Supporting the refinancing of the LBJ TExpress Lanes

The LBJ TExpress Lanes are managed lanes outside Dallas. Since the lanes fully opened in 2015, they have experienced increasing interest from travelers and growing traffic and revenue levels. With construction and early traffic risk no longer an issue and to take advantage of current market rates, the concession company sought to refinance the project debt. In early 2020, the concessionaire started to prepare for but before formally initializing the refinancing, COVID-19’s impact on traffic and revenue began.

How we helped

Steer served as the Traffic Advisor to the LBJ Infrastructure Group. Beginning in 2018, we built a toll forecasting model that reflects observed behaviors of current managed lane travelers and produces forecasts that validate against observed traffic and revenue levels. We also built this model to incorporate the latest outlook for socioeconomic growth and planned transportation improvements in the region.

To support the refinancing during 2020, it was necessary to account for COVID-19’s impact. We accordingly made adjustments to our traffic and revenue forecasts in both the short term and longer-term to reflect COVID-19’s impact. For the short-term, we reviewed data on key economic and COVID-19-related trends which we used as a basis for extending the recovery trajectory into the near future. In the longer-term, we made adjustments to the forecasts to reflect anticipated changes in a “new normal” that includes increased working from home levels, increased e-commerce, and a lingering economic recovery.

Successes and outcomes

By applying our forecasting approach that addressed COVID-19, we prepared a traffic and revenue study report that was included in the bond official statement. We prepared summary materials and answered questions from rating agencies and potential investors. This led to a successful issuance of $600 million in Private Activity Bonds in September 2020.