This morning’s story about the NTTA carries some criticism of the way the agency does business, and offers some sobering views about how the credit market and other problems on Wall Street could affect NTTA’s ability to build all the roads it has promised to build.
One reader sent me a note this morning with a question on a lot of folks’ minds: “Could the Trinity (Parkway) be one of the unnamed projects that could be in jeopardy if the NTTA can’t fund Highway 161?”
That’s a good question, but not a simple one. NTTA’s most immediate problems are related to cash flow, not long-term credit-worthiness. Its used to borrowing money for toll roads in ways that let it delay payments, and capitalize interest, for several years — meaning that during the construction and ramp-up phases of a toll road, when revenues are non-existent, they don’t have to dip into other funds to make debt payments.
It’s standard practice, but if those kinds of loans are going to remain hard to get for NTTA — and the agency has a few options at its disposal that could come to fruition over the next month — then the ability to do a bunch of toll roads all at once may diminish.
The Trinity is an especially difficult road to make predictions about because its costs are still unknown, and the agency has not yet done a complete traffic and revenue study to find out how much the toll contract will be worth. It’s all but certain that the tolls on that road will never be enough to cover the cost of its construction and operation, so already NTTA will have to dip into other funds to pay for the road.
NTTA continues to say its committed to building the road, but a lot about the parkway is out of their control, and not just the stability of the credit markets. The Trinity has yet to be given final environmental clearance, and until it does it’s hard for NTTA to know for sure what the road will cost to build and how much its toll contract will be worth. Yes, they’ve promised to build the road — but no promise comes with a blank check.
But this much is clear: The agency’s ability to absorb bad news — such as much higher than expected costs for the Trinity or higher than expected costs of credit — has been diminished, at least for the short term.
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