State Audit report reveals TxDOT incompetence behind $1.1 billion error

Link to article here. Link to Express-News blog with more here.

TxDOT error causes $1.1 billion blunder
By Janet Elliott
Houston Chronicle
08/29/2008

AUSTIN — Poor internal communication and complicated procedures caused a $1.1 billion blunder that forced Texas transportation officials to pull back on construction projects earlier this year, according to an audit released Thursday.

Texas Department of Transportation officials actually discovered the accounting error six months earlier, the report said.

The accounting error occurred when bond proceeds were counted twice when the department developed the fiscal year 2008 contract award schedule. As a result, $4.2 billion in planned projects was reduced to $3.1 billion.

This resulted in a reduction of $71.5 million worth of construction and maintenance in the San Antonio region and a $161 million deduction in the Houston area. Auditors faulted department officials for failing to immediately communicate the error to the Texas Transportation Commission, lawmakers and the public.

“Although the department asserts it briefed all commission members individually, no briefing documents, specific dates or calendars were provided to auditors to verify these briefings,” the report said.

Auditors recommended that TxDOT develop a formal process for reviewing money available for projects, keep commission members informed in open meetings, post updates on the agency's Web site and alert legislators when funding in their areas change.

The department said it was already making changes suggested in the report.

“I am committed to increasing the department's transparency, and the recommendations identified in this audit put us another step closer to realizing that goal,” said Amadeo Saenz, TxDOT executive director, in a statement on the agency's Web site.

The report comes amid a backdrop of legislative distrust about the department's financial projections as TxDOT turns to privately financed toll roads to meet future transportation needs.

The department has projected a $3.6 billion shortfall by 2015 and said that increased maintenance needs will leave little for new construction.

Lt. Gov. David Dewhurst, who along with House Speaker Tom Craddick asked for the audit, said in a written statement that the report confirms his arguments that the agency needs to be more transparent and make wiser use of its resources.

“The people of Texas deserve a world-class transportation system,” Dewhurst said. “I'm hopeful this report, along with recommendations made by the Sunset Commission, will provide the Legislature with a good roadmap for making immediate and long-term improvements to our transportation system.”

A legislator who has been critical of TxDOT welcomed the details contained in the audit.

“However, I must admit I am dismayed to learn that there were persons in the department who became aware of this error as early as September 2007, and yet it was not brought to the Legislature's attention until early this year,” said Rep. Ruth Jones McClendon, D-San Antonio, in a written comment.

McClendon sits on the Sunset Advisory Commission, which is conducting a periodic review of the department's operations. A staff report recommended replacing the five-member commission with a single commissioner.

Other proposed changes include increasing legislative oversight through a new House-Senate committee; making TxDOT's transportation planning and project development more open and easily understood; enhancing chances for public involvement; and improving TxDOT's contract management.

Backroom deal with pension funds as prize, means $1.5 billion in road projects move forward

Link to article here.

This was the compromise hatched in a backroom deal with Governor Perry, Texas House Speaker Tom Craddick,and Lt Governor David Dewhurst. Read the letter here. Perry gets access to public pension funds to build toll roads that even the private sector now deems risky, and Legislators get their $1 billion in projects TxDOT previously cut due to an "accounting error."

TxDOT to borrow another $1.5 billion
By Ben Wear
AMERICAN-STATESMAN STAFF
Saturday, August 30, 2008


The Texas Transportation Commission, taking its cue from state leaders, decided Friday to borrow $1.5 billion that would be paid back with future gas taxes.

That authority, granted on a unanimous vote of the commission in a specially called meeting, will allow the Texas Department of Transportation to issue nearly $4.3 billion in contracts in the budget year that begins Monday. At least $1.1 billion of that would be for maintenance projects. But the remainder, nearly $3 billion, would allow TxDOT to get to several state road expansions that had to be shelved this year.

That 2008 crunch directly affected the Austin area, where local leaders had approved a $1.45 billion plan to build five more toll roads based on a promise of several hundred million dollars from TxDOT. Politicians here, particularly state Sen. Kirk Watson, D-Austin, were incensed when TxDOT reneged on that promise only a few weeks after a tough October 2007 vote on the toll roads.

TxDOT Executive Director Amadeo Saenz could not say with certainty Friday whether the move to issue the $1.5 billion in gas tax bonds will restore much of that financing to Austin.

"It could help Austin," Saenz said. "We want to make sure we get projects that are ready to go in 2009."

The Central Texas Regional Mobility Authority will be building the first of those five projects, an expansion of U.S. 290 from Northeast Austin to Manor that would include toll express lanes and improved frontage roads.

However, officials with the authority this week indicated that environmental and engineering work will probably not be ready in time for construction to begin until late 2009. That would be beyond the state's budget year, which ends Aug. 31, 2009.

Saenz indicated that some of the $1.5 billion would be spent on engineering and right-of-way purchases around the state, readying projects in anticipation of even more borrowing to come. Under state law, TxDOT could borrow an additional $1.4 billion against the gas tax in the 2009-10 budget year. Austin projects could see some of that engineering money or some of the $1.4 billion if TxDOT follows through and takes on that debt as well.

And if the Legislature passes the proper legislation next year, the agency could borrow up to $5 billion more that voters approved under the Proposition 12 constitutional amendment in November. Those bonds would be paid back by general state revenue, not gas taxes.

Friday's action came in response to a letter a week ago signed by Gov. Rick Perry, Texas House Speaker Tom Craddick and Lt. Gov. David Dewhurst, the state's three most powerful elected officials. In that letter, the three backed more borrowing against the gas tax and financing the Proposition 12 bonds.

In the past year, TxDOT had resisted borrowing more against the gas tax, arguing that doing so would starve the agency's bottom line down the road as gas taxes were used to pay back the borrowed money. But in the letter last week, the three leaders supported ending or curtailing significantly the use of gas tax money for state needs other than building transportation projects.

About $1.6 billion in the current two-year state budget went to such "diversions," the bulk of it to the Texas Department of Public Safety.

If the Legislature were to return much of that money to TxDOT, replacing it with general state revenue from other taxes and fees, then TxDOT could presumably handle the additional gas tax borrowing.

Krusee sells toll road ilk to Utah politicians ready to turn freeways into FEE-ways


Link to article here. Toll roads aren't free market, they're government sanctioned monopolies. If Krusee and his crowd have their way, we'll soon be taxed for the very air we breathe. Gone will be freedom and mobility, in will be a two tiered highway system, one for the government bureaucrats, special interests, and politicians and one for the rest of us.

Fee-way: Could toll roads replace gas taxes in Utah?
By Brandon Loomis
The Salt Lake Tribune
08/21/2008

Utah's pending shift to time-of-day tolls in freeway express lanes moves the state one step closer to a necessary overhaul in highway funding, a national transportation advocate told legislators Wednesday.

Tolls are fairer and stabler revenues for road building and must anchor infrastructure plans since gas taxes will fail, starting next year, to keep the federal highway trust fund solvent, said Texas state Rep. Mike Krusee, a member of the National Transportation Infrastructure Finance Commission.

After the presidential election, that commission will recommend a national shift away from gas taxes and toward tolls to charge people for interstates they use - and more during rush hours - essentially turning freeways into fee-ways.

Both federal and state governments will have to make the change - some key Utah lawmakers are interested - as the trust fund is drained, Krusee said. The fund's shortfall will start at $5 billion next year and swell to $30 billion in 2010, likely meaning a one-third reduction in federal assistance for Utah roads, he warned.

"We don't even know in 20 to 30 years if [motorists] are going to be buying any fuel or what kind of fuel they'll be buying," Krusee told the Utah Legislature's Revenue and Taxation Interim Committee. His answer: Charge for miles traveled.

The Utah Department of Transportation plans to use electronic transmitters on Interstate 15 within two years so commuters can spot-pay for express lanes. The amount - which has yet to be set - will depend on how busy the freeway is at the time of travel. Higher traffic will mean a higher toll.

That plan could stretch to all lanes if state and federal lawmakers do as Krusee suggests.

The Texas lawmaker called the current funding plan a subsidy by taxpayers to suburban developers who use the roads to open cheaper lands and further bog down commuter-hour traffic. Charging a toll instead means everyone pays their way and the government gets a return on its investment, which it can bond against for future projects.

Electronic scanners are the method of future tolls nationwide and already are used in places such as Chicago, Krusee said. It's necessary to install cameras as well, so that cars without transmitters can be charged the toll by mail if their license plate is spotted.

Texas built a $3 billion tollway around Austin four years ago, Krusee said, and within six months sold as many transmitters for it as there are residents in the county.

UDOT pays about 85 percent for its own road projects, potentially lessening the blow from federal shortfalls compared with states that get half or more from U.S. gas taxes. But Krusee sees a market approach as the surest way for future generations to snag needed funding.

He found enthusiastic supporters in the Utah Legislature.


"Hearing you is a breath of fresh air," Sen. Howard Stephenson, R-Draper, said. "I just want to welcome you to the socialist republic of Utah," a reference to what he considers subsidized rush hours.

Stephenson is president of the business-backed Utah Taxpayers Association, which supports freeway congestion pricing. He said it is wrong for taxpayers to subsidize interstate capacity built to meet the demands of just four hours a day. Better, he added, to have those peak-hour drivers pay their way.

More than half the motorists on the nation's freeways during rush hours are not driving to or from work, Krusee said. Charging them might move them off the road until later, speeding up traffic.

Sen. President John Valentine, R-Orem, said he is "intrigued" by a market approach to roads.

Moody's warns gas prices may lead to toll increases


Link to article here.

Moody's: Gas Prices May Lead to Toll Increases
Bond Buyer
Thursday, August 7, 2008

WASHINGTON - Gasoline prices at $4.00 or more per gallon for a prolonged period could depress toll road traffic and revenue, and compel governments to increase tolls to prevent credit rating downgrades, Moody's Investors Service warned in a report issued today.

Despite the warning, Moody's gave the government-owned toll road sector a cautiously stable outlook for the next year to 18 months, pointing to steady traffic in commuter-heavy metropolitan areas as a stabilizing factor. However, greater leveraging of toll road assets could put downward pressure on the sector's A1 median rating.

"We expect continued steady debt issuance, particularly as service area economies grow and toll facilities are tapped to undertake projects that local governments would rather not fund with taxes," the report said.

Traffic and revenue growth are likely to decelerate in some regions because of deteriorating economic conditions, Moody's said. But most toll roads rated by Moody's - especially those in major metropolitan areas - should see steady, if slower, gains in traffic and toll payments.

All but four of 45 government-owned toll roads that Moody's rates are stable, and its two ratings changes this year so far have been upgrades.

"The sector's credit strength reflects favorable historical economic conditions and traffic growth in the U.S., the low elasticity of demand experienced by many toll roads, and financial strength and stability of the sector," Moody's said in its sector overview.

Other factors keeping the sector stable are solid liquidity levels, the ability to independently increase toll rates, and the "relatively resilient underlying service area economies" for many major metropolitan areas that are served by toll roads.

