TxDOT violates law, forced to pull plug on 281 toll road

IMMEDIATE RELEASE

TxDOT caught violating the law, forced to pull plug on 281 toll road
TxDOT asks feds to pull clearance due to damaging evidence of rigged study and subsequent cover-up

San Antonio, TX, October 1, 2008 – Today, the Texas Department of Transportation (TxDOT) announced it is asking the Federal Highway Administration (FHWA) to withdraw its environmental clearance for the US 281 toll project in Bexar County. Plaintiffs in a lawsuit to halt the toll project and advance an overpass plan, Texans Uniting for Reform and Freedom (TURF) and Aquifer Guardians in Urban Areas (AGUA), believe TxDOT’s move is in response to an email they obtained from a TxDOT whistleblower showing a biologist at TxDOT hired her own husband to "fix" the environmental study for 281 in order to get federal clearance for tolling an existing freeway.

She did this at the direction of top management at TxDOT, like David Casteel, the former San Antonio District Engineer now promoted to a position as the right hand man to TxDOT Executive Director Amadeo Saenz in Austin. TURF recently uncovered even more damaging emails. In its recent motion to compel TxDOT to hand over other key documents, TxDOT was put on notice that TURF knew about this illegal behavior and were about to depose witnesses under oath about it. Rather than come clean, TxDOT is again trying to hide their wrongdoing blaming the halt on a “technicality” and procurement “irregularities.”

Law enforcement to step in?

“We need law enforcement to get inside TxDOT and confiscate all of these email records and shine the light on this corrupt organization. What we know is likely just the tip of the iceberg,” urged TURF Founder Terri Hall.

"Calling this ‘irregularities’ is their way of covering-up the fact that they broke the law to pre-determine the outcome of the environmental work on 281 (see page 3 of this document) and deliberately suppressed a study (read it here and here) that warned of the potential damage the aquifer. What TxDOT did is tantamount to fraud and collusion to break federal law. TxDOT has conducted itself illegally and shamefully, and you can bet we'll take them to task for this and so must law enforcement and the Legislature,” insists Hall.

TxDOT’s Spin

TxDOT’s Jefferson Grimes, Deputy Director of the Government and Public Affairs Division of TxDOT sent out an email stating:

“This week, the Texas Department of Transportation requested that the Federal Highway Administration withdraw its Finding of No Significant Impact on the U.S. 281 project in Bexar County.

“TxDOT recently discovered possible irregularities in the procurement of a scientific services contract that was utilized in the preparation of the Environmental Assessment.  TxDOT is currently conducting an internal audit to establish relevant facts and will release the audit when it is complete.  Following the conclusion of the audit, TxDOT will take necessary corrective actions and will work to prevent similar issues from delaying future projects.”

Looking forward

TURF recently launched a new campaign to inform citizens about the 281 toll road debacle and the non-toll plan promised by TxDOT in public hearings in 2001 and paid for with gas taxes since 2003 called www.281OverpassesNow.com. TURF’s battle cry continues to be: “Give us the overpasses NOW! We don’t need toll taxes, just overpasses.”

Background on the litigation

On August 7, 2008, TxDOT asked a Bexar County federal district court for a 60 day delay in the TURF/AGUA 281 toll road lawsuit so they could beg the Federal Highway Administration (FHWA) NOT to yank their environmental clearance for the US 281 toll project. Through the discovery process of the lawsuit, Judge Fred Biery required TxDOT to hand over the complete administrative record for US 281, including all the financials and the documents from when the improvements were funded with gas taxes that would keep US 281 a FREEway. It was discovered that TxDOT withheld key documents not only from the public and TURF attorneys, but also the FHWA!

There is an email record that shows TxDOT tried to "fix" the environmental work for US 281 to pre-determine a "Finding of No Significant Impact" (or FONSI) BEFORE the environmental study was even conducted.

"They rigged it! That is a DIRECT VIOLATION OF FEDERAL LAW," says Hall.

TxDOT then hired a company, HNTB, to do the so-called "independent" environmental study even though HNTB has a MAJOR conflict of interest, in that, the Alamo Regional Mobility Authority (ARMA) also hired HNTB to do the preliminary engineering for all their toll projects. So HNTB had a vested interest in a "Finding of No Significant Impact" (or FONSI).

Then, it's also been discovered that TxDOT purposely withheld a key study from a geologist they hired that stated the potential “severe” harmful effects of the toll road on the Edwards Aquifer. Such a study didn't conclude what TxDOT wanted it to in order to get clearance from the feds, so they intentionally hid the report and failed to submit it to the FHWA who uses that crucial information in their decision on whether or not to give federal approval for the project.

TxDOT submitted these documents to the feds who completely re-examined its previous approval of the US 281 toll road. It's likely the feds were set to yank their environmental clearance for the toll road in light of this deception by TxDOT. As damage control, TxDOT beat them to it before the FHWA or the court did it for them. Of course, TxDOT and the RMA blame the citizens who brought TxDOT's deception to light for killing the toll project instead of their own willful dishonesty.

“They were FORCED to come clean through a lawsuit brought by concerned citizens, not by them being forthcoming," notes an outraged Hall.

TURF is seeking to have law enforcement get involved to prosecute the willful violation of federal law by TxDOT.

For more information on the TURF/AGUA US 281 lawsuit, go here and here.

More information on the history of the 281 freeway to tollway plan: www.281OverpassesNow.com

Counties hire PR firms to push road bond packages


Link to article here. Counties are following in TxDOT's footsteps using taxpayer money to lobby, and now to push road bond packages on voters. Who's going to hold them accountable? The taxpayers at the ballot box. TURF's lawsuit to stop TxDOT's illegal lobbying is pending appeal. It's clear the establishment, the Legislature, the courts, and law enforcement will look the other way unless the PEOPLE themselves act to put a stop to abusive government.

Williamson County's hiring of PR firm for controversial road project upsets some
County may pay as much as $1 million to firm helping with Texas 29 expansion.

By Melissa Mixon
AMERICAN-STATESMAN STAFF
Tuesday, September 23, 2008

The hiring of a public relations firm by Williamson County commissioners has drawn the ire of some residents and a political hopeful, who say that the contract is a waste of taxpayer money and that the timing is suspicious in light of controversial plans for expanding Texas 29.

County officials contend otherwise, saying Martin & Salinas Public Affairs Inc. was hired in late March to create more openness and to get more information to residents about the county's $228 million road bond package, approved by voters in 2006.

The commissioners voted to pay up to $1 million to the firm to handle seven or eight projects left over from the bond. The proposed expansion of Texas 29, a major east-west thoroughfare between Georgetown and Liberty Hill, was not explicitly part of the bond proposal approved by voters because the county was still studying the project. Texas 29 has since been added to the firm's responsibilities, which angered the project's critics.


Commissioners say the $1 million price tag is a ceiling amount and that the county probably won't spend that much on the firm, which is expected to finish its work in the next 18 months. County Judge Dan A. Gattis said the county's attempt at more openness may have backfired with the public, mainly because of the backlash over the $1 million cap.

"I don't know what a good amount would be, but $1 million set off a lot of light bulbs or rockets in people's minds," Gattis said.

That was the case for J.T. Cox, who owns land south of Liberty Hill. Commissioners announced Sept. 3 that the Texas 29 expansion will run south of the city and current road, probably going through Cox's land.

The proposed 19-mile expansion, though not final, would convert the four-lane road into 12 lanes. County officials said they hope to avoid congestion on Texas 29 similar to what's already bogged down other roads in the county, such as RM 620 in Round Rock.

Cox and other residents say the expansion is not needed, and some fear it is part of a bigger effort to push a major toll road corridor through the western part of the county.

"If they can't sell something on their own, why do they need to hire someone to do it for them?" Cox said about the firm and fears of a possible corridor. "Something is going on, and no one is being honest and truthful with us."

Commissioners, engineers working for the county and officials with Austin-based Martin & Salinas say there are no plans to turn the expansion into a toll corridor. And last week, Commissioner Cynthia Long said construction on the expansion is still 20 to 25 years away.

"There's a lot of anxiety, but I can tell you we're not doing anything with regards to pushing toll roads. ... We've not been asked by anybody" to push them, said Jed Buie, president of Martin & Salinas.

Since the firm was hired in March, it — along with other subcontractors hired by Martin & Salinas — has been paid almost $50,000 by the county.

Invoices obtained by the American-Statesman under the Texas Public Information Act show that Buie was paid $150 an hour to call residents concerned about the Texas 29 expansion, review a Web site that was created in opposition to the expansion and "discuss strategy" with engineers about an article that an American-Statesman reporter was writing on Texas 29.

Commissioners say the hiring was necessary because the job of issuing public notices, hosting town hall meetings about roads, developing Web sites and returning phone calls and e-mail from residents — among other things — is too much for the county's one public information officer, Connie Watson, who earns $55,971 annually.

In Travis County, public outreach on road projects is done in-house with its 12 road staff workers, often with residents talking directly to the road engineer or project manager. Hays County has historically left public outreach on roads to the four commissioners and county judge. This year, however, it is using a consulting firm to distribute information about a $207 million road bond package that the county is putting before voters in November. The firm's costs are estimated to be $65,000, said Hays County Judge Liz Sumter.

In Travis and Hays most of the projects have been county roads, not state roads as in Williamson County. State roads come with federal rules and more formal proceedings, which can increase the need for outside help, said Mike Weaver, a transportation consultant of Prime Strategies, who heads the county's road bond projects.

"That's an entirely different ball of wax," said Joe Gieselman, executive manager of Travis County's transportation and natural resources department. "It's probably a good reason to (hire outside help), to make sure you do it right."

Connie Watson, a spokeswoman for Williamson County, said that the county's road department has 17 employees but that those employees do little work on bond projects. That work would require hiring more engineers, she said.

Gattis said having a single firm keeps residents from having to go to multiple places for information. He said the county considered hiring additional people to help Watson. But he said it didn't make economic sense to pay three to four additional salaries (at roughly $50,000 and up) that would not be needed after the bond projects are complete.

"Then you've got to lay people off," he said.

At the time the commissioners approved the $1 million cap, Gattis said the transaction seemed normal.

"I don't remember keying on the $1 million," he said.

Hiring a public relations firm to do outreach for county road projects is not unethical, said University of Texas law professor Daniel Rodriguez. He could not speak specifically on Williamson County's situation, but he said in general any hired outside counsel — especially that of public relations firms — can raise red flags with constituents. Often the perception is that the firms are hired to push an agenda or plan that's already been derived by municipalities or counties, he said.

"They sort of have this whiff of publicity and Madison Avenue and even spin control that we'd like to think our local officials de-emphasize" Rodriguez said. "When you're in PR, you're in the business of getting things past the public."

Some of the Williamson County critics point to campaign donations from developers and engineers who have ties to toll roads as one of the reasons to worry. The county has had some controversial experiences with consultants, who were also political contributors.

For example, in 2002, a previous commissioners court hired a public relations consultant for a massive road bond project who had once worked pro bono on the campaigns of three commissioners and the county judge. The consultant, Amos "Pete" Peters, earned about $4,000 a month from the county's bond budget and had previously helped lead a political action committee that promoted the same bond package.

It was later alleged in news reports based on a review of public records that Peters billed the county for meetings that never occurred. The Texas attorney general's office investigated him, but a Williamson County grand jury did not indict him on charges of submitting false bills to the county.

County officials said at the time that his hiring was fair and that Peters was qualified for the work and did the work.

Peters said he is working for private public relations and graphic design clients in Texas and four other states.

Commissioners say contributions don't sway their votes, nor did they influence the hiring of Martin & Salinas, which did public outreach in 2004 for the Central Texas Regional Mobility Authority, an independent government agency that builds toll roads. (Don Martin, a partner at Martin & Salinas, donated $100 each to Gattis and Commissioner Ron Morrison.)

The situation is common in local politics, where groups that do business with the county are often the ones who donate to campaigns. Even so, some residents are worried.

Greg Windham, a Democrat running for county commissioner in November, has opposed the expansion of Texas 29 and the county's hiring of Martin & Salinas, calling it a "propaganda initiative" and part of "backroom" deals.

"When you're running a campaign, the scope of services are eerily similar to the scope of services being provided by Martin & Salinas," he said. "The sad part of this is there are so many other pressing projects that could be addressed with this money they're wasting."

Indiana to pay Cintra lost toll revenue due to hurricane flooding


Link to article here. Never doubt that corporations will get their money, even in the midst of a natural disaster. Yet again, the taxpayers are on the hook for something they have absolutely no control over...hurricanes! So much for corporate benevolence!

State must pay waived toll road fees
The Associated Press
September 22, 2008

MUNSTER, Ind. — Indiana will reimburse the private operator of the Indiana Toll Road for the state’s decision to temporarily waive fees along the tollway to alleviate congestion during floods that closed northwestern Indiana freeways for days.

Jane Jankowski, a spokeswoman for Gov. Mitch Daniels, said Friday that the state will reimburse Macquarie-Cintra — a Spanish and Australian consortium — for its lost revenue. She said she doesn’t know how much it will cost the state to make good on the lost tolls.
The state’s decision upsets Margie Stewart, an Indiana Toll Road employee and Teamsters Union representative.

“Why should the taxpayers pay for this? The company is making plenty of money. It was a disaster here. They could have helped,” Stewart said Friday.

