AP Public and private offficials sign highway deal in 2005. Now, they are at odds.

Bowing to a growing grass-roots anti-privatization movement in the state, both houses of the Texas legislature passed a measure on April 27 that places a two-year moratorium on the creation of privately held toll roads.

HB 1892, which passed both houses with enough votes to overcome a gubernatorial veto, places a two-year freeze on many components of Trans-Texas Corridor 35, along with most other comprehensive toll-road development agreements in the works.

The bill is the product of a privatization opposition movement that caused many toll supporters in state government  to be voted out of office or barely reelected in 2006. Many citizens have lost faith in the Texas Dept. of Transportation, says a source familiar with the situation, “They do not believe TxDOT when it says that it is only a few years from not being able to expand capacity,” he says.

HB 1892 is designed to block any new deals such as the one TxDOT struck with Spain’s Cintra Concesiones de Infraestructuras de Transporte in February. Under the pact, Cintra will pay the state $2.8 billion in concessions and provide more than $2 billion in construction and maintenance to hasten the Dallas project. In exchange, Cintra will collect tolls from the road for the next 50 years.

Nichols

State Sen. Robert Nichols (R), a former member of the Texas Transportation Commission, championed the moratorium, citing concerns over contract terms with private developers. He is concerned about clauses in privatization contracts that bar the state from building free roads that “compete” with toll roads. Nichols also claims the state is not competitively bidding the contracts, and he believes that many transportation needs can be met by issuing toll-revenue bonds.

Nichols favors convening a committee to deal with the controversy. “We need to figure out what the terms and restrictions of the contracts need to be,” he says. “It is important to get the collective input of all people affected, including engineers, bond sellers, tolling authorities, transportation organizations and others.” Nichols believes that codifying a standard  for privatization agreements will encourage more private investment by removing uncertainty.

Vicky Waddy, spokeswoman for Zachry Group Inc., San Antonio, is not as hopeful that the outcome will be positive. “This may discourage investors from coming to Texas, even after the two years are up, if their concerns are not satisfied,” she says.

Waddy says that many of the concerns that led to the moratorium are non-issues. “On our section of state highway 130, we share revenue with TxDOT,” she says. “If the state builds a competing road, its share of the revenue will only go down if our revenue goes down, so I don’t think TxDOT would build a competing road unless [the joint road is] so crowded that people could not get on.”

The moratorium will slow progress on the desperately needed TTC-35, says Waddy. In areas where requests for qualifications have not been issued, mostly in rural parts of Texas, the project will not be able to move forward until the moratorium is lifted.

The situation in Texas has attracted the Federal Highway Administration’s attention as well. James Ray, its chief counsel, sent a letter to TxDOT on April 26 noting that “there are a number of provisions that concern us from both a legal and a transportation-policy perspective. If signed into law, some of these proposals could affect the state’s eligibility for receiving federal-aid highway funds.” He adds, “Certain facets of these proposals appear to run afoul of federal law or regulation.”

Gov. Rich Perry (R), a staunch toll supporter, reportedly has a veto plan. Sources say he and his staff are working frantically to sway seven senators but have only succeeded with four so far. If Perry succeeds, he will have enough votes to prevent an override of his veto.