130 Concession Company files for Bankruptcy

[Guysdrive780]

After a couple years, the company finally files for bankruptcy. Traffic started slow and slowly started to pick up but it wasn't enough
http://transportationblog.dallasnews.com/2016/03/toll-road-developer-with-ties-to-north-texas-projects-files-for-bankruptcy.html/

[Henry]

Here's the full excerpt, for those who may not be able to see the link:

The private company that built a beleaguered Austin-area toll road – and shares an investor with three North Texas toll projects – filed for bankruptcy Wednesday. But company officials say the maneuver will not force the closure of State Highway 130 or impact any public funds.

"It's really a reorganization as much as it is anything else,"  said Robert Hinkle, the North Texas corporate affairs director for developer Cintra.

That firm is a partner in SH 130 Concession LLC, which was formed to finance and build the road. Cintra is an also an investor in three companies formed to rebuild LBJ Freeway, State Highway 183 through Tarrant County and Interstate 35W in Fort Worth.

But Hinkle said that  Cintra teams with construction firms to form individual limited liability companies for each project to prevent their financial situations from affecting each other. That means the Chapter 11 filing on SH 130 will not impact the North Texas projects.

"Everything is separate,"  Hinkle said.

While SH 130 is completely tolled, the three North Texas projects feature managed toll lanes running alongside rebuilt tax-funded lanes. The state contributed some funds to the North Texas projects, but was not financially involved in SH 130.

"We have all the risk,"  Hinkle said.

Traffic on the 41-mile stretch of SH 130 south of Austin has been far less than what was initially expected even though the corridor offers 85 mph speed limits – the highest in the nation. Company officials blamed the lower traffic figures on the fact that the road opened during the recession. They also said that traffic in 2015 increased 15 percent compared to 2014 usage.

Hinkle said Cintra still expects toll revenues to eventually pay off the company's debt, the firm just needs to restructure.

"We're continuing to work with all of the lenders from a corporate standpoint,"  he said.

[wxfree]

The press release on their web site, and the quotes in news stories, focus on how there's no financial impact to the state.  That may not be true.  TxDOT gets a 4.65% cut of the toll revenues, off the top.  The court might change that and put bondholders first.  TxDOT could end up losing that revenue stream.

My reading of the concession agreement is that TxDOT has the right to immediately cancel the agreement if the developer is in financial default.  If that happens, the company would lose the lease and future toll money and be left with nearly nothing to pay its debts.  TxDOT might have had that right under a restructuring a while back, but didn't exercise it.  This time it's in bankruptcy court, which could amend the contract (I don't know that much about bankruptcy law), which might give a reason to cancel the agreement to protect state revenue.  Also, there's a risk to the federal government because of a taxpayer-funded half-billion dollar loan they haven't even begun paying on yet.

[The Ghostbuster]

I guess that answers my question in the "US 183 and Texas 130" thread.

[Chris]

http://www.txdot.gov/apps/statewide_mapping/StatewidePlanningMap.html

According to the TxDOT planning map, the traffic volume on SH 130 was only 5,100 vehicles per day between Seguin and Lockhart in 2013. Even with the 18% growth in 2014 and 15% growth in 2015, it comes from a very low base.

[The Ghostbuster]

Is it possible that the tolls may be removed from the highway due to the bankruptcy? Or will it be picked up by another toll company? Perhaps even revert to Texas's DOT?

[DNAguy]

So with this development, does Rick Perry go down as the worst Texas governor when it comes to transportation?

Let me again emphasize transportation and not let this get political.

But considering the under-funding of TxDOT, the proliferation of toll-roads, the failed Trans-Texas Corridor, and now the failed public-private toll road is there anything during his tenure that can be considered a success when it comes to Texas transportation?

Maybe this is another thread, but it was a thought that came to mind when I first saw this.

[lordsutch]

How is this particular failure on Perry? The investors took the hit (just like with Camino Colombia), not Texas taxpayers. This is leagues away from the dumbass Virginia PPPs that resulted in no construction and taxpayers taking a huge bath.

Plus, I'm not sure you get to count "successful toll roads" and "unsuccessful toll roads" both as failures. Either can you count successful toll roads as a failure because tolls are bad, m'kay, or you count unsuccessful toll roads as failures because, well, the investors took a bath.

[The Ghostbuster]

When all else fails, blame the politicians!

