Cintra bankruptcy in Texas casts shadow on I-77

North Carolina’s governor has instructed its transportation department to reassess contracts with the Cintra-led consortium building the $665m toll road project.

North Carolina’s secretary of transportation Nick Tennyson met with Texas officials on Monday to discuss the circumstances that led SH130 Concession Company, a consortium majority owned by Cintra, to file for bankruptcy last week.

“The governor has directed us to immediately review every available option – both legal and financial – to reassess the I-77 Mobility Partners’ business model and current contract,” Tennyson said, referring to Governor Pat McCrory.

“It is important to note that the current contract protects taxpayers from financial losses,” he added, in a statement issued by the North Carolina Department of Transportation (NDCOT).

Cintra, which is a subsidiary of Madrid-based Ferrovial, is the majority shareholder in I-77 Mobility Partners, the consortium that was named preferred bidder in April 2014 to design, build, finance, operate and maintain the I-77 Express Lanes project.

In December, UK-based developer John Laing paid $25 million for an undisclosed ownership interest in I-77 Mobility Partners.

I-77 Express Lanes will add 25.9 miles of dynamically priced, high-occupancy toll lanes to existing toll-free road capacity in order to alleviate traffic congestion in Charlotte’s metropolitan area. Of the $650 million estimated cost, only $95 million will come from NCDOT and federal funds, while the private partner will contribute the rest.

It is unclear how the public-private partnership agreement could be re-assessed since the project reached financial close in May 2015 and construction began last November.

According to a statement released by I-77 Mobility Partners, “The filing by the SH130 Concession Company has no financial impact on I-77 Mobility Partners LLC, or the construction and operation of the I-77 Express Lanes. While Cintra is an equity sponsor of both projects, each project maintains a separate financial structure.”

In the case of SH130, toll revenues were lower than had been expected. This may not be the case for the I-77 Express Lanes depending on traffic forecasts and actual traffic volumes.

What’s more, even if the North Carolina project does not perform as anticipated, any situation involving developer bankruptcy would not impact state finances, NCDOT asserts on its website.

Interstate 77 is a 610-mile north-south corridor running from Ohio, through Virginia, West Virginia and North Carolina to South Carolina. In North Carolina, I-77 is a crucial thoroughfare for Charlotte, the largest city in the state.