Feds May Offer New Credit Line for Texas Toll Projects

Transportation-minded wonks in Texas often say the state has maxed out its credit card and needs a new source of revenue for road projects. The state has issued more than $17 billion in transportation debt since 2001. Yet Texas may soon get a new $6.8 billion line of credit for transportation, courtesy of Uncle Sam.

The transportation funding bill federal lawmakers passed in July gave a steroid-sized boost to the popular Transportation Infrastructure Finance and Innovation Act program, better known as TIFIA. The program provides crucial low-interest financing for large transportation projects around the country, typically ones that involve a toll element to raise the revenue to pay back the loan. Critics have argued that the program doesn't do enough to encourage public transportation projects.

The bill boosted TIFIA’s funding from $122 million per year to $750 million per year in fiscal year 2013 and $1 billion in FY 2014. In the past, the US Department of Transportation has leveraged every $1 in its TIFIA budget for $10 in financing capacity. With $1.75 billion now at its disposal, the program is expected to make more than $17 billion worth of loans.

So far, states have made $29 billion of requests for the latest round of TIFIA funding.  Texas leads the pack with six requests totaling $6.8 billion. Most of those are related to projects that are likely to include toll lanes to help cover costs.

The Texas Department of Transportation requested:

• $2.6 billion for SH 99 (Grand Parkway), a planned outer loop around Houston
• $1.4 billion for expanding I-35E project in Dallas
• $876 million to rebuild SH 183 near Dallas
• $272 million to expand State Highway 288 near Houston.

Additionally, the Central Texas Regional Mobility Authority in Austin has requested $896 million for the Bergstrom Expressway project.

Texas has long been a big fan of TIFIA and the feeling appears to be mutual. The state has received $3.3 billion in TIFIA financing since the program’s inception in 1998, far more than any other state.

Spain-based toll operator Cintra is the lead investor on three Texas toll projects, each of which has received help from TIFIA. The SH 130 toll road from Austin to Seguin that opened in October received a $430 TIFIA loan. Two North Texas projects under construction, the North Tarrant Express and the LBJ Express, together have received $1.5 billion from TIFIA.

Nicolas Rubio, president of Austin-based Cintra US, said toll projects only make economic sense if those that finance them can have plenty of time to make their money back. That’s what makes TIFIA and its 35-year terms and flexible payment plans so crucial.

“If you look at the normal funding structure, normally TIFIA can cover one-third of the private funding of a project,” Rubio said.

He was quick to defend the TIFIA money as something other than a government handout.

“It’s not a subsidy,” Rubio said. “It’s not public money. You really have to pay your interest and your principal but it’s patient.”

The US Department of Transportation is still reviewing the latest round of applications.