In October of 2012, State Highway 130, the “Pickle Parkway”, opened up in Central Texas with a lot of excitement. Not only does it have the highest speed limit in America, it was the state’s first road built via private-public partnership. But less than four years, later it doesn’t seem to be working out; the company running it has filed for bankruptcy.
SH 130 was originally pitched as an alternate route around Austin, specifically to cut down on traffic on the capital region’s busy Interstate 35.
A 41-mile portion of the road is owned and operated by the SH 130 Concession Company, “a partnership between Spain-based Cintra and San Antonio-based Zachry American Infrastructure,” The Texas Tribune explains. “...the company signed an unprecedented deal with the state to build and operate its section of the road for 50 years in exchange for a portion of the toll revenue.”
But unfortunately for the SH 130 Concession Company, not enough people have been using the road to cover the expenses of building and maintaining it. The project was in financial trouble as soon as a year after it was first opened.
In 2014, it was reported that the outfit behind SH 130 owed over $1 billion but remained “optimistic.” Now, it seems they’re finally admitting financial defeat. Current reports put the company’s debt at about $1.3 billion.
San Antonio Express News says that the SH 130 Concession Company spent $1.35 billion to build its portion of the road in the first place, and has paid out “about $143 million [to the Texas Department of Transportation as part of the toll-sharing deal] since 2012.”
Moody’s Investors Service announced they “downgraded SH130 Concession Company LLC’s senior secured bank and subordinate TIFIA loan ratings to Ca from Caa3" in light of the bankruptcy filing, saying “The outlook was changed to stable from negative.”
Nasdaq’s definition of a “Ca” rated financial asset is “highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest,” which means “a risky investment” which means “not good.”
CEO of the SH 130 Concession Company Alfonso Orol said “The filing will have no financial impact on the state of Texas. It’s business as usual for our customers, employees, vendors, and surrounding communities during these [bankruptcy deliberation] proceedings,” in a press release.
The road will remain open for now while the company tries to figure out how to stay financially stable, and toll prices are supposed to stay the same. The Concession Company has set up a website specifically to address questions motorists and Texas taxpayers might have about the unprecedented situation of a broke-ass highway.
This doesn’t mean public and private collaboration on infrastructure is bad, though it might be harder to sell in the future depending on how SH 130's situation plays out.
Anyway, if you’ve been fiending to drive the fasted highway in America, you might want to get down to Texas now—the fate of SH 130 is murky and it sure could use your toll money.
Correction: This headline has been updated to reflect that it is the operator of the toll road, not the road itself, that is bankrupt; it is also the state’s first road built via private-public partnership, not America’s.
Images via the author/zeesstof, Ken Lund
Contact the author at andrew@jalopnik.com.