Moody's gave examples of why some ratings were downgraded last year.

The North Texas Tollway Authority's revenue bond rating was downgraded by Moody's in November due to increased debt issuance and "steady toll increases" to support the additional debt, Moody's noted. Nevertheless, the traffic growth rate has remained steady. As of May, traffic was up 6% over 2007.

The Santa Rosa Bay Bridge Authority's rating was downgraded because traffic and revenue failed to meet expectations. The authority had to tap its debt service reserve fund to pay on its bonds. Lower-rated toll roads tended to be new, single-asset facilities that underperform because of local economic slowdown or "overly optimistic" predictions, the report said.

Moody's analysts said older, established toll roads linking residential centers with employment centers in both urban and rural areas are not likely to suffer from sustained drops in traffic. In fact, they said, established toll roads may be the exception to a national trend.

The U.S. Department of Transportation announced last week that drivers traveled almost 10 billion fewer miles in May than in that same month last year. It was the third-largest monthly drop in U.S. vehicle miles traveled ever recorded. All three of the largest monthly mileage drops were this year.

But "the numbers cited there are on all U.S. highways, not just on toll roads," explained Maria Matesanz, a Moody's senior vice president who authored the toll road sector outlook. Matesanz said the rate of traffic growth on toll roads "may have slowed a bit, but the usage isn't declining."

Analysts emphasized that a clear-cut trend has not yet emerged that shows toll road traffic and revenues are in trouble. If tolling does see a decline because of a prolonged period of high gasoline prices, toll increases may be necessary, the report indicated.

The report did not speculate on a breaking point at which drivers might stop using toll roads because of higher toll costs.

"There's always that point, and that potential, that you could be compounding the problem, so it is a balancing act," said Tom Paolicelli, Moody's vice president and senior analyst. "Some roads are more inelastic than others."

It remains unclear, the analysts said, whether the economy, gas prices, or a combination of both is causing the decline in traffic growth rates.

Slowing regional economies combined with high fuel prices have, however, already affected some toll roads more than others, the analysts said.

The report said the government-owned toll road outlook is "more uncertain" for 2009.

"Given the reluctance to increase federal and state taxes to the levels needed to close the funding gap for road and bridge infrastructure, Moody's expects the increased use of tolling to help pay for new transportation projects, leading to greater toll revenue-backed debt issuance," the analysts wrote. In addition, more leveraging of existing toll road systems "may have a negative impact on some credit ratings."

Moody's cited examples of trends that may bolster the sector's credit health.

Increasing use of electronic toll collection and open road tolling - or cashless tolling - and congestion pricing could bring in more toll revenues, the rating agency said. But the analysts recommended against sharp bumps in toll prices, suggesting instead that "gradual, smaller" toll increases may be more acceptable to drivers and lawmakers. Cashless tolling could speed the flow of traffic and cut operating and capital costs of government-owned toll road facilities, the report said.

"Also, as tolling becomes more electronic," Matesanz added, drivers may pay less attention to toll rates. "So they're a little bit more insulated from the toll rate increases."

Judge says TxDOT withheld "numerous" documents from the feds

Link to article here.

New documents cause delay in U.S. 281 tollway lawsuit
By Pat Driscoll
Express-News
August 21, 2008

A judge on Wednesday granted a 60-day delay on the U.S. 281 tollway lawsuit so federal officials can review recently discovered documents from a state environmental study.

The documents, called “a small addition” by the Texas Department of Transportation but “numerous” by U.S. District Judge Fred Biery, could alter the Federal Highway Administration's environmental clearance for the eight-mile toll road.

Toll critics and environmentalists filed the lawsuit in February to challenge the environmental study's thoroughness.

“TxDOT has discovered numerous documents containing potential evidence which, to its credit, says should be reviewed,” Biery said in a four-page order.

The Alamo Regional Mobility Authority, which took over the U.S. 281 toll project from TxDOT, promised not to start construction during the break, the order says.

Biery also noted that court battles take time. Thirty-plus years ago, the U.S. 281 project now known as McAllister Freeway was locked in litigation for 14 years and many contracts were delayed.

“The court presumes counsel and the parties will continue to use best efforts to proceed efficiently and professionally,” the order says. “Like good wine, the court will make no opinion before its time.”

The delay, effective Aug. 7, will end in October.

TxDOT's rigged environmental study on 281 failed to include aquifer authority


Link to article here.


Did aquifer authority weigh in on toll-road study?
By Pat Driscoll
Express-News
August 14, 2008

One bone of contention with the U.S. 281 tollway's environmental study has to do with whether officials "involved" and worked in "consultation" with an aquifer authority, as required by regulations.
281.illustration.2.jpg
Illustration of U.S. 281 tollway from Alamo Regional Mobility Authority slide show.
Critics filed a federal lawsuit in February to challenge the thoroughness of the study, which says doubling U.S. 281's width for eight miles would not cause significant impacts.

The study's conclusion is ridiculous, they say, especially since the highway traverses Edwards Aquifer recharge and contributory zones.

Toll advocates say the lawsuit is frivolous and will just delay a long-needed project.

Here's some stuff plaintiff attorneys dug up:

These pages from the study say the Texas Department of Transportation sent letters to stakeholder agencies, including the Edwards Aquifer Authority, in February 2006 to solicit input:

• Download file

The Edwards Aquifer Authority, responding to an open records request, said two months ago it has no record of the TxDOT letter or any other written request since December 2005 concerning U.S. 281 and Loop 1604 widening projects:

• Download file

But there's this record of a 25-minute telephone conversation between a TxDOT consultant and the authority:

• Download file

"It's ridiculous, in our opinion, to say that that's agency coordination," plaintiff attorney Andrew Hawkins said in an e-mail. "It's not a meeting, it's not a request for EAA to participate and give input on the project — it's a consultant yanking info out of EAA staff to plug into the consultant's report."

More on the lawsuit:

• Lawsuit uncovers holes in U.S. 281 tollway study
• State responds to U.S. 281 tollway lawsuit
• Toll agency will try to step around lawsuit
• For your eyes — U.S. 281 tollway lawsuit
• Lawsuit eyed to stop U.S. 281 tollway

Toll road traffic down, Macquarie bleeding out

Link to article here.

Even toll road industry insiders must now acknowledge what the rest of us have been observing for years: toll roads are no longer financially viable with high fuel prices! It is obvious that toll roads are purely speculative risky deals that the prudent must shun. These deals depend on low fuel prices, a booming economy, and more vehicle miles traveled, none of which we have now or into the foreseeable future. Selling billions in bonds knowing these toll roads are famous for overprojecting rosy outcomes and have a history of underperformance that will require massive toll hikes and/or taxpayer bailouts, is malfeasance.

Traffic hit hard by fuel prices - average down over 5%, but some way worse
By Peter Samuel
Toll Road News
August 24, 2008

Traffic on tax roads in the US seems to have dropped on average by 4 to 5% and on toll roads by 5 to 6% over the past year. The reduced travel is attributable almost entirely to the big run-up in gasoline prices and is about was to be expected from long-established economists' estimates of the price elasticity of demand of about -0.2. Fuel prices which dominate the marginal cost of driving are about 30% higher so you would expect traffic as measured by vehicle-miles traveled (VMT) to be 6% lower (-0.2x0.30=-0.06). Deduct one percent for the sluggish economy and you have 5%.

Toll road traffic may be down marginally more than tax roads traffic because tollroads are somewhat skewed to discretionary travel.


FHWA/OHPI data for travel on all roads show the drop in traffic slightly greater in the west (excludes TX) and the southeast but single digit percent falls have occurred in all major regions. Indeed in June all 50 states were down (only DC is up slightly).

Rural travel is down more sharply (5% to 7%) than urban (3% to 5%). Rural interstates are down nearly 7%. (VMT08juntvt.xls)

Fitch Rating survey

A survey of US tollers' traffic and revenue by Fitch Ratings shows a fall-off year on year clustered in the single middle digits range. Declines are as much as 10% in Florida and California. In Texas are declines in traffic in the lower single digits.

They say that standalone toll projects have the greatest declines and the turnpikes with their dependence on longdistance and rural traffic. Next come the bridges with the least affected being the (urban) expressway networks.

TOLLROADSnews needs to do a proper survey toll agency by toll agency, but that will have to wait a bit longer. A few tollers publish their data monthly (Orange County Toll Roads) and even weekly (91 Express Lanes). There are some more spectacular drops in traffic than Fitch mentions.

91 Express Lanes down 15% to 20%

The 91 Express Lanes are way down. Through July their toll transactions were about 17% lower than the same week last year and the first two weeks of August have been down 18%. Revenue is down about 15% in the last six weeks.

It would be interesting to see if the other express lanes are losing traffic as heavily but it seems logical that they will be more volatile than full tollroads. Most of their users are occasional users taking the toll lanes only when they want a faster ride so their use is discretionary. Furthermore and maybe this is more important: declining traffic in the free lanes means there is less congestion there and faster free trips, so the Express Lanes suddenly aren't saving as much time as before.

The Toll Roads of Orange County nearby have suffered serious traffic losses too, close to 10% in the case of Foothill Eastern TR (FETR) and San Joaquin Hills TR (SJHTR).

The burst of the housing bubble has hit this part of southern California as well as parts of Florida especially hard.

Orlando Orange County toll expressways in Florida have suffered a traffic drop but not as large. (see OOCEA in table nearby).

Macquarie hemmoraging

Macquarie has reported June quarter traffic and it has some huge drops 2008Q2/2007Q2:

- Indiana Toll Road average daily traffic down from 122.8k to 95.6k, 22.2%

- Chicago Skyway from 44.2k vs 51.7k, down 14.6%

- Dulles Greenway VA is down less from 58.6k to 55.1k or 5.9%

The three major Macquarie tollroads in the US have gone from 233k/day 2007Q2 to 195k 2008Q2 or 16% down. (South Bay Expressway is at 26k day but wasn't open in 2007).

On the Indiana TR the ticket system portion of the tollroad which caters to longdistance traffic is down 5%.

The spectacular drop is on the barrier system where daily traffic is down from 98.4k 2007Q2 to 70.5k 2008Q2. That's 28.4% down!

That's commuter and weekender traffic.

Some of the drop may be attributable to opening of improvements to the competing free route of I-80/I-94 (Bishop Ford, Kingery, Borman Expressways) and the higher tolls, but regardless, it doesn't look good for the Macquarie shareholders.

Macquarie recently lowered their valuation of these toll roads substantially.

Canada not seeing the same declines in traffic

A lot of the rise in the price of gasoline in the US is simply the fall in the value of the US$ relative to other currencies. Gasoline has risen much less in C$s because C$s now bob around at parity with US$s whereas they were 15% below a year ago.

Also rises in the oil component of the gasoline price seem less north of the border, because the fuel taxes are so much higher already.

Toronto 407ETR up over last year

In Toronto 407ETR traffic continues to be above last year's levels. Its traffic is larger than all four US Macquarie tollroads combined, so the North American Macquarie traffic in total is down only 5.8% vs 16% for Macquarie's US roads.

