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Cintra gets its claws on I-35 in DFW

Category: Public Private Partnerships

Link to article here.

Cintra snags I-35 in Fort Worth
By Terri Hall
Examiner.com

The Texas Department of Transportation (TXDOT) just announced that it inked a deal with Spanish toll operator, Cintra, for yet another toll project in North Texas -- this time on Interstate 35 W in Fort Worth. That brings the total toll projects in the hands of a single company in Dallas-Ft. Worth alone to five: Hwy 121, Hwy 183, I-820, I-635 and now I-35W. These chokepoints represent some of the most congested roads in the Metroplex, and four of the five were handed to Cintra without competitive bidding.

The LBJ project on I-635 is a standalone toll project, but the North Tarrant Express development agreement known as a public private partnership (P3) involves the other four highways, which were all awarded to Cintra in one master comprehensive development agreement with each highway subsequently negotiated using ‘facility agreements.’

P3s are all the rage at TxDOT and they’re fundamentally transforming the way highways are financed in Texas and across the country. They do not use competitive bidding, but something dubbed ‘best value’ bidding, which is fraught with potential abuses and allows contracts to be handed out to their buddies based on intangibles, not necessarily the lowest price or the best deal for the taxpayer. There’s no apples to apples comparison of one bid to another since the final design is not completed until AFTER the company’s been awarded the contract. P3s always cost the taxpayer more than a traditional publicly-owned toll project -- 50% more according to Dennis Enright, a P3 expert with Northwest Financial.

How can paying 75 cents PER MILE to access these lanes, which are partially subsidized with taxpayer money, be a good deal for anyone? Paying a premium to drive does not foster economic growth or prosperity, it hampers freedom of mobility and puts the power to tax in the hands of a private corporation whom the public cannot hold accountable. There’s no way to sugar coat it -- it’s fascism.

Prohibiting ‘free’ competition
P3s also include non-compete clauses that prohibit or penalize the expansion of free roads surrounding the private toll project, guaranteeing congestion on the free routes. Cintra landed the P3 for SH 130 from south Austin to just east of San Antonio, and it has a financial incentive that encourages the artificial manipulation of speed limits to drive more traffic to Cintra’s toll road. The Texas Transportation Commission increased the speed limits on SH 130 to 85 MPH, the highest in the country, and decreased the speed limits on the adjacent freeway, Hwy 183 in Lockhart, from 65 MPH down to 55 MPH. TxDOT received an additional $100 million from Cintra for doing so.

It’s plain to see the graft involved with P3s. Every single P3 in Texas has been awarded to the same company -- Cintra. Former Senate Transportation Committee Chair Sen. John Carona recently criticized Texas Governor Rick Perry for politicizing TxDOT by stacking it with political appointees. Texans have cried fowl at the prospect of foreign-owned toll roads which put the cabosh on the Perry’s grand plans for the Trans Texas Corridor, but Perry’s push for P3s has continued to creep its way into TxDOT.

Why wouldn’t it when his former legislative director, Dan Shelley, who lobbied for Cintra, then worked as Perry’s liaison in the Texas legislature where he secured Cintra the development rights for the Trans Texas Corridor, then went back to work for Cintra. TxDOT’s new Executive Director, Phil Wilson, is another Perry political appointment who’s enjoyed five other state posts before heading the agency.

Wilson’s former employer, Energy Future Holdings Corp., donated over $1 million to Perry through the Republican Governor’s Association. It’s the first time a lobbyist, rather than a professional engineer, has been tapped to run the highway department. With such brazen revolving-door cronyism infecting road policy, Texas taxpayers can’t possibly get a fair shake.

Cintra’s monopoly gained with ‘Monopoly’ money
Each of Cintra’s P3s are heavily subsidized with taxpayer money, whether federal TIFIA loans and private activity bonds or state gas taxes, taxpayers are footing the bill regardless of if they can afford to actually access the lanes or not. The new federal highway bill, MAP-21, increases the TIFIA loan program by nearly a factor of ten.

There is no dedicated revenue source for these federal dollars, and they’re funded by borrowed money from the Federal Reserve. So TIFIA loans are lending private toll operators borrowed funny money that we don’t have in the first place, for projects that can’t pay for themselves or stand on their own without taxpayer bailouts. TIFIA loans are almost exclusively doled out to private P3 toll projects in what amounts to corporate socialism.

