A $1.3 billion private investment to build the remaining 40 miles of State Highway 130 * the state's first concession agreement * was approved Thursday by the Texas Transportation Commission.

Public-private partnerships are part of the state's strategy to use private sector innovation and investment to bridge the transportation funding gap and accelerate needed projects.

"This public-private partnership is a sign of good things to come and a preview of future transportation financing in Texas," said Michael Behrens, executive director of the Texas Department of Transportation. "It's a huge private investment that will go a long way toward helping us accomplish our transportation goals: reduce congestion, enhance safety, expand economic opportunity, improve air quality and increase the value of transportation assets."

Under the agreement, Cintra Zachry will put up the needed financing to complete the toll road from Austin to Seguin. The financing package also includes millions of dollars for right of way costs to be paid by Cintra Zachry, lifting the financial burden from Caldwell, Guadalupe and Travis counties.

The state also negotiated a $25 million up front concession payment, which will be used for other projects in the Austin-San Antonio region.

The terms of the agreement also give the state a share of the toll revenue over the next 50 years. The state's cut of the toll revenue begins with the first dollar earned on the toll road. The agreement also defines how the state's share will increase as toll revenues reach certain levels, eventually reaching a 50-50 split with Cintra Zachry.

It is estimated that the state could receive approximately $1.6 billion over the next 50 years in toll revenue.

The agreement also calls for the transportation commission to approve the methodology for setting the tolls, as defined in state law.

The southern half of SH 130 will be an all electronic toll collection system allowing motorists to travel at highway speeds without stopping at toll plazas and looking for coins. The state will be responsible for the customer service and business operation of TxTag.

The terms of concession agreement transfer key risks to Cintra Zachry, such as construction cost, overruns, construction delays, traffic and revenue risks and financial risks.

State transportation officials stress SH 130 will be a state-owned toll road with title to any property purchased to be held by the state. Subject to environmental clearance, Cintra Zachry will be responsible for the financing, design, construction, operation and maintenance over 50 years.

Environmental work is ongoing on the 40-mile portion of SH 130 from Austin to Seguin and is expected this year. Following environmental clearance, Cintra-Zachry can begin right of way acquisition and construction. The toll road is expected to be open to traffic in 2012.

Once completed, SH 130 will afford congestion relief in Central Texas by providing commuter and NAFTA traffic an alternative to I-35 between Austin and San Antonio.

SH 130 will be a 90-mile toll road extending from I-35 north of Georgetown to I-10 in Seguin.