Texas speeds ahead with plan to end P3 toll lanes agreement
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The end is near for a 52-year public-private partnership that built a managed lanes toll road project in the Houston area, with the Texas Department of Transportation announcing Friday the state intends to take over the project’s operation in October.
The move came after financing for the P3 termination was cleared Thursday by the Texas Bond Review Board, which did not subject it to a formal approval process.
The Texas Transportation Commission
In addition to bond proceeds, the financing plan included a $357 million federal Transportation Infrastructure Finance and Innovation Act (TIFIA) loan to be repaid with toll revenue, $375.3 million in private equity, and
Fitch Ratings recently affirmed a BBB rating and stable outlook for the bonds and TIFIA loan and noted the termination payment will cover principal and accrued interest in accordance with financing documents.
In April, Fitch noted that TxDOT plans to end the arrangement before the fourth anniversary of service commencement in November, when the fixed termination amount of $1.7 billion would rise to $1.9 billion.
“The fixed payment is much lower than the fair market value of the project, which has significantly outperformed the sponsor’s traffic and revenue forecast at financial close in 2016,” Fitch said.
