Travis County Commissioners Court
May 15, 2007
Item 22
We will take up the pass through financing item. Number 22 is to consider and take appropriate action to an application to the Texas department of transportation for a pass through finance project on fn 1626 in sw Travis County.
>> good afternoon. This is a project that we'd like to submit an application to the Texas department of transportation for pass through finance. It's a program that is discretionary on the part of the transportation commission. They are using their discretionary fund toto fund projects that will be done by either the local governments or by private entities. These are projects that would otherwise not qualify for toll roads. They are all on the state system. This is a statewide program. We would be applying, just like many, many counties throughout the state of Texas. What it does is basically allow the local governments and their private partners to forward a project that they think is significant in their area. And then be paid back by the state over time. So we would somewhat step up and become the finance er of the state highway project. The contract, if the state agrees with the project and we ultimately end up in the contract with the state, it would pay back the local government and/or the private entity a base amount amount. Then an increasing amount depending on the traffic volumes that come about over time. In this case we are talking about market road 1626 in southern Travis County between the county hays Travis County line all the way to interstate 35, a little less than four and a half miles long, and then a piece of manchaca road, about two miles of it. As you may recall, talking about state highway 45 and b brody lane, at one time we considered closing that and close not to do that. But in the discussion, we talked about critical projects that would help relieve traffic from the growing areas in northern hays county. One of those, of course, was state highway 45 southwest, which is still in process, but we also talked about adding capacity to farm market road 1626 and also to manchaca road to facilitate traffic movement from hayes to Travis County. So this project in part is response to that growth, urbanization in southern trav ix and northern hayes county. The total cost of the project is about $90 million million. It includes a grade separation at the railroad just to the ease of manchaca manchaca. It also includes some new bridge structures at interstate 35 where farm to market road 1626 ties in with the interstate, and some improvements to the frontage roads on I 35. All those would be included in the cost of the project. Unlike other pass-through finance projects, we have an unsolicited proposal from zachary america to step into the shoes of Travis County as the financial party party and they would become the banker and construct tor of the project. Ultimately we have told everyone, both the state and private party, that we are pretty much at our limits with regard to county debt capacity for issuing new debt in the next three to four years for transportation or park projects or anything else, and in order to do this, we would need a private partner to finance it. And that is what this proposal or this application is proposing to do. There is one other project in the state of Texas that has followed this model, and that is brezoria county, and we are taking that model as our example of how to submit an application to tex dot dot. They as net do not have a contract with tex dot. They are working on that. You may have heard also in various e-mails and what not that the entire passthrough finance program is, there's quite a bit of competition for the available funds. I think in part because the state has received to many applications. The door is closing on just how many more applications can be funded by the state. We do not expect there to be much more life in the program after this last application process. As a matter of fact, the state has basically put us on notice that if the we hope to have a passthrough finance project, we need to get an application in fairly soon because they expect that they will probably shut down any additional applications.
>> would you describe, once again, exactly how the private company would interact with Travis County and how we would interact with them on this project.
>> we would submit the application, which is part of the packet here. So the first proposal comes from the local government, expressing some interest in the program. We would alert the state that we expect to enter into a contract with zachary as our, basically our agent in the project. Zachary would become, in effect, the finance ier for the project. And they would expect zachary america to be able to do the project below what tex dot estimate the the cost of the project to be. There are some economies of scale that they believe they can do the project, still make a profit, and with the budget that is authorized by tex dot, without any financial involvement from Travis County. We are not sure yet whether the commission would approve of that arrangement without any involvement of Travis County. No financial involvement. We expect we may get a counterproposal from tex dot that says we like that idea but we also want Travis County to participate in this manner. It may be that they would expect us to require environment of way or some piece of the project. We have in fact for this project already acquired some right-of-way on manchaca read. We did that as part of the 1984 bond election and we believe the right-of-way we acquired then is adequate for the widening of the road roadway that we propose in this application. So we may get credit for many already spent on the project.