[noelbotevera]

When all else fails, blame the politicians!

DNAguy must be another troll...

[NE2]

Whereas The Ghostbuster and noelbotevera are simply clueless. I'll take the troll every time.

[qguy]

Whereas The Ghostbuster and noelbotevera are simply clueless. I'll take the troll every time.

I don't know about Ghostbuster, but according to noelbotevera's posts, he's only 11. Lay off the kid.

[wxfree]

The road will be under new ownership, held by bondholders.  TxDOT didn't cancel the agreement and take the road back before, as they had the right to do.  I suspect they didn't do so in order to avoid depriving SH130CC of their opportunity to recover and thereby make the state look unfriendly to private investment and disincentivize future investment.  There's now no more reason not to take the road back, since the state has no agreement with or assumed or implied obligations to the bondholders.

http://www.statesman.com/news/news/local/bankruptcy-will-bring-new-ownership-to-texas-130s-/nsFWK/

[US 41]

I think the biggest problem with TX 130 is that the tolls are too high. The PBM rate is $9.83 and the 130 Concession Company only control the southernmost portion of the highway which is only 40 miles long. I mean they are charging 24.5 cents per mile which is insanely high.

Then to drive the section of 130 that goes around Austin, the PBM rate is $9.32 and that section is only 46 miles long (or 20 cents per mile).

For Waco - Laredo traffic using TX 130 you have to drive 16 miles out of the way, which isn't too bad really. But they would be paying $19 to shave 17 minutes off of their trip. I don't think most people think it's worth the money. I know I don't.

EDIT: I'm sure the price is very very high for through truckers. I guarantee most through traffic (whether its cars or semi trucks) are still using I-35 through Austin.

[kphoger]

I think the biggest problem with TX 130 is that the tolls are too high. The PBM rate is $9.83 and the 130 Concession Company only control the southernmost portion of the highway which is only 40 miles long. I mean they are charging 24.5 cents per mile which is insanely high.

Then to drive the section of 130 that goes around Austin, the PBM rate is $9.32 and that section is only 46 miles long (or 20 cents per mile).

For Waco - Laredo traffic using TX 130 you have to drive 16 miles out of the way, which isn't too bad really. But they would be paying $19 to shave 17 minutes off of their trip. I don't think most people think it's worth the money. I know I don't.

EDIT: I'm sure the price is very very high for through truckers. I guarantee most through traffic (whether its cars or semi trucks) are still using I-35 through Austin.

The last round trip I did from Fort Worth to México, I used TX-130 and found the tolls to be worth it.  However, I fully understand other people not finding the tolls to be worth it, especially those with more axles under the vehicle.

[wxfree]

The pay-by-mail rate for a standard five-axle combination, classified as a large vehicle with one trailer, is $33.83.  This is in addition to the $27.92 for the northern four sections, for a grand total of $61.75.  That's pricey.  The truck discount helps, but applies only to the northern four sections and SH 45 SE, the Austin bypass section back to I-35 in Buda.  It might help the southern portion by making the whole trip less expensive, but the discount itself is weird.  The truck discount is in effect Monday through Friday from 7 a.m. to 7 p.m.  It makes sense to bureaucrats analyzing the cost of it, but it requires truckers who aren't familiar with the area to do their homework, and then they have to make sure they don't get on too early, or too late to get by the last toll point in time.

The company is owned by a Spanish infrastructure company and a Texas road builder.  They made money paying themselves for building the road and various development fees.  Their investment was worthwhile before the road even opened.  Of course, they hoped for decades of profits, but they really had little risk of losing anything.  The loss goes to the bondholders and taxpayers subsidizing the government loan.  This is another thing I don't like about this public-private arrangement.  The private company claims to bear the risk, but in reality that risk is shifted to the bondholders.  The company almost can't fail to make a profit while building the road and has no real exposure to later losses.  The risk and reward are not borne by the same entity.

[US71]

When all else fails, blame the politicians!

Or the sucker voters?

[formulanone]

To be fair, while TX 130 is speedy alternative to I-35, there's few convincing arguments to use it as anything other than a bypass. There's almost no businesses and few residential areas located alongside of it; the revenue stream by daily-driven traffic isn't there (yet).

It's smooth as a billiard table, the infrastructure is shiny, you get your 80/85 mph kicks out of it, get to see one sign with a pickle on it, but there's not much else going for it.