Reason Foundation

Reason Foundation

NTTA's Proposal for SH-121, Is It Better Than Cintra's?

Many questions need answers before taxpayers believe agency's numbers

Leonard Gilroy
May 11, 2007

Since the May 3, 2007, release of Reason Foundation's new research paper, Tolling and Public-Private Partnerships in Texas: Separating Myth from Fact, (available at the North Texas Tollway Authority's (NTTA) board of directors approved the issuance of a proposal for the SH-121 toll road project in Denton and Collin counties north of Dallas. Reason's report provided a critical assessment of claims that public toll authorities could offer more value than private toll concessions, but until NTTA's announcement, no public toll authority had attempted to go head-to-head versus the private sector.

At first glance, NTTA's $3.3 billion bid appears to top the $2.8 billion bid of Cintra, the private firm already selected for the concession project by the Texas Department of Transportation (TxDOT) in a competitive bidding process. According to NTTA, its proposal provides more money to the region, uses a more conservative demographic forecast, would have lower rates of toll increases, and would strengthen its ability to build new roads in the future. Essentially, the message from NTTA is: "trust us, we can do it all."

Given that there is no free lunch in the transportation world—-we are going to pay for new roads through tolls or taxes, or we will pay for not building new roads with wasted time in traffic jams—-claims like NTTA's merit careful analysis and consideration, especially when many billions of dollars of transportation investment, as well as the quality of life of Metroplex residents, is at stake. Unfortunately, all that NTTA has delivered thus far are promises and platitudes via a press release and PowerPoint presentation; the full, detailed proposal—including all of the assumptions and projections critical to evaluating it—is still several weeks away from being delivered to the Regional Transportation Commission (RTC).

As North Central Texas Council of Governments transportation director Michael Morris astutely pointed out to the RTC during its May 10 meeting, evaluating the Cintra and NTTA SH-121 proposals is not just a simple matter of comparing two documents. Also key will be understanding the opportunity costs associated with each proposal, and their relative impact on the region's ability to provide the bundle of new road projects necessary to keep pace with growth. For example, if NTTA's financial proposal would require leveraging its existing system to facilitate this one project, it could overload the agency with debt and jeopardize its ability to build needed, new toll projects in the future, such as the Trinity Parkway, SH-360, and SH-170.

Since NTTA has not yet made its full proposal publicly available, it is not yet possible to prepare a detailed analysis and to truly assess the trade-offs, opportunity costs and risks in it. However, policymakers, media, and citizens can and should start asking a number of questions about NTTA's proposal, including:

Understanding the answers to all of the above questions is crucial to making an informed assessment of whether NTTA has produced a viable bid for the SH-121 project, or whether NTTA's bid is full of risky, extravagant promises that will be hard to deliver and would threaten the region's ability to address its future mobility needs.

Leonard Gilroy is Senior Managing Director, Pension Integrity Project &
Director of Government Reform

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