NTTA credit markets "non-existent" but signing concession contracts with TxDOT containing Big Out

North Texas Tollway Authority (NTTA) chairman Paul Wageman is quoted: "There is very little or no credit out there right now and the access to the credit markets are almost non-existent." So they are being innovatory.

At their last meeting the board of NTTA voted to accept a staff recommendation that they take out a 3-year Bank of America loan for $100m whose interest rate is reset each week. This is to help fund the next tranche of short term bond anticipation notes (BANs) coming due as part of the recent temporary financing of the $3.2 billion that was paid to TxDOT for the 50-year toll concession for SH121.

$225m BANs are due be be refinanced Nov 19.

The $100m looks after a hunk of that, after a fashion.

If the remainder of the $125m cannot be refinanced longterm the Authority will look for further short-term financing.

TX161, SW Parkway, Chisholm Trail bundled and contracted, kind of

Despite these problems NTTA and TxDOT recently announced agreement by the legal deadline to allow NTTA to exercise its right of first refusal on a toll concession from TxDOT to develop the TX161 tollroad (State Highway 161). Compared to $3,200m NTTA paid for the Tx121 concession, it only pays an upfront concession fee of $458m for TX161 and the concession is more in the nature of a 19th century toll charter - it is in perpetuity rather than for 50 years like the TX121 concession.

Bundled in at no cost - the valuation process is "waived" -  is TxDOT's recognition of the right for NTTA to develop the South West Parkway and Chisholm Trail projects (SWP/CT) - 45km (28 miles) of mostly 2+2 lane tollway south of and through Fort Worth.

TX161 is 20km (11.5 miles) of mostly 3+3 lane tollway in the south central portion of the Dallas-Ft Worth metro area.

Like TX121 TX161 was the subject of a private sector toll concession procurement, though unlike TX121, the TX161 procurement was incomplete when it was aborted. South West Parkway by contrast has long been an exclusive NTTA project.

see: http://www.dot.state.tx.us/services/texas_turnpike_authority/sh_161.htm

Exit ramp five lanes wide

The TX161/SWP/CT agreement between TxDOT and NTTA has a novel escape clause which seems at odds with SB792's  intent. This intent is to commit, by a date certain, government toll authorities like NTTA (often termed RMAs) to build potential projects for a concession valuation, or else have them hand the project over for competitive bidding by investor owned concessionaire groups.

NTTA has an exit ramp from the agreement with TxDOT five lanes wide.

The press release makes no secret of the Big Out: "After exercising its option to develop, finance, construct and operate the TX161 project, the NTTA retains the discretion to not undertake the project for any reason, including negative rating impacts to the NTTA System.  The NTTA retains the same discretion to not undertake the SWP/CT project."

Contract Law Innovation for the Great Finance Crisis

NTTA is committing to the three tollroad projects unless it finds it doesn't want to proceed - an innovation in contract law for these troubled times that should gain recognition from national bodies such as AASHTO, IBTTA, or ARTBA.

(Memo TOLLROADSnews Ad Rep:  Our contracts with Texas customers should in future be of the form: "For $800 upfront payment TOLLROADSnews contracts to place your ad for 6 months, unless we decide, for any reason, not to place it at all." Editor.)

TOLLROADSnews 2008-10-20