The state's grand experiment with 'public private partnership' toll roads appears to be a monumental failure, as Moody's Investment Service reports the State Highway 130 Concessions Company, the partnership of San Antonio’s Zachry American Construction and CINTRA of Spain, is 'dangerously close to defaulting on its debt,' 1200 WOAI news reports.
Moody's says the Company, which operates the southern half of the toll road from Seguin to Georgetown, the part where an 85 mile an hour speed limit, the highest posted speed limit in the nation, is allowed, is 'low n cash and scrambling to get an upcoming payment deadline waived.'
A spokeswoman for the Concessions Company, Megan Compton, said the company is confident it will overcome its current challenges, and says it routinely is assessed by Moody's.
"The June 13th opinion, which maintained SH 130 Concessions Company's previous rating, is part of that routine assessment," she said. "We remain confident that this first-class roadway will play an increasingly important role in relieving congestion along the gridlocked I-35 corridor as Central Texas continues to grow."
Moody's says the company is negotiating refinancing with the ten banks that financed its $1.1 billion debt, so an actual default is unlikely. But anti toll road activist Terri Hall of Texans Uniting for Reform and Freedom, who has been blowing the whistle on the house of cards that is the public private partnership toll road concept in Texas, says it is clearly the end of rosy predictions about toll roads.
"This is a bankrupt toll road," Hall said. "What we need to be watching out for now is that the state or the federal government does not bail out this toll road. It needs to fail."
Ever since Moody's began downgrading the Concessions Company's debt in 2012, which is now listed at 'junk bond status,' the company has been blaming the recession and other factors, and predicting that profitability is just around the corner.
But the latest report from Moody's disputes those claims. It says fiscal 2014 performance is likely to be 70% below the original forecast, actually worse than 2013 which was 60% below forecasts. This despite the state's booming economy, and the parade of trucks from the Eagle Ford Shale which are apparently bypassing the toll road.
Moody's says the debt restructuring is taking place in an attempt to 'avoid an official default,' and it says the company is trying to restructure its debt based on a 'new traffic and revenue study.'
Hall says this failure should be a loud and clear message to the Regional Mobility Authority and to other government agencies which have long touted toll roads, especially Public Private Partnerships, as the answer to the region's congestion problems.
"Not one of these toll projects being contemplated for San Antonio is toll viable," she said. "It is not a financially feasible project any more than the State Highway 130 project is. This is a failed financial model."
The RMA has proposed building toll lanes, or 'managed lanes' as bureaucratic-speak has now redefined them because the word 'toll' is too toxic, on Loop 1604, US 281, and Interstate 10, and toll roads are also on the drawing board for other roads as well.
"Texans do not want their roads tolled, this road made no sense in the first place, it was not financially feasible, no one is driving on it, and it is going to go bankrupt," Hall said.