Deal makes corridor dream a reality
Spanish toll road firm would build I-35 alternative for $6 billion


Friday, December 17, 2004

The Texas Transportation Commission agreed Thursday to let a private consortium build a $6 billion turnpike from San Antonio to north of Dallas, all without costing the state a dime.

The companies will throw in $1.2 billion for other state transportation projects as part of the 50-year deal.

The long-term partnership with the consortium, led by Spanish toll road operator Cintra Concesiones de Infraestructuras de Transporte SA and San Antonio-based Zachry Construction Corp., is at once shockingly new for Texas and historically familiar.

Spaniards, after all, built the first road in Texas, El Camino Real, about four centuries ago, some of it in the same corridor where Interstate 35 now lies and where Cintra and its partners would start the turnpike. But handing over a major state highway project to private operators, this in a state that could not even build toll roads until recent years, breaks new policy ground.

"When our hair is gray, we will be able to tell our grandchildren that we were in a Texas Department of Transportation meeting room when one of the most extraordinary plans was laid out for the people of Texas," Gov. Rick Perry said of this first piece of his 4,000-mile Trans-Texas Corridor plan. "I hope there are a lot of people in this room that are knocked back on their heels saying, 'I can't believe it.' Well, believe it."

The consortium, in the first phase of what could be a decades-long partnership, would construct more than 300 miles of four-lane turnpike (with ample room for expansion) from the Oklahoma border to the east side of San Antonio, leaving a gap only for Texas 130 near Austin.

The road would tie into the south and north ends of Texas 130, a toll road currently under construction by the Lone Star Infrastructure LLC consortium. Lone Star's primary partner is Fluor Enterprises Inc., which was the lowest ranked of the three bidders Thursday for the new turnpike.

The Cintra consortium -- Cintra, with 85 percent equity in the partnership, is the primary member -- and the Texas Department of Transportation hope to reach accord on a contract within two months.

If those talks break down, then the state would turn to the second-place bidder, Trans Texas Express LLC. Given the widespread glee at what Cintra is offering, such a breakdown in relations seemed unlikely Thursday.

If the deal is successfully struck, the Cintra group would then have a concession to charge tolls on the road for the next 50 years. The toll rates would be subject to approval by the Transportation Commission.

Officials expect that construction could start on the first segment from the south end of Texas 130 to San Antonio by 2007. The other four segments would begin in 2009 and 2010, with completion of the entire route by the end of 2014.

Cintra and Zachry, along with about 16 other subcontractors, would also build other segments of the I-35 alternative, including a connection to Mexico either through the Rio Grande Valley or Laredo, sometime after 2025.

The conceptual plan submitted by Cintra recommended that the extension go to the Valley (rather than the hometown of the man Perry defeated in 2002, Tony Sanchez), but a final decision on that route is likely years away.

The specific path of the entire project, in fact, is still a work in progress.

The Transportation Department, in conjunction with Cintra and federal highway regulators, plans to narrow that route down to a 10-mile-wide corridor by late spring. The final route would likely be as close as possible to urban centers, officials said, but still far enough enough to be largely free of city traffic.

Perry, who proposed the Trans-Texas Corridor during the 2002 election campaign, made an unusual appearance at the commission meeting, joining the commissioners on the dais for a long presentation on the I-35 alternative. At the end, Perry, who has taken hits from every direction for what many saw as an unrealistic pipe dream and for his staunch support of toll roads, took a few minutes for a rhetorical victory lap.

"We have just seen the future, and it is here. It is today," Perry said.

State Rep. Mike Krusee, a Williamson County Republican who is chairman of the House Transportation Committee and the author of the bill making the corridor project possible, remembered meeting with Transportation Commission Chairman Ric Williamson and Perry when he first joined the Legislature 12 years ago.

Krusee said they talked about leadership, about doing great things for Texas. "Ric, I think we were talking about days like this," he said, his voice cracking with emotion.

Just how Cintra and Zachry can afford to lay out $7.2 billion and still make a profit remained unclear Thursday.

Jose Lopez, United States and Latin America director for Cintra, said the toll rates would be comparable to current Texas toll rates, which generally fall between 10 cents and 20 cents a mile for passenger cars and three to four times that for large trucks.

And, Lopez said, the company's financial plan did not include making money off concessions along the roads such as fast food restaurants, souvenir stores or gas stations.

Cintra and Zachry, simply put, believe that if they build it, the drivers will come. One possible incentive: The 2003 legislation that allowed the state to build the Trans-Texas Corridor, or let someone else build and operate it, allows speed limits on the road of up to 85 miles per hour.

David Stall, a former Columbus city manager who quit that job to fight the Trans-Texas Corridor concept, said that if the Cintra deal sounds too good to be true, that may be because it is. He said just what kind of a deal the state and the public are getting won't be clear until the contract is signed and released for scrutiny.

"I would liken what happened today to a teenager stopping by the car lot on the way home from school and having a car salesman pitch him a deal on a car," Stall said. "And the car looks great, it's shiny, and as a matter of fact, we'll give you a billion dollars to take home with you.

"Now comes the time when we'll all get a chance to raise the hood and see what's in there, and walk around and kick the tires," he said. "Until we see what's in the agreement, we won't know what our risks and hazards are."