Toll meltdown in Virginia

Link to article here.

More DOUBLE TAXATION and Robin Hood financing schemes being contemplated by lawmakers against the taxpayers of Virginia. Public private partnerships (P3s) are the most expensive, most anti-taxpayer, sovereignty-destroying way to do toll roads. Gov. McDonnell ought to take a page out of the playbook of Gov. Nathan Deal in Georgia -- it's not worth selling-off state sovereignty to get a road built. Under NO circumstances should the profit margins of private corporations supercede the public interest! P3s put taxation in the hands of corporations whom the public cannot hold accountable for out of control taxation. They also grant state-sanctioned monopolies to private interests who then control public infrastructure for a half century or more! There is no 'softening' a P3 to make it acceptable enough, scrap it and let the State build it!

Midtown Meltdown

Posted on March 30, 2012 by James A. Bacon| 6 Comments


by James A. Bacon

Bacon's Rebellion blog

The controversy over tolls on the $2.1 billion Midtown Tunnel/Downtown Tunnel project in Hampton Roads is spreading statewide as transportation advocates in other parts of Virginia ponder the implications of what it means for them. In a missive distributed yesterday Robert Chase, president of the Northern Virginia Transportation Alliance, warned that one “rumored” scenario under consideration by House-Senate conferees would be to renege on the $2.1 billion public-private partnership agreement with Elizabeth River Crossings (ERC), even if it meant triggering multimillion-dollar penalties.

Hampton Roads legislators are up in arms over the deal, which would slap tolls on users of the two tunnels and the Martin Luther King Expressway later this year in order to finance major improvements that aren’t scheduled to be complete for two years. Two weeks ago, the Virginian-Pilot reported, Del. Chris Jones, R-Suffolk, was researching how the contract could be terminated as an option of “last resort.”

If Chase is correct, Jones’ idea has morphed from a research project into an option under consideration by House and Senate budget conferees in Richmond. Jones, as it happens, is one of the six House conferees, as is Johnny Joannou, D-Portsmouth, whose district is at ground-zero of the controversy. Under the Jones scenario, writes Chase, the state “would legislatively scrap the $2.1 billion Hampton Roads Midtown-Downtown Tunnel PPTA contract and mandate that only a new Midtown Tunnel be built entirely with state funding through over $1 billion in federal GARVEE financing.”

Needless to say, that idea won’t play well in Northern Virginia, or anywhere else for that matter. Conferees are weighing the idea of providing an additional $300 million, plus $150 million already agreed upon, to defray the cost of the Rail-to-Dulles METRO rail project in Northern Virginia, but half or more of that project financing still will be paid by commuters on the Dulles Toll Road. It’s an open question how NoVa lawmakers will cotton to an arrangement that extracts $4 tolls from Dulles Toll Road commuters for a rail service they aren’t even using while Norfolk commuters get a new tunnel for free.

Notes Chase:

Scrapping the PPTA deal would mean breaking a legally binding contract with the consortium, incurring financial penalties  and totally circumventing the Commonwealth Transportation Board/state and local planning and approval processes. Not a real private-sector confidence builder for a state with virtually no construction dollars desperate to attract private sector investment. …

Virginia has already committed $400 million to the Downtown/Midtown/MLK Extension project to buy down tolls. To provide the total $1 billion (and allow Hampton Road residents a toll-free trip) the Commonwealth would have to add another $600 million in GARVEE funds or essentially all of the $1.2 billion in authorized GARVEE bond funds for the next 10-12 years to a single Hampton Roads project. (GARVEE bonds are repaid from future federal revenues meaning that about $100 million/year in future federal revenues will go to a single Hampton Roads project as opposed to being leveraged across many throughout the state.)

Transportation officials say that this would most likely kill Northern Virginia’s I-95 Express HOT Lanes project for which GARVEES are targeted and potentially several others including the Route 7/Belmont Ridge Road Interchange and the Leesburg Bypass/Sycolin Road interchange.

In sum, scrapping the ERC contract would derail the McDonnell administration’s entire transportation grand strategy, which is based upon leveraging the borrowed dollars through public private partnerships. Accordingly, the chances of the governor going along with the Jones scenario are just about zero. I would conjecture that Jones doesn’t really want to un-do the ERC deal, he’s just using the prospect of disaster as leverage to extract enough money from the state to offset tolls until the tunnels are built.

