Lenders foreclose on Camino Colombia tollroad Laredo TX
Assets of the Camino Colombia Toll Road (CCTR) are scheduled to be sold at auction to the highest bidder in a foreclosure sale at the Webb County Courthouse in Laredo Texas Jan 6. No statements have been made by anyone yet, but a Douglas Yaeger of the law firm Locke Liddell & Sapp has filed a public notice at the Webb County Court of the bankruptcy sale. The lawyer must be acting on behalf of New York Life Insurance and John Hancock Life Insurance who between them lent $75m for the $90m tollroad. Ever since the pike opened Oct 18 2000 it has been struggling to get traffic and has been unable to service its debt.
CCTR was somewhat cagey about exact traffic numbers, but they were tiny. When we visited, a few months after the opening the single toll collector at the toll plaza was delighted to chat. We talked for probably ten minutes before he had to excuse himself to take a toll.
CCTR said that URS produced a forecast of 1500 trucks per day and 300 cars per day in the first year which was the basis of their business plan. At $16 for trucks and $3 for cars our calculator shows that traffic would produce $9m/year in toll revenues. The forecast of 1500 trucks was based on the tollroad getting a quarter of the 6,000 trucks per day projected to be crossing the bridge at its southwestern end.
$500k revenue vs $9m forecast!!!
Rather more cars showed up than expected - maybe 400 to 500 - but the trucks hardly showed up at all - maybe 75 a day we understand. So toll revenue must have been about $500k or about 6% of the URS forecast. That 94% undershoot must be one for the record books?
I talked to the prime mover for the tollroad and president of Camino Colombia Inc, Carlos Y Benavides III by phone at the time of the opening in Oct 2000: Its just a great feeling that we have got there. Its been a big effort but now its done. Were celebrating. Well have a few speeches, and then well have a real Texas barbecue out there. Im not that big on ceremonies, but weve got some bigshots along. Of course the big question is: Will they (traffic) come? Weve had great forecasts done, and we have our expectations, but you never really know until it opens.
Benavides is an impressive man in his early 40s - well educated, energetic, charming, bilingual, worldly, a successful local businessman and landowner, and comes from a long-established and well regarded local family. He has a 200k acre (810sq km) ranch. He has oil and gas wells and runs some cattle but increasingly stocks deer and earns income from managed deer hunts.
Camino Columbia Inc, the tollroad entity is a private company formed by Benavides and about a dozen other large landowners along its route. They contributed $15m in equity, mostly in the form of granting strips of land for the right of way from their cattle ranches but also an unknown amount of cash.
The tollroad provides a direct connection between I-35 and the Colombia Solidarity Bridge (Bridge 3) over the Rio Grande to Mexico. The pike is 35km (22mi) long and mostly just a single 2-lane roadway, though it has segments of 2x2-lanes and runs through fairly flat scrubby grazing country just north of Laredo. The most expensive part of the project is the interchange at I-35, made expensive by the need to hoist everything up over parallel frontage roads and a railroad line alongside. The toll plaza of four toll lanes is located only 7km (4mi) from the southwestern end toward the border bridge. Several cross roads are at-grade intersections and allow free trips.
When I visited some months later Benavides was already disappointed but hoped to drum up sufficient traffic to hang in.
City's Bridge 4 more attractive
The basic problem for CCTR seems to be that most of the cross border truck traffic is more efficiently handled by City of Laredo Bridge 4 closer in to Laredo. It is closer to the many customs agent and transhipment yards serving cross-border trucking. Benavides and his colleagues hoped that NAFTA would allow Mexican and American truckers to abandon the "drayage" and tractor exchanges at yards on either side of the river and drive direct Monterey MX to Chicago IL or Guadalajara MX to Atlanta GA in which case Bridge 3 and the CC tollroad would be a good deal. But in fact the vast majority of trucking sees the trailers shuttled over the border by customs agents' tractors and dumped off in transhipment yards to be picked up later by native drivers. These drivers prefer to be closer in where the truckstops and motels are concentrated even if it is a few miles more.
