Tx-249 Tollway Troubling Bankruptcy Question: What would happen if the tollroad fails financially?

Who would be among the winners if the Tx-249 Tollway fails to pay its revenue bond debt and goes into bankruptcy? These guys: From left to right, Binkley & Barfield engineers’ Dave Hamilton, Doyal’s business partner and best friend as well Halff Associates’ engineer Bobby Jack Adams, County Judge Craig Doyal, and Precinct 4 Harris County Commissioner “Cactus Jack” Cagle.

Conroe, September 12 – Montgomery County Judge Craig Doyal and Precinct 2 County Commissioner Charlie Riley want the The Decimation of Hope Highway, all 3.6 miles of it, also known as the Tx-249 Extension, to be a toll road at the far southwest edge of Montgomery County, a stretch of road rarely used by Montgomery County residents to get anywhere. Showing that the use of County funds and credit on this worthless project is even more reckless, the Texas Department of Transportation has made clear repeatedly that it would construct the Tx-249 extension without the participation of Montgomery County. Both State Representative Mark Keough, now running for County Judge against Doyal, and Precinct 3 County Commissioner James Noack have confirmed that Tx-DOT would build the road without Montgomery County participation.

Doyal and Riley want Montgomery County to build the road that goes to nowhere – in the middle of pastures and fields near Todd Mission, Texas, at the edge of Grimes County – at a cost between $73 million and $100 million, making the road one of the most expensive road projects in American history. They’ve already spent $13.4 million of general revenue taxpayer funds of Montgomery County for the crazed project. The primary recipients of those funds have been Doyal’s and Riley’s closest engineering/political contributor cronies, such as the project manager, Halff Associates, the engineering firm of Doyal’s best friend and business partner Bobby Jack Adams.

On August 22, 2017, Doyal, Riley, and Meador voted 3 to 2 in the Commissioners Court (with Noack and Precinct 4 County Commissioner Jim Clark voting against) to pay CDM Smith, a company in a lot of trouble with the United States Department of Justice, the World Bank, and the government of India for bribing highway officials and inflating invoices in order to generate the cash for the bribes, $405,500 for a “road study” which will support their argument that traffic will somehow support between $73 million and $100 million of revenue bonds for a 3.6 mile stretch of road.

The Montgomery County Toll Road Authority (MCTRA), comprised of the five members of the Montgomery County Commissioners Court, would own the 3.6 miles of toll road, and would be the debtor on the revenue bonds, bearing unusually high interest, that Doyal and Riley want to use to finance the project. They want revenue bonds for the project, rather than lower interest general obligation bonds, because with revenue bonds they won’t have to go to the voters for a referendum on the road project. As Rich Muller, an attorney Doyal and Riley hired to support the tollroad, has admitted on April 13, 2107, they all know that the voters would never approve the crazy project.

Bankruptcy is a serious possibility

Knowing that CDM Smith has a very shady past, that Doyal and Riley themselves have shady pasts and presents, that MCTRA has a terrible track record for predicting road usage (such as for the SH 242 flyover at Interstate 45), what would happen if MCTRA did not garner the projected revenue on Decimation of Hope Highway and couldn’t make the payments to the bondholders on the $73 to 100 million of debt?

Is bankruptcy a real possibility for a tollroad?

The answer is a clear “yes,” because a Texas tollroad just went through that precise experience where the impact on taxpayers was disastrous. On March 2, 2016, the company, very similar to MCTRA, which had financed and built State Highway 130, a 41 mile tollroad in southern Travis County that sought to connect Seguin to south Austin to San Antonio, filed Chapter 11 bankruptcy when, after only 4 years of failing to enjoy the traffic its consultants had projected, the tollroad couldn’t meet its debt obligations.

SH 130 received financing from a federal project managed by the United States Government. On that deal, when the tollroad came out of bankruptcy, in June, 2017, the federal government lost all of the debt financing it provided. The new ownership group, led by a group of investment banks, bought the tollroad “free and clear of all debts” out of the bankruptcy.

As a result a private company gained complete ownership of a public tollroad. The private company can set the tolls, determine the maintenance schedule, and determine the construction for SH 130. Amazingly, the private company benefitted 100% from the right-of-way acquisitions which had occurred before 2012 to purchase land along the route by eminent domain.

Decimation of Hope Highway

If the same scenario happened with the Tx-249 Tollway, the revenue bondholders would likely get left holding nothing but worthless debt. Public investment markets would not look particularly favorably on doing business with Montgomery County in the future. A private company – perhaps one which Craig Doyal, Bobby Adams, Rick Sheldon, Charlie Riley, and their pals owned – could buy the tollroad for a fraction of its cost out of bankruptcy.

The experience of Travis County with SH 130 reveals that such considerations are not speculative musings at all.

U.S. PIRG, a nonpartisan public interest research group, has named the TX-249 extension project among the Twelve Most Questionable Highway Projects in the United States! The research group noted, “Citing outdated traffic projections, the Texas Department of Transportation claims it needs to spend between $337 million and $389 million building a 30-mile six-lane highway from Pinehurst in Montgomery County through Todd Mission in Grimes County to College Station…TxDOT expects vehicle traffic on one road in the area to quadruple from 2015 to 2040. State traffic projections represent average annual growth rates of between 3.7 and 5.5 percent. But data at TxDOT traffic counters in the area show that from 2007 to 2013, the growth was far lower, between zero and 4 percent a year.”

It’s genuinely outrageous that Doyal, Adams, Riley, and their ilk would take those risks with Montgomery County’s future without putting the issue to the voters of Montgomery County first.

 

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