Texas DOT gets $3 billion of bond authority from state legislature

Bonds

The Texas Transportation Commission, historically one of the largest debt issuers in the state, will return to the bond market with $3 billion of authorization from the state Legislature.

House Bill 2219 allows the commission to issue new Texas Mobility Fund obligations until Jan. 1, 2027.

The bill requires that the aggregate principal amount of new bonds be issued after May 31, 2021, and before January 1, 2027. The debt may not exceed an amount equal to 60% of outstanding principal of TMF debt as of last May 1.

The Texas Department of Transportation plans redevelopment of Interstate 35 through Austin.

TxDOT

The bill, awaiting Gov. Greg Abbott’s signature, repeals the commission’s authority to issue bonds for publicly owned toll roads.

The Texas Mobility Fund was created with voter approval of Proposition 15 in 2001 after approval by the 77th Texas Legislature.

In its 2021 progress report, the Texas Department of Transportation, the agency governed by the TTC, identifies progress made during a global pandemic.

TxDOT has more than $24 billion of projects under construction, which is the largest in state history. In the past fiscal year, TxDOT approved more than $7 billion in construction and maintenance contracts and its payments to contractors increased 26% year over year from fiscal year 2019 to 2020.

A major focus for the agency has been reducing congestion and improving mobility in the state’s most congested areas through the Commission’s congestion relief initiative, called Texas Clear Lanes.

The program, aimed at providing congestion relief through non-tolled projects, is focused on tackling the biggest traffic chokepoints in Austin, Dallas, Fort Worth, Houston and San Antonio — TxDOT’s five metro districts. So far, TxDOT has completed six major Texas Clear Lanes projects. Another 19 are under construction, and 18 more in the planning stages.

TxDOT expects to issue $1.5 billion of bonds in fiscal year 2022, which begins Sept. 1. Final maturity on those bonds would come in 2045. Another $1.5 billion would be issued in fiscal year 2024, with a final maturity date in 2042. An aggregate interest rate of 3.2% is anticipated.

Debt service payments on the new bonds would begin in fiscal year 2023 at a cost of $40 million to the Texas Mobility Fund 365, with debt service payments and costs to Fund 365 continuing through fiscal year 2045. TxDOT estimates total repayment over the life of the bonds would be $4.5 billion from Fund 365.

Among TxDOT’s most costly projects is redeveloping Interstate 35 through Austin and Central Texas.

TTC plans to provide $4.3 billion to build new lanes on I-35 through Austin. The funding would be in addition to money already approved by the commission, bringing the total investment on the I-35 Capital Express Project to $7.5 billion.

“In recent years, I-35 through Austin has repeatedly been one of the worst chokepoints for drivers in Austin and Texas and the source for understandable frustration,” Bugg said. “The I-35 Capital Express Project is a statewide strategic priority project, not just for Austin, but the State of Texas.”

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