Project Financing and Implementation

Financing for the $1.397 billion NTE Segment 3A was finalized in September 2013. NCTCOG is contributing $145 million in public funds and NTEMP is providing the remaining $1,252 million. NTEMP's Segment 3A financing includes toll equipment for both Segments 3A and 3B.

Financing for the $244 million Segment 3B is primarily being provided by TxDOT in the form of traditional state and federal funds. A small portion of NTEMP's financing will also cover Segment 3B. Financing for the proposed $700 million Segment 3C is expected in 2017 pending a development agreement between TxDOT and NTEMP.

North Tarrant Express 35W Project

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NTEMP's financing package for Segment 3A includes a combination of private equity and debt. NTEMP's private equity contributions from its three partners total $442 million and it also expects to generate $46 million in interest income. The private partners will be repaid for their initial investment and receive a return over the life of the concession from toll revenue collections.

NTEMP also capitalized on two federal credit programs administered by the U.S. Department of Transportation that reduce financing costs for private developers. Together with TxDOT, the company secured a $531 million loan from the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, of which $524.4 million was allocated to Segment 3A and $6.6 million to Segment 3B. TIFIA provides low cost, flexible credit assistance to transportation projects of national and regional significance. The flexibility provided in TIFIA's debt service schedule was critical to the successful financing of the project.

In addition, NTEMP's financing includes $274 million in tax-exempt bonds that TxDOT issued on behalf of the concession company ($3.4 million of these proceeds will go toward Segment 3B). 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 back the facility in a prescribed state of good repair when the concession expires on June 22, 2061 (or on another date, as agreed upon between the TxDOT and NTEMP).

Construction of Segment 3B nears completion at the end of 2016. Construction on Segment 3A is anticipated to be complete in 2018. Segement 3C's completion depends on the timing of the P3 partner and TxDOT executing a development agreement.