DALLAS -- Harris County, Tex., is expected to complete its acquisition of the Houston ship channel toll bridge from the Texas Turnpike Authority tomorrow when officials are scheduled to meet in New York City.
The long-awaited closure of the deal follows Harris County's successful sale of about $232 million in general obligation bonds April 11 to pay for the acquisition by defeasing bridge debt and to raise additional funds for toll road completion.
"We are getting a lot of assets back for what we are paying," said Wesley Freise, director of the Harris County Toll Road Authority. "I am looking forward to the completion."
Freise said the county was paying about $200 million to defease senior lien debt as well as junk-rated junior lien notes, which were headed for default in 1996 when interest payments were scheduled to balloon.
In exchange for taking the debt off the turnpike authority's books, Harris County is getting the bridge, which has an annual cash flow of $10 million, and a total of $290 million in assets, funds, and services to improve the Harris County toll road system that feeds the bridge, Freise said.
The $290 million includes $90 million in Intermodal Surface Transportation Efficiency Act money through the Federal Highway Administration, and right-of-way and construction services worth about $200 million from the Texas Department of Transportation.
Harris County's decision to purchase the bridge was contingent on the provision of those funds and has been in the works for three years as the municipality sought control of the debt-laden bridge in an attempt to improve its transportation system. The turnpike authority wanted to get rid of the bridge because it has been unprofitable since it opened and a constant source of worry.
"I look forward to wrapping up the detail," Freise said.
The real estate closing was scheduled yesterday, and the pre-closing today, with the final agreement and money transfers expected tomorrow, officials said.
Harris County already has sold about $32 million of the bonds it will need for its portion of the funds to complete the east and south belt sections of the Beltway 8 toll road, which circles Houston and provides feeder roads for the bridge.
Initially, the county planned to sell about $160 million in bonds in the fourth quarter of this year or the first quarter of next year, but officials decided to take advantage of the trends in interest rates, which they believed would rise further.
"We thought with the rates where they were that we would hedge what we would do later," said Larry Catuzzi, Harris County's financial adviser and head of public finance for Rauscher Pierce Refsnes.
Freise said plans call for asking for contractor bids on the toll road sections in July and starting construction in August.
The exact amount of bonds that need to be issued will be determined after the bids are received and market conditions are assessed, but preliminary plans indicate that $130 million in additional bonds will be issued later this year or early next year, Freise said. About $30 million could be general obligation bonds and about $100 million could be revenue bonds, he said.
Harris County voters approved the authorization for the bonds in the early 1980s.
