Moody's Investment Service today declared the southern half of the State Highway 130 toll road to be in 'technical default,' saying it rescheduled rather than made a June 30 payment on it's $1.1 billion debt, Newsradio 1200 WOAI reports.
"By executing a waiver agreement, we understand that the project is not in legal default," according to a Moody's investor note. "However, Moody's view is that the failure to meet the full payment that was originally scheduled for June 30, 2014 constitutes a default under Moody's definition."
Since the road, which is the only highway in America where a motorist can legally drive 85mph, is not in legal default, the project will continue said a spokeswoman for the State Highway 130 Concessions Company, which operates the southern half of the highway, pointed out the difference.
"The SH 130 is not in default," spokeswoman Megan Compton said. "It has reached an agreement with lenders that modifies the payment date such that no failure to pay occurred. A portion of the payment was made recently and the remainder is due in the future. As a result of the modification, as a matter of fact and as a matter of law, there is no default."
But Terri Hall, a long time anti toll activist and the founder of Texans Uniting for Reform and Freedom says the bottom line is, the public private partnership toll concept does not work.
"There are never going to be enough people in this state that have the kind of money to plunk down $7, $10, $12 a day in tolls to get around," Hall said.
Hall said the financial troubles facing the SH 130 project will make it a lot less likely that private companies will step forward and agree to finance proposed toll lanes on Loop 1604, Interstate 10, US 281 and elsewhere. She says TxDot and the state bent over backwards to give the SH 130 project every advantage, from the super high speed limit to promoting the highway throughout Austin and San Antonio, and even with those advantages, the project is struggling.
"There is no way that these roads are ever going to cash flow, and make the kind of money that is going to make any private developer want to take a look at it," she said.
She says the proposed toll roads in Bexar County will not have the advantages that SH 130 had, and that will make it even more unlikely that a builder will step up to build the roads.
Compton said Moody's made very clear that the project is not in legal default. She said the lenders do not consider the project to be in default, and that is what matters the most.
"The company continues to provide an excellent service to central Texas drivers and to fulfill all its contractual obligations," Compton said.