Jankowski said the funds will come from the $3.8 billion the state received from the foreign consortium for the 75-year lease agreement to operate and profit from the toll road.

The private operator, called the Indiana Toll Road Concession Co., and the Indiana Department of Transportation announced Tuesday that tolls would be temporarily suspended on Interstate 90 on a 25-mile section from Portage west to the Indiana-Illinois border after Interstate 80/94 was closed by flooding. A portion of Interstate 65 was also closed.

The closures caused large traffic jams from traffic that had to be detoured. State Rep. Dan Stevenson, D-Highland, called on Daniels to suspend tolls to ease traffic. Tolls went back into effect Thursday, the same day the freeways reopened.

AIG bailout forebodes next big crisis...toll road deals gone south

Link to article below here. See related story here. See article warning of limited financing and limited profits for toll roads here.

The bailout of private industry by the U.S. taxpayer has stirred-up unparalleled outrage among the grassroots. By hook or by crook, the federal government is aiding and abetting corporate greed that repeatedly runs away with the profits, but leaves the taxpayers with the tab when the bubble bursts. There can be no doubt that the next BIG financial crisis where private industry comes crying to the taxpayers for a bailout will be the emerging "infrastructure market," aka - toll roads.

With the financial collapse of Wall Street banks, and even the insurance company that insures municipal bonds, AIG, money for infrastructure will be hard to come by and it come at an extremely high cost if it CAN be found. The continued rise in the price of oil coupled with the declining dollar, and rising unemployment, the economic warning signs show few will be able afford an additional toll tax to get to work. Who will bailout the toll roads when they fail to produce the revenues owed to bond investors? You guessed it, the brow-beaten U.S. taxpayer. Time for a true taxpayer revolt at the ballot box this November to avert yet another financial catastrophe!

Bailout uncertainty sinks Wall Street
By Steven C. Johnson
Mon. Sep 22, 2008
Reuters


NEW YORK (Reuters) - Stocks tumbled on Monday as investors worried a $700 billion bailout for the financial sector may not resuscitate a slumping economy, while a record spike in oil prices renewed concern about consumer spending.

Banks, home builders and big manufacturers were among the biggest decliners as negotiations over the government's rescue plan to mop up bad mortgage debt on banks' balance sheets heated up in Washington.

Investors also dumped consumer-oriented companies and airlines as oil surged $16.37 to settle at $120.92 a barrel, its biggest one-day jump on record. A sharp fall in the dollar added to oil's gains.


A Wall Street analyst downgrade hit shares of JPMorgan Chase, the No 3 U.S. bank, which fell 13.3 percent, making it the top drag on both the Dow and the S&P 500. Wells Fargo dropped 11.6 percent. For details, see

The S&P financial index shed 8.5 percent, while an index of airline stocks fell 9.4 percent.

Monday's market swoon wiped out nearly all the gains seen on Friday when the bailout announcement sparked Wall Street's best one-day advance since 1987. Only 2 of the Nasdaq 100 stocks end higher.

Investors cited uncertainties about the rescue plan's details and concern about whether it would provide a lift for the U.S. economy, which many fear is already in recession.

"Here it is Monday and people are waking up from a gigantic hangover, trying to figure out what's next," said John Schloegel, vice president of investment strategies for Capital Cities Asset Management in Austin, Texas.

"There's pain ahead for the economy, pain for the consumer, pain at the gas pump," he said. "And we're getting hit with a double whammy today with commodities moving higher."

The Dow Jones industrial average dropped 372.75 points, or 3.27 percent, to 11,015.69. The Standard & Poor's 500 Index slid 47.99 points, or 3.82 percent, to 1,207.09. The Nasdaq Composite Index fell 94.92 points, or 4.17 percent, to 2,178.98.

The Bush administration is pressing Congress to approve one of the costliest U.S. bailouts for financial companies since the Great Depression, but debate about the particulars of the plan continues on Capitol Hill.

A top Congressional Democrat on Monday said Treasury had agreed to take an equity stake in the firms that unload assets under the rescue plan, though other details remain unclear.

"There is lingering uncertainty about the overall economy despite the moves to shore up the financial markets," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

"Clearly the weakness in the financial markets has been part of the drag on the economy in the first nine months, but it has not been the only drag. Merely shoring up the weak financial markets is not necessarily a salve to the overall economy's problems."

With oil prices up sharply, investors sold shares of consumer-oriented companies, including Procter & Gamble, down 3.3 percent at $68.04. Shares of Target Corp, the No. 2 U.S. discount retailer, dropped 6.6 percent to $49.80 after Lazard Capital Markets cut the stock to "hold" from buy." Earlier during the session, U.S. oil futures prices shot up as high as $130 a barrel.

Uncertainty about the bailout overshadowed news that Japan's largest bank, Mitsubishi UFJ Financial Group, planned to buy a stake in Wall Street bank Morgan Stanley.

Goldman Sachs and Morgan Stanley are abandoning their investment bank model of two decades to become bank holding companies regulated by the Federal Reserve.

Morgan Stanley shares fell 0.4 percent to $27.09 after earlier adding more than 10 percent, while Goldman Sachs shares dropped 7 percent to $120.78.

JPMorgan Chase shares fell 13.3 percent to $40.80 while Wells Fargo shares fell 11.6 percent to $35.18.

Among home builders, shares of Hovnanian Enterprises declined 6.5 percent to $8.46.

Meanwhile, shares of Caterpillar Inc , an economic bellwether and a Dow component, lost 2.8 percent to $64.60.

Kraft Foods Inc, a new member of the 30 Dow industrials, effective at Monday's opening bell, also dropped 4.6 percent to $33.09.

On Nasdaq, shares of Apple fell 7 percent to $131.05 after JPMorgan cut its price target on the iPod and iPhone maker's stock.

About 1.27 billion shares changed hands, below last year's estimated daily average of roughly 1.90 billion, on the New York Stock Exchange, while on Nasdaq, about 1.93 billion shares traded, also below last year's daily average of 2.17 billion.

Declining stocks outnumbered advancing ones on the NYSE by more than 4 to 1. On the Nasdaq, decliners beat advancers by about 3.5 to 1.

Ogden sells out urban commuters in effort to quell TTC opponents in his district

It must be election season and the signs show incumbents are feeling the heat. Senate Finance Committee Chair, Steve Ogden, makes it plain that he plans to vote to toll urban areas as long as the Trans Texas Corridor doesn't come through his district. Can you say, backroom deal? He's voted for every major piece of toll road legislation, including the bill that authorized the Trans Texas Corridor (HB 3588), now he seeks to cover his own tail by selling out the millions of Texans in urban areas with crippling toll taxes just to get to work!

Don't believe the TTC is dead for ONE MINUTE. Read why here.

Ogden: TTC plans may be scrapped
By Philip Jankowski
Taylor Daily Press
September 12, 2008

In an interview with the Taylor Daily Press, State Sen. Steve Ogden revealed a possible new course for the controversial Trans-Texas Corridor.

Instead of building superhighways across the state, Ogden said, the state may opt to augment the Texas Trunk System, a web of rural highways that includes U.S. 79.

The plan would expand those highways to four-lane divided highways, while expanding urban infrastructure with toll roads.

“We need to limit that concept to existing highways,” Ogden said of the proposed network of superhighways and tiered rail systems. “I passed a bill last session that did that, but [Gov. Rick Perry] vetoed it. I’m happy to report that he may have changed his mind.”

One of the main reasons for backing away from the Trans-Texas Corridor concept is the daunting amount of funding necessary to complete the 4,000 mile road project, he said. In 2002, the project was estimated to cost the state $145.2 billion to $183.5 billion. In today’s dollars that amount has grown to about $169.9 billion to $214.7 billion, according to current inflation figures.

Included in the price is the cost of acquiring more than half a million acres of right of way for the 1,200 foot wide corridor, which has drawn much ire from communities - including Taylor, Granger and Coupland - that lay in study areas.

“I don’t think there ever was a possibility that that could occur,” Ogden said. “There never was the funding.”

Despite the possible change in direction for transportation, Taylor already is a step ahead of the rest of the trunk system as far as expansion goes. The county and city recently approved an interlocal agreement that effectively took portions of U.S. 79 in East Williamson County out of the Texas Department of Transportation’s jurisdiction for construction purposes so they could be expanded at a quicker pace.

Construction has already begun east of Taylor.

Ogden said he will work to avoid budget shortages that led the county and city to turn their backs on TxDOT by placing more oversight on how the department spends its money. The Texas Legislature’s Transportation Committee recently decided to give the problem-beleaguered department a cash infusion of $1.5 billion.

Currently the Legislature writes TxDOT’s budget, but the department has not followed recommended appropriations, Ogden said.

“Except for the bottom line, the way TxDOT spends their money is not how we appropriate it,” he said.

Ogden said there is legislation in the works that would require TxDOT’s spending to fall more in line with legislative recommendations.

And as chairman of the Finance Committee, Ogden is in a unique position to be influential on how that money is spent.

“I’ll write their budget,” he said. “We’re going to better align their budget with the state’s budget.”

Credit crunch effects Texas toll roads

When you read Cintra's reaction to this news, that the North Texas Toll Authority is overextended financially and may not be able to meet its obligations, it's not hard to predict where the wind is blowing on toll roads. Despite the near total collapse of the financial markets and subsequent government takeover, these private investors are still salivating over the thought of hijacking our public highways and forcing us to pay homage, a toll tax, to get anywhere.

If you think that because credit is tight and toll road ridership is falling that such conditions should be enough reason for authorities to scrap these toll plans, think again. More than ever, the government will seek private capital, even though cash is tight. How will they pay it back with so few able to pay tolls on a daily basis? Jack up the tolls to make up for fewer drivers. The insidious cycle will continue unless the taxpayers demand change!

Credit crunch puts State Highway 161 toll road in jeopardy
10:53 PM CDT on Wednesday, September 17, 2008

By MICHAEL A. LINDENBERGER / The Dallas Morning News
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Radically shifting fortunes on Wall Street have left the North Texas Tollway Authority scrambling to keep a key promise it made last year when it won the right to pay $3.2 billion for the State Highway 121 toll road.

On Wednesday, NTTA made clear that its ability to keep that promise has been compromised by the nation's financial uncertainties.

NTTA chairman Paul Wageman again delayed a decision on whether to build the highly anticipated State Highway 161 toll road. Just months ago, the toll contract was seen as a lucrative sure bet and had been the subject of months of acrimonious negotiations between NTTA and state transportation officials.

"Needless to say, the financial markets are in high stress," Mr. Wageman told a packed room of more than 150 contractors, consultants and engineers eager to hear which direction the agency is moving. Another delay is "the prudent thing to do," he said.

The pause gives NTTA another month to seek hundreds of millions of dollars in loans on the terms it needs, which include deferred payments until after construction is complete.

That the agency would be struggling to borrow money for SH 161 is surprising on a number of fronts, not least because that road, like the larger SH 121 deal, is one of the few toll projects NTTA has promised to deliver that is expected to be profitable.

Some critics, including the executives at the Spanish firm NTTA beat out last year for the SH 121 project, allege the authority is simply overextended. To the firm, NTTA's delays on SH 161 foreshadow problems it will have with finding money to pay for many of the projects it has promised to build.

"They mortgaged every room in the house," said Jose Lopez, North American president for Cintra. "They don't have the leverage left to borrow the money they need for the long list of projects they have promised. Sure, there may be value there in 10 or 20 years, but does Dallas-Fort Worth want to wait that long for those roadways?"

Temporary crunch

NTTA says it's not overextended. Instead, the NTTA is facing a temporary credit crunch that will ease once the credit market rights itself, officials there said.

But NTTA president Jorge Figueredo has said that the agency's ability to keep promises made a year ago will probably depend on how soon the credit markets stabilize.

"We have been looking at all the projects on our list, and looking at when will these projects be ready to go, when will we actually need the money to get started?" he said. "But if the markets continue to go sour and TxDOT and RTC and ourselves don't have ability to leverage each other, then what we thought was possible a year will likely not be possible."

What NTTA promised is that in addition to paying for SH 121, the agency would borrow another $7 billion to pay for six additional toll roads that would open by 2015.

But almost immediately after winning the SH 121 contract, the credit markets began to act unexpectedly. And as some companies stopped dealing in municipal bonds, others began trimming back the kinds of loans they offer.

NTTA has scrambled to not only find money for new projects, but also to retire short-term debt it took out for SH 121.

Relief for 360

Wednesday's delay won't immediately slow the completion of SH 161, which is under construction, news that will probably reassure Grand Prairie commuters anxious for an alternative to jammed State Highway 360.

But NTTA is looking hard at other projects, including the big Southwest Parkway Corridor toll project in Fort Worth. Delays to that project will cost $10 million a month. But on Wednesday, NTTA opted to study again the finances for that project, given that costs have gone up as available tax dollars for the project have gone down.

Michael Morris, transportation director for the North Central Texas Council of Governments, said NTTA's delays are worrisome, especially because other sources of road funds – including the state – are also under increasing strain.

"This is very important," Mr. Morris said, noting that NTTA's original plan included paying billions for SH 121, while still having enough available for additional projects. "If you go back to last summer, when the vote for 121 was held, I think the regional transportation council said, 'We know there are some risks out there, but we want to vote for our partner. And NTTA is our partner.' "

Now it's time for NTTA to figure out a way to reward that faith, said Mr. Morris, who was among the fiercest advocates for letting Cintra build SH 121.