Where from here? (SPECULATIONS)

Our sense is that traffic should stabilize at roughly present levels if gasoline prices stay where they are. Short-term adjustments to the higher prices have been made.

And if the US economy continues in its present sluggish state but avoids a real recession and systemic financial collapse then traffic won't get much lower than now.

Over the longer term one adjustment to higher prices will be a move to more fuel efficient vehicles - to smaller lighter vehicles, to hybrids, plug-in hybrids and diesels. That will allow road travel to recover somewhat.

Significant and last mode shift to rail transit seems unlikely. It is seriously unprofitable and capacity constrained and is only competitive at the margin.

Motor fuel prices of course could go strongly up, or they could collapse.

So much crude oil comes from the Middle East and South America and is under the control of hostile governments that major supply disruptions could easily occur. Iran's nuclear program could lead to war in the Persian Gulf just months from now. At home there is fierce resistance to any new production and to any new oil refinery capacity, while the Democrats vilify "Big Oil" and threaten discriminatory taxes against the very companies which will increase fuel supply if they're allowed to.

On the other hand public sentiment has shifted in favor offshore drilling and concerns about disruptions may already be reflected in oil prices. With luck and even a glimmer of good sense by governments, fuel prices could fall as quickly in the next year as they rose in the last. But you can't count on it.

With forecasting so difficult, organizational agility looks key.

Burka brings moral clarity in retirement fund raid for toll roads

Link to article here.

Investing pension funds in toll roads is an irresponsible–and immoral–idea
By Paul Burka
Texas Monthly
Saturday, August 23, 2008

I doubt whether Rick Perry, David Dewhurst, or Tom Craddick has ever heard of the Lane Cove Tunnel in Sydney, Australia. If they had, they might not be so eager to raid the teacher and state employee retirement funds to build toll roads.

On the day the Olympics opened (08/08/08), the Sydney Morning Herald carried the news that the tunnel “is rapidly turning into a bottomless pit for its financial backers….” Two credit rating agencies, Standard & Poor’s and Moody’s, have warned that the toll road could default on its $1.1 billion debt with a year. The tunnel has suffered three consecutive monthly dropoffs in traffic usage. The estimated usage before the road was built was 100,000 vehicles per day; actual numbers in June and July barely exceeded 50,000. A Standard & Poor’s analyst predicted that unless the project gets fresh capital (at least half a billion dollars), it will default within 10 to 16 months. Perhaps TxDOT, since it is such a believer in such projects, would like to invest.


The problem with the financial wheeling and dealing with retirees’ funds that Perry, Dewhurst, and Craddick have proposed is that toll road projects are risky investments. They are risky for two reasons. One is that they are subject to economic fluctuations that affect people’s driving habits, such as the price of gasoline or the pace of development. The second reason is that, when government is involved, they are vulnerable to political pressure and favoritism. Google “toll road defaults” and you will find a trove of stories with unhappy endings. The Camino Columbia toll road in Laredo, which was rife with political intrigue over which landowners would benefit from having a road go through their property, opened in 2000 and defaulted in 2004. Cost: $90 million. Auctioned off for: $12 million. Tx-DOT bail out acquisition payment: $20 million.

The Dulles Greenway toll road to Washington’s Dulles Airport defaulted on its bonds within a year of its opening in 1995. The private owner, Toll Road Investors Partnership II, have lost money every year since the road opened. When toll roads lose money, tolls go up–in this case, to $4.80 by 2012. That works out to an astronomical 35 cents per mile. There are similar stories in Orange County, California (where the state had to buy failing toll lanes), and along Florida’s west coast, and near Richmond, Virginia, where the 8.8-mile Pocohantas Parkway, financed with tax-free bonds, has suffered around a 50% shortfall in projected toll receipts; the state has had to maintain the road because the private owners don’t have the money. Bond ratings have been lowered to below investment grade. To pay off the bonds, the toll was increased by 50%.

It is true that many toll roads have been success stories. In Texas these include the Dallas-Fort Worth Turnpike, which paid off bondholders with toll revenues after thirty years and became free Interstate 30; the Dallas North Tollway and its northern extension; and the Sam Houston Tollway on the west side of Houston. The issue here is not toll roads per se. It is toll roads built with pension funds (and probably other investment funds as well, such as the Permanent School Fund and the Permanent University Fund). These are trust funds. They belong to the members. It is morally wrong to require fund managers to invest them in risky ventures like toll roads. Does anybody doubt that there will be pressure on the pension funds to invest in certain projects that favor certain people and certain contractors and certain areas? We all know what kind of people we are dealing with here. Rick Perry can’t resist it. He appointed the members of the boards that oversee the pension funds. These deals will be neck-deep in politics.

The Statesman’s story on the leadership’s plan quotes Britt Harris, the chief investment officer of the Teacher Retirement System, as saying that investments in infrastructure made sense if the proposal was “equal or better than something we can get [in another project].” Harris then pointed out that the fund’s “ultimate loyalty is to the members,” not to target investments based on geography or politics. The last clause does not appear in quotation marks in the article. Bravo for Britt Harris, but I think he should keep his resume updated.

The biggest risk in toll roads as investments is political pressure. The pressure comes in two forms. The first is pressure on the consultants to provide favorable projections for use of proposed toll roads. Does anybody trust TxDOT–or the consultants they hire, or the private entities they seek to contract with–to do hardnosed, accurate projections? If you do, then consider these comments from an article in Business Week several years ago, at about the time Rick Perry was unveiling his proposal for the Trans-Texas Corridor:

* “There is a history of feasibility studies for toll roads being overly optimistic,” says John J. Hallacy III, director of municipal bond research for Merrill Lynch and Co.

* “Of the 10 major private toll roads constructed since the mid-1990s, nearly half carry far less traffic than projected. Some $4 billion in toll road bonds risk default over the next five years unless they’re refinanced,” estimates Robert H. Mueller, a municipal bond analyst at the J.P. Morgan securities Inc.

What about financing toll roads with bonds? Well, don’t expect bond raters to give the bonds a good rating. I’m quoting here from an article that appeared eight years ago in a tollroad industry publication, so it is possible that things may have changed, though I doubt it. Credit is much harder to get today than it was in 2000.

Fitch-ICBA, the New York bond rating agency says that there is a permanent bifurcation of the toll road bond market. Established systems of toll facilities can expect to be rated in the range A to AA, whereas most standalone and startup toll facilities will be rated BB- to BBB. They see a continuing demand for new toll road financings because of what they call a “seemingly unbridgeable gap” between highway needs and the ability to finance them with tax monies that toll projects can often help to fill.

According to BondsOnline, bonds rated BBB are “lower medium grade” and bonds rated BB- are “speculative.” The lower the bond rating, of course, the higher the interest rate that bond buyers demand. No one is going to be getting any bargains on toll road bonds. And AAA ratings are just a dream: “Fitch says that the ever present possibility of state governments siphoning off surplus toll revenues or leveraging them for other borrowings prevents state owned turnpikes from achieving the AAA rating.” So how can asking pension funds to invest in these bonds ever be a prudent investment? It can’t.

The article continues: Another problem with bonds for highways is that bond rating houses distrust state governments. It is unlikely that any state owned turnpikes will ever reach AAA: The key reason is susceptibility to political interventions.

I have said this before, and I will say it again. There is a sensible way to finance roads. It is to increase the gasoline tax and index it to inflation in the highway construction index. The gasoline tax has some weaknesses. Part of it is diverted to public education. People drive less when gasoline prices go through the roof. Cars are more fuel-efficient. All of this cuts into the revenue potential of the tax. Nevertheless, Texans still love their cars. The suburban lifestyle here is designed around the automobile. Even if the revenue per mile driven is declining, there is a lot of life left in the tax. A portion of the revenue could be dedicated to paying off the bonds for toll roads. This should be capped to ensure that money will still be available for free roads. While the resistance to tax increases is formidable, so is the resistance to toll roads. If you can persuade the public that a gasoline tax increase will reduce the need for toll roads, I think that proposition could be sold. Anything is better than insisting that the savings of retired teachers and state employees be invested in risky ventures like toll roads.

Perry, Dewhurst, Craddick want to raid teacher retirement funds for toll roads

Link to article here. Link to letter from Perry, Dewhurst, Craddick to Transportation Chair Delisi here.

Teachers had better stage a Texas-sized taxpayer revolt over this sell-out by Rick Perry and his minions. As if Perry's destruction of his own Party thanks to his relentless push for toll roads and the Trans Texas Corridor that nobody wants isn't bad enough, now he's coming after teacher retirement and public employee pension funds to be his suckers on toll road schemes that even the private sector is calling "risky." And why not when Rick Perry has great influence over these boards, many appointed by him.

Here's what made it into the article:
"It's a mixed bag, ending the DPS diversions is a start, but forming a corporation and using public employees pension funds to fund risky toll projects the private sector is beginning to shy away from borders on malfeasance."

Here's what didn't:
The warning signs that toll roads are risky deals due to high gas prices and a decline in driving and toll road usage are flashing like neon lights to anyone with a pulse. Fitch just downgraded toll road bonds and Moody's warns that new toll roads may not be financially sustainable without toll hikes. How will Legislators defend to a retired teacher on a fixed income that they squandered her retirement on risky toll road deals? "Oops, we couldn't foresee the toll road bust" won't fly with the evidence already before them. The options in this letter don't change the fundamental direction away from the most expensive transportation tax, tolls. Texans can't afford Perry's long-term debt and high tax "solutions" any longer. Read more here.

Top leaders strike deal on funding Texas toll roads
By Peggy Fikac
Express-News
August 22, 2008


AUSTIN — State leaders trying to meet Texas' transportation needs said Thursday they'll work to stop the diversion of more than $1.1 billion from the highway fund and to allow state-based public investment funds — including pension funds — to invest in toll roads.

Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Tom Craddick also backed the sale of road bonds already authorized by voters. The GOP leaders said transportation officials should immediately sell up to $1.5 billion in bonds to “ensure that greater road funding levels are maintained through the fall and spring until we can work with other elected officials to provide additional solutions.”

Perry had stood against the sale of the bonds until leaders could agree to a broader transportation solution.

The leaders laid out their agreement in a letter to Texas Transportation Commission Chairwoman Deirdre Delisi, who is Perry's former chief of staff and who took part in the discussion over funding solutions. Their proposal drew praise from those looking for more road funds and concern over the ramifications for other programs and services.

The $1.1 billion that's now diverted from the gas-tax-fueled highway fund to the Texas Department of Public Safety, for example, would have to be replaced with general revenue money. That would pit DPS against other programs “so someone else is going to come up $1 billion short,” said Dick Lavine of the Center for Public Policy Priorities, which advocates for programs for lower-income Texans.

“It's just another indicator that we don't have a revenue system that can produce the money we need to provide the services we need,” Lavine said. Ending that diversion could be phased in over two or more years, said Perry spokeswoman Allison Castle.

