Project Financing and Implementation

Financing for the NTE Segments 1 and 2 was finalized in December 2009. TxDOT contributed $594 million in public funds and NTEMP provided the remaining $1.53 billion. Its financing package includes a combination of private equity and debt. NTEMP's private equity contributions from its three partners totaled $426 million. The private partners will be repaid for their initial investment and receive a return over the life of the concession from toll revenue collections. In August 2012, a fourth private partner, the Dutch pension fund APG, joined the concession by purchasing a portion of Meridiam's shares in the project.

North Tarrant Express (I-820 and SH 121/183)

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NTEMP also capitalized on two federal credit programs administered by the U.S. Department of Transportation that reduce financing costs for private developers. They secured a $650 million loan from the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, which provides low cost, flexible credit assistance to transportation projects of national and regional significance. The TIFIA loan also contributed $54 million in capitalized interest to the project. The flexibility provided in TIFIA's debt service schedule was critical to the successful financing of the project.

In addition, NTEMP's financing includes $398 million in tax-exempt bonds that TxDOT issued on behalf of the concession company. These Private Activity Bonds, or PABs, allowed NTEMP to gain access to the tax-free municipal bond market, lowering its interest rates substantially. The TIFIA loan, as well as the PABs will be repaid from project revenues.

The concession agreement shifts certain risks from TxDOT (and the taxpayer) to the private developer. For example, NTEMP has assumed the risk that toll revenues may be lower than expected. NTEMP's profit will come from the toll revenues with any excess being shared with TxDOT for use on future transportation projects in the region. Texas retains ownership of the land and improvements. NTEMP must hand the facility back to TxDOT in a prescribed state of good repair when the concession expires in 2061.