He has since supported NTTA in its negotiations with the state and says the region has no choice but to work together.

That's what NTTA vice chairman Victor Vandergriff had in mind Wednesday. Looking at the billions of dollars the agency will need to borrow to make good on its promises, he suggested it may need help from the state or regional partners.

"That's a lot of money, and while we can expect profits to flow, they aren't going to be seen for maybe 40 or 50 years," Mr. Vandergriff said Wednesday. "I urge us as we are proceeding forward to talk with our regional partners and with TxDOT, to think through how we do these projects."

More bad news for toll roads: traffic on Cintra’s toll roads down

Link to article here. It seems the bad news just keeps comin' for toll roads and toll operators. We've been warning for years that increasing the cost of transportation hurts the economy and the evidence is now EVERYWHERE. There's only so much money in the family budget to devote to transportation before it takes away from necessities. Restaurants, clothiers, auto makers and many other industries are taking a hit due to high gas prices (and the subsequent rise in food prices). Now even toll road concessionaires that proponents have touted as bullet-proof because "people HAVE to get to work," are taking a hit, too. We're building an unsustainable transportation system with toll roads. Time to change course.

Cintra's August traffic falls on main concessions
Reuters
Thu. Sep 11, 2008

MADRID, Sept 10 (Reuters) - Spanish toll road operator Cintra (CCIT.MC: Quote, Profile, Research, Stock Buzz) said on Thursday that traffic fell for nearly all of its main concessions in August.

On Canada's 407-ETR road, traffic measured in daily journeys fell 4.8 percent in August from a year earlier, affected by the economic downturn and the fact there were two less working days in the month, the company said.

On the Indiana Toll road, traffic measured in daily journeys dropped 6.89 percent, and 6.66 percent on the Chicago Skyway, reflecting tariff increases and the economic slowdown in the United States.

Cintra's Spanish motorways reflected the impact of the domestic economic slowdown, with traffic measured in daily journeys dropping 7.25 percent on its Ausol I concession from a year earlier and 4.67 percent for Ausol II. The only motorways to show rises in traffic were the Madrid-Levante and the M4-M6.

At 0952 GMT, Cintra shares were 0.89 percent lower at 7.78 euros, while the blue-chip IBEX-35 had lost 0.71 percent. (Reporting by Judy MacInnes; editing by Rory Channing)

Federal Highway Trust Fund gets raided funds returned

You would think the sky is falling by returning funds Congress stole from the Highway Fund by listening to Secretary of Transportation Mary Peters. Below, you can contrast her press release to that of the facts laid out by the American Highway Users Alliance.

Congress raided the highway fund in 1998 to the tune of $8 billion and all the lawmakers are doing is returning that money to the taxpayers for roads as intended. Does this sort of robbery sound familiar? Our state legislature has raided the highway fund to the tune of $10 billion, which is even worse, but they expect us to double or triple our transportation costs with toll taxes in order to bail out their bad decisions. Mary Peters is now "spinning" the move by Congress as an irresponsible bailout for a bankrupt highway fund (in order to push privatized toll roads, of course), calling it a "dangerous precedent." (See article that follows the press release). What's dangerous, Ms. Peters, about restoring raided funds? They twist everything to push privatization and tolling.

The Senate passed the bill today.

____________________________________

Motorists Praise Bush Admin’s “Flip-Flop” On Highway Fund
Senate Urged to Take Immediate Action to Keep America Moving

American Highway Users Alliance
For Immediate Release

WASHINGTON, DC (September 8, 2008) –The American Highway Users Alliance, which represents the interests of millions of American motorists and businesses,  today praised Transportation Secretary Mary Peters’ decision to make a “U-Turn” and support solvency for the federal Highway Trust Fund.  Until late Friday afternoon, the Bush Administration had threatened to veto the needed legislation, H.R. 6532, which passed the House of Representatives by a vote of 387 to 37.

In reversing course, the Secretary has asked Congress to expedite passage of H.R. 6532 and has warned that the Federal Highway Administration will be unable to pay its bills unless the legislation is enacted this week.

“It appears that Secretary Peters and the Bush Administration have finally come to their senses,” said American Highway Users Alliance President Greg Cohen.  “Until last Friday, they had planned to allow the highway fund to go bankrupt, expecting that it would happen after they left office.  For years they have been an obstacle to restoring the $8 billion in highway user fees diverted from the fund.  We’re elated that they have ‘flip-flopped’ and hope that any remaining opposition to this bill in the Senate evaporates with the Administration’s change of heart.”

The American Highway Users Alliance supports HR 6532 because a solvent Highway Trust Fund keeps the motoring public moving, bolsters the economy, combats highway congestion and improves safety on major American roads.

“The Senate has just returned from a month long summer recess.  One of the highest priorities before adjournment should be passing HR 6532,” said Cohen, “and there is no reason why this bill should not garner unanimous support.”

H.R. 6532 enjoys overwhelming support because it solves the problem by restoring $8 billion in user fees taken from the Highway Trust Fund and does not increase the budget deficit. These taxes, paid by motorists at the pump, were quietly transferred out of the fund in 1998 to be used for non-highway purposes.  Now that the money is desperately needed, it is important that Congress restore the funds.  Unless these highway user fees are restored, the Federal Highway Administration will be unable to pay its bills for road, bridge, and safety projects currently underway.

Background

On July 23, 2008, the U.S. House of Representatives passed the H.R.6532 bill by a vote of 387-37.  When the Administration threatened to veto the bill, the Senate did not schedule debate on it because individual Senators threatened to use parliamentary maneuvers to waste valuable time.  Now that the Administration has lifted its veto threat and supports passage, the Senate should be able to pass the bill quickly.

H.R. 6532 serves as the only viable solution to the emergency shortfall facing the Highway Trust Fund.  When Congress passed the last major highway bill in 2005, the Bush Administration and Congress agreed to deplete the fund by September 2009 and reassess the problem later.  However, due to recent decreases in highway travel, the Highway Trust Fund has run short of fuel and truck tax revenue a full year earlier than expected.

The American Highway Users Alliance represents motorists, AAA clubs, truckers, bus companies, motorcyclists, RVers, and a broad cross-section of businesses that depend on safe and efficient highways to transport their families, customers, employees, and products.  Highway Users members pay the taxes that finance the federal highway program and advocate public policies that dedicate those taxes that to improve highway safety and mobility.

______________________________

DOT 128-08
Contact:  Brian Turmail, Tel.:  (202) 366-4570
Friday, September 5, 2008

U.S. Transportation Mary Peters Announces Steps to Delay Highway Trust Fund Shortfall, Calls on Congress to Pass Legislation to Address Problem
Trust Fund Fix Needed Because Congress Ignored Three Years’ Worth of Warnings
           
U.S. Secretary of Transportation Mary E. Peters today directed the Federal Highway Administration to take immediate steps to protect the solvency of the highway account of the Highway Trust Fund and called on Congress to act quickly to finally address this long-predicted problem.

            “Time and again, the President has warned Congress of the pending shortfall and submitted fiscally prudent budgets to close the gap,” said Secretary Peters.  “Americans cannot afford to have Congress play ‘kick the can’ with highway funding for another year, another month, or frankly, another week.”

She called on Congress to provide immediate short-term relief by passing pending legislation, already approved by the House of Representatives, that would make an additional $8 billion available for the highway trust fund.  She urged Congress, however, to avoid adding pet projects, new earmarks or unrelated provisions on the “must pass” legislation and to get the bill done by the end of next week.           

The Secretary said the legislation was needed now because Congress had failed to heed over three years of warnings from the President and the Department about the long-predicted highway trust fund shortfall.  She added that the recent and sudden decline in American driving and the resulting decline in gas tax revenue during the summer had accelerated the predicted shortfall.   

The Secretary said that, in order to allow for continued highway payments to states while Congress acts, the federal government would begin making reimbursements to states on a weekly basis starting next week.  In addition, she said the agency would make funds available on a pro-rated basis.  For example, if there are only enough funds to cover 80 percent of requests, the highway agency will pay only 80 percent of each.

            Secretary Peters added that states would receive the balance of the funds in the following week, and then any new requests would also be dealt with on a pro-rated basis.  She added that the Department will also review its personnel and purchasing policies and consult with other federal agencies receiving highway funds to find ways to free up additional funding for reimbursing state partners.

As recently as July, the Administration opposed the House Trust Fund legislation, in part because the $8 billion would come from the government’s general fund.  However, the recent decline in federal gas tax revenue requires immediate action on legislation that has already passed the House to ensure states are not adversely affected.   

Secretary Peters noted that today’s problem would have been avoided had Congress acted on the President’s fiscally responsible proposal from last February to transfer funds from the highway trust fund’s mass transit account, which has a surplus.  That measure would not have affected current transit investments at all, the Secretary added.   

“Taking money from other pressing national priorities to plug a hole caused by poor fiscal discipline sets a dangerous and disturbing precedent,” the Secretary said.  She added, though, that “states are working hard to keep the nation’s bridges and roads in good repair and deserve better than IOUs from Congress.”

The Secretary said it was time to fundamentally reform the nation’s scattered approach to transportation.  She said Congress should do away with billions in annual earmarks and consolidate the over 100 special niche programs that require states to slice and dice federal transportation funds to do things like build museums and restore lighthouses.  She noted that the Administration issued a comprehensive transportation reform proposal along those lines several weeks ago.  

To avoid future shortfalls, the Secretary said it was time to embrace new funding mechanisms that respond to today’s transportation challenges and are in keeping with national energy policies.  “The current approach may have made sense 50 years ago, but it is ineffective and unsustainable when we are trying to reduce congestion and encouraging Americans to embrace more fuel-efficient cars,” she noted.

High gas prices have dimmed private equity’s hopes of rosy returns on toll roads

Link to article here. No matter what, selling off our infrastructure to the highest bidder on Wall Street means higher taxes, sweetheart deals for special interests, and taxpayer bailouts when the risky deals fail. Just like the mortgage and banking bailouts, government is facilitating the taxpayer rip-off by privatizing toll profits and socializing the losses (or the risk).

The Trouble with Transportation
High gas prices have dimmed private equity's hopes of rosy returns on infrastructure and transportation projects.
Government could be the loser
By Catherine Holahan
Businessweek
September 5, 2008

For private equity investors, the sheen is wearing off purchases of public asphalt. A year ago, banks and private investment firms were racing to pour money into infrastructure projects such as highways and light-rail systems. Compared with an investment in stocks, buying or leasing a highway seemed like a low-risk bet with easily estimated, long-term returns. After all, competing highways or mass transit systems couldn't just spring up overnight to divert toll- and ticket-paying customers.

But $4-a-gallon gasoline slowed the enthusiasm for such projects. Many commuters are choosing to leave their cars in the garage and take mass transit, or don't have a job to drive to anymore. "If you look at the publicly reported forecasts for the Chicago Skyway or Wall Street estimates of global traffic, they are completely different now," said George Bilicic, a managing director at NYC private equity firm Kohlberg, Kravis, Roberts who spoke on a panel held Sept. 3 at the University of Minnesota. "It goes into the risk assessment associated with the investment decision."

The purpose of the panel was to bring politicians in town for the Republican National Convention together with business representatives in a discussion that fits into GOP efforts to find privatized solutions to large public problems such as crumbling infrastructure. "Transportation is both broke and broken," said panelist Bruce Katz, vice-president and director of metropolitan policy at independent research firm the Brookings Institution. "How do we have the collaboration with the private sector so we can really deal with the totality of this issue?"

Power to Private Equity

One answer may be to accept that private equity gets to dictate more terms, and use up-front revenues from long-term infrastructure leases to provide tax breaks offsetting higher commuting costs. That solution dovetails with the Republican convention theme of lower taxes.

But higher risk means investors are going to demand larger returns. And that's not welcome news for government officials. Some of those present at the panel discussion said they don't want to slam voters with higher commuting costs but do want private investment to fund improvements in roads and mass-transit systems (BusinessWeek, 5/7/07) not to mention provide immediate cash for other government projects. "We are acutely aware of transportation challenges in this community," said St. Paul Mayor Chris Coleman, referring to the difficulty of getting a light-rail system constructed between St. Paul and Minneapolis. "I think there is a lot of room for private investors to invest in our community."

Despite the economic downturn, private sources could still account for $240 billion of the capital needed for infrastructure worldwide each year, according to a September 2007 report by Ernst & Young. "The pools of private capital are gathering," says Bilicic. "And these pools are forming with a global point of view."

Renegotiating the Terms

But investors are adjusting by lowering their bids on long-term public infrastructure leases and demanding more assurances that the managing firms can raise tolls or adopt controversial measures such as peak toll pricing. (On one privately owned road in California, tolls jump from less than $2 to more than $20 during rush hour under the peak pricing model.) "Nobody will bid on [a toll road] at the fare of $1.50 per person," said panelist and former Washington Senator Slade Gorton.