The city's World Trade Bridge (Bridge 4) opened after the forecasts for the tollroad were made and indeed only shortly before the CC tollroad opened. Bridge 4 has seized four-fifths of the truck traffic of the three crossborder bridges that take trucks (Bridge 2 downtown takes pedestrians and cars only.) Truck traffic across the Solidarity (Bridge 3) at the end of the CC tollroad has dropped from about 5,000 a day to 1,300. Bridge 4 is now running 6,300 trucks per day of the total 7,800 per day that cross the three city bridges. (The downtown Bridge 1 is reduced to a mere 200.)
URS forecasts apparently failed to anticipate the huge shift of trucks to the new trucks-only Bridge 4. Local politicians also managed to get state and federal grants for a $70m 4km (2.5mi) freeway spur off I-35 linking the interstate directly to Bridge 4, cutting time advantages of the CCTR. When the CCTR forecasts were made it was probably reasonable to assume that trucks crossing the closer-in bridges would have slow trips on surface streets between the bridge and the interstate. There is now a massive four-level stack interchange at I-35 and the urban freeway spur built courtesy the taxpayer for the rival bridge. The interchange and spur is called the Loop 20/Mines Road upgrade.
Other disappointments for Camino Colombia have been:
a promised tollroad connection on the Mexican side of the border that was expected at the same time as the CCTR has only just opened
the failure of the city to force hazardous materials ('Hazmat') loads to go over Bridge 3 the Colombia Solidarity bridge which traffic CCTR thought it would have a lock on
a slowdown in the rate of growth of overall US-Mexico truck traffic
difficulty in establishing roadside business at Bridge 3 and along the CCTR given the shift of truck traffic to Bridge 4
In April this year Benavides told the LAREDO TIMES that "The only reason people use toll roads is because there is congestion (on free roads)." Without congestion leading to the fourth bridge the tollroad wasn't viable, he was quoted as saying.
Texas Transportation Commission has formally granted TxDOT authority to attend the foreclosure sale and it may bid. Contact Locke Lipp & Sapp lawyers for the creditors 214 740 8000 or 512 305 4700 TRnews 2003-12-25
WOT'S IT WORTH: A property grossing $500k isn't worth much on that basis. If its operating costs are $300k, it is netting $200k. Capital value: $2m or $3m at most versus $90m that went into it. A bid beyond $2m or $3m is a bid based on optimism about growth and change. The CCTR, Bridge 3, and more importantly the roadway on the Mexican side have the potential to eventually become the dominant corridor between Monterrey MX and Dallas TX. Bridge 3 leads on the Mexican side to the new pro-business city of Colombia set in a tiny neck of the very entrepreneurial state of Nuevo Leon of which Monterrey is the capital. Bridge 4 by contrast leads into Nuevo Laredo. It is far more difficult and expensive on the Mexican side in Nuevo Laredo to replicate the Loop 20/Mines Road spur. Probably Mexican connections to the main highways south (85D Tollroad) will always be inferior via the now dominant Bridge 4 crossing route. So the capacity of Bridge 4 may be limited by congestion on the Mexican side, at which time Bridge 3 and to some extent CCTR gets the spillover which hardly exists at present. But so long as Mexican-US trucking remains in thrall to drayage or shuttle operations in which there is minimal through-trucking CCTR won't benefit very much. All the facilities for drayage are back down in Laredo near Bridge 4.
Only when Mexican tractors with Mexican drivers are accepted deep in the US, and American tractors and drivers deep in Mexico will the CCTR comes into its own, since it is the most direct and uncongested route. NAFTA is supposed to have made that happen, but labor unions and the safety lobby have so far blocked US implementation of its obligations under NAFTA. It would be unthinkable in Germany or France or the UK for Greek or Polish trucks to treated the way the US treats Mexican trucks. President Bush has been a pretty strong force in favor of NAFTA through-trucking reforms, and in opposing the racist and reactionary elements in the labor unions and the Naderite organizations that have blocked them so far.
A bid for the CCTR is something of a bet on a breakthrough in opening up the borders and winding down the primitive border drayage operations. Also of course it is a bet on the sheer growth of trade over the Rio Grande. TRnews 2003-12-26