DALLAS -- The Texas Transportation Commission has agreed to help provide funds and the right of-way for a proposed $300 million toll road project in Harris County, removing one obstacle to the county's plan to take over the debt-laden Ship Channel toll bridge.
"As far as we are concerned, it does help clear the way for the transfer of the bridge ... but we have some tough negotiating to do," Harris County Judge Jon Lindsay said.
Under the agreement, which the transportation commission approved late last month, Harris County would be allowed to use about 28 miles of state right of way to complete a toll road along an eastern and southern section of Beltway 8. The road is intended to provide a critical link between the county's east and west sides, relieve traffic congestion, and provide a feeder road to the Ship Channel bridge.
Harris County would pick up much of the estimated $300 million tab for the toll road, possibly through the sale of a combination of general obligation and revenue bonds, Lindsay said. But the state has committed to try to secure up to $90 million in Federal Highway Administration funding, which officials said they expect will be available.
"The money is there, but it is a matter of getting the document processed," said Ed Shaddock, general counsel for the Texas Department of Transportation.
Lindsay said that Harris County already has hired several firms to do preliminary engineering and design work, including Houston-based Brown & Root Co., and expects to complete the east section of the project in 1996 and the south section in 1997 or 1998.
David Bernsen, chairman of the Texas Transportation Commission, said the agreement expedites building of the road, which the state cannot complete now. "It's a win-win situation. If we would build it as a free road, it would take eight to 10 years longer," Bernsen said. "It will relieve congestion on Harris County roads."
The road also will provide a feeder link to the Ship Channel toll bridge, which has lost money since it was opened in 1982. As a result, Harris County has made its proposed takeover of the bridge contingent on completion of the road, which is expected to provide more traffic and more revenue for the bridge.
With the project underway, Harris County is resuming its negotiations to acquire the bridge from the Texas Turnpike Authority, which has long wanted to get rid of the headache.
A meeting to discuss the deal is set for Wednesday in Harris County, said John Ramming, executive director of the Texas Turnpike Authority. Those attending will include Bernsen, Lindsay, and the turnpike board chairman, Luther Jones.
Officials called it a preliminary meeting and would not disclose details on issues involved, but said they were confident that a deal eventually could be reached.
The turnpike's board "wants to transfer the bridge as soon as possible," said Jerry Shelton, director of administration for the turnpike authority. "They just want to get rid of it."
The authority is hoping to head off default of $210 million in junk-rated junior lien debt that was issued about eight years ago to cover revenue shortfalls. The default could occur in 1996 when high-coupon junior lien debt converts from zeros to interest-paying bonds with a 12.625% coupon if the project is not refinanced.
"We either had to refinance it or transfer it to Harris County," Jones said. Now, "Harris county intends to refinance it," he said.
Lindsay said several refinancing options were being considered because Harris County could not afford to take over the bridge with its existing debt. He declined to talk about specifics.
In an earlier interview in September, Lindsay said options being considered included an early call of the junk bonds, replacement of some revenue bonds with general obligation debt, and obtaining concessions from bondholders.
Investment bankers, including representatives from Masterson Moreland Sauer Whisman Inc. and Dillon Reed & Co. Inc. have held negotiations with bondholders, Lindsay said.
"We have to have something that works financially," he said.
Lindsay said he is reasonably confident that terms can be reached with the both the Texas Turnpike Authority and bondholders. He said Harris County will move ahead as rapidly as possible, although the transfer of the bridge would not occur this year.
If completed, the transfer would culminate several years of effort to give Harris County local control of the bridge. Earlier this year, state lawmakers passed legislation giving the turnpike explicit authority to sell its bond-financed projects.
"It's been in the mill for quite some time," Jones said. "It doesn't make sense for the Texas Turnpike Authority to operate a toll bridge."