A proposed tollway on U.S. 183 in East Austin got a $200 million shot in the arm Thursday when the Texas Transportation Commission gave preliminary approval to a package of cash and loans for the roughly $875 million project.
Assuming that state cash infusion gets final approval next month, as expected, the Central Texas Regional Mobility Authority would still have to borrow another $650 million from the federal government and on the bond market from private investors. But officials with the local toll agency, deputized by the Texas Department of Transportation to build the 8-mile, six-lane tollway, said the expected revenue from the toll road makes it highly likely that they will be able to secure the rest of the money by year’s end.
Construction is expected to begin early next year. The road, which will be built on top of the existing four-lane U.S. 183 and include six free-to-drive frontage road lanes, should open in stages in 2018 and 2020, mobility authority executive director Mike Heiligenstein told the transportation commission, which governs TxDOT. The northern section, from near Springdale Road to north of the Colorado River, would be completed first; the southerly stretch to Texas 71 would take an extra two years or so to open.
The commission approved a $143.4 million cash grant to the mobility authority, as well as a $30 million loan from TxDOT’s state infrastructure bank and another $30 million loan from TxDOT’s general revenue. Both of those loans likely will be 30-year notes and carry interest rates of about 4 percent, officials said. TxDOT previously had given the mobility authority another $4.4 million grant as it worked through the early planning and design phases of the tollway project.
The commission will be asked to give final approval of the grant and loans after TxDOT and the mobility authority finish hammering out the terms. Officials from both agencies were scheduled to meet Friday.
Bill Chapman, the mobility authority’s finance chief, said the agency likely will seek a loan for a third of the project cost, or nearly $290 million, from the U.S. Department of Transportation. Chapman said that loan likely will have an interest rate similar to the TxDOT debt.
Not so for the remainder of the project borrowing — about $360 million — from a bond sale expected to occur in October. Chapman said the agency can expect to pay at least 1 percent more on the private market, or above 5 percent interest.
The authority in May awarded a final design and construction contract for $581.5 million to a consortium led by Fluor Corp. But the agency also expects to pay about $133 million on debt financing costs, much of it for so-called “capitalized interest” and a debt-service reserve fund. The capitalized interest, an estimated $93 million, is used to make early debt payments during the four-year construction phase, when there is no toll revenue coming in, and during the early months or years after the road opens as traffic builds on the toll lanes.
The agency also expects to spend about $63 million on construction management and oversight by consultants, and $13 million on toll system software and hardware. The project cost estimate also includes a $40 million contingency.