While the state comptroller has projected $10.7 billion in balances will greet lawmakers when they return in regular session in January, $3 billion of that is dedicated to property tax relief and $5.7 billion is in the rainy day fund, which requires a two-thirds vote of the Legislature to spend.

In addition, collections from the state's new business tax are projected to be $1.5 billion less than anticipated this year, although other tax collections have been higher than projected.

The proposal to allow public investment funds — such as the Teacher Retirement System and Employees Retirement System — to invest directly in toll roads also drew attention. The investment would occur through a new entity that could be called the Transportation Finance Corp.

“TRS needs to make those decisions exclusively on the same basis they make any other investment decisions. The fact that the person who appointed them might have a preference really shouldn't matter to them,” said Richard Kouri of the Texas State Teachers Association. Perry and other officials appoint TRS and ERS board members.

Castle said decisions about investing in toll roads would be made using the same standards as other investment decisions.

Terri Hall of Texans Uniting for Reform and Freedom, which objects to the way that the Texas Department of Transportation has been moving forward with toll projects, called the leaders' proposal “a mixed bag.”

Ending the diversion of highway money to the DPS “is a start, but forming a corporation and using public employees' pension funds to fund risky toll projects the private sector is beginning to shy away from borders on malfeasance,” Hall said.

Justin Keener of the Texas Public Policy Foundation, which advocates limited government, called the agreement “a significant step towards reducing traffic congestion and improving the flow of people and goods.”

Fitch downgrades toll road bonds, outlook bleak

Link to article here. Add to the Fitch Report this story in the Austin Business Journal about how vulnerable Texas drivers are to high gas prices, taking 6% of one's income (tolls could easily double one's gasoline cost), it's malfeasance for politicians and their political appointees to continue to push toll roads.

Toll road and airport projects are now riskier
By Pat Driscoll
Express-News
August 20, 2008

High fuel prices, inflation and a dragging economy have made bonds for toll roads and airports riskier, Fitch Ratings said in a report today.

toll.traffic.jpgWith tollway and airport traffic down as much as 16 and 19 percent, respectively, the report said the outlook for tollways and airports is now negative, down from a stable assessment just five months ago.


"The question is whether the current trend will continue for a longer period," it states. "It is Fitch's view that challenging conditions will persist over the next one to two years."

Though fuel prices have been dropping from last month's record, the economy and credit markets remain troubled and Europe and other countries show signs of stress, the report explains. Besides, food and other commodities haven't joined the fuel-cost slide.

Not mentioned is that the U.S. Energy Information Administration expects even higher gas prices next year, and a debate slogs ahead on whether global oil production has peaked — and if not, then when — and how well technologies and alternative sources can fill the gap. Many agree that the age of cheap energy is over.

If pressures continue, and policymakers start pushing more money to public transit and more people begin shunning suburbs to live in urban cores, toll roads will face bigger problems, the report says. Airports could lose 10 percent of capacity within several years.

The report's title rings ominous: U.S. Transportation Assets: Facing a Temporary Decline or a Permanent Change?

TOLL ROADS

Most U.S. toll roads now face traffic losses of 2 to 10 percent, says the Fitch report, which tracked numbers through June. Operators may have to boost rates and cut costs to keep bond ratings healthy, which might be difficult, even more difficult for private concessionaires charging maximums allowed in contracts.

Texas toll hopes, though, aren't as bleak.

"Facilities in Texas appear to be a bright spot, with year-on-year reductions of less than 5 percent, which is half of what most other facilities in the Northeast, Midwest, Southeast and the West are experiencing to date," the report says.

AIRPORTS

Seats on domestic flights could be down nearly 8 percent in the last quarter of 2008 compared to a year ago, the Fitch report says. Major airport hubs will fare better, losing only 6 percent.

Some airports could grow mostly because Southwest Airlines continues to expand, it says. San Antonio International Airport, where Southwest is by far the biggest carrier, saw record months in May and again in June. But several airlines, including Southwest, recently announced they will pull back some flights here.

Most U.S. carriers plan to cut capacity 6 to 14 percent in the third and fourth quarters of this year, Fitch says. Airports in the middle of big projects, such as San Antonio's huge expansion, will likely have less flexibility to weather any financial storms.

TURF testimony at 3 public hearings at Transportation Summit in Irving

The road building and transportation lobby's biggest event of the year is arguably the Texas Transportation Summit, hosted annually by Dean International in Irving, TX. Not usually an invited guest among those whom ordinary citizens have ardently opposed, TURF was invited to attend by the Summit's Founder, David Dean. An olive branch and honest effort to incorporate differing views? We hope so. Time will tell. Below is the TURF testimony at three public hearings that were held concurrently with the Summit: one addressing MPOs, another public private partnership toll roads, and another addressing the diversions from the gas tax to non-transportation uses.

Testimony by TURF Founder, Terri Hall, before the Senate Transportation and Homeland Security Committee Addressing MPOs, August 12, 2008
Chairman Carona, Senators, thank you for having public testimony on this vital issue effecting transportation decision-making in the state, MPOs. The citizens have found by and large that MPOs are rife with many of the same problems we’ve experienced with TxDOT. MPOs are tone-deaf to the public and do not represent the will of the taxpayers anymore than TxDOT does, regardless of the elected officials that sit on those boards.

The process by which this shift to toll financing for nearly every road project is flawed to begin with. The public has been shut out from DAY ONE and has never been given ANY meaningful input  as to whether Texans even want to be charged both gas taxes and tolls to get to work or have any chance at mobility.

We don’t want or need any more organizations that give political cover to TxDOT (and frankly to the Governor and Legislature) that allows TxDOT to check the public involvement box and ignore the overwhelming opposition to tolling existing right of way and proceed as planned anyway.  I’ve personally witnessed it in the NEPA public hearing process and there is no meaningful public input to date.

There is no provision that allows the public to veto a project or influence how its financed. There are already 2 lawsuits pending against the MPOs in this state due their flawed decision-making processes. MPOs are not a reflection of the will of the people. When hundreds of citizens have turned out to ask MPO Boards to nix toll plans (by a 2 to 1 or even 3 to 1 margin against), they consistently vote to toll anyway.  What is the point of “public involvement” if the public’s input is consistently ignored? The only redress is to unseat at least half the MPO Board in the next election only to again have it stacked with pro-corridor, pro-toll, pro-privatization appointees. The citizens never know who will be appointed to the MPO,  and therefore have no way to truly impact the MPO even at the ballot box. If a board member votes with the people, they promptly get removed from the Board and replaced with one who will vote pro-toll. Ask former Chairwoman Andrade, she facilitated that retribution in Bexar County.

THE FAIR AND EQUITABLE SOLUTION
Ordinary citizens and taxpayers have been alienated from the process of transportation decision-making at EVERY level. The citizens have a right to self-determination in a Republic and we deserve the right to bring this to a public vote or have some other means of having citizen input heeded perhaps through the NEPA process, rather than continue the TxDOT & MPO charade of “citizen involvement.”

Let’s remind ourselves what TxDOT thinks of as citizen involvement…it’s them breaking the law to hire a lobbyist to lobby elected officials and hire marketing firms and political consultants to write and coordinate their speeches, public appearances and press statements in order to spout the glowing benefits of the tolling to taxpayers in Town Hall meetings to convince an angry public that they really do want toll roads.

Texans are smart enough to know if we truly need this new infrastructure, how they want it financed, and what the preferred route and solution ought to be. It’s not just the top-down approach that’s upsetting people, it’s the lack of any meaningful input into the decisions being made at EVERY level of the process.  It’s abundantly obvious that the decision has already been made for us. That’s what people are objecting to.

I do hope our message is clearly communicated and HEEDED in your recommendations to the Legislature.

Testimony by TURF Founder, Terri Hall, before the Legislative Study Committee on Private Participation in Toll Roads, August 12, 2008

The invited testimony before this CDA Study Committee has been noticeably stacked in favor of CDAs or PPPs, despite the overwhelming public opposition to privatizing our public infrastructure. Rather than heed the public’s concern, you have instead chosen to try and tweak PPPs in order to make them more palatable to an angry public rather than truly study what you were charged with studying: the EFFECTS of PPPs on the traveling public. This committee operated form the assumption that PPPs would continue from day one, rather than deliberate whether we should be engaging in any more of these types of contracts and whether this type of contract is in the public’ best interest.

We feel strongly that you should take a few steps back and study whether or not the government should even be in the business of making a profit and whether or not massive leveraged debt in this lending is the right approach. This committee also ought to study whether we should continue such a heavy reliance on tolling considering the sustained volatility of the price of gas. Considering both Houston and Dallas toll roads have experienced a decline in toll road usage and that there has been an overall decline in driving due to high gas prices, will 87+ toll projects be toll viable in 5 or 10 years given these conditions. Will the taxpayers be stuck with even higher toll prices because of lower ridership or worse be stuck bailing out a toll road in default?

Increasing the cost of transportation, particularly with a market-based toll rate and/or a PPP which is the most expensive transportation tax, is not only unwise, it’s a recipe for economic disaster.

Gas prices have caused a dip in toll road usage (per articles in Express-News and Landline Magazine) and caused marked drops in driving in general. The bond debt for these toll projects is very likely to default under these conditions, which most leading energy analysts agree will continue for the foreseeable future.

Where is the consideration of the taxpayer in all of this?  Short of some brief comments by Senator Tommy Williams and Rep. Wayne Smith, the taxpayers pocketbooks and their ability to pay these new taxes hasn’t even been on the radar. Where was the invited testimony from leading experts about high gas prices and the dwindling availability of oil and its effect on driving and the subsequent increase in usage of other modes of transportation? These issues have an enormous impact on the sustainability of 87+ leveraged toll projects. The Transportation Summit put on by Dean International had a speaker on this subject, and this area is being investigated by Congress, yet the Committee didn’t see fit include such an elephant in the room in its decision of whether or not to recommend the most expensive transportation funding option….PPP toll roads?

Several witnessed testified that most toll roads aren’t self-sustaining. Why are we building toll projects that can’t sustain themselves and need massive taxpayer subsidies? Raiding other public funds to piece these projects together does the exact same thing the gas tax does, takes from some to give to others. How is this process better or more efficient for the taxpayer? It’s not, it just allows an unaccountable government revenue stream.

Testimony in answer to Senator Robert Nichols’ question concluded not a single PPP currently on the books anywhere in the U.S. could be used as an ideal model or exemplary PPP deal. The taxpayers can’t afford any more untested experiments when the risks and costs to the pubic are so high. We’re not guinea pigs for the financial markets and road builders to “try out” their “innovative financing” schemes.  We’ve studied these deals for many years now and we’ve been reaching to find one that served the public well. So far, one doesn’t exist. To continue such risky schemes and to ignore the obvious warning signs to the tune of billions of dollars is totally unacceptable.

Dennis Enright testified that CDAs cost 50% more, that there is no risk transfer, and these projects should always stay in the public sector. None of these areas make PPPs palatable to the taxpaying public. We keep hearing PPPs and tolling are just a tool in the “toolbox” and that “one size doesn’t fit all,” but due to TxDOT’s Minute Order passed December 18, 2003 mandating all new capacity be studied for tolling, it’s become the only tool in the toolbox unless you remove it.

