Texas – Expediting Road Construction With Toll Financing

At a time when the need for new highway capacity greatly exceeds traditional sources of revenue, toll revenue financing is attracting increased attention. Issuing bonds secured by toll revenue gives state and local authorities the ability to accelerate road construction and undertake new projects that might otherwise take years to implement if they were to depend on funding from state and federal gasoline taxes. Nowhere is this philosophy more evident than in the state of Texas. The Texas legislature has declined to raise the gas tax. Instead, in June 2003, it passed landmark legislation (HB 3588) providing an arsenal of new financial tools that promise to vastly speed up transportation improvements. The new law authorizes a $3 billion bond issue to be used for highway improvement projects (subsequently ratified by a constitutional amendment in September 2003). It also provides additional authority to the Regional Mobility Authorities (RMAs) which are charged with constructing, maintaining and operating toll facilities on a regional basis. HB 3588 authorizes the RMAs to issue revenue bonds backed by tolls and to enter into comprehensive development agreements with private entities to design, construct and operate toll road facilities. The law also has introduced two innovative new features: it authorizes the Texas Transportation Commission to convert regular state highways to toll facilities and to transfer them to RMAs for operation and maintenance; and it provides for payment by Texas DOT of per-vehicle fees (called pass-through or“shadow” tolls) as reimbursement to RMAs for construction and maintenance of state highways or as compensation for the cost of maintaining toll facilities transferred to an RMA. In a recent action, the Commission, acting under its new authority, directed the Texas Transportation Department to establish guidelines to evaluate all highways “in any phase of development or construction” for potential tolling.

Interest in toll roads in Texas goes back to the 1950s when the state legislature enacted the Texas Turnpike Act, under whose authority the first toll road, the Dallas-Fort Worth Turnpike, was built. The facility was opened in 1957 and operated as a toll road until the 1970s when it was turned over to the Texas Highway Department upon repayment of the bonds. Ever since then, the state of Texas has been on the forefront of toll road development. Its two tollway authorities – the North Texas Tollway Authority (established in 1997) and the Harris County Toll Road Authority (est. 1983) – and the Texas DOT’s Turnpike Authority Division, are known nationwide for their pioneering use of electronic toll technology and for innovative financing partnerships such as the privately financed Camino Columbia Toll Road.

Now, a new generation of toll roads is taking shape in Texas, facilitated by the bond issue and legislative

changes. Major toll projects include the $3.6 billion Central Texas Turnpike Project, the first phase of which is under construction in the Austin area; a reconstruction of the LBJ Freeway (I-635) in North Dallas which will include four HOT lanes; an expansion of the Katy Freeway in west Harris County including conversion of its HOV lanes into high-occupancy toll (HOT) lanes; and a 12-mile toll road built by the state’s first Regional Mobility Authority, the Central Texas RMA. The first phase of the Central Texas Turnpike Project involves a total of 138 miles of toll roads, financed with a $1.8 billion bond issue backed by toll revenue and built under a design-build-maintain contract with a guaranteed completion date.

Thanks to the arsenal of the new financial tools authorized by HB 3588, the new toll roads will be completed many years earlier than they would have under traditional pay-as-you-go funding that relies on state and federal gasoline taxes. “Tolling allows us to build roads years if not decades faster,” said Commissioner Robert Nichols.

In addition to providing bonding authority, HB 3588 authorized the Texas Transportation Commission to convert any non-toll segment of the state highway system to a toll facility if such conversion will improve overall mobility in the region or if it is found to be the most feasible and economic means to improve or extend a non-toll segment. Acting under this authority, the Commission in a December 18 action, directed the Texas DOT to establish guidelines for evaluating all highway projects “in any phase of development or construction “ for potential toll operation. In other words, the State of Texas is henceforth going to consider tolls as part of every new highway project and every expansion of an existing highway. Toll revenues collected from the operation of a converted highway will only be used to finance the improvement, extension or operation of that highway.