Strapped commuters obviously are in no mood to pay for higher tolls. What investors are counting on is that taxpayers are even more averse to paying the higher taxes needed to repair century-old roads, bridges, and other public facilities. The American Society of Civil Engineers estimated in 2005 that it would cost $1.6 trillion to simply bring the nation's infrastructure up to "good" condition. That doesn't include the amount it would cost to add environmentally friendly mass-transit systems and other infrastructure upgrades needed to help people move closer to the cities where they work, thereby reducing vehicle-related pollution.

Many taxpayers are already skeptical about federal and state transportation expenditures, panelists said, because they often get allocated to politically powerful districts rather than where they are most needed. "It never made sense to me why we would tax ordinary people and use that money to subsidize this type of sprawl development," said panelist Tom Darden, CEO of Cherokee Investment Partners, a firm that works with government to invest in land development around new transportation hubs.

Congestion Plagues Cities

"It's hell trying to get around any city in America today, from sea to shining sea. We are just at a stall in congestion," said panelist John Mica, the ranking Republican on the U.S. House Transportation & Infrastructure Committee. "Some people think I have been smoking the funny weed and hanging out with college students when I say we need more than a trillion dollars… But we have got to do something."

Pennsylvania Turnpike "lease" puts it at policy crossroads

Link to article here.

Leasing of Landmark Turnpike Puts State at Policy Crossroads
By CRAIG KARMIN
Wall Street Journal
August 26, 2008

(See Corrections and Amplifications item below.)

DONEGAL, Pa. -- Hobbled by the credit crisis, Wall Street firms and many state governments are hoping that a pockmarked strip of Pennsylvania highway could provide a road out.

Next month, the Pennsylvania legislature is expected to vote on a $12.8 billion deal struck between the governor and a group of private investors to lease America's oldest major toll road, the 537-mile Pennsylvania Turnpike.

If it passes, the deal would be by far the largest ever of its kind in the U.S. Under these arrangements, known as public-private partnerships, investors lease or buy roads, bridges or other infrastructure, operate them independently and collect tolls.

A green light in Pennsylvania could bolster the political will of officials in other states trying to hash out similar deals. That in turn could jump-start projects in waiting, from Florida's Alligator Alley to Chicago's Midway Airport. Last month, New York Gov. David Paterson urged legislators to consider leasing some of his state's roads, bridges and tunnels to help shrink a budget deficit projected at $26.2 billion by 2011.


Proponents say the lease approach could provide financial relief to state governments struggling with foreclosures, ballooning pension obligations and reduced tax bases. That's not to mention crumbling roads -- and lately, a drop in tax revenue to pay for repairs, owing to high gasoline prices that have reduced driving. The U.S. needs about $1.6 trillion in investment over the next several years to bring infrastructure conditions to acceptable levels, according to the American Society of Civil Engineers.

Pennsylvania's needs rank among the highest in the nation; the state's Department of Transportation estimates it will cost $11 billion just to repair the state's bridges. Drivers complain about the turnpike's potholes, insufficient shoulder room, and continual construction.

As much as states need money to fix their roads and bridges, Wall Street firms are eager to supply it. With the industry's core businesses in distress from the credit crisis, so-called infrastructure funds -- which have already raised more than $160 billion, according to Morgan Stanley -- have emerged as one of the most promising growth areas in years.

Yet this hot area is already suffering growing pains. The end of cheap credit has forced all funds to borrow at higher rates, severely crimping profits at some of the leading infrastructure funds. The share price for Australia's Babcock & Brown Ltd., one of the bigger publicly traded funds, tumbled 36% on Thursday to a record low after reporting a large decline in earnings, before rebounding. Shares of another Australian fund, Macquarie Group Ltd., have also sold off this year.

[turnpike]
Pennsylvania Turnpike
Known as the nation's first Superhighway, the Turnpike opened in 1940.
Those financial pressures are unlikely to affect the Pennsylvania deal, which already has a check in hand. But it might not have the votes to cash it. Gov. Edward Rendell, a Democrat who has championed the project, concedes that "the concept of leasing the turnpike is a decided underdog."

Detractors, from the Turnpike Commission itself to labor unions, question whether the state is selling too cheaply. They also worry that jobs will be lost -- under the proposal, union contracts are guaranteed only until 2011 -- and that tolls will rise. The new operators can raise tolls 25% in 2009, then keep them in line with inflation every year.

More broadly, in a country that has often mythologized the car and the open road, the deal is sparking debate about whether America's highways are too much a part of the national fabric to be controlled by anyone but the public. Adding to the backlash: Many of these private funds come from outside the U.S., where investors have reaped huge profits from rising oil and commodities prices and are looking for new places to put their money. The consortium vying to lease the Pennsylvania Turnpike includes Citigroup Inc. and Abertis, a Spanish toll-road operator.

Crowds opposing the deal have gathered along Route 209, in the northeastern part of the state, waving signs like "Pennsylvania's Not For Sale," as truckers honk horns in approval.

"Americans built this turnpike," says Catherine Johnson, a nurse in Tarentum, Pa., who regularly drives the turnpike. "Why do we need someone else to operate it?"

The lease agreement is not the first time the nation has looked to the Pennsylvania Turnpike for a glimpse into the future.

The highway heralded a new era of transportation when it opened in 1940. A year earlier, a World's Fair exhibit in New York sketched out an exciting vision of a publicly funded highway system that would crisscross America, connecting East to West. The exhibit, commissioned by General Motors Corp. and dubbed "Futurama: Magic Motorways," enthralled an audience that still relied heavily on railroad travel.

The 160-mile stretch that initially connected the outskirts of Pittsburgh in western Pennsylvania with Harrisburg, the state capital, embodied that vision; it is often touted as the nation's first superhighway. Service plazas along the road sold postcards, banners and other turnpike trinkets. Many drivers apparently saw it as an American autobahn; the turnpike's wide, gently sloping lanes encouraged speed, and the road opened without a speed limit. A series of accidents eventually led to a 70-miles-per-hour rule.

Nearly seven decades later, the turnpike and other Pennsylvania roads are in worse shape than most. The state has 6,000 structurally deficient bridges. Pounded by harsh winter weather and hard-driving 18-wheelers, some 9,000 miles of highway are in poor condition, according to the state's Department of Transportation.

"Seems like they are always having to do work on it, always having to fill potholes," says Helen Elborne, a self-employed resident of Harmarville, in the southwestern part of the state. "There are a lot of accidents." Ms. Elborne often takes the turnpike on trips to Ohio, where she says "the roads are better."

Saving the Skyway

While private investment in state infrastructure has been around for decades in other parts of the world, it hasn't caught on in a significant way in the U.S. State governments have turned instead to the municipal-bond markets for much of their funding. But this decade, costs for health care, education and pensions mushroomed.

Since 2005, eight states have enacted legislation enabling officials to sell or lease highway or transit infrastructure, bringing the total to 25 states, according to the U.S. Department of Transportation. Infrastructure funds recently acquired long-term leases for the Indiana Toll Road and the 7.8-mile Chicago Skyway bridge. Chicago has used about half of the $1.8 billion in lease fees to retire debt and to boost emergency reserves. It has also used the money to fund homeless programs and job-training initiatives.

In bad shape just three years ago, the Skyway itself has been given new life. Australia's Macquarie Infrastructure Group and Cintra, another Spanish toll-road operator, together leased the bridge, filled in potholes and added electronic tolling that can process nearly triple the number of cars as the cash lanes can. They also installed reversible lanes, so that the bridge can better accommodate periods when traffic flows are particularly strong in one direction.

Abertis, the Spanish company hoping to lease the Pennsylvania Turnpike, operates motorways in the U.K., South Africa and Chile. It points to its other ventures in the U.S. as proof that it can turn around a sinking ship -- or in one case, an airport. The company took over operations of the Orlando International Airport in Florida in 1996, paying $20 million for a 30-year lease and assuming $30 million in debt. Since then, it has invested $70 million on upgrades, from parking spots to expanding the gates. Last year, Orlando officials extended the lease for 30 more years.

In Pennsylvania, Abertis says it and its partners are committed to spending at least $11 billion on the turnpike over the proposed lease period. Its plans include wiring fiber optics and installing a series of tiny monitors and cameras across the length of the turnpike. Abertis says this equipment, combined with an independent fleet of roving patrol cars to supplement the state Highway Patrol, will enable it to detect accidents in five minutes or less. That could get help on the way faster, and warn motorists earlier to detour. Currently, Abertis says, it takes the Turnpike Commission up to half an hour to detect an accident.

Other improvements would be more subtle. Jordi Graells, managing director of Abertis, says turnpike workers now sprinkle too much salt on the roads before winter storms. Salt can enter the ecosystem, damaging trees and other vegetation. Abertis workers, he says, are trained to add just the right amount of salt to minimize the environmental effects.

Carl DeFebo, a spokesman for the Turnpike Commission, says, "When it comes to winter maintenance, turnpike crews do whatever it takes to keep the road open in the heaviest snow and ice storms." He says the salt is necessary to de-ice the roads "despite some infrequent impacts to plants near the highway."

Regarding accident detection, Mr. DeFebo says the commission uses the latest technologies and is working to improve incident detection and response times.

The Turnpike Commission, which has operated the road for nearly 70 years and is run by officials appointed by the governor,

says it can fix the highway without foreign aid. It plans to invest $4.8 billion over the next 10 years, and a fiber-optic network is in the works, though "it is going to take some time," Mr. DeFebo says.

The commission estimates the turnpike can generate $83.3 billion in revenue for the state over 50 years. But it first has to receive federal approval to add tolls to Interstate 80, which runs parallel to the turnpike in the northern part of the state, or that figure could be cut in half.

'The Last Bastion'

The commission, some charge, has another reason for not wanting to turn over control of the turnpike: The politically powerful group is often accused of filling jobs with friends or relatives of elected officials. "It is the last bastion of political patronage for both parties," says Gov. Rendell. "Very few in politics want to mess up that arrangement."

While the commission says it listens to lawmakers when filling job openings, "the turnpike is not obliged to hire referrals," Mr. DeFebo says.

When Mr. Rendell campaigned for the governor's job in 2002, he promised to tackle the problem of deteriorating road conditions. But the legislature failed to enact funding measures during his first two years in office. The spike in oil prices made an increase in the gasoline tax politically untenable. Toll increases weren't much more popular.

In 2006, when Indiana leased its toll road, "the governor said, 'Why don't we consider something like this?'" recalls Roy Kienitz, a deputy chief of staff.

That deal, which brought the state $3.8 billion in exchange for a 75-year lease, has helped shore up Indiana's finances, according to Standard & Poor's Corp. In July, the ratings agency upgraded the state's credit rating to triple-A.

A Lucrative Prospect

The lucrative prospect of running a turnpike more than three times the length of Indiana's toll road quickly attracted myriad banks, funds, toll-road operators, law firms and other contractors.

But Gov. Rendell found little enthusiasm in the state legislature. Then in August 2007, the collapse of a Minneapolis bridge across the Mississippi River, with 13 deaths, sparked a nationwide re-examination of structurally deficient bridges. The tragedy brought a new sense of urgency to find funds for repairs, and the governor renewed his effort to lease the turnpike.

By early 2008, the field of bidders had been narrowed to two groups: the Citigroup-Abertis team and one led by Goldman Sachs Group Inc. In a second round of bidding, Pennsylvania gave the teams one week to come up with their final offers. The Citi group's $12.8 billion bid won.

With less than three weeks to go until the Pennsylvania legislature returns from summer recess, Gov. Rendell says he plans to meet with as many lawmakers as he can to win them over. Most opposition comes from his own party. Prominent unions have also condemned the plan. The governor sounds less than enthusiastic about its odds. "This is very high on my list of priorities," he says. "There's still a decent chance it will pass."

Corrections and Amplifications:
Abertis Infraestructuras SA runs the Orlando Sanford International Airport, which is in Sanford, Fla. This article about the Pennsylvania Turnpike incorrectly said Abertis runs the Orlando International Airport, which is in Orlando, Fla.

Unemployment climbs to 5-year high, who’s got money for extra toll taxes?

Link to article here.

Unemployment climbs to 5-year high of 6.1 percent
Friday September 5, 2008
By Jeannine Aversa, AP Economics Writer

WASHINGTON (AP) -- The nation's unemployment rate bolted above the psychologically important 6 percent level last month for the first time in five years -- and it's likely to go even higher in the months ahead, possibly throwing the economy into a tailspin as Americans pick a new president.
A blizzard of pink slips propelled the jobless rate from 5.7 percent in July to 6.1 percent in August, the Labor Department reported Friday. Such a sharp increase is usually a strong recession warning, and it dashed investors' hopes for a late-year recovery.

Worried about the economy and their own business prospects, employers cut payrolls by 84,000 in August, marking the eighth straight month of losses.

So far this year, a staggering 605,000 jobs have vanished -- slightly less than the population of Alaska. The economy needs to generate more than 100,000 new jobs a month for employment to remain stable.

Richard Yamarone, economist at Argus Research, feared that the jobless rate would cause consumers and businesses to "move from a moderately concerned stage to outright fear" and reduce their spending even more.

A toxic trio of housing, credit and financial problems has badly shaken the economy, and the crisis shows no signs of letting up. It's the public's top worry, and many experts believe the situation will get worse before it gets better.

The unemployment increase means many companies will feel pressure to reduce their business investments -- either in capital projects or hiring -- for the rest of the year.

"Mix business caution with consumer exhaustion and you have a recipe for a real recession," said Terry Connelly, dean of Golden Gate University's Ageno School of Business.