The GAO recently cautioned that public protection must be put in place when using PPPs and indicated PPPs aren’t right for every project. SB 792 took the first step toward primacy, but the fundamental assumption that everything that can be tolled will be tolled (including subsidizing projects that aren’t 100% self-sustaining) must be removed. Senator Nichols’ Primacy Determination model needs to take a few steps back to change the assumption that everything will be a toll project of one kind or another, to one where the priority is to improve freeways and keep them freeways, resorting to tolling dead last.

To ignore the economic warning signs and bury our heads in the sand and continue down the path of models that require sustained increases in driving and affordable gas, is to foolishly invite economic disaster and would be a complete failure of the Legislature’s fiduciary duty to the public it swears an oath to protect and serve.

Testimony by TURF Founder, Terri Hall, before the House Appropriations Transportation Subcommittee on Transportation Financing Options, August 13, 2008
Thank you for studying the vital issue of transportation. There are many considerations before this committee that will impact the taxpayers’ everyday lives. The shift to privatizing and even maximizing profit (even on public toll roads) should cause every public servant to pause.

While some are trying to “fix” PPPs to make them more palatable to an angry public already suffering under high gas prices, we need to take a step back and look at whether this shift to reliance on tolling to fund new road construction is prudent, protects the public interest, and is sound fiscal policy that best serves the public interest. We submit that tolling satisfies none of those areas.

While we’re not opposed to all tolling, the tolling of existing right of way, market-based tolls, and privatization smack of runaway taxation and both government and private profiteering exploiting what amounts to government-sanctioned monopolies, our public highways. The toll-first Minute Order #109519 passed by the Transportation Commission on December 18, 2003 demonstrates tolling isn’t just a “tool in the toolbox,” it’s the only tool they’ll continue to use in order to fill their coffers. Through the prolific use of tolling, TxDOT has become a defacto taxing entity with no accountability to the traveling public who depends on these highways for their daily living.

We’d like to bring some things to your attention that we feel are vital to setting transportation on the right course.

TOLL ROAD USAGE, DRIVING DOWN
First, we cannot bury our heads in the sand and ignore the warning signs around us. In a San Antonio Express-News article July 29 and a Landline Magazine article from August 1, it states that toll road usage is down in both Dallas and Houston, largely due to high gas prices. The FHWA also reports that driving is going down causing gas tax revenues to also drop.

One can see there is an inverse relationship between a drop in driving and the escalating price of gasoline. So any transportation policy that substantially increases the cost of transportation will not only wreak havoc on the economy and leave less money for taxpayers to cover other necessities, it’ll actually reduce tax revenues, particularly toll road usage, necessitating increases in toll rates or causing the massive leveraged debt used to build these facilities to go into default leaving the taxpayers to bailout a HUGE mess not unlike the mortgage and banking crisis we’re seeing now.

INDIRECT EFFECTS OF TOLL ROADS
We must also consider indirect effects and the unintended consequences of toll proliferation like traffic diversion to surface streets which will increase wear on county and city roads, not meant to handle such traffic loads. In a study called the Empirical Evidence of Toll Road Traffic Diversion by Peter Swan of Penn State and Michael Belzer of Wayne State, released January 14, 2008, Swan and Belzer noted that efforts to "monetize" existing toll roads is a recipe for the level of higher toll rates that increase truck diversion.

A summary of the findings published in the Newspaper.com (January 14, 2008) states:

The researchers analyzed decades of data from the Ohio Turnpike and nearby alternate routes in Ohio, comparing both to national data to determine the effects the toll rates had on nearby free roads. Ohio raised toll rates in the 1990s and subsequently lowered them, allowing an easier calculation of the effect of different rate levels. The study showed that as the Turnpike toll increased, truck traffic increased on alternate, free routes as truckers balanced the monetary savings with the cost of the extra time needed to take an indirect route.

Swan and Belzer's economic modeling showed that the Turnpike could maximize its revenue by setting a truck toll rate of 46 cents per mile and collecting $111 from each truck driving the length of the Turnpike. At this high rate, however, the number of trucks avoiding the toll road would quadruple and place 608 million vehicle miles of added traffic and wear on secondary roads.

The study did not directly examine accident rates but the results suggested that imposing tolls on divided highways would increase the number of road fatalities by pushing truck traffic onto roads not designed to handle heavy truck traffic.

"Because we know that secondary roads pose greater safety hazards, the safety cost of diversion will be substantial," the study explained. "We know enough about the frequency and severity of crashes based on highway type to suggest that a substantial increase in crashes, crash severity, and fatalities in the state of Ohio probably would occur as a result of this diversion."

Interestingly, 46 cents a mile is the exact truck toll rate set by the Alamo RMA in the 281 toll project. In a TURF lawsuit to stop that toll project due to an insufficient environmental study of the impacts of that toll road on existing residents and businesses, no economic impact was conducted nor any study of the indirect effects of the toll road on surface streets and neighborhoods due to diversion.

DELIBERATE SUPPRESSION OF POTENTIAL NEGATIVE IMPACTS HIDDEN
Also found through litigation to stop the 281 toll road, TURF attorneys discovered a key study by a geologist TxDOT hired was deliberately hidden from the FHWA during the environmental review process. The report speaks of potentially “severe” impacts from the toll road on the Edwards Aquifer. Obviously this information could have changed the outcome of the FHWA’s environmental clearance (“Finding of No Significant Impact” or FONSI) for the 281 toll project had it been submitted with the environmental assessment. TURF’s attorneys also uncovered correspondence that shows management at TxDOT tried to pre-determine a FONSI on both 281 and 1604.

Such deliberate deception by a state agency cannot be tolerated, not to mention it violates the National Environmental Policy Act (NEPA). The public trust can only be restored by direct punishment (employee terminations) for such violations and through strong legislative oversight.

PUBLIC PROTECTIONS PARAMOUNT
The GAO recently released a report to Congress in February 2008 citing concerns about needing more rigorous up front analysis of PPPs to ensure pubic protections are put in place. Senator Robert Nichols released a draft of a decision tree of sorts called a “Primacy Determination” that suggests a process by which any decision to toll would go through to determine if a PPP was the right type of method for a given project. We think this sort of process must be in place to ensure the public interest is protected. However, it assumes most if not all projects will be toll projects.

We submit that this decision-making draft ought to take one step back, and that is, to have a process by which TxDOT and the MPOs must go through to keep our freeways toll-free FIRST. Tolling should be the last option considered (PPPs, if not completely eliminated, the last on the tolling option list), especially considering high gas prices and tighter, more expensive lending conditions.

HIGH COST OF BORROWING
Even if a public toll authority does the project, a Bloomberg article, Not Even 2% Fed Funds Help Munis Amid Record Rates, from just days ago, August 7, 2008, shows that even municipal bonds and other government financial instruments are experiencing higher lending rates.

Two experts didn’t parse words:

``The world is falling apart'' for borrowers, said Robert Doty, the president of American Governmental Financial Services, an advisory firm in Sacramento.

``The unwinding of the credit bubble has had dramatic implications,'' George Friedlander, a municipal strategist at Citigroup Inc. in New York who has covered the market for more than 30 years, said in an Aug. 1 report.

Government and certainly the Appropriations Committee cannot ignore its fiduciary duty to the public by looking the other way and ignoring the warning signs.

OVERSIGHT AUTHORITY MUST HAVE TEETH
Another area the Legislature needs to consider addressing in statute is giving the State Auditor the authority to force a tolling entity (whether public or private) to redo their traffic and revenue studies if the methodology or study is insufficient in any area. For instance, the State Auditor asked the Alamo RMA to redo its traffic and revenue study to take into account high gas prices, which is an obvious factor tolling authorities must consider in whether a toll road will be viable long-term. These agencies are doing inadequate studies to ram their agendas through. An article in the Express-News about this recommendation from the Auditor, emphasizes that the Auditor cannot force the RMA to re-do anything, that SB 792 only has the Auditor review their methodology. The Auditor should have the ability to force a tolling entity or TxDOT to redo an inadequate study that could potentially put these public roads in default at the taxpayers' expense.

MPO TONE DEAF TO PUBLIC
Also, MPOs can be just as tone-deaf to the public as TxDOT. Certainly RMAs and unelected toll authorities fit into this category as well. The public by and large has been left out of transportation decision-making at EVERY level. There is no provision that allows the public to veto a project or influence how its financed. There are already 2 lawsuits pending against the MPOs in this state due their flawed decision-making processes. MPOs are not a reflection of the will of the people.

When hundreds of citizens have turned out to ask MPO Boards to nix toll plans (by a 2 to 1 or even 10 to 1 margin against), they consistently vote to toll anyway.  What is the point of “public involvement” if the public’s input is consistently ignored? The only redress is to unseat at least half the MPO Board in the next election only to, again, have it stacked with pro-corridor, pro-toll, pro-privatization appointees. The citizens never know who will be appointed to the MPO, and therefore have no way to truly impact the MPO even at the ballot box. If a board member votes with the people, they promptly get removed from the Board and replaced with one who will vote pro-toll. Ask former Chairwoman Andrade, she facilitated that retribution in Bexar County.

THE FAIR AND EQUITABLE SOLUTION
The taxpayers have a right to self-determination in a Republic and we deserve the right to bring this to a public vote or have some other means of having citizen input heeded, perhaps through the NEPA process, rather than continue the TxDOT & MPO charade of “citizen involvement.” We need some public involvement REQUIREMENTS that FORCE TxDOT to implement the alternative chosen by the public, not the one that makes the State the most tax revenue.

LOBBYING FOR TOLLS/PPPs
Let’s remind ourselves what TxDOT thinks of as citizen involvement…it’s them breaking the law to hire a lobbyist to lobby elected officials and hire marketing firms and political consultants to write and coordinate their speeches, public appearances and press statements in order to spout the glowing benefits of the tolling to taxpayers in Town Hall meetings to convince an angry public that they really do want toll roads.

We provided the Sunset Commission as well as the Chairwoman Harper-Brown’s office with in-depth documentation of TxDOT’s illegal lobbying activities. The Texas Government Code Chapter 556 states that TxDOT is subject to a reduction in appropriations per 556.005

(c)  A state agency that violates Subsection (a) is subject
to a reduction of amounts appropriated for administration by the
General Appropriations Act for the biennium following the biennium
in which the violation occurs in an amount not to exceed $100,000
for each violation.

DETERMINE TRUE NEEDS, COMPARE FREEWAY FIX TO TOLLWAYS
We need to end the toll road wish lists (MPO TMMP plans that even the Governor admitted were based on an if-money-were-no-object principle) and get a true side-by-side, apples to apples comparison of the cost of fixing our roads and keeping them freeways versus the cost of turning them into tollways. If it's anything like the US 281 project in Bexar County, TxDOT/ARMA has turned a $100 million gas tax funded FREEway plan into a $1.3 billion toll project. This side-by-side comparison will help Legislators and the public discern our true "unfunded needs,” since we cannot rely on TxDOT's "funding gap" figures to be accurate. Then and only then can we accurately assess funding our roads in the least invasive, most affordable, and most transparent fashion.

