1. The Harris County Toll Road system generated ~$318 million in toll revenue during the last fiscal year. This cash cow currently belongs to Harris County taxpayers. As Harris County tax payers, we are essentially shareholders of HCTRA. We taxpayers already receive the financial benefits from public investments like the Sam Houston Toll Road, and we will for years to come. Some of that revenue is spent servicing HCTRA’s $1.8 billion in debt, and the rest is spent to improve and expand the toll road system.
2. In order for the County to receive up front today as cash the benefit of 30-75 years of future toll revenue -- the "multi-billion dollar windfall" referred to by Judge Robert Eckels -- taxpayers will have to pay a significant premium, either in the form of increased borrowing costs, increased tolls or both.
3. Harris County is already in the business of borrowing against future toll revenue (i.e. floating toll-backed revenue bonds) to get cash today to pay for road projects. As long as the county's bond rating remains investment grade, the county enjoys a lower cost of capital than that of any U.S. for-profit entity (e.g., bank, hedge fund, toll consortium, etc.).
4. An investor (i.e. Cintra/Zachery) will be interested in this deal based on the profits they expect to be able to extract from the toll roads, which must more than cover the price they pay to Harris County and whomever is providing the capital to purchase the tollroads.
5. Harris County, as a public entity, can borrow at a lower rate of return than a private borrower can achieve. Given that a private investor will have a higher cost of capital than Harris County does, then basic finance says that the present value of the cash flows from our toll road system will be worth less to them than they are to Harris County. Since the cash flows are worth less to a private investor than the County, that means no private investor can afford to pay the County what the flows are worth to taxpayers.
6. Further, this “deal” is a once-only proposition. If we sell our interest in Harris County's toll revenue to a private investor, we can never again borrow against it. We will have to borrow against other, less-desirable assets, which will affect the County's bond rating. So, this "deal" may have the effect on Harris County taxpayers of raising our cost of borrowing to 3-5 times the current rate. It would suddenly be as if we had built the toll road system and then decided to pay for it with high-rate credit cards instead of the low-risk bonds for which the taxpayers voted.
In my opinion, it is NOT in the interest of Harris County taxpayers to allow the County to do such a deal. Frankly, I'd prefer the County did not spend any more money studying the concept either.