Two lines of argument would support such a bid. First, it is entirely unreasonable by any standard to ask people to pay tolls for transportation improvements they are not using. (Admittedly, that argument didn’t work for Dulles Toll Road commuters, so it may not be a strong one.) Second, if the state is forking out up to $450 million for the Rail-to-Dulles to provide toll road relief, it’s hard to argue that it can’t afford a measley $100 million or so for Hampton Roads.

Whatever happens, Virginia has reached a sad state of affairs. Billions of dollars of bond proceeds are sloshing around uncommitted. The monies are not subject to the usual transportation formulas which, though flawed, at least ensure that funds are distributed around the state in a manner roughly approximating population and need. The criteria for allocating bond monies, it appears, will be he who screams the loudest gets the most money. Political considerations will supplant economic considerations, and the results will be sub-par.

Welcome to the New Dominion.

Update: Here’s another reason why the Jones scenario of cutting the cost by building just one tunnel won’t work: The improvements to the Midtown Tunnel, Downtown Tunnel and Martin Luther King Expressway are designed to work as a network. The MLK Expressway will funnel a lot of drivers off the Interstate to the two tunnels, according to my source. The plan is to provide up-to-date info about driving conditions at both tunnels to commuters on the MLK, by signs or other means, to steer them to the least congested facility. Building the  components of the plan one by one won’t deliver the same congestion-mitigation benefits.

________________________________________________________________

Link to article here.

Gov. McDonnell now open to delaying tunnel tolls
By Debbie Messina

Virginian-Pilot

April 3, 2012

Gov. Bob McDonnell is considering delaying toll collections on the Midtown and Downtown tunnels, plus other undisclosed measures to soften the impact of a public-private deal that could otherwise collect tolls as early as July 1.

The administration has agreed to an amendment in a public-private partnership deal that makes postponing tolls possible.

"The amendment was negotiated with our private partner, Elizabeth River Crossings, because the governor wanted the ability to possibly delay the collection of tolls from the public," according to a statement from the governor's office. "This, as well as other initiatives, are currently under evaluation by the administration."

It indicates a shift in position. Last week, the governor's office said: "Altering this binding contract at this point would result in significant financial costs to the Commonwealth and would compound longstanding congestion issues in the region."

Last week, the administration also claimed that a toll delay would violate contract law.

Ultimately, the final decision whether to postpone tolls will be negotiated by the governor and the General Assembly. A delay would cost the state money, which would have to be appropriated by the legislature.

The $2.16 billion deal with ERC - to build a second Midtown tunnel, improve the existing Midtown and Downtown tubes and extend the Martin Luther King Freeway to I-264 - has sparked local outrage and prompted some lawmakers to try to undo the contract altogether.

A provision to postpone tolls until January 2014 was pushed through the Senate version of the budget last week by state Sen. Louise Lucas, D-Portsmouth. It did not make the House version and is now part of budget negotiations.

The amended contract with ERC allows toll postponement up until substantial completion of a second Midtown tube. It states that the Virginia Department of Transportation and ERC "will collaborate with each other to explore strategies for postponing the commencement of the imposition, collection and enforcement of tolls."

It also says the state would have to pay ERC for the lost revenue. Lucas had indicated that would be an estimated $125 million if the tolls were delayed until January 2014. During construction, about $350 million is expected to be collected in tolls through 2016, according to VDOT.

Lucas said of the governor's new position: "I am extremely happy to hear that information for as hard as we fought for the people of Hampton Roads, and Norfolk and Portsmouth particularly."

But not all lawmakers are happy.

"So we'd borrow money to pay a private concern to delay tolls?" questioned Del. Chris Jones, R-Suffolk. "This is not a good deal as it's structured."

Jones wants the scope of the project as well as the profit allowed to ERC dialed back in order to lower tolls.

Del. Kenny Alexander, D-Norfolk, said he appreciates the governor has "softened up a little bit," but added: "Postponing the inevitable is not good enough.... The whole deal is still flawed and needs revisiting."

He said the $1.84 rush-hour toll level and the fact that it can increase by 3.5 percent or more every year is troublesome. He also dislikes that the state may have to pay ERC for lost revenue if a competing water crossing is built.

Alexander and some Portsmouth residents have hired Richmond attorney Patrick McSweeney to wage a legal battle against tolls. Collecting tolls four years in advance of project completion is one of the challenges in the lawsuit, which has yet to be filed.

