TTC must defend process,
June 27, 2007
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.
At stake is Texas' reputation as a place
where officials keep their word. Or do they
opportunistically change the rules in the
end game just because a ambitious political
hustler (Paul Wageman - no one in the toll
business outside Dallas had heard of the guy
this time last year) takes control of the
board of directors of the local public toll
authority, throws out the CEO, tears up a
protocol agreement with the state, and
exploits a redneck movement against 'foreign
takeovers of our roads' to establish a local
tollroad monopoly and make his name as a
some kind of latterday Sam Houston beating
back the 'spanicks.
NTTA has been one of the best public toll
authorities in the country. They pioneered
the technologies which have transformed the
toll business - transponder toll collection
and openroad tolling, now cashless tolling
with video. They have built several great
tollroads and operated them very efficiently
by the standards of public toll authorities.
They have generally kept costs under control
and generated a surplus that they have
plowed back into improvements for the public
Until the recent takeover they behaved like
a confident and honorable public authority,
open, candid, and businesslike.
Invariably their line on SH121 was: "We've
looked at it. We think it may be viable at
some time in the future, but for now it
looks marginal. We have higher priorities.
We are heavily committed to a bunch of
better projects..." and they'd reel off
eastward extension of the Pres George Bush
Turnpike, northward extensions of the Dallas
North, the Trinity and SW Parkways...
They expressed their self-confidence and
openness to competition by saying: "If TxDOT
and some investors think they can make SH121
work, good luck to them."
And so they signed an agreement with the
state in which they agreed not to bid for a
concession on SH121 while getting a
guarantee of five years doing toll
collection for the chosen concessionaire.
It was on that basis that the Texas
Transportation Commission set in process the
procurement of a concession - in their odd
bureaucratic lingo, a CDA. Texas state
officials got a dozen or more companies to
participate in a competitive procurement
investing millions of dollars in proposals
and the process. Toward the end of the
procurement local officials balked at some
of the details. State officials handed off
power to negotiate the final shape of the
agreement to regional officials. The
CDA was shaped by those same officials in
the Dallas Ft Worth region who disgracefully
voted recently 27/10 to dump the contract in
favor of the rule-breaking last minute
intervention by the NTTA.
NTTA clearly won the PR, media and political
battle. They got in early with $billion
numbers that seemed to look better than
Cintra's. If anyone reminded them of their
agreement to stay out of the SH121
procurement they played victim of the big
bad state DOT, suggesting somehow they'd
been threatened almost with guns to their
heads to sign that thing. Baloney.
baloney was the idea that with
NTTA you'd be
keeping the dollars at home, where otherwise
they would disappear into Delaware, or
Barcelona. NTTA would have to sell bonds and
raise bank loans on a national and global
scale just like Cintra. It would have to
borrow more, actually, than
Cintra which can
enlist equity. Servicing capital sends money
out of the region if that capital is raised
out of the region regardless of who is
raising the capital and regardless of
whether it's bonds, bank borrowings or
shareholder dividends. It's a quite phony
issue - a distinction without any real
But there are important and real
differences. Cintra is contractually
committed to annual payments, to living
within toll caps, and to forgoing their toll
concession rights if they should breach any
of the contractual commitments.
NTTA by contrast retains complete
discretion over toll rates. They cannot
subordinate any annual payments to their
other debt. They pledge the revenues of
other tollroads to the SH121 debt.
Cintra cannot be put off SH121
if they fail to live up to their
commitments. They stay regardless of their
NTTA tried to confuse the issue of
interoperability payments, used low discount
rates to obtain inflated values for risky
future revenue streams, made claims about
traffic and revenue and other financial
modeling and then refused to release them.
They were all empty assertions and promises.
Talk about hustlers!
Cintra's is clearly the more solid.... no,
Cintra's is the only solid proposal for