Thank you for allowing us testify to the citizens’ concerns and we trust their voices will be heard and heeded as we seek to restore trust in the transportation decision-making process across the state and to put the citizens back in the driver’s seat.

Gas tax diversions get legislators’ attention, so does bogus TxDOT study

TxDOT's trumped-up study by yet more consultants, at a company called Cambridge, is based on totally bogus assumptions. They assumed vehicle miles traveled by Texans would go up 70% by 2030 and that our population would be more prosperous and thus own more vehicles (and do more driving). What planet are they on? The Federal Highway Administration's statistics have shown Texas driving as flat or going down since gas prices began to escalate in 2005. The Texas State Data Center's (basically the Texas' census data center, SDC) own population projections show the complete opposite of what these consultants divined from the blue sky. Texas' projected population growth will be poorer, less educated and older. In a UT Austin study from 2005, outlining the potential pitfalls of the Trans Texas Corridor (TTC), it cites this data as problematic to the TTC, and, we conclude, to TxDOT and the road builders' larger agenda that requires more cars, more driving, and lots more money from taxpayers to get around.

Since retirees aren't the ones clogging our roads during commute time, and the less educated struggle just to make ends meet much less take on the exploding cost of owning and using a personal vehicle, TxDOT's numbers are all wet. Their assumptions also fail to take into account the high price of gas (as the State Auditor recently admonished a tolling authority to do) and the reality of dramatic reductions in driving and toll road usage as a result. Our Legislature must do its duty to exercise oversight over such a blatantly trumped-up figure that is not even remotely based on reality.

Harper-Brown: Highway fund getting short-changed
by Mark Lavergne
Lone Star Report
August 19, 2008

IRVING - The Transportation Summit abounded with big transportation ideas to meet the state's big future transportation needs. Meanwhile, the state itself is coming up short on funds to meet transportation needs of the present.

The House Appropriations Subcommittee on Transportation met Aug. 13 to examine problems in funding for the state's highways old and new, and possible solutions.

In the spotlight was Fund 6, the state fund that, in theory, is designated for building and maintaining the state's highways. The problem, said committee chairman Linda Harper-Brown (R-Irving), is not merely funds that go to Fund 6 that are then diverted to things other than roads, but also funds that ought to go to Fund 6 but never make it there in the first place.

Harper-Brown said she anticipates that in 2009 "we will have an opportunity to make it a transportation session," as TxDOT is under Sunset and because of gas prices and new funding needs. "This is the time if there ever was one," she said.

What Fund 6 pays for

Thomas Galvan, of the Legislative Budget Board (LBB), told the subcommittee what percentage of the Fund 6 money goes where: 86.2 percent to the Texas Department of Transportation (TxDOT); 7.1 percent (about $1 billion) to the Texas Department of Public Safety (DPS); 5.1 percent to benefits for employees at Texas Department of Transportation, the Attorney General's Office, and a few other agencies; a few hundred million to other small agencies, salary increases for the various agencies, etc.

That's just the beginning. Some funding for SB 10, the healthcare bill from last session, is coming from Fund 6 this biennium ¡V about $107 million for medical transportation. DPS's $1 billion a year pays for employees benefits including insurance and retirement. The Texas Education Agency receives $100 million each biennium for public school transportation. (The recent school finance summit hosted by Commissioner Robert Scott featured a veritable choir of superintendents saying they will need more.)

The Health and Human Services Commission gets $20 million each biennium for ambulance services. Also $66.9 million goes for (mostly TxDOT but a few others) employee salary increases (for salaries altogether it's about $623 million). The Texas Transportation Institute gets $12.8 million each biennium, and the Office of the Attorney General $11.5 million. The latter went towards transportation-related cases such as right of way acquisition.

The Texas Historical Commission also is receiving funding from TxDOT's portion of Fund 6, about $500,000 a year. Another $6.3 million each biennium goes to the State Office of Administrative Hearings (SOAH), for DPS' license verification program. The Public Integrity Unit at the Travis County District Attorney's Office receives about $1.9 million a biennium to prosecute motor vehicle tax fraud cases. The unit has received money from Fund 6 as far back as LBB's records show, which is 1990, Galvan said. Most other diversions started after 2000.

Jim Smith, a financial analyst for the Comptroller's Office, told the subcommittee that currently 10 state agencies receive appropriations from Fund 6. As of July 31, Fund 6's cash balance was $4.3 billion. But Harper-Brown questioned how much of that was going to local communities for local transportation needs.

What Fund 6 should be getting paid, but isn't

Harper-Brown asked for a consolidated list of revenue that should be going to Fund 6 but isn't. "One of the things that concerns me is that we're always talking about diversions out of Fund 6 that need to be paid for from that fund," Harper-Brown said. "But there are a lot of funds that don't go into Fund 6 and not only are there funds that go into GR that are transportation-related and never made it to our transportation funding, but then some of those ¡K fees are going into the general revenue side, but the expenditures are coming out of the Fund 6 side."

TxDOT's chief financial officer, James Bass, told the subcommittee that a lot of revenue generated by operations managed and paid for by TxDOT, which thus should go to Fund 6, is going instead into the state's general revenue (GR) fund.

Among these are the Automobile Burglary and Theft Prevention Authority, which assesses a $1 fee for each auto insurance policy in the state. That fee is deposited into GR, and paid for by Fund 6. Likewise, historically there has been a $20 permit required to drive oversized and overweight vehicles. From each of those $20 fees, Fund 6 only got 30 cents. Recently the fee was upped to $40, and now the fund receives $20.30, Bass told the subcommittee.

Bass said that if those funds were directed back into the state's highway fund, it could save the state each year about $15 million for the auto theft prevention program, and $7.5 million for overweight permits, or $45 million in Fund 6 per biennium.

TxDOT executive director Amadeo Saenz said lack of funding for Fund 6, along with diversions from there, were preventing TxDOT from "building and maintaining highway systems."

Rep. Dan Gattis (R-Georgetown) told Saenz, "We need transparency to know what certain agency's budgets are being spent on and making sure that they are being spent on the appropriate things."

Another TxDOT-produced study

Members of the subcommittee balked when Saenz told them that TxDOT had hired two analysts to produce yet another detailed study forecasting the state's future transportation funding needs. The study's magic number: $15.9 billion more per year. Members were skeptical of the report's findings, saying its assumptions and methodology were unclear.

Gattis told study co-author Allan Rutter of Cambridge Systematics that "$15.9 billion doesn't mean squat to me if you don't tell me what it's based on."

Harper-Brown said TxDOT's credibility was in question because of how the agency had crunched numbers.

Rutter defended the report, saying that neither he nor co-author David Rose was told what to put in the report.

Rutter said the number is attributable to the state's booming population, saying vehicle miles traveled (VMTs) will go up 70 percent by 2030 with increased population and affluence.

But Terri Hall of Texans United for Reform and Freedom, the transportation watchdog group that has opposed TxDOT's recent toll road policies, told LSR that the premise of VMTs varying directly with population increase is "totally bogus," citing a 2005 study from the University of Texas-Austin showing that although the state's population is indeed growing, much of the new population is older and making less money, and thus not driving their own vehicles. Harper-Brown also observed that the baby-boom generation was getting ready to retire.

She also criticized the report for not taking high-speed rail, which she believes will play a big role in the state's future infrastructure, into account for determining the state's future funding needs. "Shouldn't we look at a total big picture?"

"Maybe high-speed rail's time has come," she said. "We just can't continue to build these roads. We can't get them done quick enough."

Texas drivers hit hard by gas prices, spend over $2,000/yr on gas

Link to article here. Perhaps what's most frightening about this reality is that this report doesn't take account the 87+ toll road projects yet to be built, and how that could add a minimum of 20 cents PER MILE to drive in Texas costing the average family $2,000 or more per year (the equivalent of doubling the cost of gasoline!).

Report: Texas Drivers Spend 6 Percent of Income on Gasoline
Austin Business Journal
Published in Texas Insider: 08-11-08

Drivers in Texas spend nearly 6 percent of their income on gasoline, twice as much as what drivers in some states spend, according to a report released today by the Natural Resources Defense Council.The report highlights two areas: state-by-state vulnerability to high oil prices and implementation by states of alternatives and solutions.

Texas is the 16th most vulnerable state when it comes to gas prices. The average Texas motorist spent $2,174 on gasoline in 2007, or about 5.85 percent of income, the report shows.

Motorists in Mississippi, which ranks at the top of the list, spend an average of more than 8 percent of their income on gasoline, while drivers in Connecticut, the least vulnerable state, spend 3.17 percent of income on fuel.

The states in which drivers are most at risk to high gas price increases are Mississippi, South Carolina, Georgia, Louisiana, Kentucky, New Mexico, Indiana, Arkansas, Oklahoma and Iowa.
States doing the most to promote energy-saving policies to reduce oil dependency and protect residents from oil price spikes include California, New York, Connecticut, Washington, Pennsylvania, New Jersey, Rhode Island, New Mexico, Colorado and Maryland.

Despite a growing focus on alternative energy, Texas, where the petroleum industry remains a large part of the economy, has a long way to go to wean itself from oil dependency. The report ranks the Lone Star State 36th on the solutions list.

Guerra: TxDOT didn't coordinate with Aquifer Authority on 281 toll road


Link to article here. What's so damaging about this revelation is that the feds gave a "Finding of No Significant Impact" on this project over the Edwards Aquifer (extremely environmentally sensitive area and the sole source of drinking water for nearly 2 million people)when TxDOT didn't even solicit comment from or coordinate this massive project with the Edwards Aquifer Authority!

The email correspondence showing that the management of TxDOT pre-determined the outcome of "no significant impact" along with the fact that they didn't bother to coordinate with the AQUIFER AUTHORITY on potential impacts to the aquifer (when they state in their study that they had) proves a fraudulent study was submitted to the feds. TxDOT just can't seem to play by the rules. They have to deceive and rig the results in order to railroad their agenda. Well, the light of day is now shining on these ill-conceived toll plans, and the citizens are seeking justice.

NOTE: AGUA and People for Efficient Transportation (PET, Inc.) filed the lawsuit in 2005. TURF and AGUA filed the current lawsuit in February this year.

TxDOT documents not reassuring about toll-road concerns
By Carlos Guerra
Express-News Columnist
August 9, 2008

Long faulted for its arrogance, the Texas Department of Transportation also is under fire for embracing toll roads.

They are forced to because gas taxes can't meet growing highway needs, TxDOT officials say. So they will finance a lot of new highway lanes by tolling new and existing roads, and by handing some publicly owned right-of-way to private toll-road builders and operators in exchange for letting them collect tolls for decades.

TxDOT and the Alamo Regional Mobility Authority plan to pay for a huge expansion project by tolling 70 miles of U.S. 281, Loop 1604 and other area highways.