"The governor and administration probably determined they could not win that one," Alexander said.

Delaying tolls, he said, "will only strengthen our position because they're starting to make concessions on what we're arguing."

Meanwhile, Lucas said the prospect of toll relief doesn't resolve the broader road funding debate. Delaying tolls gives the General Assembly "the opportunity to sit down and have an adult conversation" about how to pay for the upkeep of existing roads and building new ones, she said.

The senator favors increasing Virginia's 5 percent sales tax by 2 cents and tying increases in the state's 17.5 cent per gallon gas tax to inflation. Lucas suggested she'll propose legislation to do that.

"I'm not saying people are going to be happy with it, but I know people aren't happy with tolls," Lucas said.

Pilot writer Julian Walker contributed to this report.

Debbie Messina, 757-446-2588,  This email address is being protected from spambots. You need JavaScript enabled to view it.

Texas increases speed limits to 80 MPH

Link to article here.

The most disturbing reason for this change in speed limits is what we warned the Texas Legislature of in 2011 -- this is about maximizing toll revenues for a private, foreign corporation, Cintra, as well as the State of Texas. Both our lawmakers and TxDOT are making transportation decisions based on profit potential, not public safety. It's no secret that the traffic levels on SH 130 have been abyssmal, and TxDOT has been searching for ways to boost the number of cars that take the toll road, even lowering toll rates 67%! But this move to increase speed limits is based solely on the prospect of a higher share of toll revenues TxDOT will split with Cintra when its two segments of SH 130 open later this year. Details are in the public private partnership contract linked in the story below.

Texas Expands 80 MPH Speed Limit
Texas toll roads to post 80 MPH speed limits.

80 MPHRoads nationwide are getting faster. States around the country have been experiencing record low fatality rates, despite posting speed limits, in some cases 25 MPH faster than the Double Nickel limit imposed in 1975. That has encouraged jurisdictions to continue boosting the legal maximum.

Currently, the top speed crown belongs to Texas and Utah, each of which post 80 MPH on select highways. The Lone Star State adopted the top limit in 2008, but only on rural sections of Interstates 10 and 20. Last week, the Texas Transportation Commission decided that speed studies justified raising the limits on fifty-six miles of the State Highway 45 and State Highway 130 toll roads near Austin.

"The Texas Department of Transportation [TxDOT] has conducted the prescribed engineering and traffic investigations to determine reasonable and safe prima facie maximum speed limits for those segments of the state highway system," the commission order stated.

The new speed takes effect once updated signs are posted. The National Motorist Association has been lobbying lawmakers to boost their limits to better reflect speed at which drivers are traveling. There has been no downside to changing the number on the sign upward.

"The trend by several states to raise selected speed limits recognizes the proven engineering principle that the safest, most efficient patterns are established by letting traffic flow freely at its natural pace," NMA President Gary Biller told TheNewspaper. "Despite drumbeat calls by insurance industry backed groups to lower the speed limits back to 55 MPH, our highways have never been safer. The national highway fatality rate has declined by more than 36 percent, according to NHTSA."

TxDOT's contract with the Spanish and US companies that own the toll routes presumes the higher limit will make the road more attractive and valuable. Had the limit not been raised, TxDOT would have had to lower the speed limit on I-35 near where it runs parallel to SH130 or face an significant financial penalty (view contract excerpt). These non-compete provisions are designed to keep bondholders happy at the expense of other motorists. Following the same principle, the Maryland Transportation Authority is currently conducting studies to raise the speed limit on the Inter County Connector toll road.

A copy of the Texas Transportation Commission's order us available in a 75k PDF file at the source link below.

Source: PDF File Minute Order 113072 (Texas Transportation Commission, 3/29/2012)

'Loss aversion' with toll roads

Link to article here,

Any interesting take on public resistance to tolls in some circumstances but not others. This author makes the case that good toll projects are those that pay for themselves. But most toll projects being done today especially, HOT lanes, DO NOT pay for themselves and use massive amounts of public tax revenue to build the project but then commuters have to pay another TAX to use the road/lanes -- hence DOUBLE TAXATION and public opposition.
Virginia Toll Projects and “Loss Aversion”

Posted by Jim Bacon • March 29, 2012 • Printer-friendly

In his book, “Thinking, Fast and Slow,” psychologist and Nobel Prize winner in economics Daniel Kahneman describes the phenomena of “loss aversion” and “reference points.” These deeply embedded cognitive quirks, which had survival value for hunter-gatherers, pose dilemmas for politicians in complex modern societies who try to change the status quo. The McDonnell administration’s plan to ameliorate traffic congestion in Hampton Roads is a case in point.