At an unemployment center in St. Louis, Kimbel Adams could recite the exact date he was let go from his job as a hospital security guard -- April 8. Since then, he has applied for 10 or 15 jobs, with little luck.

"Most of the jobs you can get, it's hard to make a living off. I could always work at a fast food restaurant and struggle to pay the bills," Adams said.

Adams, 27, said unemployment checks and irregular gigs as a nightclub bouncer help make ends meet. But eating at restaurants is a thing of the past, and Adams continues to drive a 1991 Buick in spite of the constant maintenance problems.

The number of unemployed rose to 9.4 million in August, compared with 7.1 million a year ago. Economists predict more job losses ahead, pushing the unemployment rate to 7 percent by fall of 2009, according to some projections.

Against this backdrop, a growing number of analysts predict the economy will jolt into reverse in the final three months of this year and possibly in the first three months of next year, meeting a classic definition of a recession.

The economy shrank late last year and barely budged at the start of this year. Growth picked up in the spring, thanks to brisk exports and the government's tax rebates, which energized shoppers at home. But that rebound wasn't expected to last.

Slower growth overseas will probably cause exports to fall off just as Americans are cutting their spending and the benefits of the rebates disappear.

Job losses were widespread at factories -- especially housing-related manufacturers and automakers -- as well as construction companies, retailers, mortgage brokers, real-estate firms, hotels and motels, and temporary-help firms, which are looked at as a barometer of demand for future hiring.

Those losses swamped employment gains in government, education, health care and elsewhere.

After the last recession, in 2001, the unemployment rate rose as high as 6.3 percent in June 2003.

By historical standards, the country is far from the employment carnage seen more than two decades ago, when unemployment climbed above 10 percent during President Reagan's first term in the early 1980s.

Still, some groups are being hit harder than others. The jobless rate for blacks jumped to 10.6 percent last month, the highest since late 2005. And, the unemployment rate for Hispanics rose to 8 percent, a five-year high.

The grim report prompted Capitol Hill Democrats to renew their push for a second stimulus package. The Bush administration and other Republicans have been cool to the idea.

Presidential candidates Barack Obama and John McCain seized on the job figures to attack each other's proposals to turn the economy around.

"The working men and women I meet every day are working harder for less," Obama said. He advocates tax cuts for working families and investment in road, bridges and other projects to lift the economy.

McCain vowed to "fight for those that lost their jobs, savings and real-estate investments." He said tax reductions for people and businesses, job training and measures to promote trade will help ease the economic woes.

The latest employment snapshot was worse than economists were forecasting. They were expecting payrolls to drop by around 75,000 in August and the jobless rate to tick up a notch, to 5.8 percent.

The White House was disappointed, too.

"There is no question that the labor market is not as strong as we'd like," said press secretary Dana Perino. "We want to see the economy return to job growth, and we understand that this is a difficult time for many Americans. We want everyone who wants to work to be able to find a job."

Wages went up modestly last month, but prices have been rising faster. Average hourly earning rose to $18.14, up 3.6 percent from last year. High food and fuel costs mean paychecks aren't stretching as far, though.

A separate report showed a record 9.2 percent of American homeowners with a mortgage were either behind on their payments or in foreclosure at the end of June, according to the Mortgage Bankers Association.

The Fed, which is struggling to curb inflation and improve growth, is expected to leave a key interest rate alone at 2 percent when it meets Sept. 16.

At its last two meetings, the Fed didn't change the rate. Before that, though, it had aggressively cut rates to shore up the economy. Many thought the Fed might start to raise rates next year to fend off inflation. But now with employment deteriorating, some wonder whether the Fed might be forced to lower rates again.

Associated Press Business Writer Christopher Leonard in St. Louis contributed to this report.

(This version CORRECTS that prediction of 7 percent unemployment is for fall 2009, not this fall.)

Gas prices cut driving for 8th straight month!


Link to article here. Once again, with driving going down to the increased expense, toll road usage also continues to drop. Now is NOT the time for toll roads using leveraged debt that likely will not be repaid. We're setting ourselves up for another financial "bubble' not unlike the mortgage crisis if our politicians don't heed the warning signs!

High gas prices cut driving for 8th month
Aug 14, 2008
By Tom Doggett
Reuters

WASHINGTON (Reuters) - Americans scaled back their driving during June by almost 5 percent in response to soaring fuel costs, the government said on Wednesday -- a day after announcing the biggest six-month drop in U.S. petroleum demand in 26 years.

The Transportation Department said U.S. motorists drove 12.2 billion fewer miles in June compared to a year earlier, marking the eight month in a row that travel declined in the face of record gas prices as Americans change their driving habits, buy more fuel-efficient cars and switch to public transport.

"Changes in consumer behavior have essentially erased five years of growth in gasoline demand," the American Petroleum Institute said on Wednesday in a separate report that showed gasoline use during the first seven months of 2008 fell by 2.1 percent to the lowest level for the period in five years.

The impact of driving less was also reflected in new Energy Department data released on Tuesday that said total U.S. petroleum demand shrank by an average 800,000 barrels a day during the first half of this year, the biggest decline since 1982, because of soaring pump costs and a weak economy.

Since last November, U.S. motorists have driven 53.2 billion fewer miles than they did over the same period a year earlier, topping the 1970s total drop in U.S. miles traveled of 49.3 billion miles that was caused by several recessions and increases in gasoline prices over the decade.

The Transportation Department collects its highway data from more than 4,000 automatic traffic recorders operated around the clock by state agencies.

The presidential candidates have responded to voter angst over high gasoline prices by offering different solutions they claim will bring down short-term fuel costs.

Democrat Barack Obama wants to release 70 million barrels of crude from the U.S. emergency oil stockpile that he believes will immediately cut prices as more supplies are put into the market.

Republican John McCain wants to expand offshore drilling, which he says said would result in lower prices by sending a message to oil traders that the United States was serious about boosting domestic oil production.

The decline in miles traveled since last November has occurred the most in rural areas, where travel has fallen by 4 percent, compared to the 1.2 percent drop in urban miles traveled, the department detailed.

High fuel costs have the biggest effect on individuals in rural areas, who normally drive more and spend a larger share of their income on gasoline.

In response to soaring fuel prices, Americans appear to have given up their long love affair with big, gas-guzzling vehicles and are leaving them for cars that can save money at the pump.

U.S. automakers reported that car sales in July outpaced SUV and other light truck sales by 10 percentage points, with cars accounting for 55 percent of all vehicles sold.

Trucks sales had consistently made up the majority of vehicles sold between 1997 and 2007, until rising gasoline prices encouraged consumers to switch to cars with better fuel economy.

"Hopefully, the era of the Hummer and other gas guzzlers is over," said Daniel Weiss, energy expert at the Center for American Progress think thank in Washington.

Honda Motor Corp., the industry leader in fuel efficient cars, is expanding its fleet in 2009. "Small, fuel-efficient vehicles are not short-term strategies for Honda," Richard Colliver, executive vice president of Honda America said on Wednesday at a forum in Traverse City, Michigan.

"I do think there has been a shift in consumer preference here," said Tim Evans, energy analyst for Citi Futures Perspective. "Over the intermediate to longer-term, I don't think automakers are going to risk building as many SUVs."

Many Americans are giving up the car altogether to get to work and instead are using public transportation.

"Americans are beginning to drive less and less," Miami Mayor Manny Diaz, head of the U.S. Conference of Mayors, told Reuters. "America is beginning to change its habits, which I think is a good thing, and government investment ought to follow," he said, referring to more money for public transportation projects.

However, the downside of less driving for the government is fewer dollars to pay for highway projects and public transportation, which is funded by an 18.4 cent-per-gallon gasoline tax and a 24.4 cent-per-gallon diesel fuel tax.

(additional reporting by Soyoung Kim and David Bailey in Traverse City, Michigan and Rebekah Kebede and Martha Graybow in New York; Editing by John Picinich and David Wiessler)

Mexico plans HUGE Baja port for U.S. trade

Link to article here.

For anyone who still thinks there's no merit to the North American Union and the deep economic integration of the U.S., Mexico, and Canada through trade agreements like NAFTA, here's your proof. This massive influx of Chinese goods is the "congestion" the USDOT and TxDOT are trying to solve with the Trans Texas Corridor, foreign-controlled toll road.

Mexico plans HUGE Baja port for U.S. trade
By Marla Dickerson, Los Angeles Times Staff Writer
August 28, 2008

MEXICO CITY -- Mexico's government is setting sail with the largest infrastructure project in the nation's history, a $4-billion seaport that it hopes will one day rival those of Los Angeles and Long Beach.

President Felipe Calderon is scheduled to travel to northern Baja California today to open bidding on a development that his administration hopes will catapult Mexico into a major player in North American logistics.


Plans call for the construction of a massive port in the tiny coastal village of Punta Colonet, about 150 miles south of Tijuana, along with new rail lines to whisk Asian-made goods north to the United States. Mexico's aim is to snatch some Pacific cargo traffic from Southern California's ports, whose growth is constrained by urban development and environmental concerns.
Punta Colonet is expected to have a capacity of 2 million shipping containers annually when it opens in 2014, Mexico's transportation secretariat told The Times But officials envision it ultimately handling five times that amount. Last year, the ports of L.A. and Long Beach handled 15.7 million containers combined.

The massive development is to be privately funded, with the first phase estimated to cost $4 billion to $5 billion. The government is expected to award the 45-year concession in 2009.

A number of major players are expected to vie for the project, including Mexican billionaire Carlos Slim Helu, the world's second-richest man. Slim's infrastructure company, known as Ideal, has teamed with Mexican mining and railroad giant Grupo Mexico and New Jersey-based terminal operator Ports America Group to make a run at the deal.

"We've spent a lot of years working on this," said Miguel Favela, head of Mexican operations for Ports America. "It's going to make Mexico . . . much more competitive."

About 30 million shipping containers crossed the Pacific Ocean last year, a flow that increased about 10% annually in the last decade. A weak U.S. economy has slowed the trade, but experts predict it will rebound.

With shippers increasingly worried about congestion at L.A.-Long Beach, Punta Colonet has emerged as an attractive alternative. It's close to the United States. It possesses a wide, natural harbor. And it's in a lightly populated area offering room for expansion.

When Calderon visits the dusty hamlet of about 2,500 people today, he is expected to talk about the big changes in store. The village will need extensive upgrades to its roads, housing, electrical grid and water supply. State and local officials are planning for a city of about 200,000 to spring up around the port.

The changes envisioned are alarming environmentalists, who worry about the potential destruction of the area's plants and wildlife. But the farmers who scratch out a living there are thrilled at the prospect.

"What we need is employment for our kids," said Jesus Lara, representative of several peasant landowner groups that are eager to sell. "Everyone is excited. Having the president come to your town is like winning the Lotto."

But whether Punta Colonet turns out to be lucrative for Mexico won't be known for years. Competitors up and down the Pacific coast are in the midst of major upgrades. Panama has begun a $5.3-billion expansion of its landmark canal. Canada's Prince Rupert port in British Columbia began speeding containers to the American heartland by rail last year and is planning a major expansion.

Little of the cargo bound for Punta Colonet will stay in Mexico, making the port vulnerable to the whims of shippers, who can choose other routes to the U.S.

"Nothing is guaranteed," said Asaf Ashar, research professor with the National Ports and Waterways Institute in Washington. "It's a big risk."

Building a seaport from scratch would be difficult enough. But the overland transportation piece is likely to make or break Punta Colonet. The deal is being structured as a joint port-and-rail project, requiring terminal operators, railroads and construction companies to team up in consortia to win the bid. The railroad's ultimate route and U.S. crossing points will depend on which railway operator is chosen and how it manages to link up with existing rail networks on both sides of the border.

Union Pacific Corp. of Omaha and Fort Worth-based BNSF Railway Co. control the U.S. side of the tracks at most of the key U.S.-Mexico border crossings. Striking a deal with one of those companies to get the cargo to the American side will be crucial, said Paul Bingham, managing director of the global trade and transportation practice for Global Insight, a Massachusetts-based consulting firm.

"They have the ability to essentially choke off that port," Bingham said.

BNSF spokesman Patrick Hiatte said Wednesday that the company was "very interested" in the Punta Colonet project. He declined to say with whom the firm might collaborate to make a bid.

Union Pacific could not be reached for comment. The company earlier had teamed with Hong Kong-based Hutchison Port Holdings to make a run at the project, but that alliance dissolved last year.

Roads paved with debt


Link to article here.

Roads to hell paved with debt
By Ian Verrender
Sydney Morning Herald
August 28, 2008

There will come a time in the not-too-distant future when ordinary people will look back on this era, shake their heads in wonder and ask: how on earth did anyone ever think toll roads were sexy?

From the tulip bubble in Holland in the 1630s through to the dotcom boom of the late 1990s, otherwise rational minds have discarded logic and joined the frenzied mob in whatever investment fad promises fabulous wealth.

Without fail, they always end in tears. And so it is with the infrastructure boom.

Yesterday, Macquarie Group found itself under concerted attack from hedge funds as its shares fell 10 per cent to $41.61.

That's wiped out all the gains from the bull market and left senior executives floundering in a sea of confusion about how to stop the rout.


