Tollway 'feasible' as mobility authority seeks better credit

A planned 30-mile tollway connecting Hidalgo County’s five international bridges to Expressway 83 will be a boon for trucks seeking a quicker route to points north.

But unless the Hidalgo County Regional Mobility Authority can enhance its credit rating enough to pay for two lanes in each direction, it could also be a nightmare for passenger vehicles unable to pass slow-moving tractor-trailers on the one-lane road.

Fresh off securing a $70 million contribution from the state to help finance the southern tollway, the mobility authority is essentially asking Hidalgo County to cosign on a loan to expand the project’s scope.

Because the mobility authority has no credit history — the independent government agency is still working on its first project since its creation in late 2005 — and because it collects less than $6 million in guaranteed revenues each year from vehicle registration fees, financial firms that will lend the money for the $400 million tollway will charge higher interest rates, said mobility authority chairman Dennis Burleson. But if the agency can get Hidalgo County commissioners to guarantee the vehicle registration fee, that would lower the interest rates and increase the debt capacity.

That could give the mobility authority the financial flexibility it needs to build four lanes instead of two.

“The county can borrow cheaper because the county has other resources right now. The RMA doesn’t,” Burleson said.  “When the RMA has tolls coming in, we don’t need the county’s credit enhancement, but right now we do.”

INTERCONNECTED

The prospects for the tollway brightened last month when the state agreed to contribute $70 million through its pass-through program, a state program that allows local municipalities or private entities to pay for a transportation project and then get reimbursed by the state for the traffic that travels along it.

The mobility authority will use the state funding to construct the Trade Corridor Connector, a 12.7-mile, east-west corridor that connects the Anzalduas International Bridge to the Pharr-Reynosa International Bridge. But the connector will be coupled with a separate project in eastern Hidalgo County — called the International Bridge Trade Corridor — linking the western county project to the Donna-Rio Bravo International Bridge and U.S. 281.

The 16.3-mile section on the eastern side of the county will be built first. The mobility authority's board is expected to make a decision later this month on whether to accept the guaranteed maximum price submitted for the project by Hidalgo County Roadbuilders, a group headed by Houston-based developer Gerry Pate that was brought on board in March 2008 to develop the Hidalgo County loop.

The mobility authority decided last week to begin soliciting proposals next month from engineering firms interested in the contract for the western section of the project.

Although both sections will be independently developed, traffic studies show that the two projects depend on each other to generate enough toll revenues to be viable.

Built alone, the eastern section would generate $19.7 million in annual toll revenues by 2030, a traffic and revenue study completed this month shows. But built with its companion section on the western side of the county, toll revenues would reach $57.6 million the same year.

'FEASIBLE AND DOABLE'

The mobility authority plans to finance the two projects by borrowing against future revenues from tolls, the pass-through funding, the county's vehicle registration fees and increases in property valuations along the corridor.

Projections show the mobility authority will only be able to raise about $175 million from the vehicle registration fees and tolls for the eastern section, said Richard Ramirez with First Southwest, the mobility authority’s financial adviser.

Building the eastern county section at that initial price would require narrowing its scope to only include one lane in each direction, a limited number of off-ramps and no access roads.

 Under the current plan, those amenities would be added years down the road once the full project is built out and the tollway has a steady stream of traffic, Burleson said. But getting the county to agree to back some of the debt would reduce interest rates enough to allow the mobility authority to raise at least $10 million more while offering the same collateral — the vehicle registration fees.

As it stands now, the mobility authority can finance the eastern section of the project on its own, Ramirez said, but the county's credit enhancement would result in a better price.

“We certainly think the project is feasible and doable,” the financial adviser said. “We just have to get some of the logistics out of the way.”

SALES PITCH

Noe Hinojosa, the county's bond counsel, said the credit enhancement shouldn't negatively affect the county's credit rating or its own ability to borrow money. The county also would not have to change its current tax rate.

County Judge-elect Ramon Garcia attended a workshop Wednesday with current and future county commissioners and the mobility authority board to discuss financing for the tollway.

He said he was receptive to working with the mobility authority on the tollway as long as doing so doesn't force the county to raise taxes or prevent it from working on drainage or other infrastructure projects.

Helping the mobility authority would also improve the quality of the tollway, potentially allowing it to build out four lanes instead of two, Garcia said.

 “Nobody is going to want to be behind a line of trucks,” he said.

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