DALLAS -- A proposed $210 million bailout of the Houston Ship Channel Bridge project moved closer to final approval after Texas officials yesterday got some answers they had been lookin for.
But members of the Texas Bond Review Board, which must approve the refunding, were split over whether the deal would be approved as early as June 18 or be delayed until this fall.
Wardaleen Belvin, a special assistant to Lieut. Gov. Bob Bullock, one of the five member of the review board, yesterday said the matter could come before the panel at its regular meeting in two weeks.
"I think it will move forward," she said. "I don't think it's dead."
Texas Treasurer Kay Bailey Hutchison, who was represented at yesterday's meeting by an aide, said she continues to be troubled by the high cost of the deal and believes there is still time to find another solution while interest rates are low.
"We know there needs to be a restructuring, but we feel that what has been brought to us is not acceptable," she said in a telephone interview. "Eventually, I hope to be able to vote for it. But I do think we have several months of an interest rate window."
Historically, interest rates have remained stable in presidential election years. A spokesman for the Texas Turnpike Authority yesterday said that while rates are likely to remain low, a delay could jeopardize the current proposal.
"We've got a lot of pieces to put together," said Bob Peterson, senior vice president at First Southwest Co. of Dallas, the authority's financial adviser. "Right now, they all work. But one of those pieces could fall out."
The board met with turnpike officials and their advisers yesterday in Austin to discuss the refunding and possible alternatives to averting an expected default on high-coupon junior lien bonds in 1996.
Tom Pollard, executive director of the review board, said much of the meeting was spent discussing the possibility of loaning the project funds from a separate state highway fund.
"A specific strategy was not discussed, just the idea of borrowing highway dollars on a loan basis," Mr. Pollard said.
However, such a plan would require changes to the Texas Constitution and state laws, something officials have said is not likely.
"The answer they had from three sets of lawyers was that under the current constitution, there was no mechanism to get to the money," Mr. Peterson said.
It is were an option, loaned funds could be used, for instance, as part of a new debt restructuring strategy or simply to help the turnpike authority plug $30 million in shortfalls expected between 1996 and 2001.
"I would rather not have the state make an infusion of any kind," Ms. Hutchison said.
The authority announced two years ago that it expected to default on series 1985 junior debt in 1996 when zero coupon bonds convert to interest-paying bonds with a 12.625% coupon. That change will cause annual debt service to rise to $21 million a year from $9 million, a level that is not expected to be met by revenues.
To avert a default, the authority has proposed using $90 million in new, low-grade senior debt and $120 million in unrated junior lien bonds. The proceeds from that sale would be used to retire $88.5 million in Series 1978 senior debt on Jan. 1, 1993, and to establish an escrow for the junior bonds through their redemption on July 1, 2002.
The turnpike authority approved the refunding, which would be underwritten by PaineWebber Inc. and Lehman Brothers, on April 3. However, the review board has delayed a final decision as it continues to study the proposal.
At the meeting yesterday, state officials also briefly discussed the possibility of privatizing the bridge or involving the Harris County Toll Road Authority, a separate, tax-backed agency in the Houston area.