BIKE: Securing Toll Road Bonds

[Roger Baker]

Karen Sonleitner may say that but its not true. Those responsible for 
issuing bad bonds that cause the big boys lots of money WILL get a bad 
reputation on Wall Street. Thats just how the bond biz works.

One big reason why Karen Sonleitner voted against McCracken's call for 
an independent investigation of the new $22 billion dollar CAMPO plan 
unveiled at the last CAMPO meeting is because the toll roads and the 
rest of the plan can't withstand the close scrutiny of outside experts.

Any sober and independent investigation of the new CAMPO plan would 
reveal it as a special interest plan designed to benefit the road 
contractors and land speculators who dominate Central Texas politics, 
as well as all the other beneficiaries of oil-addictive sprawl, such as 
WalMart and so on. All the special interests are clearly revealed on 
the website www.austintollparty.com

The reality is that local governments which issue bonds that 
subsequently default and cost the big investors  a bundle of money -- 
get a bad reputation on Wall Street -- no matter what state level legal 
disclaimers the road lobbyists might have caused to appear somewhere in 
the fine print in their tax free municipal bonds. Thats why TxDOT 
bailed out Tony Sanchez's Camino Columbia toll road and why TxDOT wants 
to use the CTRMA to issue the toll bonds, instead of doing it 
themselves like they did with SH 130. Travis County's credit rating 
will suffer when these bonds default.

Its true that the bonds are insured and also have the padding of $66 
million in federal TIFIA loans that take the default hit first. But 
thats still not enough to take away the enormous risk of default due to 
peak oil and soaring fuel prices. Another risk is that the projected 
sprawl growth will not materialize where the CTRMA board has its land 
investments, and which the roads are designed to enhance.

The traffic and revenue consultants clearly acknowledged the peak oil 
risk in the fine print of the "Official Statement" on the US 183A 
bonds. The quote below is verbatim from page 77 of the nearly 500 page 
PDF file. For the bonds to be a good risk, the consultants stipulate 
that the price of fuel must not rise above $3 per gallon any time in 
the next 30-40 years!!!!  -- Roger


"... Motor Fuel Prices and Taxes  Among other assumptions, the Revenue 
Forecasts in the Traffic and Revenue Report are based on  (i) the 
assumption that motor fuel will remain in adequate supply and motor 
fuel prices (in current dollars)  will not exceed $3.00 per gallon and 
(ii) the assumption that federal and State motor fuel taxes will not  
increase to the extent that, together with price increases, motor fuel 
pump prices exceed $3.00 per gallon.   There is no assurance that motor 
fuel will remain in adequate supply or that motor fuel prices and 
federal  and State motor fuel taxes will not increase to the extent 
that motor fuel pump prices exceed $3.00 per  gallon during the 
forecast period covered by the Traffic and Revenue Report.  Motor fuel 
pump prices in  excess of $3.00 per gallon could negatively impact the 
Revenue Forecasts contained iRevenue Report.  See “APPENDIX D – TRAFFIC 
AND REVENUE REPORT.” ..."



On Feb 23, 2005, at 12:50 PM, Patrick Goetz wrote:

> floating to work in the sea of south side land boats seems to have 
> made me a bit jumpy; as the send button was activated before I was 
> done with the previous message.
>
> TOLL ROADS
>
> Toll road enthusiast and Travis County commissioner Karen Sonleitner 
> posted the following letter to last week's Chronicle:
>
>      The Feb. 11 letter from Dolores Leyba and Jim McDermitt claims, 
> "The formation of
>      the Central Texas Regional Mobility Authority, as a new toll road 
> authority in
>      Central Texas, causes Travis County to commit the full faith and 
> credit to the RMA
>      bonds, obligating Travis County to raise taxes to pay for
>      the bonds if the toll fees do not cover the cost of the bonds" 
> [“Postmarks”].
>
>      Not true. Here are the facts. The bond documents, including the 
> bonds themselves,
>      contain language stating that neither the state of Texas nor any 
> other political
>      subdivision of the state of Texas, other than the CTRMA, is 
> obligated to pay
>      the bonds. Further, there is no pledge of taxes from any entity 
> to the payment
>      of the bonds, and the bonds will state that the CTRMA has no 
> taxing power.
>
> Can this possibly be true?  Why on earth would anyone invest in 
> speculative, unsecured junk bonds like this?  There must be a catch, 
> and I'm wondering if anyone is in the know on what the scam is.  
> Astute list participants will recall that Karen Sonleitner is the 
> person who had a $1500 a plate fundraiser attended by 30-50 
> individuals from companies which stand to profit directly from the 
> toll road plan; i.e. anything she says about this issue should be 
> taken with 2 salt mines and a majority stake in the Morton 
> corporation.