In part, the renewed attack on the Silver Donut is in part the fault of Babcock & Brown, the deeply-flawed and heavily-indebted infrastructure group.

When B&B's bankers effectively seized control in a bloodless coup last week - sidelining Phil Green and Jim Babcock while they figure out how to retrieve their $50 billion in loans - the attention inevitably swung towards the last bastion of financial engineering.

Macquarie is not a Babcock & Brown. It has a huge global banking operation that will ensure its survival. But its growth strategy of the past decade has been built on buying infrastructure, loading it up with debt, selling it off to investors in tax-effective listed trusts and then "managing" the assets - with fees extracted every step of the way.

Even dividends and distributions were paid with debt rather than earnings.

With the business model now

dead, Macquarie's future growth has evaporated. And every group that imitated the Macquarie model, such as the listed property trusts, is now in trouble.

Macquarie's early response was to start buying units in its deeply-discounted satellites, spending as much as $500 million alone on Macquarie Infrastructure Group.

Lately, the plan has morphed into a strategy to delist the satellites from the sharemarket and resell them into unlisted funds. But events appear to be overtaking the plan.

There are now serious doubts about whether it has the cash reserves to privatise the assets. A stockbroking analyst from UBS concluded yesterday Macquarie Group had between just $150 million and $500 million in excess capital - well below the $3 billion claimed by Macquarie.

That started the hounds barking and was enough to concentrate the minds of hedge funds.

Another to run into a roadblock yesterday was Transurban, which started life as the successful developer and owner of Melbourne's CityLink toll road.

It is a fairly simple model that goes something like this: cars drive on a road; they pay a toll.

The operator pays the government a concession for the right to build and operate the road for anywhere between 25 and 100 years. That invariably requires large borrowings that ensure losses in the early days. But as time goes on and the loan is paid down, the company becomes increasingly profitable.

Transurban did well out of CityLink. But as toll road mania swept the land, and then the globe, Transurban's boss Kim Edwards scouted around for expansion opportunities. First he took Sydney - with a takeover of Hills Motorways M2 and a half share in the Macquarie-controlled Westlink M7. Then he bought a major slice of the M1, M4 and M5 from Macquarie. And then it was off to show the Americans a thing or two.

Each deal meant more debt to buy assets in an inflated market. And to keep the punters happy, Edwards pumped up the dividends with - a little more debt.

Transurban's newly-appointed Chris Lynch, the former BHP executive, has inherited this mess and taken swift action. He's raised extra equity and, luckily, has a strong backer in the Canada Pension Plan. He's also slashed the dividend which left investors with a bitter taste.

Lynch, a no-nonsense former AFL player from Broken Hill, says he wants to transform Transurban back into a "fair dinkum" company. He's going to have to.

So are numerous others who bloated themselves on cheap debt and now are stuck with overpriced assets no one wants.

NYT: Cities Debate Privatizing Public Infrastructure

Link to article here.

More doubts loom over the risks of Public Private Partnership toll roads. With the increased cost of transportation causing our economy to spiral downward, now is not the time for massive leveraged debt that requires lots of driving and motorists with money to burn.

Cities Debate Privatizing Public Infrastructure
By JENNY ANDERSON
New York Times
August 27, 2008
Cleaning up road kill and maintaining runways may not sound like cutting-edge investments. But banks and funds with big money seem to think so.

Reeling from more exotic investments that imploded during the credit crisis, Kohlberg Kravis Roberts, the Carlyle Group, Goldman Sachs, Morgan Stanley and Credit Suisse are among the investors who have amassed an estimated $250 billion war chest — much of it raised in the last two years — to finance a tidal wave of infrastructure projects in the United States and overseas.

Their strategy is gaining steam in the United States as federal, state and local governments previously wary of private funds struggle under mounting deficits that have curbed their ability to improve crumbling roads, bridges and even airports with taxpayer money.

With politicians like Gov. Arnold Schwarzenegger of California warning of a national infrastructure crisis, public resistance to private financing may start to ease.

“Budget gaps are starting to increase the viability of public-private partnerships,” said Norman Y. Mineta, a former secretary of transportation who was recently hired by Credit Suisse as a senior adviser to such deals.

This fall, Midway Airport of Chicago could become the first to pass into the hands of private investors. Just outside the nation’s capital, a $1.9 billion public-private partnership will finance new high-occupancy toll lanes around Washington. This week, Florida gave the green light to six groups that included JPMorgan, Lehman Brothers and the Carlyle Group to bid for a 50- to 75 -year lease on Alligator Alley, a toll road known for sightings of sleeping alligators that stretches 78 miles down I-75 in South Florida.

Until recently, the use of private funds to build and manage large-scale American infrastructure assets was slow to take root. States and towns could raise taxes and user fees or turn to the municipal bond market.

Americans have also been wary of foreign investors, who were among the first to this market, taking over their prized roads and bridges. When Macquarie of Australia and Cintra of Spain, two foreign funds with large portfolios of international investments, snapped up leases to the Chicago Skyway and the Indiana Toll Road, “people said ‘hold it, we don’t want our infrastructure owned by foreigners,’ ” Mr. Mineta said.

And then there is the odd romance between Americans and their roads: they do not want anyone other than the government owning them. The specter of investors reaping huge fees by financing assets like the Pennsylvania Turnpike also touches a raw nerve among taxpayers, who already feel they are paying top dollar for the government to maintain roads and bridges.

And with good reason: Private investors recoup their money by maximizing revenue — either making the infrastructure better to allow for more cars, for example, or by raising tolls. (Concession agreements dictate everything from toll increases to the amount of time dead animals can remain on the road before being cleared.)

Politicians have often supported the civic outcry: in the spring of 2007, James L. Oberstar of Minnesota, chairman of the House Committees on Transportation and Infrastructure, warned that his panel would “work to undo” any public-private partnership deals that failed to protect the public interest.

And labor unions have been quick to point out that investment funds stand to reap handsome fees from the crisis in infrastructure. “Our concern is that some sources of financing see this as a quick opportunity to make money,” Stephen Abrecht, director of the Capital Stewardship Program at the Service Employees International Union, said.

But in a world in which governments view infrastructure as a way to manage growth and raise productivity through the efficient movement of goods and people, an eroding economy has forced politicians to take another look.

“There’s a huge opportunity that the U.S. public sector is in danger of losing,” says Markus J. Pressdee, head of infrastructure investment banking at Credit Suisse. “It thinks there is a boatload of capital and when it is politically convenient it will be able to take advantage of it. But the capital is going into infrastructure assets available today around the world, and not waiting for projects the U.S., the public sector, may sponsor in the future.”

Traditionally, the federal government played a major role in developing the nation’s transportation backbone: Thomas Jefferson built canals and roads in the 1800s, Theodore Roosevelt expanded power generation in the early 1900s. In the 1950s Dwight Eisenhower oversaw the building of the interstate highway system.

But since the early 1990s, the United States has had no comprehensive transportation development, and responsibilities were pushed off to states, municipalities and metropolitan planning organizations. “Look at the physical neglect — crumbling bridges, the issue of energy security, environmental concerns,” said Robert Puentes of the Brookings Institution. “It’s more relevant than ever and we have no vision.”

The American Society of Civil Engineers estimates that the United States needs to invest at least $1.6 trillion over the next five years to maintain and expand its infrastructure. Last year, the Federal Highway Administration deemed 72,000 bridges, or more than 12 percent of the country’s total, “structurally deficient.” But the funds to fix them are shrinking: by the end of this year, the Highway Trust Fund will have a several billion dollar deficit.

“We are facing an infrastructure crisis in this country that threatens our status as an economic superpower, and threatens the health and safety of the people we serve,” New York Mayor Michael R. Bloomberg told Congress this year. In January he joined forces with Mr. Schwarzenegger and Gov. Edward G. Rendell of Pennsylvania to start a nonprofit group to raise awareness about the problem.

Some American pension funds see an investment opportunity. “Our infrastructure is crumbling, from bridges in Minnesota to our airports and freeways,” said Christopher Ailman, the head of the California State Teachers’ Retirement System. His board recently authorized up to about $800 million to invest in infrastructure projects. Nearby, the California Public Employees’ Retirement System, with coffers totaling $234 billion, has earmarked $7 billion for infrastructure investments through 2010. The Washington State Investment Board has allocated 5 percent of its fund to such investments.

Some foreign pension funds that jumped into the game early have already reaped rewards: The $52 billion Ontario Municipal Employee Retirement System saw a 12.4 percent return last year on a $5 billion infrastructure investment pool, above the benchmark 9.9 percent though down from 14 percent in 2006.

“People are creating a new asset class,” said Anne Valentine Andrews, head of portfolio strategy at Morgan Stanley Infrastructure. “You can see and understand the businesses involved — for example, ships come into the port, unload containers, reload containers and leave,” she said. “There’s no black box.”

The prospect of steady returns has drawn high-flying investors like Kohlberg Kravis and Morgan Stanley to the table. “Ten to 20 years from now infrastructure could be larger than real estate,” said Mark Weisdorf, head of infrastructure investments at JPMorgan. In 2006 and 2007, more than $500 billion worth of commercial real estate deals were done.

The pace of recent work is encouraging, says Robert Poole, director of transportation studies at the Reason Foundation, pointing to projects like the high-occupancy toll, or HOT, lanes outside Washington. “The fact that the private sector raised $1.4 billion for the Beltway project shows that even projects like HOT lanes that are considered high risk can be developed and financed privately and that has huge implications for other large metro areas,” he said .

Yet if the flow of money is fast, the return on these investments can be a waiting game. Washington’s HOT lanes project took six years to build after Fluor Enterprises, one of the two private companies financing part of the project, made an unsolicited bid in 2002. The privatization of Chicago’s Midway Airport was part of a pilot program adopted by the Federal Aviation Administration in 1996 to allow five domestic airports to be privatized. Twelve years later only one airport has met that goal — Stewart International Airport in Newburgh, N.Y. — and it was sold back to the Port Authority of New York and New Jersey.

For many politicians, privatization also remains a painful process. Mitch Daniels, the governor of Indiana, faced a severe backlash when he collected $3.8 billion for a 75- year lease of the Indiana Toll Road. A popular bumper sticker in Indiana reads “Keep the toll road, lease Mitch.”

Joe Dear, executive director of the Washington State Investment Board, still wonders how quickly governments will move. “Will all public agencies think it’s worth the extra return private capital will demand?” he asked. “That’s unclear.”

Fourth man guilty in TxDOT bribery case

4th man guilty in TxDOT bribery case
Valley Morning Star
August 19, 2008

McALLEN — A fourth man has pleaded guilty in connection with a cash-for-contracts scheme at the Texas Department of Transportation.

Ricardo Ballí admitted Friday that he lied to FBI agents and Texas Rangers investigating allegations that TxDOT’s local maintenance administrator had extorted cash payments from a contractor looking for work.

The administrator, Cresenciano “Chano” Falcon, 56, and two other TxDOT inspectors pleaded guilty in May to accepting bribes in exchange for certifying completed contract projects.

Authorities have remained tight-lipped about Ballí’s connection to the scheme since opening a case against him last month, even declining to release his age, city of residence or occupation. But local TxDOT spokeswoman Amy Rodriguez has previously said Ballí never worked for the agency.

His attorney, Robert Armand Berg, refused to comment Monday.

The investigation into the three TxDOT workers was initiated after a private contractor informed authorities he was asked to pay bribes to the men in order to receive work from the agency.

Falcon and his two co-defendants — Ray Llanes, 50, and Noe Beltran, 42 — face up to 10 years in prison and $250,000 in fines at a sentencing hearing set for next week.
Under a plea agreement with prosecutors, Balli will not face any additional charges beyond lying to investigators. He entered his plea Friday before he was formally indicted in the case.

A sentencing date has not yet been scheduled for him. He could face up to five years in prison.

Public comment on TxDOT's "Public Involvement Plan" & "Strategic Plan"

Public comments DUE on TxDOT's "Public Involvement Plan" (Sept 12 by 4 PM, submit via email here) and its "Strategic Plan" (Sept 15 by 5 PM, submit via email here).

TURF Public Comment on TxDOT’s Public Involvement Plan
TURF is a non-profit, grassroots organization with close to 50,000 members. Our mission is to educate and defend citizens’ concerns about toll roads and the Trans Texas Corridor, as well as to promote non-toll transportation solutions.

1. It doesn’t matter if TxDOT properly informs the public of a transportation project that affects them if they summarily dismiss the public comment submitted. What matters is that the TAXPAYERS have veto power over projects they don’t want or to have their concerns taken into account in a meaningful way. TxDOT needs to be required to do the transportation “alternative” that the public prefers and it must be the alternative that is also the most affordable and least invasive. This must be required in order to restore the public’s trust that transportation decisions are being made in the public’s best interest.

On page 5 TxDOT claims they “thoughtfully consider the feedback received during the public involvement process” yet they DO the exact opposite.

2.  TxDOT’s document states on page 3: “All other interested parties are provided notice of the comment period and public hearing via the Texas Register public notice and TxDOT’s website.”

TxDOT’s only notification of its plans is through notice in the Texas Register (which few citizens are even aware of or have time to wade through) or its web site. The Sunset Committee Report notes the non-user friendly problems with TxDOT’s web sites. Finding needed information on TxDOT’s web sites is at times near impossible unless one knows where to look. There must be an announcement made through major news outlets under public service announcements so that a mass audience is made aware of transportation hearings or that public comment is being solicited.