>> so we have identified this is one of the critical roads for Travis County in terms of current day congestion, need for some type of relief.
>> what it is, it's in a growth area. It's certainly within the belt of urbanization that's occurring in a north-south axis. That is typically the way Austin has grown up and down I 35. What we are seeing right now is a lot of additional development in southern Travis County in the manchaca area as well as in northern hayes county, all the area along I 35. This facility, 1626, is basically the east-west facility between not only loop one manchaca road, by then I 35. So it will begin to serve much like william cana does in the urban area, a maybe east-west arterial. The other point is that when it reaches the hay yes, Travis County line, it then turns a north-south axis parallel to I 35. It is very much within that urban growth car door that is growing up from all the stuff happening on both sides of interstate 35. We expect 16125 within hayes county also to receive quite a bit of additional traffic over the next 20 years. The facility right now is a two-lane roadway. It will quickly reach capacity given the amount of development occurring in this area. That is why it's important not only to hayes but also to Travis County.
>> judge, one of the things that is perhaps some consideration at this stage, one of the things up until this last Saturday, when hay hayes had their road bonds k they are part of 1626 from effectively I 35 coming towards the Travis County line, has been in a past- past-through financing mode. Now, one of the things that frightened us was that we don't have the capacity right now, with it being a two-lane road as we found out when we went through the closing of brody lane with everything coming out of northern hayes, and now, if they are updating that to a four-lane divided road, the capacity that it is going to put into Travis County and brody lane is even going to be more. Quite frankly, I don't think anybody knows right now what is going to happen in hayes county since the bond failed but I will say that I have been, in close contact with Commissioner barton, and I will tell that you he has all the energy in the world to cut whatever deal has to be cut to not get that thing out or to find out or to determine what kind of a mechanism is going to be used so that they can move forward on, you know, the expansion of their road.
>> 1626 specifically. I spoke with them as well, and they also expressed desire to continue pursuing funding mechanisms for 1626.
>> with that in mind, even though the bonds failed, I do think there is still a tremendous amount of energy to do something with their part in hayes county. It's all the more, you know, the reason to try to figure out a way to do saying on our part. I mean in our county with regards to 1626 onto I 35.
>> so do we think that we need the Travis County part of 1626 even if hays county does not proceed with its proposed budget ?
>> I do. I think whether or not, and think quite frankly, hays county will also need 1626 widened. I understand the bond election failed and there may have been a lot of reasons for that. But that aside, if they continue to approve subdivisions mthat corridor, they are either going to, you know, add the capacity or face congestion because at some point it will be gridlocked if they don't start widening those rode waist. They don't have many choices choices. They don't have a lot of roadway network. The ones they do they are going to have to widen if they expect to continue to improve developmentwe need this no matter--
>> we need this no matter what hays does.
>> ours is the same way. At some point we need to widen the roadways.
>> we don't have the authority to not approve, correct ?
>> that is right, as long as they meet our guideline, they are pretty much administratively approved.
>> how do these roadway projects impact manchaca and brody ?
>> we had talked about that when we closed brody. There certainly is some land use issues am we have the school there at the intersection of manchaca and 1626. I believe the school district is talking about improvements to that and possibly relocating that. There is some conflict now along the route. That probably being the high highest. So, the state does have now a project they are working on, a safety project that would add a turn lane on manchaca road, but that is kind of a short-term improvement. I think ultimately they are going to have to add travel lanes to both those faciliti facilities to accommodate the additional traffic.
>> judge, if you remember--
>> I'm looking for, it will relieve some of the traffic congestion shun on manchaca or brody, or is that correct correct?
>> it will relieve it for a period. Again, roadways have a life span. Will you get some relief in congestion for 10-15 years but as growth continues you'll get the congestion back.
>> part of this project is the widening of manchaca road where it now narrows down into two lanes, which is about a mile and a half short of 1626.
>> right.
