Yet again, Texas Toll Road has Credit Rating Downgraded

Sigh:

Moody’s Investors Service Inc. has again downgraded the credit rating of SH 130 Concession Company LLC, based on what it said was inadequate traffic growth on the company’s 41-mile, tolled section of SH 130, the high-speed highway that runs around Austin parallel to I-35.

The road has been called an asset to economic development in towns along the route, such as Pflugerville, but has been hampered by what Moody's called "slow to moderate, yet inadequate" traffic growth. The credit rating agency expects that without a debt restructuring or additional investment, the Concession Company will be unable to meet its debt service payments due in June 2014, according to the rating report.

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The short-term implications of a default are unclear, Moody's wrote, but a continued payment default could lead the Texas Department of Transportation to terminate the concession agreement.

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“A yearlong initiative by the Texas Department of Transportation to significantly subsidize truck tolls on the entire length of SH 130 is having a positive impact on traffic and revenue for the Concession Company, and additional long-distance signage is increasing awareness of the road. We remain confident that the recently-opened SH 130 Segments 5 and 6 will benefit our investors and the people of Texas," said Chris Lippincott, a spokesman for SH 130 Concession Company.

Here's a radical thought: Why not allow privately owned and operated toll roads with ZERO financial contribution (including loan guarantees) from the state?!?  If the people who operate toll roads were on the hook when those toll roads lose money, they'd darn sure figure out a way to make sure said toll roads don't lose money.  Only the free market can solve Texas' transportation challenges.