3. Page 5: “Several divisions are instrumental in TxDOT’s efforts to ensure a transparent process that provides the public with comprehensive information on a timely basis to facilitate stakeholder input in key decisions throughout the transportation planning process. TxDOT encourages Coordination, Cooperation, and Communication with the public…”

Transparency is not a part of TxDOT’s standard operating procedure (SOP). The SOP is to obfuscate, mislead, and hide vital financial information in the name of “proprietary information” or “draft” document loophole.  The Trans Texas Corridor TTC-35 development contract had the financial guts withheld from the public for 18 months AFTER a contract was signed and AFTER the Attorney General ordered it be made public.

Toll viability studies, market value studies, and other financial information on toll roads are routinely denied not only to the public (they lobbied to change the law, SB 792 passed in 2007, to allow them this sham protection), but even to Legislators and MPOs who have to vote to approve certain financial terms without even seeing them first! This is an egregious breach of open and transparent government and must be changed. There’s nothing proprietary about projected traffic volumes, projected toll rates, projected diversions rates, financing scenarios, and the projected financial viability of a project. If TxDOT is truly interested in transparency, they’ll release these documents BEFORE a contract is signed and PRIOR TO any vote for approval by MPOs or other decisions makers. Otherwise, the deal is done before the public or its duly elected representatives have an opportunity to weigh in.

4. Page 3 states and SAFETEA-LU requires:
“To the maximum extent practicable, ensure that public meetings are held at convenient and accessible locations and times” and “Demonstrate explicit consideration and response to public input”

The Alamo Regional Mobility Authority held its public meeting in June 2008 on the financial disclosure of its toll rate information in the middle of a workday (1 PM) more than 20 miles from the project area with NO PARKING. In 2007, TxDOT held its final NEPA hearing for US 281 several miles to the southeast of the 281 project area at the Alzafar Shrine Temple in an area almost entirely inaccessible to public transit users, and they refused to allow concerned citizens to have a table out in front with fliers and information stating “”this is a private facility, you can’t have a table out here,” regardless of the fact that it was PUBLIC meeting paid for with PUBLIC money. TxDOT shouldn’t hold meetings at private facilities if that means public involvement and information sharing can be hindered. At a later hearing for the Loop 1604 toll project, TxDOT tried the same tactic but after a County Commissioner and lawyer got involved, they finally relented and allowed the public to hand out information at a public hearing PAID FOR BY THE TAXPAYERS!

In 2006, at another hearing for Hwy 46 in Comal County, Greg Malatek of TxDOT stated that during public comment no one would be allowed to say the word “toll.” When I got up to make my comments, Judy Freisenhahn of TxDOT ripped the microphone from my hand when I said the word the “toll” (a word in the pass through financing contract for the project, but they arbitrarily deemed it “off limits”) in a total violation of my First Amendment rights. Armed police officers then surrounded me, simply for saying the word “toll.” TxDOT staff around the state have routinely forced citizens to face the TxDOT facilitator on the stage and NOT allow any speaker to turn around to address their fellow citizens face to face during public comment. When a citizen in San Antonio pressed the issue, armed police officers surrounded him and he was threatened and intimidated into silence or risked arrest.

At an MPO Meeting on a key vote at the San Antonio MPO, David Casteel of TxDOT directly threatened retribution against the public transit board members for voting against a 281 toll project and both those members were removed from the MPO in retaliation. All of these examples demonstrate a flagrant violation of federal law as it pertains to “public involvement.” Bullying, retaliation, threats, and intimidation are not to be tolerated in a free society. This is the pattern of behavior at TxDOT and it must be changed immediately!

5. On page 6: “TxDOT divisions work closely with state and federal regulatory agencies to ensure that the planning, engineering, environmental, public involvement, and construction processes result in the safe, efficient and effective movement of people and goods throughout the state, while facilitating trade and economic opportunity, and accomplishing TxDOT’s five primary goals: reduce congestion, enhance safety, expand economic opportunity, improve air quality, increase the value of our transportation assets.”

Increasing the value of the public’s highways (that TxDOT calls “assets”) and “expanding economic opportunity” have NOTHING to do with providing transportation. These should NOT be TxDOT’s goals. Their mission changed once public opposition to toll roads and PPPs came on the scene in earnest in 2005. They use these “goals” to justify their toll and Trans Texas Corridor agenda of pushing the most expensive transportation financing option, toll roads. Increasing the cost of transportation through tolling does NOT expand economic opportunity for taxpayers, it hurts the family budget and sucks money away from other household necessities.

 
TURF Public Comment on TxDOT’s 2009-2013 Strategic Plan
 
The Texas Department of Transportation used to have admirable goals that the public could support. Now, however, their primary mission is to “maximize the value” of our public “assets,” which simply used to be called highways. On page 2, it asks, “Are we doing the right thing?” The public’s answer is a resounding “NO!” The public’s highways, bought and paid for by the taxpayers, are not the Department’s to hawk up to the highest bidder on Wall Street in a risky leveraged debt toll road scheme requiring an additional toll tax to use them.

It’s time TxDOT wake-up and smell the warning signs around them. Fitch and Moody’s have warned that toll roads are becoming more risky, not less, and that governments or private operators will have to increase tolls in order to make bond payments to prevent default since toll road usage continues to drop as the price of gas rises. A continued push for massive leveraged debt and ever increasing toll hikes is as foolish in this economic climate as it is a taxpayer rip-off.

We’re in a different era than we were in 2000 when the push for toll roads began. We’re in the midst of a volatile oil market causing high gasoline prices and an increase in the cost of basic necessities like food, as well as a credit crunch and declining dollar causing an overall economic decline. The cost of living is rising faster than wages and people’s ability to keep up. Continued reliance on tolling is a recipe for economic disaster and will likely lead to a “bubble” that will later “bust” and require massive taxpayer bailouts.

More specific concerns with the Plan are outlined below:

1. On page 2 of the proposed plan it states: “The Texas transportation system plays a critical role in the economic and social well-being of all Texans. It provides the basic infrastructure that supports our economy and quality of life.”

TxDOT acknowledges that Texans rely on our transportation system for daily living and it’s the backbone of our economy. Increasing the cost of transportation from 1-2 cents per mile in gas taxes to 20 cents or more per mile in tolls is an expense most Texans can ill afford. A recent Austin Business Journal article stated Texans are hit particularly hard by high gas prices. On average they spend over $2,000 a year in gas. Since the average cost in tolls will be $2,000-$4,000 a year per family (20 mile commute at 20 cents per mile in tolls, roundtrip daily cost = $8, $40/wk, and over $2,000/yr), tolls will, at a minimum, double the average Texan’s cost of gas!

Toll taxes will negatively impact the family budget, and hence decrease the quality of life of Texans as more money gets sucked into transportation leaving them less money for basic necessities for their families. Though toll roads may save time, it costs more money. It’s an empty promise to say toll roads will give Texans more time with their families as they race home on uncongested tollways, since most Texans will have to work longer and harder in order to pay their toll bills or remain stuck in traffic.

2. The Plan also states on page 2: “Travel demand for people and goods is growing…”

This is untrue. In March of 2008, the United States experienced the largest drop in driving (vehicle miles traveled) year over year in recorded history. Federal Highway Administration statistics show a steady decline in driving almost entirely attributable to high fuel costs. So to continue to rely on old travel demand models that assume VMT will continue to rise is fundamentally flawed and ignores reality.

3. Page 4 states: “Economic and population growth negatively affects the performance of our transportation system. As travel demand increases, congestion worsens, air quality suffers, safety concerns grow, and maintenance needs multiply.”

 

Again, TxDOT falsely assumes mere population growth leads to highway congestion. The Texas State Data Center predicts population growth will be poorer and less educated. An increase in retirees is expected and they generally do not drive during peak congestion nor contribute to peak traffic in urban areas. A less educated populace will tend to lack the personal income to own and maintain a personal vehicle and less likely to be able to afford tolls on a daily basis.

So TxDOT’s entire “Strategic Plan” is flawed since it’s based on flawed assumptions of growth in driving and congestion. TxDOT also fails to take into account that new population growth and any influx of new users on the highway will also pay gas taxes and thus increase revenues. Additionally, TxDOT fails to consider that a reduction in driving also translates into a reduction in the need for road maintenance.

4. TxDOT’s Vision, Mission, and Goals do not reflect the ideals of most Texans.

Vision
We will deliver a 21st century, multimodal transportation system that will improve the quality of life for Texas citizens and increase the competitive position for Texas industry.
Mission
We will provide safe, efficient, and effective means for the movement of people and goods throughout the state, facilitating trade and economic opportunity.
Goals
Our five goals establish the general direction we will take to realize our vision and mission: reduce congestion, enhance safety, expand economic opportunity, improve air quality, increase the value of our transportation assets.
Strategies
We will harness market-based principles to maximize competition, reduce costs, and guide investments. We will facilitate consumer-driven decisions that respond to market forces.

“Increase the competitive position for Texas industry” and “facilitating trade and economic opportunity” are goals for private industry and should NOT be the aim of a taxpayer-funded public agency. This smacks of corporatism and does not protect the public interest.

Increasing the value of the public’s highways (that TxDOT calls “assets”) and “expanding economic opportunity” have NOTHING to do with providing transportation. These should NOT be TxDOT’s goals. Their mission changed once public opposition to toll roads and PPPs came on the scene in earnest in 2005. They use these “goals” to justify their toll and Trans Texas Corridor agenda of pushing the most expensive transportation financing option, toll roads. Increasing the cost of transportation through tolling does NOT expand economic opportunity for taxpayers, it increases the tax burden and hurts the family budget by sucking money away from other household necessities.

TxDOT’s strategy of using “market-based” tolling is diametrically opposed to protecting the public interest and its access to government-sanctioned monopolies, our public highways. It is NOT the government’s role to implement market forces in order to access public “assets.” Private industry utilizes competition and market forces, but highways are monopolies built with public money to serve the public and cannot be viewed as subject to the same market forces as other private sector goods and services.

A recent poll done by Lyceum, a non-partisan public policy institute, shows only 9% of Texans use toll roads regularly and it also shows the majority of Texans do not want an increase in gas taxes or TOLLS and they are also against tolling existing freeways. TxDOT’s “goals” are in direct opposition to the majority of Texans. Its goals must be changed to reflect the will of the taxpayers who pay the bills.

TxDOT’s stated “tactics” do not protect the public interest using controversial methods like debt financing, handing control of our public roadways over to private entities through PPPs, a state infrastructure bank, and public pension funds to finance toll roads.

5. Congestion not going up, but down.

TxDOT sites the travel time index for Texas’ major cities as going up. Yet, a San Antonio Express News article July 29, 2008, using the most recent Transguide data shows the opposite…travel times in both San Antonio and Houston are going down. Peak congestion in San Antonio went from 3 hours a day down to under 2. This is function of higher gas prices and people finding other ways to get to work.

6. Increasing the cost of transportation does NOT help, but HURT the economy.

TxDOT assumes that by merely increasing the number of transportation-related jobs helps the economy when the economic data shows an increase in the cost of transportation (whether gas prices, gas tax, tolls, or other increases) hurts the economy and causes a dramatic rise in the cost of goods and services, including necessities like food.

7. Texans don’t want the Trans Texas Corridor and PPPs, and TxDOT’s claims of protecting the public interest are false.

Page 31 states:
All state highway facilities, including toll roads, will be completely owned by the State of Texas at all times.

• Only new lanes added to an existing highway will be tolled, and there will be no reduction in the number of non-tolled lanes that exist today.

• CDAs will not include “non-compete” clauses that would prohibit improvements to existing roadways.

Effective ownership is transferred when the PPP is for half century. TxDOT is taking away existing non-toll highway lanes and replacing them with frontage or access roads. That’s highway robbery plain and simple. The non-compete clauses may not prohibit expansion, but the state will have to pay the toll operator a penalty for doing so. The punitive financial consequences will in itself prohibit expansion of non-toll options.

Bottom line: Texans don’t’ trust this agency, its assumptions laid out in this plan are flawed, do not protect the public interest, and will hurt the economy, and its goals do not reflect the goals of the majority of Texans. This Strategic Plan is more of the same, not a fresh start as Chairwoman Delisi assured the Sunset Commission on July 15. TxDOT must return to a more affordable, less risky approach to highway funding.

Financial details on 281 toll road get released

Link to article here.

This traffic and revenue study conducted by the Alamo Regional Mobility Authority (ARMA, the tolling authority), was withheld from the public, MPO Board members and legislators until our lawsuit to stop the 281 toll road. Now this information is being made public because a Judge ordered it. This same study was also criticized by the State Auditor for not including high gas prices in its analysis of the financial viability of the project.

The Auditor asked the study to be re-done. So Brechtel's comments below are pure spin. The ARMA knew it needed this information since 2006 when citizens and previous toll studies warned gas prices at $3 a gallon threaten the financial sustainability of toll roads, and yet it conducted a study without analyzing it. For them to now act as if they called for a new study including gas price analysis on their own is a farce.

U.S. 281 tollway is seen as a road to $2.1 billion
By Patrick Driscoll
Express-News
08/29/2008
At 17 cents a mile, and rising steadily each year, the tolls for driving on U.S. 281 will add up fast.

