North Tarrant Express Segments 1 & 2A, Dallas-Fort Worth, TX
The North Tarrant Express (NTE) Segments 1 and 2A project will rebuild the existing general purpose (free) lanes and add four toll-managed lanes, doubling capacity along a 13-mile stretch of Interstate Highway 820 (IH 820) and the Airport Freeway from IH 35W to the State Highway 121 split in Tarrant County. This $2 billion project will also add two non-tolled mainline lanes, not later than 2030, at no additional cost.
This is the first phase of a planned 36-mile managed lanes facility that will reduce congestion, improve air quality, facilitate access from Fort Worth to the Dallas-Fort Worth International Airport and provide for anticipated traffic growth in one of the country’s fastest developing regions. The project is considered the largest and most complex in the history of Tarrant County.
The new managed lanes, called TEXpress Lanes, will allow drivers to purchase congestion relief when they want to avoid travel delays on the general-purpose lanes. Prices on the managed lanes will be dynamically set – as often as every 5 minutes – so as to keep traffic moving at speeds of at least 50 miles per hour. The NTE will use an electronic open-road tolling system that allows traffic to enter and exit the managed lanes without passing through toll booths.
The project is being constructed as a public-private partnership (P3) where the private developer will lease the facility from TxDOT and will set toll rates and receive toll revenues over 52 years in return for designing, building, financing, operating, and maintaining (DBFOM) the project.
Not long after the corridor, now known as the NTE, opened to traffic in the 1960s, traffic volumes far exceeded the design capacity of the facility. Planning for an expanded corridor began in the late 1980s and continued throughout the 1990s. However, TxDOT found that the amount it could fund was far below the project’s required size and scope. In general, funding from gas-tax collections, the sole source of transportation revenue in the region, was not sufficient to meet current and future transportation infrastructure investment requirements.
In the early 2000s North Texas began to explore new ways to finance and procure transportation improvements that would (1) allow for viable projects when public funds were insufficient and (2) address future travel growth through more efficient system operations. To this end, in 2003, authorizing legislation for P3s was passed. And, in 2006, the North Central Texas Council of Governments and its Regional Transportation Council approved a 19-point Regional Managed Lanes Policy. This policy, which includes guidance for private developers interested in potential managed lanes projects, provides a basic framework to help guide the development of new projects.
In 2006, TxDOT and regional and local officials initiated a P3 procurement process. This is the first P3 project in North Texas.
Project Financing and Delivery
In 2009, after a competitive bidding process, the Texas Transportation Commission determined that NTE Mobility Partners (NTEMP) provided the best value to TxDOT and the P3 agreement (known as a Comprehensive Development Agreement, or “CDA” in Texas) was agreed to by NTEMP and TxDOT.
The NTEMP is a special purpose entity established by Cintra and Meridiam to execute the concession. Cintra, a Spanish company, is a highly experienced toll road developer and operator. Meridiam is based in France and is one of the largest investors in and developers of public infrastructure facilities in the world. Consortium partners also include the Dallas Police and Fire Pension System and Bluebonnet Contractors, a joint venture between Ferrovia Agroman (a subsidiary of Cintra) and Houston-based Webber.
The concession is providing roughly two-thirds of the total financing required to construct the project, with the remainder coming from TxDOT. Private equity contributions total $426 million, with 57 percent coming from Cintra, 33 percent from Meridiam, and 10 percent from the Dallas Police and Fire Pension System. This is the first time an American pension fund has invested directly in a US toll facility. Additionally, NTEMP took advantage of two Federal credit programs administered by the U.S. Department of Transportation (USDOT) that reduce financing costs for private developers. First, they secured a $650 million loan from the TIFIA Federal credit program. The flexibility provided in TIFIA’s debt service schedule was key to the successful financing the project. Second, after receiving a Private Activity Bonds (PABs) allocation from USDOT (under special authority provided for highway projects by Congress), NTEMP issued, through a special Texas conduit, $398 million in tax-exempt PABs. The TIFIA loan, as well as the PABs will be repaid with project revenues. TxDOT contributed $573 million in a construction grant to the project.
The concession agreement shifts certain risks from TxDOT (and the taxpayer) to the private developer, NTEMP. For example, NTEMP has assumed the risk of lower-than projected toll revenues. NTEMP’s profit will come from the toll revenues with excess toll revenues being shared with TxDOT for use on future North Texas transportation projects.
Texas retains ownership of the land and improvements. NTEMP must hand back the facility to TxDOT in a state of good repair and fully operational when the lease has expired.
Construction began in November 2010, with Bluebonnet delivering the project via a fixed-priced design-build contract. The project was completed and opened to traffic in October 2014, eight months ahead of schedule.