SECTION 27.10. Compensation upon Termination for Convenience

(a) Purpose. Transportation Code, §371.101 requires a comprehensive development agreement under which a private participant receives the right to operate and collect revenue from a toll project to contain a provision authorizing the department to terminate the agreement for convenience and purchase the interest of the private participant in the comprehensive development agreement and related property, and to include a price breakdown stating a specific price for the purchase of the private participant's interest at specified intervals from the date the toll project opens. This section describes the methodology for determining the compensation amount owed to the private participant as a result of the termination for convenience of a comprehensive development agreement in which the private participant has an ownership right to the toll revenues and is subject to Transportation Code, §371.101.

(b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Fair market value--The amount that a willing and able buyer would offer, and a willing and able seller would accept, for the purchase and sale of the private participant's interest, in an arm's length transaction, under the conditions specified in the comprehensive development agreement.

(2) Specified interval--A period of not less than two years and not more than five years that is specified by the department within the term of the comprehensive development agreement from the date the toll project opens, as defined in the comprehensive development agreement.

(c) Price breakdown. A proposer shall include a proposed price breakdown in its proposal, using the specified intervals required by the department. The department will evaluate the proposed price breakdowns as provided in §27.4 of this subchapter.

(d) Compensation amount. A comprehensive development agreement under which a private participant has an ownership right to revenue from a toll project shall include provisions regarding compensation to the private participant if the department chooses to exercise its option to terminate for convenience the comprehensive development agreement at any time before the toll project opens. A comprehensive development agreement under which a private participant has an ownership right to revenue from a toll project shall provide that, if the department chooses to exercise its option to terminate for convenience the comprehensive development agreement and lease at any time during a specified interval, the compensation to the private participant respecting the termination may not exceed the lesser of:

(1) the price stated for the interval in the price breakdown included in the comprehensive development agreement that is in effect on the date of purchase, as defined in the comprehensive development agreement; or

(2) the greater of:

(A) the fair market value of the private participant's interest on the valuation date, as defined in the comprehensive development agreement, plus or minus any other applicable amounts specified in the comprehensive development agreement; or

(B) an amount equal to the amount of outstanding debt specified in the comprehensive development agreement, plus or minus any other applicable amounts specified in the comprehensive development agreement.

(e) Notification of price interval and exercise of option to terminate. A comprehensive development agreement subject to this section shall include a provision requiring the private participant to notify the department of the beginning of a price interval not later than 12 months before the price interval takes effect. The department shall notify the private participant if it will exercise the option to terminate for convenience the comprehensive development agreement during the price interval not later than 6 months after receiving the private participant's notice. The comprehensive development agreement shall provide that the department may rescind a notice of the exercise of an option to terminate without liability.

(f) Adjustments to compensation amount. If a project requires expansion or reconstruction in a manner that differs from the manner provided in the original project scope or schedule, the price for terminating the comprehensive development agreement may be adjusted to reflect the changes in the agreement.

Source Note: The provisions of this §27.10 adopted to be effective December 6, 2007, 32 TexReg 8859; amended to be effective February 20, 2014, 39 TexReg 1000