The Trans-Texas Corridor

Dwarfing the Central Texas Turnpike Project, will be the Trans-Texas Corridor (TTC), also authorized in

HB 3588. The TTC will include a system of toll roads, toll truck lanes, rail lines and utilities. Major components of the project, estimated to cost $150-185 billion, will include a 608-mile north-south transportation corridor from the Oklahoma border to the Mexican border, generally paralleling Interstate 35; and a 559-mile east-west corridor, generally paralleling Interstate 69. This huge project, to be built over several decades, will be implemented through Comprehensive Development Agreements and will take advantage of the full array of financing tools: the Texas Mobility Fund, the Regional Mobility Authorities, the sale of bonds, toll equity, pass-through toll agreements and comprehensive development agreements.

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  • Short-Term Lending and Personal Loan FAQ Guide

    Borrowing money for the first time can be intimidating. There is a whole range of financial tools used by lenders to determine the borrower’s creditworthiness. For good reasons, however, personal loans and short-term lending are increasingly becoming popular for covering sporadic and massive expenditures.

    Here’s a guide that covers short-term lending and finding the best personal loan that suits you.

    What are business needs suitable for short-term financing?
    Different types of short-term lending are appropriate for varied business needs. Examples of needs projected to have short-term ROI include physical renovation, hiring new staff, and purchasing new equipment.
    Is APR an ideal way to make cost calculations?
    The annual percentage rate is only a single way to represent total interest cost and fees as a yearly payment which may appear higher than the overall cost of a short-term loan. When you look at other factors like the total cost of your loan and different business needs, you’ll realize that a short-term loan would better fit your business needs. At a glance, a short-term loan with a higher APR is more affordable than a long-term loan with a lower APR.
    How long does it take to receive a response?
    Depending on the loan issuer, your credit history and loan amount, the typical wait time could be 45 minutes or less. However, some lenders could take up to 3 working days to approve, it will vary from lender to lender and based on your unique lending needs.
    How does the lender determine the interest rate?
    Your personal short-term loan interest rate is determined based on your risk profile. The general rule is that the lower your credit score, the higher the risk. Lower risk means a lower interest rate, and higher risk means a correspondingly high interest rate.
    How long will I have to repay the loan?
    You’ll have to begin repaying the loan within 30 days in installments. Most lenders provide repayment terms ranging from six months to six or more years. The interest rate and monthly payment will be impacted by the period you choose to repay the loan.
    Are there other fees associated with personal loans?
    Creditors may charge sign-up, processing coupled with landing fees. In most cases, these charges are billed only once and are often outlined in the application documents. Although it’s not uncommon to have obscured payments, hidden fees would generally add up between 1 to 5% of the entire amount.
    Do I need a good credit score?
    Before you start applying for a short-term personal loan, it’s crucial to know you’ll qualify with your credit score. Most loan issuers are looking for customers with good credit scores. However, if you have a good relationship with the creditor, you may get a favorable term, particularly if your account shows a history of timely payments and honoring the terms of past loans.
    Can I get a loan with a low credit score?
    Loan issuers have different loans designated for people with varying credit scores. Lending options meant for consumers with bad credit are, without a doubt, different from those with good scores. While a higher score boosts your approval chances and gives you favorable terms, there are specific loans meant for people with low credit scores.
    How do I apply for a short-term personal loan?
    Once you’ve identified the financing option ideal for you, assemble all the documentation needed. Do not yield to the pressure to have money as soon as possible to offset the chances of making a shoddy application. It’s always good to fill the documents comprehensively, attach personal information, your resume if needed, business and personal tax returns, financial statements, and the collateral value that may be required.
    Will the lender approve my application?
    Your business and personal credit will be essential metrics in determining a lender’s decision. At its core, one of the handiest tools used by the lender is looking at your credit score. At the same time, other factors include your debt ratio, business debt, revenue trends, personal and business debt coverage.

    How do I improve my chances of getting approved?
    It sounds harsh that most loan requests are rejected. Looking at the reasons that contribute to applications’ inevitable rejection, the ideal way to improve your standing is to build your credit score. Aside from convincing the lender that you’re better suited for approval, a healthy credit score helps you qualify for favorable interest rates.

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