Texas oks next portion of $4.75bn highway deal

The Texas Department of Transportation has given its approval to move forward with the next portion of the North Tarrant Express project, led by Cintra and Meridiam. But an implementation plan will still have to be worked and approved by the Texas attorney general, among other hurdles.

The Texas Department of Transportation has agreed with the private developers on its North Tarrant Express that the next two segments of the highway are ready for development, bringing the $4.75 billion public-private project closer to completion.

Texas sent a letter to the developers, North Tarrant Express Mobility Partners, outlining its decision on the matter yesterday, according to Texas Department of Transportation spokesperson Tony Hartzel.

Last month, North Tarrant Express Mobility Partners, a consortium between Spanish toll road developer Cintra and European fund manager Meridiam Infrastructure, provided a packet of information to the department arguing that the next 10 miles of the North Tarrant project are ready for development.

Under a competitive procurement process won by Cintra and Meridiam last year, the Texas Department of Transportation awarded the firms an agreement to develop the first 13.3 miles of the North Tarrant Express, along with an option to develop the next 23 miles, including the 10 miles known as segments 3A and 3B.

The 36-mile corridor improvement project is located in the highly congested Dallas-Fort Worth metropolitan area.

Cintra and Meridiam said 3A and 3B were the next two segments ready for development and should proceed as a toll road concession “containing generally the same commercial terms” as the first 13.3 mile section composed of segments 1 and 2W.

That section reached financial close on $2.05 billion of financing in December 2009 and is proceeding to construction in the fourth quarter of this year. Cintra and Meridiam were given a 52-year concession for the toll revenues from the section.

The next step is for Texas and the private partners to write-up a document called a “facility implementation plan”, which outlines the roles and responsibilities of both parties and a general scope of the project. That should take approximately four months, Hartzel said.

Once the plan is drawn up, the parties will move toward a final facility implementation agreement, which is expected by early 2011.

Aside from the 3A and 3B, which Cintra and Meridiam estimated would cost about $1.6 billion, the firms will also have the option to develop an additional three segments, the 3C, 4 and 2E, totaling about 13 miles. The Texas Department of Transportation has previously estimated the total capital cost of all these segments at $2.7 billion.

Including the $2.05 billion cost of the 1 and 2W, the total capital cost of the project exceeds $4.7 billion, though public funds have thus far constituted only one-third of the financing, according to the department’s website.

The future developments are all subject to a cost study that will be done by the Texas Department of Transportation and reviews by the attoney general and the state's legislative budget board.