC, the North Texas region will benefit for decades to come."

Paul Wageman, Chairman of the NTTA Board of Directors: "The agreement reached yesterday provides significant value to the citizens of North Texas and the NTTA System. As a natural extension of the President George Bush Turnpike, SH 161 will provide improved mobility in Dallas and Tarrant counties. I want to especially thank Lt Governor David Dewhurst and Texas Senators John Carona, Florence Shapiro and Chris Harris who supported a timely resolution of the SH 161 market valuation."

Michael Morris, director of transportation for the North Central Texas Council of Governments: "I would like to commend all parties that have been involved in this negotiation. We are proceeding with a project that has been in our plans for decades. Our focus in 2008 is to get projects built. This is a fine example of the team work that it will take to meet the region’s transportation needs."

Major local newspaper argues for real competitive bids

The Dallas Morning News editorialized this morning: "The whole process has wasted time, goodwill and, perhaps, big money. It's the first test of a new way of picking tollway builders that the Legislature came up with last year. At the time, members were inflamed at the idea of private operators winning a bid competition, so they essentially gave NTTA the right of first refusal. But that depended on TxDOT and NTTA agreeing to terms - a goal more elusive than lawmakers guessed.

"Given the sorry North Texas spectacle over Highway 161, it would be better for lawmakers to go back to a more direct bid competition that would assure efficiency and the best deal for the public."

TX161 will run from I-183 to I-20, a distance of 17km (11 miles). The roadway is due to be complete to I-30 by January 2009, the rest by the end of 2010. An 8 lane expressway plus frontage roads with three major interchanges it is estimated to cost about $900m.

TOLLROADSnews 2008-04-21