DALLAS - A top state highway official said yesterday that a Texas Turnpike Authority plan to sell all three of its projects and refocus its mission could signal a greater role for revenue bond financing in state highway planning.
"I've never really favored the use of debt for highways," said Ray Stoker, a turnpike board member and chairman of the Texas Highway Commission, who sees bond financing as a drain on future resources. "But I think there could be more of a role for [bonds] than before. "
In fiscal 1993, the highway commission expects to spend $1.6 billion on road projects, all of it coming from current revenues. The state Highway Department does not use debt to build or maintain the state's highway system, which has enough roads to circle the world seven times.
If plans to have the Turnpike Authority work with more local governments and private partnerships move forward, Stoker said more highway projects could be financed with bonds supported by tolls.
He acknowledged that another factor is that highway funding, particularly from the gas tax, is not unlimited. "We have an awareness of the anticipated funding limitations we face in the future," he said.
Proposals to use debt even for part of the state's highway construction needs have never got far in the past. Last year, Texas Comptroller John Sharp proposed giving the state Highway Department bonding authority for up to $150 million a year for capital needs. The plan was not passed by lawmakers.
But the turnpike board signaled a new direction for the agency last week when it voted to effectively sell all three of its existing projects to local agencies.
The turnpike board on Friday gave conditional approval to transfer control of its financially troubled Houston Ship Channel Bridge project to the Beltway 8 Transportation Corp., an agency created by the Harris County Commissioners. The transaction, valued at $320 million, is to be completed by Dec. 1 by underwriters Dillon, Read & Co.
The board also gave conditional backing to a plan to sell its Dallas North Tollway and the Mountain Creek Lake Bridge to a Dallas County entity. Details of the proposed sale have not yet been resolved.
"Even if they don't go through, it's no problem." said Stoker. "The board has indicated that the appropriate function for the Turnpike Authority should be to work with the Department of Transportation and local governments and private individuals who have an interest in building toll roads."
He said the Turnpike Authority would evolve into an advisory role to help others build projects, while retaining its ability to finance, own, and operate projects.
Stoker predicted that the change in focus could reverse legislative plans to merge the Turnpike Authority with the state Highway Department by 1996. The Texas Legislature approved the merger last spring.
"My personal belief is that the Texas Turnpike Authority will remain a free-standing, autonomous state agency." he said. "I think the Turnpike Authority needs to have a role in the state."
Turnpike Executive Director John Ramming did not return telephone calls yesterday seeking comment on the future of the agency.
The plan to turn over control of the Houston Ship Channel Bridge faces its next test on Wednesday, when officials meet with Texas Attorney General Dan Morales to discuss the proposal.
Harris County officials are proposing to license the bridge, which would allow it to remain legally owned by the Turnpike Authority, while permitting the county-created corporation to defease all but a nominal amount of the outstanding debt.
Under the arrangement, the county corporation would then operate the project and retire an estimated $320 million in new debt.
The proposal would help the Turnpike Authority avert a default in 1996 on high-coupon junior lien debt it sold in 1985 to solve an earlier revenue shortage.
John Crew, managing director at Dillon Read in Dallas, said that if the attorney general's office rejects the licensing proposal, officials could be ready Friday to seek a court order allowing the authority to directly sell the project to the county agency.
Under that procedure, the county would ask a judge to rule that under the seldom-used Texas Bond Validation Act, bond proceeds can be legally used to buy the bridge. The ruling is necessary because the attorney general has refused to rule whether the bridge can be legally sold.
"I think the bridge is going to be sold; it's just a matter of when and through what mechanism," said a Texas investment banker familiar with the transaction. "So far, they seem to have a plan to overcome any obstacle."
