Bidding on a $535 million toll road concession in Texas with revenue risk – rather than availability payments – is now open, with a deadline to respond set for August.
The Texas Department of Transportation (TxDOT) has published a Request for Qualification (RFQ) involving State Highway 288 (SH 288) in Houston. A Texas Transportation Commission (TTC) in 2011 let the Department pursue a public-private partnership (PPP; P3) to finance the project.
TxDOT has identified north-south SH 288 as “highly congested” and proposed a toll road to relieve traffic along the 74-year-old thoroughfare.
The design, build, finance, operate, and maintain (DBFOM) project is concerned with a 10-mile section of SH 288 and would include toll road and general purpose construction. The P3 has a 52-year term.
The use of a revenue risk concession – in which the stream of income is based on traffic – for a toll road P3 has become rare in the US.
The 2006 Indiana Toll Road (ITR) P3 as well as the Chicago Skyway toll road lease both used revenue risk. The $3.8 billion ITR deal has been judged problematic for joint concessionaire Cintra and Macquarie Group.
Meanwhile, the concessionaire in the South Bay Expressway toll road P3 in San Diego – which also had revenue risk – went bankrupt in 2009.
Instead, availability payment has emerged as the preferred method to structure a toll road deal in the US. Through availability payments, the private partner is paid for maintaining the asset.
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