“It's a massive, multibillion-dollar project over the most sensitive parts of the (Edwards Aquifer) recharge zone,” says Bill Bunch, an attorney who, along with Andrew Hawkins, represents Aquifer Guardians in Urban Areas and Texans Uniting for Reform and Freedom.

Construction on the 281-1604 project — which will be 19 lanes wide in parts — started in late 2005, and within weeks, a contractor ruptured a sewer main, spilling raw sewage for three weeks before it was fixed.

The two groups sued TxDOT and the regional mobility authority over their environmental assessment — required by the National Environmental Policy Act to get federal funds — which the groups say is flawed and grossly insufficient.

And they sued the Federal Highway Administration (FHWA) for approving TxDOT's environmental assessment and demanded a more extensive environmental impact statement (EIS) before irreparable harm is done to the aquifer.

The massive highways will traverse numerous recharge features and a lot of the Edwards' contributing zone. That notwithstanding, TxDOT's environmental assessment included a “finding of no significant impact,” which in bureaucratize is written: “FONSI.”

Bunch and Hawkins pressed their case, and just before it went to court, TxDOT and the RMA raised the white flag and the federal agency “disapproved” TxDOT's environmental assessment, forcing the state agency and the RMA to conduct the much more extensive EIS.

In the conduct of legal discovery, the attorneys recently uncovered some apparently damning documents.

In TxDOT's environmental assessment, the agency asserts that it “coordinated with” and “solicited comments and input regarding the proposed action and potential issues that should be considered during the development of the environmental assessment” from a number of agencies, one of which was the Edward Aquifer Authority.

“Hogwash,” says Hawkins. “We scoured everything in (TxDOT's) administrative record and found no letter asking for comment or coordination.”

In fact, all they found was a “Record of Conversation” of a 25-minute phone call made by a TxDOT contractor to an aquifer authority staffer asking for technical info. That isn't exactly “comment and coordination.”

But to be on the safe side, the attorneys checked with the aquifer authority for any correspondence whatsoever from TxDOT from December 2005 to the present concerning the planned toll roads on U.S. 281 and Loop 1604. “And they wrote us back saying we have nothing, no e-mail, no correspondence. Nothing,” Bunch says.

The lawyers did find two e-mails from a TxDOT geologist and a biologist that raise questions about the impartiality of their science.

In one to the U.S. Fish and Wildlife Service, the biologist wrote: “At the moment we are trying to get a FONSI from the FHWA by September.”

And the geologist wrote a colleague at TxDOT saying that he was “unclear on ... the extent to which we need to study (the) 1604 corridor,” before adding, “plus I know mgmt want to get (the) FONSI on 1604 right after 281 so we really need to get working on both.”

Texas School Land Board votes to invest $100 million in toll roads

Link to article here. Even more appalling than this investment handed to Goldman Sachs (for presumably a variety of toll road infrastructure projects), is the fact that the GLO has already given that amount to a single company, Australia-based Macquarie. This is the same company that bought dozens of Texas newspapers in the path of the Trans Texas Corridor to control the negative press it's been getting, a bidder on many Texas toll projects, and proposing to takeover the Austin airport.

Texas Land Office commits $100 million to infrastructure fund
By Robert Elder
Austin American Statesman
August 5, 2008
The Texas School Land Board today voted to invest $100 million in an infrastructure fund run by Goldman Sachs. (To recap the hierarchy of these investments: The school land board approves investments for the General Land Office, which does real estate and land investing on behalf of the Texas Permanent School fund. Income from the PSF helps pay for public education. Got it?)

Rusty Martin, deputy commissioner for funds management, told the land board that the Goldman fund will top out at about $7.5 billion and invest primarily in transportation and utilities infrastructure.

The generally dismal state of global infrastructure has spurred great interest in infrastructure as an investing asset class. The need is obvious, from bridge collapses in the U.S. to China’s goal of adding the equivalent of the U.S. highway system in the next few years.

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The area has also drawn the attention of Texas lawmakers such as Sen. Steve Ogden (right), chairman of the Senate Finance Committee. The Bryan Republican has floated the idea of Texas public pension funds as a source of capital for infrastructure in the state. If the funds are investing — or contemplating investing — in infrastructure deals all over the world, Ogden reasons, why not put some of that money work in Texas?

To date, Texas public pensions have not committed large sums of money to infrastructure, although some funds hold stock in publicly traded infrastructure companies.

The Goldman Sachs investment is the General Land Office’s second infrastructure deal. The GLO in February committed $100 million to Macquarie Infrastructure Partners II. Macquarie Group Ltd. is an Australian investment bank.

Tolling Authority did inadequate toll study for 281, no study of impact of high gas prices

Link to article here. See the letter the State Auditor sent to the Alamo Regional Mobility Authority (ARMA) warning them of their inadequate toll viability study that failed to take into account high gas prices. High gas prices have been responsible for declines in driving and toll road use. Yet the ARMA continues to stick its head in the sand and ignore the economic signs that the 281 and other toll projects are in jeopardy due to high gas prices. And who will pay for such malfeasance? The taxpayers left to bailout the bonds when the toll roads default.

U.S. 281 toll-road planners didn't figure on costly gas
By Patrick Driscoll
Express-News
August 8, 2008

Gas prices shot through the roof this year and a debate drags on over what the future holds, but none of that was reflected in recent traffic and revenue projections for the planned U.S. 281 toll road.

As a result, the estimates got a thumbs-down last month from State Auditor John Keel, who meted out his case in a single page of bean-counter lingo.

“Explicit consideration for the possible effects of higher motor fuel prices on the usage of the toll facility and, therefore, on revenues would seem warranted,” he concluded in a letter to the Alamo Regional Mobility Authority.

The state auditor doesn't actually sign off on traffic and revenue reports from toll agencies. According to a 2007 tolling law, the auditor just reviews and comments on them.

Alamo Regional Mobility Authority Director Terry Brechtel noted that in a letter responding to Keel, saying the audit's over.

However, she said the local agency agrees with his criticism and already had asked the consultant, URS Corp., to do a gas-price impact analysis.

“We will nevertheless forward to you a copy of the fuel sensitivity analysis once it is completed,” she said.

Such an analysis was a no-brainer to toll-road critics as long as two years ago.

Activists had tried to get the Metropolitan Planning Organization, which approved 70 miles of tollways in San Antonio, to study rising gas prices and the impacts to toll bonds that can stretch over several decades. The MPO board refused.

“It doesn't make sense,” said Terri Hall of Texans Uniting for Reform and Freedom. “We're glad the state auditor has the same concerns that we do. Will this road even be viable in 10 years with the trends we're seeing in gas prices?”

Wary motorists have been scaling back in the face of gas prices soaring to a record U.S. average of $4.11 a gallon last month, according to AAA.

Americans drove 2.4 percent fewer miles through May compared to the same time last year and rush-hour congestion eased in many U.S. cities from March through May, federal data show.

San Antonio drivers spent 4.7 percent less time stuck in traffic, though officials say new lanes opening on Interstate 10 and new ramps at two Loop 410 interchanges helped.

Americans also have started avoiding some toll roads, with Houston reporting a 3 percent drop in traffic from March through June, and Dallas seeing a 2.3 percent slip in June on its President George Bush Turnpike. Growth on the Dallas North Tollway was flat.

Dallas' North Texas Tollway Authority asked its consultant to take another look at traffic projections for planned toll lanes on Texas 161.

“But they're not anticipating any change,” Dallas toll spokeswoman Sherita Coffelt said.

Unlike San Antonio's toll-road consultant, Moody's Investors Service took rising gas prices seriously Thursday when it issued a stable but cautious report on U.S. government toll roads through 2009. The long-term outlook was more uncertain.

“Gas prices at around $4 per gallon for a prolonged period could have a dampening effect on traffic and revenue and, if declines are not offset by rate increases, it could cause Moody's to change our stable outlook,” Moody's Senior Vice President Maria Matesanz said in a statement.

Federal forecasters say gas prices will spike even higher next year, but where they go from there is wrapped in a muddy debate on when global oil production will peak and begin to slide. Some say it's happening now; others say there's a four-decade cushion for technologies to come to the rescue.

San Antonio toll officials, getting ready to sell 40-year bonds later this year to help fund toll lanes on eight miles of U.S. 281 north of Loop 1604, are undeterred. They point to the success of Austin's 65 miles of toll roads, which began opening in late 2006 and are raking in more money than expected.

“If we get higher fuel efficiencies in our vehicles, that could have an impact,” Alamo Regional Mobility Authority spokesman Leroy Alloway said. “People are still going to be driving, we're still a very auto-centric country.”

Still, many toll critics aren't sold on the car-dominated vision.

“It's time for us to shift to sustainability, by moving to mass transit, or pay the price,” Bexar County Commissioner Tommy Adkisson said. “All the warning signals are there.”

ACS of Spain wins 50 year right to develop TTC-69, without competitive bidding!

Link to ACS statement here.


TxDOT has repeatedly misled the public about the Trans Texas Corridor projects and has denied they're part of any effort to economically merge (through trade and commerce) the U.S. with Canada and Mexico through key transportation corridors. Yet the release by ACS below clearly states the opposite. TxDOT also tried to misrepresent the breadth of the TTC-69 development contract awarded to ACS/Zachry in June leading even lawmakers to believe it only included upgrading Hwy 77 to interstate 69.

Yet as TURF warned (and the media has failed to report), the devil is in the details and the request for proposals by TxDOT clearly stated this contract was for the long-term development of the TTC. TxDOT also denies this grants ACS/Zachry the right of first refusal (preferential contracts without competitive bidding) for TTC-69 segments, but again, this statement by ACS tells its investors otherwise.

Read more about the egregious contract and taxpayer rip-off on the first segment of TTC-69 in the Rio Grande Valley here.

ACS to participate in the development of a great transportation infrastructure corridor in Texas

Iridium and the North American Zachry have been chosen by the State of Texas as strategic partners for 50 years to design, plan and develop a great infrastructure corridor of 1,000 kilometres in length.

The estimate project investments, involving the construction of road and railway infrastructures, exceed 30,000 million dollars, 5,000 million during the first seven years.


The I-69/TTC (Trans Texas Corridor) will connect the Mexican border with the Gulf of Mexico coastline, Houston and major industrial and logistics centres in Texas with the north of the country.

This is the second concessions project awarded to ACS in North America in seven days, after last week being awarded the A-30 highway in Canada.

Madrid, June 26, 2008. ACS Infrastructures Development, the North American branch of Iridium, the concession development company of ACS, and the Texan concessionaire Zachry American Infrastructure have become the successful bidders for the design, planning and development, as strategic partners of the Texas Department of Transportation (TxDOT), of the I-69/TTC infrastructure corridor for the next 50 years.

The I-69/TTC will be a great road and railway infrastructure corridor that will cross the State of Texas from north to south. Specifically, it will start in the Rio Grande valley to Houston offering new exits towards the centre of the Union from large industrial and logistics centres in the south of the State, including a branch towards the Gulf of Mexico and the port of Corpus Christie. The estimate investment for the entire project is around 30,000 million dollars, of which 5,000 million shall be invested during the first 7 years.

