Great story in The Dallas Morning News yesterday by Brandon Formby revealing that the toll road agency in our area has been sitting on $1.7 million worth of traffic studies for the one they want to build along the Trinity River through downtown. The North Texas Tollway Authority just won a legal ruling saying they don't have to show the results to the public.
What's so big about that? Well, look, we've only been arguing about his unbuilt toll road for almost 20 years. When you dig through all of the insane hype that people on both sides proffer, pro and con, the traffic studies are the truth. Letting us in on the traffic studies would be like a magician showing us how the trick is done.
It's so easy to say, as the mayor has, that if we built the toll road, people could use it to drive from Pleasant Grove to Parkland Hospital. Well, yeah. But compared to what?
I offered you an example yesterday. The mayor has also been saying that if we built the toll road, black people could use it. So true, so true. His argument is that the toll road might help commuters from poor black neighborhoods reach jobs in the Stemmons Corridor. City Council member Vonciel Hill has even backed the mayor up by saying that, since black people could use the toll road, not building it would be racist.
But I told you yesterday about a guy named Robbie Good, a graphics designer and community activist, who looked on Google maps and saw that the street grid in much of black South Dallas is all chopped up already by highways and rail lines. He proposed a quick simple fix, linking S.M. Wright Freeway with Riverfront Boulevard.
He guessed that would cost $10 to $20 million. I have no idea how a graphics designer (or a newspaper columnist) would know the price on something like that. But hooking two existing roads together with a short link has to be enormously cheaper than the $1.8 billion which was the last official estimate I saw years ago for the cost of the toll road.
See. People can say all kinds of things. If we built the toll road, nuns could use it. Are you anti-nun? But that's not the question. Yeah, nuns could use it for $1.8 billion. But is there a way to get the nuns around for way less than that without the dire opportunity costs?
That's what that $1.7 million in traffic studies is all about. And let me tell you more specifically why they want to sit on that information. What it's really about is competing roadways.
This is a recurring problem with toll roads. Where do you get the money for a toll road? You go to the bond market and borrow it. The people who buy the bonds and lend you the money want to be sure they're going to get their money back plus a return on investment. So they ask for a few kinds of traffic studies.
The first, the simplest one, asks, "How many sick people from Pleasant Grove, black people, nuns, Hittites and dubsteppers will use this road and pay tolls regularly enough to guarantee the kind of income needed to pay off the bonds?"
Fair enough, right? If you are the bondholder, you what to know somebody is going to use the road and pay you back. But then there's an entire second range of questions that have to do with competition. What if the bonds are sold, the money borrowed and the toll road built, but the voters press City Hall to carry out other road improvements as well?
There was a Texas Department of Transportation study going around 10 years ago - long since deep-sixed and impossible to find now -- that said straightening out the existing freeway interchanges downtown would move more traffic through downtown more cheaply than building the toll road. That project, by the way, originally called Pegasus, now more modestly dubbed Horseshoe, is underway in bits and pieces as we speak.
So if Project Horseshoe works and if driving gets noticeably easier on the existing freeways, why would anybody drive out of the way and pay a toll on the new road? Wouldn't a lot of the toll road's target market leak away to the older roads and make paying off the bonds more difficult?
What if we just did Robbie Good's fix? All of that South Dallas traffic the mayor and Councilperson Hill have promised to the bondholders could be gone overnight.
For this reason, toll road promoters in the past have sought non-compete contracts with client governments: the Maine Turnpike in 1947, the Garden State Parkway, New Jersey Turnpike, Massachusetts Turnpike, New York State Thruway, Kennedy Highway in Maryland, Ohio Turnpike, Indiana Toll Road, Illinois Tollways, Florida Turnpike, Kansas Turnpike, Oklahoma turnpikes, turnpikes in Connecticut and New Hampshire, and toll roads in Virginia and Texas, all were financed with non-compete agreements.
A non-compete agreement can take many forms. The most common is a straight-up prohibition on building free highways or expanding or substantially improving existing highways that might draw traffic away from the toll road. Or the agreement might allow local government to build competing capacity if it pays the toll road company back for any revenue it loses as a result.
The non-compete agreement Governor Rick Perry wanted us to sign to get a Spanish company to build his Trans Texas Corridor project would have forbidden Texas from doing any of the reconstruction that's going on right now on Interstate 35 between Dallas and Austin. I-35, already a horror of narrow cracked lanes and junk car caravans on their way to Mexico, would have disintegrated even more until we all had no choice but to pay whatever toll the Spaniards wanted to charge us.
In 2008, after Perry's Trans Texas Corridor was shot down, stabbed, throat-slit, boot-stomped and unspeakably defiled by the Legislature, Texas lawmakers also passed new laws making it much more difficult if not impossible for the state itself to enter into any non-compete agreement over roads.
But the question of what local governments are free to do or can be bamboozled into doing (same thing) is a gray area. In the debate over the Blacklands Toll Road from Dallas to somewhere in East Texas , there was a lot of conversation about possible non-compete agreements.
The specific case of Dallas and the Trinity toll road ought to be plenty scary for investors. Suffice it to say that a ton of people in Dallas have grown to hate this project by now and would continue to hate it, probably hate it even worse, if it ever got built. And the ability to kill it won't stop when it's built. If anything, killing it might be even easier once it's up and running.
Robbie Good's idea. Project Horseshoe. How many projects would it take to drain enough revenue away from that sucker to put it belly-up? If I'm an investor, I'm going to be worried about the considerable constituency of people out there who despise this thing and would welcome any chance to put it six feet under.
That's what they've spent their $1.7 million on: 1) What's the market for it? 2) What are the competitive threats to it? 3) If I buy bonds, how do I know I'll get paid?
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SHOW ME HOW
In Formby's piece in the News yesterday, he quoted former City Council person Angela Hunt, who said if the news were good from the studies, if the studies showed the toll road with a bulletproof market and little to no vulnerability from competition, that news would have been all over the blogs, Page One and TV long ago:
"I would imagine they would be waving around those documents at meetings if those documents supported their argument for a toll road," Hunt said.
So is the determination of the toll road agency to conceal the reports a reason for toll road opponents to rejoice? Does it mean the toll road is toast?
No. It means they have big problems, and they need big solutions, including some kind of non-compete agreement that gets around the state prohibition. It means they are working furiously behind the scenes to put together agreements for all of that, and we won't see a word of it until they think the trick is perfect. That's just how they roll. Magic is not our friend here.