>> where you can bring that four or five lanes, bus bus bus--because of the center turn lane, about a mail and a half farther as it interfaces manchaca road. But does it solve a lot of problems? Probable not. Just gives you another avenue to use a road more effectively if you have upgraded to the degree that it needs to be. It needed to be upgraded a long time ago but because of the funding situations we haven't been able to do itwe would also acquire in this project right away for its ultimate 6-lane section, and that is the right away in the campo plan. That would come date the traffic we expect to see-- see--come to--accommodate the traffic we expect to see in the next 10-15 years.
>> I thought I remembered a statement last week that if the hays proposition failed, then we would put this on hold. What I'm hearing today is we need to go ahead and get the application to tex dot.
>> I think that is pretty much so, think we lose our opportunity to even compete if we don't put an application in.
>> the people that are contacting me, I need to take one week to let them know we are going to act on this and send this back up.
>> all right.
>> hopefully they are listening to the discussion also.
>> judge, I just want to bring about, trying to follow the example of another county, kind of the model in this particular venture, my question, though have they required rosario county to put up any type of funding? I remember we talked about the 1984 bonding issue where we did set aside certain things that may be added value to what Travis County is proposing to do. My question now, has the state required rosario county to put any funding in their particular model. If we are talking about trying to spin off that model. Can you answer that question for me ?
>> not to my knowledge. I also know they don't have a contract yet with the state. That may be yet still cooking.
>> we don't really know the answer at this point. Okay I guess another thing I'd like to bring up doing, brody lane being left up, being closed, when we have many of the hays Travis County residents participating in public meetings that we have before the Commissioners court, brody lane is open but again I'm trying to determine now is there any possibility that the Austin of--the city of Austin that also has generated volume, have they been asked to participate in maybe this particular partnership arrangement? Or this is something that has been considered ?
>> this project goes both through the city of consider.
>> san liana.
>> thank you, san liana and city of Austin. We would need interlocal agreement from both to consent to the project. I do not expectrs since Travis County does not a this point anticipate being financially involved in the project, we would not seek financial participation from either of the cities. Now, if we get a proposal back from tex dot that says we want Travis County to participate financially, we would certainly seek financial involvement from both of those cities as well.
>> okay. Certainly some time ago when we first had an opportunity to hear about passthrough financing, there was testimony given in the past on passthrough and we had several persons that spoke on this particular matter. If my memory serves correctly, it was basically to look at some farm to market type road set thags would--settings that would need such type of financial funding. However, there was at that time brought to the attention of us in the public setting that the question came to why not 183 south, in Travis County, and also 290. Can you answer to me why those particular roads have not been r not included into a passthrough financing setting ?
>> actually, I think I can do better than that. Do I have some representatives from tex dot here today.
>> we do ?
>> they can probably explain.
>> okay. I didn't know people were here from tex dot. Thanks.
>> they can probably explain the screening. There are some criteria they will be use to go determine what is toll eligible and what is eligible for pass passthrough financing. As we expressed to you before, it is our an understanding that if a project is toll feasible, it would not be considered for the passthrough finance program.
>> I guess my question then, maybe twofold, one is the answer to that question that I just posed to mr. Gieselman, but I guess to you. Could you state your name.
>> sure, lonnie web, program director of planning and development for the Austin district of tex dot.
>> okay. If you can answer that question, I have another question right after that one. So go ahead if you can answer this particular question.
>> there is no prohibition in the rules for a controled access type facility like 18 183 or the proposed 290 east from being in an application for a passthrough toll financing arrangement. It becomes problematic when the department begins to evaluate those projects and the outlay that would be associated with those projects. If they are toll feasible, as the feeway segments if-- if--freeway segments are, that calculation of revenue stream that the department would realize for tolling as opposed to nontolling would be taken into account in the pay back for the pass through arrangement so that if the department f we had a facility that was toll viable and those tolce would help pay the maintenance of that facility, that is an expense the department would forego in a full doll situation. If it's pass through finance there would be in revenue stream to help pay for that maintenance, and that cost would be borne by the department. That going to be taken into consideration when they start determining what the payback on that pass through financing is going to be, and it would essentially drive the payback to zero. So the commission is probably not going to be real interested in passing any pass through financing deals on toll viable freeway freeways.