P3s are structured the same way as the loans that begat the subprime mortgage crisis, so it won’t surprise you to learn that Fannie Mae and Freddie Mac were also public private partnerships. Ditto for Solyndra. In every case, the taxpayer is left holding the bag.

In Texas, P3s last for up to 52 years, so Cintra has locked down a monopoly over six major highways in Texas, including portions of two interstates, for multiple generations. The Texas Constitution prohibits monopolies and perpetuities, yet Perry and the Texas Legislature continue to sell-off Texas sovereignty for a half century at a time to a sole private developer.

Perry’s mantra seems to be ‘name your price and I’ll sell you Texas.’ Nowhere can this be seen quite so clearly as P3s and Texas road policy. Buyer beware!

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With this contract or 'facility agreement' as part of a larger public private partnership, Cintra now has total control and development rights to all the major congested roadways in DFW -- segments of I-35, Hwy 121, Hwy 183, I-820, and I-635. All but I-635 are part a single procurement/bid and were awarded to Cintra without competitive bidding.

PRESS RELEASE

Date: Oct. 10, 2012

TxDOT Negotiates Construction Agreement, Setting In Motion Much-Needed $1.6 Billion Expansion on Texas' No. 1 Congested Highway
Transportation agency partners with private company to design, construct expansion of I-35W starting mid-2013

AUSTIN — Each year, Texans waste more than 2 million hours sitting in traffic on I-35W near downtown in Fort Worth. With the completed negotiation of a new highway construction agreement this week, the Texas Department of Transportation hopes to cut that time by more than a third. The draft agreement with NTE Mobility Partners Segments 3 LLC (NTEMP3) will add two managed lanes each way on I-35W, or the North Tarrant Express, and rebuild the existing highway, which today tops TxDOT’s 100 Most Congested Roadways.

“Texans have better things to do than to sit in traffic, and that’s why we’re proud to partner with the private sector to speed up a critical transportation project,” said Phil Wilson, TxDOT executive director. “TxDOT continuously strives to move aggressively with our priority projects in order to address congestion and help Texans spend less time on the road and more time with their families.”
Funding for the project highlights the region’s strong transportation partnerships. The North Central Texas Council of Governments has committed approximately $89.5 million for the project, and identified another $40.5 million for project contingencies.

Additionally, the U.S. Department of Transportation invited the developer to apply for a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan of up to $537 million to help fund the project. The project also is expected to receive $273 million from Private Activity Bonds issued by the developer and $446 million in developer equity. The scheduled improvements from north of I-30 to north of I-820 (Segment 3A) will provide $1.4 billion of needed infrastructure to the Fort Worth area. The agreement also provides operations and maintenance until 2061.

“This is a project that I have been involved with for many years and seen advance through many considerable obstacles, but with the help of four different Fort Worth mayors, county judges, legislators, business leaders and other advocates, we have managed to keep advancing it forward,” said TxDOT Commissioner Bill Meadows. “This project will address mobility on the No. 1 most congested roadway in Texas. It is a project that is critical to the state’s economy and essential to the region. It is a quality of life issue as well as an air quality issue, and I am glad to be a part of its success.”

As part of this project, TxDOT will also make improvements to Segment 3B, which runs from north of I-820 to US 81/287. Segment 3B will be rebuilt and widened to include two managed lanes each way at a total project cost to TxDOT of $234 million. Once constructed, Segment 3B will be turned over to NTEMP3 for operations and maintenance under the agreement.

TxDOT will host a public hearing Thursday, Oct. 11 at 6 p.m. at the TxDOT Fort Worth District Regional Training Center (2501 Southwest Loop 820, Fort Worth) to present the draft agreement. The public hearing is a requirement prior to executing the final Facility Agreement. The draft agreement will be submitted for review to the Texas Legislative Budget Board. The Texas Attorney General’s office also will review the draft agreement for legal sufficiency. The final Facility Agreement is expected to be signed in early 2013. Construction is scheduled to begin in mid-2013 with substantial completion in mid-2018.

“We have been working together with the state for the past three years designing and building the first phase of the North Tarrant Express project, and look forward to getting this next segment along I-35W in Fort Worth underway,” said Nicolas Rubio, president of Cintra US. “This is one of the most traffic congested areas in the United States, and we are proud to further serve the cities, region and state through our involvement in this public-private partnership as we all strive toward better mobility and a greater quality of life.”
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Link to article here.