SH121

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.

North Texas Tollway Authority has successfully refinanced $2.4 billion of bond anticipation notes (BANs). The sale of bonds today was heavily oversubscribed. Over 60 institutions put orders in for $16b in NTTA bonds according to Bear Stearns who organized the placement.

NTTA chairman Paul Wageman said the result was "particularly gratifying" given recent turbulence in the municipal bond markets.

TxDOT's 50 year toll concession and lease of SH121 to the North Texas Tollway Authority (NTTA) reached financial close late Thursday when the NTTA wired $3,197m into a bank account of the Texas Department of Transportation.

North Texas Tollway Authority (NTTA) has had its bond rating downgraded because of concerns about the debt it's taking on to finance its concession agreement with TxDOT on SH121. Standard and Poor's (S&P) have lowered their rating on NTTA longterm bonds from A+ to A, a high rating still. But the NTTA will remain on "Creditwatch with negative implications until NTTA clarifies its longterm plan of finance," S&P say.

Texas officials have revealed that in the past few days they discussed with the FHWA canceling the past approval of NTTA taking over SH121, together with canceling the Cintra concession. They got an assurance the cancelations would get Texas back in compliance with federal procurement law. They have sent us copies of two letters on the SH121 crisis both dated Tuesday Aug 21 TxDOT-FHWA, and FHWA-TxDOT.

The long expected abortion was performed today. Cintra's selection as concessionaire for SH121 north of Dallas was cancelled by the Texas Transportation Commission (TTC) in favor of North Texas Tollway Authority (NTTA), despite a clear warning from Federal Highway Administrator Rick Capka that this violates federal procurement law, and subjects the state to sanctions.

Richard Capka federal highway administrator has sent a blistering letter to Texas authorities saying the US Government will subject it to extra scrutiny for a period of two years - read: long delays - if it persists with procurement on SH121 in violation of federal contracting laws. FHWA legal counsel Robert Rae several weeks ago made criticisms of the proposed cancellation of the toll concession with Cintra in favor of the North Texas Tollway pointing out the legal problems posed.

The Dallas area metro plan organization (MPO) says it has reached agreement with the North Texas Tollway Authority (NTTA) on terms for its development of SH121, a new tollroad north of Dallas.

A draft "project agreement term sheet" approved today by the North Texas Tollway Authority board commits it to adhere to the toll rate caps of the private sector concession with TxDOT. However it provides few enforcement teeth - no binding arbitration or termination for default.

The SH121 saga continues. It was not resolved today in favor of either NTTA or Cintra as had been expected. The Texas Transportation Commission voted a 60 day deadline for the North Texas Tollway Authority (NTTA) and the Dallas area Regional Transportation Council to reach a firm agreement on SH121, including enforcement provisions, toll rate policy, a project schedule, payment obligations, quantification of public benefits, and other matters.

EDITORIAL: It would have been convenient for the Texas Transportation Commission which meets tomorrow (Jun 28) to decide if Dallas area politicians had voted recently 27/10 in favor of Cintra, the winner of their concession procurement, instead of the other way around. Higher levels of government love to be able to say they are respecting the decisions of local government.

Interoperability charges were a major part of the controversy about whether NTTA or Cintra offers better value with their proposals for tolling SH121. Interoperability charges are NOT toll collection costs as several of our readers seemed to think. They are the extra costs of handling a "foreign" transaction.

We asked TxDOT and NTTA for a succinct statement of the issue.

The state's policymaking Texas Transportation Commission (TTC) lifted an August 2006 bar on the North Texas Tollway Authority (NTTA) going forward with a bid for SH121, a major new toll project north of Dallas.

NTTA's pledge of system revenues for SH121 opens Dallas North and PGB commuters to higher toll rates, financial analysts point out. They say that the crucial distinction between the NTTA bid and Cintra/JPMorgan is that Cintra/JPM will put no lien on the existing tollroads in north Dallas. NTTA's proposal is for a system financing, they say.

Federal Highway Administration (FHWA) chief counsel James D Ray has written again to TxDOT detailing how the toll concession bill HB1892 contains provisions that put federal support for Texas highways in jeopardy. The procurement process for a SH121 concession detailed in HB1892 providing NTTA with topping rights "seems to directly contradict" the requirements of US law requiring fair and open competition.

James Bass, chief financial officer of Texas Department of Transportation (TxDOT) says we erred in attributing a two-page critique of the North Texas Tollway Authority (NTTA) to KPMG/Goldman Sachs. He says it was written by TxDOT Dallas staff. TxDOT asked both KPMG and Goldman Sachs to review it and comment.

But he says this became moot once NTTA released their executive summary of their proposal.

Here is the email, we received:

The Federal Highway Administration (FHWA) is warning that Texas may be in breach of federal laws requiring fair and open competition if the North Texas Tollway Authority (NTTA) is allowed to belatedly intervene in the procurement for a toll concession on SH121. This may result in withholding of federal funds and the end of expedited permitting, the letter says.

NTTA's bid was announced today.