DALLAS -- Gov. Ann Richards signed legislation last weekend enabling the Texas Turnpike Authority to use surplus funds from future projects to bail out its troubled Houston Ship Channel Bridge bonds.
Turnpike Executive Director John Ramming said that while the new law could help solve debt service shortfalls beginning in 1996, the agency is investigating other proposals to address the deficit.
"Those efforts are continuing," he said.
The authority last September raised fares by 20% on the Houston Ship Channel Bridge and announced that PaineWebber Inc. and Lehman Brothers had been hired to develop alternative financing plans for the project bonds.
At the time, the authority said its advisers would study options including refundings, exchanges, or tender offers for all or part of the bonds.
Legislation to allow the authority to commingle project surpluses was drafted last fall by state Sen. Gene Green, D-Houston, whose district includes the bridge. Bondholders and others agreed the plan could solve the expected deficit.
However, the fractious debate over the proposal prompted the Texas Legislature to modify the original proposal -- making it more difficult to transfer money from projects in one area of the state to another.
"There was a lot of consternation about the provisions," said Clint Winters, an aide to Gov. Richards. "There were concerns about having one part of the state subsidize another."
In particular, Dallas-area legislators were concerned that surpluses from the Dallas North Tollway could be shifted to pay debt service on a Houston project.
Because of those concerns, the final version of the legislation made it more difficult to use surpluses.
The authority could transfer funds but only from projects financed after Sept. 1, 1991, and then only if the turnpike board -- with directors from Dallas and Houston -- approve the subsidy.
Rick Porter, a lawyer with McCall, Parkhurst & Horton of Dallas, the authority's bond counsel, said that the law would still allow the authority to use surpluses from the entire Dallas North Tollway if that project were extended with debt issued after Sept. 1.
Mr. Ramming said that trust agreements of future issue would also require provisions allowing for the transfers, but he said there are currently no bond issues planned that would allow the authority to tap the Dallas surplus.
For the 12 months ending April 30, the turnpike authority reports that the Dallas North Tollway had $12.3 million in net revenues and the Mountain Creek Lake Bridge project had $464,492 in net revenues. Meanwhile the Houston Ship Channel Bridge had a deficit of $4.61 million.
The deficit is actually down from the same period a year ago when the shortfall totaled $5.13 million.
However, depsite the 20% fair increase seven months ago, the Houston project had had only marginal revenue growth.
"The 20% increase in tolls has increased revenues very little," said Harry Kabler, secretary-treasurer of the authority. "There's been an increase of maybe 2% or 3%, but the [numbers] for April are up more."
He said that revenues are up about 2% for the first four months of 1991 compared to the same period a year ago, while total traffic is down about 12%.
The authority announced on March 14, 1990, that projected revenues for the bridge project would not cover debt service on the $27.9 million junior lien revenue refunding bonds between 1996 and 2008.
The project was originally financed in 1978 and a $102 million offering, but the junior lien bonds were issued six years ago to meet revenue shortfalls.
The authority's financial adviser, First Southwest Co. of Dallas, said last spring that projected revenues would not cover debt service after Jan. 1, 1996, when the zero coupon debt reverts to interest-paying bonds with a 12.625% coupon. At that time, debt service requirements will increase from approximately $9.4 million annually to $12 million.