I-77 Mobility Partners says the new bankruptcy petition filed over a 90-mile toll road project in Texas has no impact on the Interstate 77 toll lanes project it is building from uptown Charlotte to the Lake Norman area.
That’s not exactly true, of course. The Texas bankruptcy has no direct legal or financial impact, since two separate companies run the two projects. But both companies are subsidiaries of the Spanish road-building firm Cintra, and both projects are built on the same dizzyingly complex financial framework.
If the Texas project went bust, as has Cintra’s Indiana Toll Road, who’s to say ours won’t, too?
That question definitely dents the political stock of the I-77 project, North Carolina’s first full-fledged foray into the uncertain new world of public-private toll projects.
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As a board, we have long questioned the soundness of the thick legal contract underpinning the $662 million I-77 deal. The N.C. Department of Transportation insists taxpayers are protected in the event of default. But we can only hope that the agency’s contract-negotiation skills grade out much higher than its project roll-out skills have thus far.
It was hardly surprising Friday to hear Transportation Secretary Nick Tennyson say that the news from Texas offers no basis for backing out of the I-77 deal.
Given the spotty financial histories of these projects, you can rest assured that Cintra double-covered its own rear end. When the DOT says it will cost upwards of $100 million to escape the contract, you – or, rather, Cintra – can take that to the bank.
Rural lawmakers, no fans of Charlotte, will never let the state pay millions in break-up fees to accommodate what they’ll see as a change of heart by Charlotte suburbanites.
Javier Tamargo, head of I-77 Mobility Partners, suggests there’s no cause for worry. He told the editorial board Thursday that the Texas and I-77 projects are different. SH 130 runs through an undeveloped area and was designed to attact long-range truck traffic, he said, rather than the daily commuters of I-77.
We aren’t reassured. The general financial model is the same. The risk is comparable.
Gov. Pat McCrory was right to dispatch Tennyson to Texas for a closer look at the bankruptcy of SH 130, which runs between Austin and San Antonio.
But given the deep mistrust local toll opponents have voiced for the DOT, the agency should not review this project in-house again.
Outside accountants and attorneys who specialize in complex business contracts should be tasked with giving the deal one more look – especially the provisions covering financial liability in the event the project fails.
The General Assembly has set aside millions to hire private attorneys to defend some of the more controversial laws it has passed.
We have felt Republican lawmakers, faced with a Democrat, Roy Cooper, in the attorney general’s office, have spent too freely in defending wrong-headed legislation on constitutionally questionable abortion restrictions and fighting gay marriage.
But in this narrow instance, it would be money wisely spent, given the news from Texas, the substantial public dollars at risk on the I-77 deal and the project’s precedent-setting possibilities for North Carolina.