DALLAS - A Dallas County-created authority will need to issue up to $400 million of revenue bonds to buy control of two Texas Turnpike Authority projects, Dallas County Commissioners learned yesterday.
The commissioners met with bond counsel and financial advisers yesterday to discuss the specifics of the deal and how the county will obtain control of the projects.
The officials expect to tentatively approve a plan next Tuesday that would involve purchasing a franchise to give them control of the Dallas North Tollway and the Mountain Creek Lake Bridge projects by yearend.
Under the plan, senior managers would be interviewed to underwrite the bonds and negotiate terms of the deal, which was approved Oct. 2 by the Turnpike Authority.
Ray Hutchison, senior partner at Hutchison, Boyle, Brooks & Fisher in Dallas, the county's bond counsel, said the plan resembles a proposal by Harris County to buy control of the financially troubled Houston Ship Channel Bridge in a $320 million transaction expected by Dec. 1.
In the Dallas plan, according to Judge Lee Jackson, the county's chief executive and head of the commission, the commissioners would seek an agreement to give neighboring Collin County a say in operating the projects but would avoid creating a regional agency for the time being.
"Unlike the Harris County situation, the Dallas County program is on the verge of being a bi-county project," Jackson told the four-member court of county commissioners.
Like Harris County, Dallas officials would seek an exclusive license to operate the projects under existing laws that allow the Texas Turnpike Authority to turn over control and financial responsibility for them to a third party while retaining ownership.
In a related development yesterday, Texas Attorney General Dan Morales told Harris County officials that his office would approve the issuance of junior and sentor bonds by the county-created Beltway 8 Transportation Corp. to buy control of the bridge.
Turnpike officials have said the plan is expected to avert a default in 1996 on junior debt, while placing the project under local control.
"The attorney general has consented to the idea," said John Crew, managing director at Dillon, Read & Co. in Dallas, underwriter for the Harris County deal. "All they have said is that they want to look at the technical aspects of it."
Hutchison said that because the Turnpike Authority cannot sell any of its three projects, it would retain title to the projects unless state law is changed to allow the outright sale.
Still, lawyers said the authority can sell control of its projects. This would be accomplished by having the not-yet-created North Texas Regional Transportation Corp. sell bonds that would defease all but $100,000 of the $377 million of outstanding turnpike authority debt on the two projects.
The Dallas North Tollway has $370 million of outstanding debt with a final maturity of 2020, while the Mountain Creek project has $7.06 million maturing through 2007.
As the sole bondholder of turnpike debt, the final maturity would then be extended to 40 years, just one year longer than an anticipated 39-year franchise for the county to operate the facility. Keeping the nominal amount of debt would allow the Turnpike Authority to legally retain ownership of the projects.
At the same time, Hutchison said the bonds for the acquisition and for $30 million in new money for an already planned expansion of the Dallas North Tollway would likely have a 25-year final maturity.
Commissioners said that even though the arrangement allows for a 14-year period in which they would operate the projects after all their corporation's debt had been retired, they did not plan to divert surpluses.
"There are people who could be concerned that these projects would become political footballs." Jackson said.
He and several commissioners agreed that bond documents would be drafted to prohibit the county from using surpluses, which now average about $10 million a year, for its general fund budget or to subsidize future revenue bond-financed projects.
Commissioner Chris Semos questioned whether the financings would threaten the county's triple-A general obligation bond rating if the projects became financially troubled like the Houston bridge.
"No it would not, even if it were a Dallas County revenue project," said Jackson, who said the only security for the bonds would be project revenues. "The good news is that both of these projects operate at a monthly surplus now."