Motorists could pay $2.1 billion over 37 years to use the 8-mile stretch of tolled express lanes expected to open by 2012, according to a recent traffic and revenue report needed to sell bonds for the project.

That averages almost $57 million a year, an eighth of the $472 million needed upfront to design, buy land and rebuild U.S. 281 into a tollway with non-toll frontage roads.

Bottom line, according to Moody's Investors Service, the project is a sound investment for bond buyers, Alamo Regional Mobility Authority Director Terry Brechtel said.

“It's conservative,” she said. “So we feel good about it.”

The money would trickle in at first, with toll lanes fetching just $8 million the first year, says the report by consultant URS. But as waves of people and jobs migrate north of Loop 1604 and traffic increasingly chokes area roads, drivers will warm to the idea of paying to double their speeds, analysts predict.

Toll traffic could swell five times over by 2048, when about $1.3 billion in bonds, loans and interest would be paid off. Also, the 17-cent-per-mile fee should rise to about 48 cents by then, while trucks would be paying almost triple the rate.

By the time today's teens get around to eyeing retirement four decades from now, the U.S. 281 tollway might be on track to rake in $120 million a year.

Startup and debt costs aren't the only outlays needed.

Expenses to collect tolls and pay staff would eat 18 percent, or $427 million, of revenues, a recent HNTB Corp. engineering report says. Maintenance would add another $170 million.

The biggest risks to money flows would be a major slowdown in population growth, which feeds traffic congestion, or political backlash that reigns in annual toll-rate increases, the URS report says.

If San Antonio's population and job growth falls 14 percent below forecasts — which, to be safe, URS set lower than 1990s trends — the toll road could lose more than a fourth of earnings. A recession stopping growth along the corridor for five years could slice revenues more than a tenth.

Robust growth and perpetually escalating toll rates are much of what activists fear.

A pending federal lawsuit challenges a state environmental study for not seriously considering how the toll road would spur growth over recharge areas of the Edwards Aquifer or financially harm residents.

Yet, the URS report confirms that healthy traffic and revenues rely on such growth, said Bill Bunch of Save Our Springs Alliance, which is representing two area groups.

“If you are projecting decades of substantial traffic growth along U.S. 281 and then taking on debt based on those projections, then you are basically betting in favor of polluting the aquifer and paving the Hill Country,” he said.

Another looming concern involves record-high gas prices, which the URS report doesn't specifically address.

Most experts agree that global oil production is peaking now or will in a few decades, and that the age of cheap energy is over. But how adjustments play out with alternatives, including public transit and fuel-efficient cars, is less certain.

After seeing the URS report, Brechtel requested a close look at gas-price impacts.

“I said, ‘Thank you very much, I want a specific gas-price analysis,'” she said.

With high gas prices pushing Americans to drive less this year, most U.S. toll roads lost 2 percent to 10 percent of traffic, Fitch Ratings said in a report last week. Texas losses are under 5 percent.

The trouble could last one or two years, Fitch said. If pressures continue, and policymakers start funneling more money to transit and more people begin shunning suburbs to live in urban cores, toll roads will face even bigger problems.

“The question is whether the current trend will continue for a longer period,” the report states.

Not the time for toll roads: Dow plunges after warning of 'financial tsunami'


Link to article here.

Dow plunges after warning of 'financial tsunami'
By Tom Bawden in New York
The Times Online
September 5, 2008

Weary investors in the United States received a further pummelling yesterday as data showed new unemployment claims at a near-five-year high last week, a leading fund manager gave warning that America faced a “financial tsunami” and key retailers released disappointing sales figures.

The mounting nervousness about America’s economy dragged down shares. The Dow Jones industrial average fell 344.60 points, or 3 per cent, to 11,188.20, and the S&P 500 closed down by 38.20 points, or 3.3 per cent, at 1,236.80 points.

The Labour Department reported that the number of Americans claiming unemployment benefits for the first time rose by 15,000 to 444,000 in the week to August 30. The disappointing figures came after companies cut staff in the face of a weakening global economy and contrasted with a consensus forecast that new jobless claims would fall to 420,000.

The data, combined with a call by the manager of the world’s biggest bond fund for the Government to inject more money into the banking system, spooked US investors already jittery about the outlook for the global economy. Bill Gross, co-chief investment officer of Pimco, said that the US was confronted by “systematic debt liquidation”. He added: “Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami.”

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Dow soars as banks pump $280bn into markets
Markets take fright on deepening credit fears
Mr Gross said: “If we are to prevent a continuing asset and debt liquidation of near-historic proportions, we will require policies that open up the balance sheet of the US Treasury.”

Hugh Johnson, head of Johnson Illington Advisors, the US fund manager, said: “The stock market declines are more than just the jobless figures. Although they are not good, it is more that they tap into growing concerns that the global economy is weaker than expected and that the problems facing financial institutions are not going away.”

Furthermore, Gap and Abercrombie & Fitch, the clothing retailers, and Target, the discount retailer, all reported a decline in same-store sales for August. Gap said that its sales fell by 8 per cent in August.

Saks, the luxury department store chain, and Limited Brands, the owner of the Victoria’s Secret lingerie chain, also reported weaker sales.

A separate Labour Department report provided a glimmer of hope, announcing that productivity – the amount of output for every hour of work – rose to an annualised rate of 4.3 per cent in the second quarter, one percentage point above consensus forecasts. Analysts said that the higher productivity was encouraging because it helps to keep a lid on inflation.

Commentary: Privatizing what the public paid for


Link to article here.

Privatizing What the Public Paid For
Special to the Star-Telegram
By Ed Wallace
September 5, 2008

"Right. It takes unconventional and courageous thinking to come up with a plan that clears a highway lane for the well off, while the middle class and working poor are left to inhale each other’s $5-a-gallon exhaust fumes. The worst thing about this ill-conceived decision … is it allocates freedom of movement according to income." --From "Diamond Lanes for the Rich," by Tim Rutten (Los Angeles Times, April 26, 2008)


Few think of it this way, but America already has a major flat tax that we all pay equally: the 18.4-cent federal tax that is applied to each and every gallon of gasoline we purchase, or the 24.4 cents on every gallon of diesel. Say a young person, who just lost his job at McDonald’s, buys a gallon of gas to get to an interview at Burger King at the same time Warren Buffet buys a gallon of gas to get to the airport in Omaha to board his personal jet: Both the unemployed, below-minimum-wage worker and America’s richest billionaire contribute the exact same amount toward the nation’s highway system on that day.

Now, however, we are being told – to an increasingly urgent drumbeat – that America can no longer afford the luxury of building new infrastructure or even maintaining our current road system, because there’s just no funding for these programs. It’s here that the complete absence of critical thinking about America’s future should astonish and dismay anyone who looks at the facts even casually.

Just for the Rich?

In just a few months America has come up with nearly $1 trillion to cover foolish losses on Wall Street and in the nation’s banking system – losses primarily self-caused in the investor-driven buildup to the mortgage crisis over the past three years. But at the same time we’re being told flat out that Social Security is a disaster waiting to happen, because it will be $1 trillion in default somewhere around mid-century. Yes, you read that right: We can save our financial centers today in mere weeks when it looks like they are over $1 trillion upside down, but there’s no way we can find that much money over the next 40 years to secure all working Americans’ retirement.

And on Wall Street, many firms are pleading poverty and demanding federal intervention, claiming to be incapable of rescuing themselves from the disaster they have brought on the nation. But, according to a New York Times article from August 27th on privatizing the nation’s infrastructure, "Kohlberg Kravis Roberts, the Carlyle Group, Goldman Sachs, Morgan Stanley and Credit Suisse are among the investors that have amassed an estimated $250 billion war chest – much of it raised in the last two years [emphasis added] — to finance a tidal wave of infrastructure projects in the United States and overseas." (The last Federal Highway Bill appropriated $286 billion over a multi-year period, only $36 billion more than Wall Street has escrowed to buy up our infrastructure now.)

Likewise, Washington cries poormouth when asked how much we can spend in our next highway bill to fix and expand our nation’s highway system. Yet in less than one month Washington easily found $168 billon to send out in tax rebate checks to spur the economy – so the second-quarter GDP figures would look stronger.

Yes, America once found it necessary to "kick start" our economy in tough financial times. But back then the sudden infusion of $168 billion was spent on things everyone could use, like new highway projects: The money still had the same impact on the economy, but America gained something of lasting value to show for it. Long after the economic slowdown turned around and became a recovery, we would all benefit from better transportation.

It’s the bitterest irony of all that today elected officials talk about how great our economy has been on Monday, then on Tuesday say America doesn’t have the money to improve our nation’s infrastructure.

Which is it? Are we rich or broke?

Happy Motoring Now Has a Price

What’s even sadder is the fact that Washington is actually paying out taxpayers’ money to take the highways away from everyone who contributed to them; your dollars are being used to carve out separate lanes, so that those who can afford to pay additional tolls every day can drive unfettered by the congestion that traps the rest of us.

In Los Angeles the federal government allotted $213.6 million to convert many of that city’s HOV lanes into toll roads, on which drivers pay variable surcharges based on peak driving periods. Keep in mind that the unemployed of LA who bought gasoline paid the exact same highway taxes toward the construction of those roads as did the wealthiest individuals in Beverly Hills. What that means is that we have all contributed equally to create a system of motoring exclusion. Then again, that’s how flat taxes work. Everybody pays, most are excluded.

Recently it was mentioned that, just like LA’s, Interstate 30’s new HOV lanes could be turned into toll lanes for the well off. As they do in other cases around the nation, advocates of this divisive and unfair move claim that it will cut congestion and save fuel; but a daily casual observation of the road quickly exposes the difference between reality and that PR spin.

For if you really wanted to cut congestion and save fuel, those lanes should be immediately opened to everyone when an accident turns I-30 into a parking lot. That way, thousands upon thousands of motorists could start moving again – saving untold gallons of gas and tons of air pollution – not just the chosen few. Of course, that’s not the plan.

Just Plane Elite-Friendly

It should also be mentioned that a relatively large infrastructure campaign is now going on to improve the nation’s secondary airports. For the most part those airports are serving the ever-growing number of private aircraft; personal jets have become all the rage in the last decade. As David Cay Johnston points out in his excellent book, Free Lunch; How the Wealthiest Americans Enrich Themselves at Government Expense, airport expansions for private jets continue unabated, but it’s the average American taxpayer footing the bill.

Johnston further discusses the $31 million airport expansion for the field that serves the Bandon Dunes Golf Course in Oregon, where 5,000 private jets land each year; that’s up from three or four landings a year as recently as 1999. That airport expansion’s costs are covered by taxes paid by all fliers on commercial airlines and by a hefty chunk of the monies paid by Oregon Lottery gamblers – even though the improved airport mostly benefits executives flying in for a round of golf.

A similar report, put together by the Institute for Policy Studies, shows that private jet ownership has risen from 1,000 in 1970 to 10,000 in 2006; and, while these jets use 16 percent of the nation’s total air traffic services, they pay just 3 percent of the costs. Although this is assuredly on a different plane (pardon the pun) than selling off the nation’s already paid-for highways, the overall concept is the same: The majority of the people pay to build and improve infrastructure that will benefit and convenience only a tiny minority: the ultra-rich.

Private and Public: Don’t Mix

This is the modern politics of exclusion. But privatizing a country’s public infrastructure has already proven to be a bad business model, one that can and will reverse a half-century of smart economic expansion. One has only to look at England to find the truth behind today’s political spin.

Today England’s largest airports "… are in shambles. Terminals and runways are so overcrowded that flights depart late and bags are lost. Faulty plumbing has become a point of pride for many visitors from Africa; the lavatories at the airports back home work better." And that’s the opinion of the very conservative Economist magazine, which blasted the fact that 21 years ago the Thatcher administration’s sold London’s three largest airports to one private company.

When I returned from London in June, my plane’s passengers were all loaded onto buses and driven to our jumbo jet, which was parked nowhere near the terminal; there aren’t enough passenger gates to handle all of Heathrow’s flights. Of course, private industry’s job is to cut expenses and maximize quarterly profits; but that’s never the priority in intelligent long-term planning for public transportation — whether it is for highways or airports. England privatized its utilities, airports and other government functions in the eighties, and today that nation is paying an enormous cost, with their equivalent of our Treasury Secretary calling its recent economic downturn the worst in 60 years.

Then again, now England is saying that the current private owners should divest of many of their airport holdings to other private ownership groups (and possibly back to government hands), but this will only extend the country’s current problems. It could even make them worse.

It’s true that many things our government does, it does poorly; but there are things that government does exceptionally well. The problem today is that our government wants to sell off what it does best and keep what it demonstrably isn’t very good at.

We’ve paid for all of it; yet now government is asking the majority of us to pay so the smallest minority can enjoy the benefits. Not only is that not a sustainable plan, it’s not even remotely American.

© 2008 Ed Wallace

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, given by the Anderson School of Business at UCLA, and is a member of the American Historical Society. He reviews new cars every Friday morning at 7:15 on Fox Four’s Good Day, contributes articles to BusinessWeek Online and hosts the talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.
Private industry’s job is to cut expenses and maximize quarterly profits; but that’s never the priority in intelligent planning for public transportation — whether it is for highways or airports.

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