DALLAS - Harris County, Texas' proposed takeover of the Houston Ship Channel Bridge is jeopardized by obstacles in obtaining $90 million of federal funds to complete linking toll roads and to use revenues to pay debt, an official said yesterday.
"We may not be able to purchase the bridge from the Texas Turnpike Authority because we would not be able to pay the debt," said Wesley Freise, executive director for the Harris County Toll Road Authority. "We need assurance that we can apply the federal funds at our own discretion."
The Texas Turnpike Authority yesterday had been expected to approve a preliminary agreement to transfer the bridge in an attempt to head off possible default of junk-rated junior lien debt in 1996. Under the plan, Harris County would assume the debt on the bridge and defease senior and junior lien debt by issuing between $260 million and $270 million of general obligation bonds.
However, the board failed to take action after discussing the issue in executive session. Turnpike Authority chairman Luther Jones, who earlier predicted approval, declined to detail reasons, saying only that the two groups still were negotiating.
In an earlier interview, Freise said problems had emerged in negotiations for federal funds between Harris County, the Federal Highway Administration, and the Texas Department of Transportation. He estimated that there was a 40% chance that the project would be stalled over the troubles.
The problems stem from the interpretation of the federal Intermodal Surface and Transportation Efficiency Act, which would provide the funds for the toll road project, Freise said.
Harris County wants to divert some toll road revenues and to spend some funds to pay debt service incurred to acquire the Ship Channel toll bridge, which has lost money since it opened in 1982.
County officials are seeking clarification from the Federal Highway Administration, Freise said, and the county hopes still to reach an agreement in 60 to 90 days.
Harris County, which has long been trying to take over the bridge, had made its most recent plan contingent on obtaining the federal funding to help complete 28 miles of toll road along a southern and eastern section of Beltway 8.
The $300 million project to complete Beltway 8 is intended to relieve traffic congestion and provide more traffic and more revenues for the bridge.
The county proposed to pay most of the project cost by issuing a combination of revenue and general obligation bonds, but wanted the federal funds to ease the burden and make its defeasance of the bridge bonds possible.
The Houston Ship Channel Bridge has been in financial trouble for years. About eight years ago, the Texas Turnpike Authority issued junk-rated junior lien debt to cover revenue shortfalls. The authority is now trying to head off possible default of the debt in 1996 when debt service rises to $21.45 million from $9.36 million in 1995.
Currently, there is about $85.74 million of senior lien debt, and $74.1 1 million of junior lien debt on the bridge, a turnpike official has said.