Setbacks force highway developers to shrink loop to start construction

With state funding unlikely and in-depth environmental studies needed, developers of the Hidalgo County highway loop are temporarily downsizing the project in an effort to start construction by next year.

The looming question is whether they can even finance a small section of the loop.

The Hidalgo County Regional Mobility Authority — an independent government agency tasked with developing the loop — should find out this week if it will be able to make a last-ditch effort to construct a southern section of the project solely with local funds.

If not, construction won't start at least until the mobility authority secures state or federal subsidies. A delay of up to five years is likely as the loop winds its way through an extensive environmental approval process.

Officials were once optimistic construction could start in 2010, but a number of setbacks have plagued the project.

First, in April, the road's developer learned it had lost a gamble that the loop wouldn't require extensive environmental work.

Then the state Legislature didn't adequately fund a program crucial to the loop's financing plan.

Faced with these setbacks, the mobility authority asked its Houston-based developer at its last meeting whether a small portion of the loop could be built with local revenue — by borrowing against projected income from vehicle registration fees, tolls and taxes expected to be generated by development along the loop.

A report on the feasibility of financing a small section is expected at this week's meeting.

The mobility authority still plans to build a complete loop within Hidalgo County, said Dennis Burleson, the agency's chairman. But the recent setbacks are changing its timeline.

"We still consider the whole loop our long-range plan," Burleson said. "It would have been nice to be a long-range plan of a few years, but it may turn into a long range plan of 15 years."

FINANCIAL BARRIERS

The mobility authority is investigating whether it has the revenue to build all or part of Sections A and B, the portion of the loop that extends 37 miles through densely populated areas such as Donna, Pharr and Hidalgo.

By turning its focus to constructing a section of the loop with no state or federal help, the agency can overcome two barriers facing the project, said Gerry Pate, the mobility authority's developer for the project.

The first is the funding.

Pate's plan for financing most of the loop is dependent on the state's pass-through program to provide $300 million, which covers about half the cost.

Pate submitted the loop to the Texas Department of Transportation during a recent call for projects requesting pass-through funding, but it was one of 34 projects with a total cost of $3 billion that were submitted from across the state.

TxDOT initially estimated it had $300 million for the program. That money is up in the air, though, after state lawmakers failed to get much done about transportations during the regular legislative session, said Mario Jorge, TxDOT's district engineer overseeing the Rio Grande Valley.

The Legislature agreed last week in a special session to allow TxDOT to sell $2 billion in voter-approved bonds, but the department only has discretion on how to spend half of those funds.

The agency could devote its entire share of the bond revenue to the pass-through program and not have enough to fund the projects for which it received applications.

With state funding unlikely in the short term, the mobility authority would need the three revenue sources it already has in place locally to pay for the small section, Pate said. The local revenue streams aren't enough to pay for the entire loop but could pay for a smaller portion, such as a road connecting the Pharr-Reynosa and Anzalduas international bridges.

Since the A and B sections traverse the more densely populated sections of the county, they're projected to generate more revenue from tolls and taxes, making financing easier, Pate said. They're also the sections that are likely to become more expensive in right-of-way acquisition and construction costs in the future.

ENVIRONMENTAL

Funding a section of the loop locally also removes a delay caused by extensive environmental requirements required by the Federal Highway Administration.

Early on, the county mobility authority wagered that the federal agency would require an environmental assessment of only modest cost and scope for the project, Jorge said. But the FHWA notified the mobility authority in April that the proposed loop instead needed an environmental impact statement — a more rigorous process that Jorge estimated would postpone construction four to five years.

By funding a section of the project without state or federal funds, the mobility authority would be exempt from the enhanced requirement and could continue with the environmental studies that are already nearly completed, Jorge said. The more in-depth environmental studies would still be needed for other sections of the loop financed with state or federal subsidies.

LOCAL OPTION

The biggest barrier of all to constructing a small section might be convincing the county's political leadership that vehicle registration fees collected countywide would be used to fund a stretch of roadway impacting a small segment of Hidalgo County residents.

When the county created the mobility authority in 2005, the agency chose to take on building the Hidalgo County loop because of its economic development and revenue-generating potential.

The full loop is still important to meet the transportation needs of Hidalgo County over the long term, said Burleson, the mobility authority's chairman. But with no state funding, using local revenues to build a small section of the project to get it started is the only option in the short term.

"Hidalgo County had largely realized over the last couple of years that if they were going to continue to grow their transportation system, they were going to have to shoulder some of the burden," Burleson said. "That's still our burden."

Jared Janes covers Hidalgo County government, Edinburg and general assignments for The Monitor. He can be reached at (956) 683-4424.