NCDOT assessing options to cancel, change contract or purchase I-77 toll lanes

CHARLOTTE, NC (WBTV) - The North Carolina Department of Transportation has hired a private firm to evaluate ways to change or terminate its relationship with the private company currently hired to build and operate the I-77 toll lanes.

On Friday, NCDOT said it hired Mercator Advisors LLC to conduct a review of the project.

The announcement comes weeks after new NCDOT Secretary Jim Trogdon announced a review.

"I regret, and I personally regret, that this has become a divisive issue in this community over the last three years," Trogdon said. "We can't change what got us here but we can change where we go next."

It is not clear whether the outcoming of the new review will result in any changes to the project. Opponents of the toll project - including members of the North Carolina General Assembly - have said the review could find enough evidence to cancel the contract for cause.

"We expect our final report no later than late this summer and we will be transparent throughout this process with you with frequent updates," he said. "NCDOT remains committed to insuring the final project is built to the highest standards."

Previous: NCDOT announces new review of I-77 tolls contract

According to the contract between NCDOT and Mercator, the company is being hired to "evaluate the merits and potential costs associated with various policy options for the Project, including, but not limited to, termination of the CA and modifications of the CA to achieve certain policy objectives or to facilitate the potential purchase of the complete facility by a public entity."

Under the contract, the company may be asked to provide assistance with negotiations or changes to NCDOT's contract with Cintra.

The contract with Mercator runs through June 30, 2017.

New firm has ties to Cintra

At the time of his announcement in mid-March, Trogdon emphasized his agency would select a company that had not previously been involved in the I-77 project. That point was emphasized again in the press release from NCDOT announcing the company's hiring.

"Mercator has no previous involvement in the project and has an extensive transportation finance background," the release said. "The firm provides a wide array of financial consulting services to public agencies that sponsor major infrastructure projects and capital assistance programs. Mercator's clients include federal, state and local governmental agencies."

Although Mercator has not been involved in the I-77 project, WBTV has confirmed that Mercator has worked with Cintra on previous projects.

Records obtained by WBTV show that Mercator worked as a "non-equity major participant" on the SH-130 toll road project Cintra built in Texas.

That road - which was first highlighted in a WBTV investigation in February 2016 - opened in 2012 and went bankrupt in March 2016. The US Department of Transportation has said the revenues collected from tolls on the highway have fallen well short of projections, with revenues more than 60 percent below original estimates.

A spokeswoman for NCDOT said the lead Mercator consultant working on the I-77 evaluation was not involved with the Texas project. But records provided by NCDOT and other records of the SH-130 project obtained by WBTV show other consultants working on the I-77 evaluation were heavily involved with Cintra's project in Texas.

Under Mercator's contract with NCDOT, James Taylor - a longtime investment banker who has been involved in arranging financing for private toll projects in Texas and Virginia, among other states - is the lead consultant.

Taylor's partner, Bryan Grote, is also expected to spend up to 48 hours working on the I-77 review, the contract shows. A disclosure form filed by Cintra as part of the Texas project shows Grote was Mercator's point of contact for the project.

The spokeswoman for NCDOT said Mercator advised Cintra on a TIFIA loan from the federal government for the project but could not explain, then, why the firm was listed as a "major participant" on the project.

WBTV spoke with a principle at Mercator Monday morning who referred questions to another consultant. That consultant had not returned calls with additional information by Monday afternoon.

Other companies considered

According to a NCDOT spokeswoman, the agency considered a total of seven companies to conduct the review.

The contract was awarded as a sub-contract through an already established contract between NCDOT and HNTB.

It was not immediately clear whether the companies considered submitted bids or were added to a list by NCDOT staff.

Other than Mercator, NCDOT considered the following companies: PFM, BDO, Canadian Imperial Bank of Commerce, Ernst & Young, Deloitte and Macquarie.

NCDOT did not provide specific justification for why it selected Mercator over the other companies.?

Copyright 2017 WBTV. All rights reserved.