>> because of the opportunity costs that would be lost.
>> absolutely.
>> and who makes that determination ?
>> the commission.
>> who makes that determination ?
>> as the projects are developed, we make a determination if they are toll feasible . Tex dot.
>> you bet.
>> following up on that question, if they are financed through a pass through financing rainment with tex dot, then the revenue source from which that reimbursement comes from tex dot is gas tax, right ?
>> yes.
>> so if it's feasible for being financed with toll tacks rather than gas attacksattacks -- taxes, there's a preference for it being toll tax.
>> for the facilities being evaluated, yes.
>> okay.
>> my second question to that, because I want to make sure that those participants who came here and witnessed, participated in the public hearing and also witnessed the public hearing when we discussed this earlier, I want to make sure they hear that. You know, I do not support that anywhere in Travis County, period. But saying that I've said that, second question is, are there any roads such as at 290, 183, or any of those proposed tolls, possible roads, that have been approvedapproved with the financing mechanism presented by pass through financing? Do we have anything in the state of Texas like this ?
>> I'm unaware.
>> you're not aware of it.
>> I'm not aware.
>> okay. I wanted to see if there was a matter of record, a model somewhere that has actually taken place. You're not aware of it, you're just not aware of it. I posed the same question to joe, and he kind of scratched his head. I don't think he was aware of it either. Asking you, we get two scratches of the head. Anyway, those are just some of the questions that I needed to pose. I think a week's delay in this, in my opinion, I think there are still some questions that I still need to figure out because hays county resident were very aggressive as far as assuring that they had some type of support as far as the roadway system to get them into Travis County ap points north within Travis County. And of course, I still don't know what happened to that bond language or how it was structured. I don't know as far as those bonds falling down in hays county. I just didn't know if Travis County would now be also alone in this project. So I'm just kind of, I have some reservations right now until I hear more on this. But thank you for your question, sir. I appreciate it.
>> mr. Griffith, can I ask you one more before you go. I want to make the distinction for myself and other people who hear the term pass through because some folks referred to it previously. So back to the answer that you gave to my question, if they are toll feasible, ie, feasible to finance this road improvement through a toll tax, then they are not going to be viewed as favorable for pass through because that is financed as gas tax. Correct ?
>> it has to do with the out outlaw of cash, of money.
>> right. The outlay of cash--
>> for maintenance costs.
>> right. So what I'm getting at, if the you're financing it with gas tax, you are just, of course, providing enough gas tax to pay for the building of the road, whereas if you have the option to do a toll tax, much as our previous agenda item starting with ct ctrma, you also have the option to generate more oven off the road with toll tax than it actually costs to build or maintain it, there by use the excess for other roads correct ?
>> it would depend on the facility.
>> but you agree with me that that would be one option that would be available if it was toll tax financed.
>> the option is to use excess revenue ?
>> right, that would be an option that would be available to the transportation authority, whichever one was building it.
>> absolutely.
>> so in other words, we have existing roads such as 290 east.
>> is that question relevant to today's item? We're getting off this item.
>> okay, judge.
>> I'll be glad, commission Commissioner, to come by.
>> we can do that. We can talk. I'd just like to say this again, that I am opposed to toll roads--
>> anything relevant to this item.
>> the judge has--
>> my question to you is this. Our pose pose--proposal is basically for zachary, a privatecal, to put up the $9 $90 million to construct sh shproject. Thereafter there after, zachary would deal with tex dot for pass through.
>> yes.
>> has tex dot approved similar proposals in the past ?
>> there's no contract in existence today. Like zow said, the brosaria county model is the one bee would be following but that arrangement has no approved contract yet.
>> this is new ground.
>> yes.
>> thank you very much. We know how to reach you thank you very much we'll have this back on next week.
>> thank you, wes.
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Last Modified:
Wednesday, May 16, 2007, 8:00 AM