Texas' SH 130 toll road went bankrupt on missed projections — and emerged with new owners

SH 130 Concession Co. operated and maintained a 41-mile stretch of Texas State Highway 130 under a public-private partnership. Tolls failed to meet the original, pre-recession projections, the concession company suffered what Construction Dive calls irreparable financial losses, and it went through Chapter 11 reorganization.

The reorganization handed management of the concession and the toll road from Cintra and Zachary American Infrastructure to Strategic Value Partners and Louis Berger Services. SH 130 secured a $260 million loan to help the company exit bankruptcy, and there was no increase in tolls as a result of the process.

The exit came as public entities grew more comfortable with P3s — handing financing, design, construction and operations to the private sector — a structure central to the Trump administration's plan to turn $200 billion of federal investment into a $1 trillion infrastructure initiative. Construction Dive's caution: the potential for P3 failure may be overlooked, citing Indiana's takeover of an I-69 highway P3 where $236 million of work remained against $72 million of funding.

Out of Chapter 11 with new owners and a $260M loan financing the exit; tolls were not raised.

The concession's economics were priced on pre-recession traffic and toll projections that never materialized.

A P3 concession leaves the revenue risk with the private operator, so the shortfall landed entirely on SH 130 Concession Co.

The fix was financial rather than operational: new ownership, new management and $260 million of exit financing instead of higher tolls.

Traffic projections are the riskiest number in a P3: SH 130 priced a 41-mile road on pre-recession forecasts, and the shortfall sank the concession into Chapter 11.

As of July 2017 the road was out of bankruptcy under Strategic Value Partners and Louis Berger Services, with the $260 million loan in place and tolls unchanged. Construction Dive held the case up as a warning that P3 enthusiasm can obscure failure risk, alongside Indiana's I-69 takeover.