With the award of this project, ACS and Zachry, the largest construction group in the State of Texas, have become strategic partners of the Texas Department of Transportation and shall propose the development of specific projects and activities for which they will have a preferential negotiation option without public tender. In fact, the consortium is already considering the renewal of a first route whose concession will be negotiated with the Texas Department of Transportation, the US 77, which shall include the construction of a series of highways under concession regime connecting to it and which shall require an investment of 2,500 million dollars.

The I-69/TTC development project includes, in its initial design, the construction of a 1,000 kilometre network of highways and roads as well as railway lines. Based on this, ACS and Zachry will draft a Master Plan with the Texas Department of Transportation to establish the priority activities as well as the form and deadlines for their execution.

The winning consortium for the project, led by Iridium and Zachry, and which has UBS as its financial advisor and SDG as infrastructure planning consultant, also enjoys the involvement of Dragados, the parent company of the ACS construction area, and SICE, company belonging to its Industrial Services area and which has extended experience in the installation of traffic control systems, as well as other engineering and construction companies in the State of Texas.

The I-69/TTC is one of the high priority transportation infrastructure corridors identified by the State of Texas, the first of which has already been set in motion. In total, it entails an infrastructure network of around 3,000 kilometres and investments of 150,000 million euros to improve State communications with Mexico, centre and north of the country and Canada. Eight States of the Union, including Texas, which is the developer, are involved in the project.

Second concession in North America in one week

The awarding of the I-69/TTC represents the consolidation of the presence of the ACS Group in United States, where it already has considerable presence in civil works, and is the second concession won by Iridium in North America in seven days. Last week the ACS concessions developer was awarded by the State of Quebec, together with Acciona, the project to finance, build and operate for 35 years the A-30 highway in Canada, a project with an investment of 1,000 million euros, which shall require the execution of important civil works to connect the south of Montreal with the North American border. The A-30 is also the first concession awarded to Iridium in Canada.

This way, ACS continues its expansion process in North America, a market it has defined as strategic. Through Dragados, the parent company of its construction area, is already present in United States in its civil works activities since 2005, when it became the successful bidder for the first expansion of the New York Subway; a large engineering project connecting the Grand Central Station in Manhattan to Queens under the Hudson River, representing 400 million dollars. Later Dragados assumed new projects in the north east of the country to improve roads, dams and subways, and recently was awarded the construction of a dam in Puerto Rico and the first contract for the expansion of Miami airport. In December 2007, it acquired 100% of Schiavione; a company specialized in construction in the north east of the country.

Iridium, the ACS concessions company, has been for the last ten years the greatest private transportation infrastructure investor in the world, with promoted investments exceeding 22,000 million euros. The infrastructure and public equipment company participates in the management of more than 40 companies of these characteristics, encompassing the entire concessional business value chain.

TTC-69 lobby group, Alliance for I-69, takes their show on the road

Link to article here.

Alliance for I-69 is the biggest pro-TTC-69 lobby group in the state. Their chief lobbyist, Gary Bushell, is also the same lobbyist TxDOT illegally hired with our taxpayer money to lobby elected officials in the path of the TTC-69. Bushell is also a notable campaign contributor to MANY politicians, Bexar County Rep. Frank Corte among them. Today, Alliance for I-69 teamed up with Zachry, who along with Spanish company ACS won the development rights to TTC-69 in June, hit Victoria with their dog and pony show, and they've been in Austin hitting up lawmakers, too. Their logo on the material they left with lawmakers even has a Canadian, Mexican, and U.S flag morphed together, yet TxDOT denies the Trans Texas Corridor is about NAFTA, international trade, the movement of freight/goods, or the economic integration of the three countries.

I-69 partners make presentation
Victoria Advocate
August 05, 2008

The Alliance for I-69 Texas and U.S.-owned company Zachry American Infrastruture have partnered up and are traveling across the state giving presentations on I-69. On Tuesday, they stopped in Victoria.

During the short initial meeting, city leaders met with Gary Bushnell of the advocacy group and Gary Kuhn, senior project manager for Zachry, the firm awarded the contract for the superhighway.

The Interstate 69 corridor project is a proposed multi-use, statewide network of transportation routes in Texas that will incorporate existing and new highways, railways, utility right-of-ways and toll roads. Zachry was awarded the contract for the project in June by the Texas Transportation Commission.

The presentation focused on ways Victoria could use I-69 to their economic advantage and about the potential the corridor has in terms of new transportation technology.

According to Kuhn, Zachry is working on a master plan that takes into account local projects Texas communities want to do and how the company can help improve local economic development. Kuhn also discussed Zachry’s proposal for a freight shuttle that would go alongside the existing route of U.S. 77 in Victoria. According to Kuhn, the freight shuttle combines the best characteristics of the rail and truck transportation, but is more efficient, cheaper and causes less pollution. He added that it would run on electromagnetic pulses that create motion and a freight shuttle system across Texas could be up and running by as early as 2015.

“We’ve been working with the Alliance to visit all the communities involved in the I-69 Interstate. There is a lot of collaboration that needs to take place among these communities,” Kuhn said. “It’s a kind of one for all and all for one deal.”

The meeting included Mayor Will Armstrong, Dale Fowler of the Victoria Economic Development Corp. and Lee Swearingen of the Victoria County Navigation District.

TxDOT caught in deception, hid docs from the feds that prove violation of the law


Link to article here. This violation of federal law is much more than a "snag," it blows a hole right through the 281 toll project. TxDOT was caught in willful deception, so this story is the understatement of the year!

Planned U.S. 281 tollway hits another bump
By Pat Driscoll
San Antonio Express-News
August 7, 2008

A federal lawsuit blasted as frivolous has dug up some documents that throw yet another curve at San Antonio's planned U.S. 281 tollway.

The documents were uncovered in a discovery process for the lawsuit, which challenges the thoroughness of the tollway project's environmental study.

The Texas Department of Transportation, which did the study, won't say what the documents are but is handing them over to the Federal Highway Administration, which approved the study last year.

“We wanted to take the cautious advice of the attorneys and give the FHWA another opportunity to review this project,” TxDOT Director Amadeo Saenz said in a statement.

TxDOT asked the court's judge to delay the lawsuit for two months to give federal officials time to review the documents and decide whether to amend the environmental study or reconsider approval. Pulling the clearance would delay the toll project even more.

Widening eight miles of U.S. 281 north of Loop 1604 has been on hold for years, first as TxDOT waited to build it as a freeway and then converted to a tollway plan, and then after activists filed a 2005 lawsuit to force a redo of the environmental study.

The more recent lawsuit, filed in February by Texans Uniting for Reform and Freedom and Aquifer Guardians in Urban Areas, is similar to the 2005 suit in that it calls for a closer look at impacts to motorists, water and wildlife.

One of the documents missing from the latest environmental study is a report on how the 10- to 20-lane tollway could affect the Edwards Aquifer, which supplies most of San Antonio's drinking water, said TURF founder Terri Hall.

“They have withheld information from the Federal Highway Administration that could blow a hole in the middle of the 281 project,” she said.

The Alamo Regional Mobility Authority, which took over the $472 million toll project from TxDOT, hoped to sell bonds in October and planned to start opening new lanes in three years, now must push its schedule back at least two months.

BREAKING NEWS: TxDOT caught withholding 281 docs from the feds

CAUGHT IN DECEPTION!

TxDOT asks court for 60 day delay on 281 case

In what amounts to a total victory for the grassroots, TxDOT has to ask the court for a 60 day delay in the 281 lawsuit so they can beg the Federal Highway Administration (FHWA) NOT to yank their environmental clearance for the 281 toll project. Through the discovery process of our lawsuit, the Judge required TxDOT to hand over the complete administrative record for 281, including all the financials and the stuff from when the improvements were funded with gas taxes that would keep 281 a FREEway. It's been discovered that TxDOT withheld key documents not only from the public and our attorneys, but also the feds!

There are a heap of emails that show TxDOT tried to "fix" the environmental work for 281 to pre-determine a "Finding of No Significant Impact" (or FONSI) BEFORE the study even began. They rigged it! That is a DIRECT VIOLATION OF FEDERAL LAW! 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 tolling 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 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, thanks to our lawsuit, now has to submit these documents to the feds who will completely re-consider their previous approval of the 281 toll road. It's likely the feds will yank their environmental clearance for the toll road in light of this deception by TxDOT. If they don't, the court is likely to do it for them. So TxDOT is in total damage control mode and released a statement about their motion for a 60 stay in our lawsuit that tries to minimize what the documents reveal and, of course, blames us for the delay instead of their own incompetence and deception. As usual, they seem to think they can wiggle out of their corruption without consequences simply by supplementing the record. They were FORCED to come clean through a lawsuit brought by concerned citizens, not by them being forthcoming. The tactics at TxDOT never cease to amaze.

So stay tuned, we'll see how the Judge rules and what other damaging information these "other" documents reveal.

Official TxDOT propaganda on the request for a stay in litigation...


The Texas Department of Transportation (TxDOT) has asked a federal district court judge to issue a stay of the litigation regarding the expansion of U.S. Highway 281 in San Antonio.  We recently located documents which they feel may need to be reviewed by federal officials as part of the environmental evaluation of the transportation project.
 
In the process of responding to discovery requests for the lawsuit, staff identified documents that had not previously been submitted to the Federal Highway Administration (FHWA).  TxDOT will submit these documents to FHWA for their review.  FHWA will then determine whether the administrative record for the U.S. 281 project should be amended and whether the project's prior environmental clearance would need to be reconsidered.  In order to provide FHWA time to review the documents, TxDOT requested that the ongoing litigation be delayed up to 60 days.
 
"Every day that this project is delayed is another day that Bexar County drivers are stuck in traffic," said TxDOT Executive Director Amadeo Saenz.  "Nevertheless, we are committed to making sure that the 281 project complies with all federal and state requirements.  The extension we requested would allow FHWA to review these new documents and come to an independent decision about how to proceed.  We recognized that we should bring these documents to the attention of FHWA, and we want to make sure they have the time they need to review them."
 
Saenz said that the documents will be submitted to the FHWA out of an abundance of caution.  "A new, more conservative view of TxDOT’s records related to the 281 project would require these materials to be forwarded to FHWA," he said.  "We wanted to take the cautious advice of the attorneys and give the FHWA another opportunity to review this project.  On balance, this is a small addition to the 24,000-page administrative record, but it deserves scrutiny from FHWA."
 
In its filing with the court, the department wrote that it has no intention of delaying the proceedings but wants to ensure that the FHWA has ample time to examine the recently identified information to determine whether the administrative record should be amended.
 
We recently adopted new policies on how to assist FHWA in the preparation of the administrative record showing the environmental review of a transportation project.  "Preparing the administrative record for a complex transportation project is an enormous task.  We will do our part to make sure the process is the best it can be," said Saenz.

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