Loss aversion is the phenomenon in which people experience the loss of a thing with greater intensity than they experience the gain of a comparable thing. Thus, people will experience more anguish from the loss of $100 than pleasure in the gain of $100. Gains and losses are judged in relation to a reference point, which often is the status quo (but sometimes can be a future expectation). When there is a departure from the status quo, losers feel their pain more intensely than the winners.

These principles are well established through numerous psychological experiments conducted over several decades. There is nothing controversial about them. Now, let’s apply them to the McDonnell administration decision to pay for roughly $2 billion to make improvements to the Midtown Tunnel, Downtown  and Martin Luther King Boulevard in Norfolk and Portsmouth.

The tunnels were paid for originally by tolls, but the tolls came down a couple of decades ago, and the citizens of Hampton Roads have enjoyed the status quo of using them for free. Within half a year, Elizabeth River Crossings, the public-private partner in charge of expanding the tunnel capacity and collecting the tolls, will start charging tolls — more than $3 per day for a two-way trip — before the improvements are even made.
Not surprisingly, this has caused an outcry among Hampton Roads commuters. (I’ll defer for a later discussion the issue of whether or not people had ample warning that the tolls were coming and had sufficient opportunity to let their opinions be known.) The McDonnell administration response is that, yes, people will have to pay tolls, but the project will eliminate the half-hour congestion they experience each time they cross the Elizabeth River, and that by any rational calculation, saving an hour in stop-and-go traffic is well worth $3 or $4 in tolls.

From the perspective of  purely economic calculation, the argument is impeccable. But, as Kahneman points out, humans are not always economically rational creatures. The anticipation of paying that toll causes greater grief for many than the anticipation of spending less time stuck in traffic promises relief. As a result, the citizenry is up in arms and Gov. Bob McDonnell has a big problem on his hands.

Now, let’s compare the public reaction in Norfolk to the reaction in Northern Virginia, where people soon will begin paying HOT lane tolls on the Capital Beltway. Northern Virginians are far less upset. Why? Because the tolls are being used to add new express lanes. People who place a premium on their time can pay to use the new lanes and avoid congestion. They have an option they did not have before. Those who don’t wish to pay the money can continue using the same old, congested lanes. While they devoutly may wish that money would fall out of the sky and pay for the new lanes so everyone could use them for free, their situation remains the same. They do not perceive themselves as losing anything. They do not get agitated. McDonnell does not have a problem on his hands.

There is an important political lesson to be learned here as the McDonnell administration forges ahead with a series of high-profile public-private partnerships and other toll projects. Toll projects similar to the Interstate 95 HOT lane, which creates new capacity and new options for drivers without imposing tolls on roads that now are used for free, will meet less political resistance. By contrast, the prospect of paying higher tolls on the Dulles Toll Road to finance the Rail-to-Dulles project is causing an uproar. Predictably, the administration’s proposal to toll I-95 in order to raise money to pay for improvements in the corridor likely will raise a clamor as well.

You can argue economic logic all you want, but people who perceive themselves as losing something will gripe and moan. The politically astute path is to select toll projects that pay for themselves by creating new choices for drivers, not imposing tolls where there were none before. To put it more simply, toll projects must be structured as win-win arrangements to gain popular favor.

James A. Bacon is the author of “Boomergeddon” and publisher of the Bacon’s Rebellion blog at www.baconsrebellion.com.

MoPac toll project to profit off DOUBLE TAXATION


Link to article here.

First MoPac was to become a privatized toll project, fraught with problems like loss of sovereignty over public infrastructure, punitive toll rates in the hands of unaccountable private interests, non-compete agreements, and granting a state-sanctioned monopoly to a corporation without competitive bidding. Now, Austin transportation boards want to take TAX dollars to expand MoPac, but still charge tolls for a road that would already be paid for with TAX money! So it's cede the road to a private corporation or get DOUBLE TAXED, these are not options. Fix MoPac and keep it a FREEway!

MoPac loan deal gets tentative nod

By Ben Wear
Updated: 5:14 a.m. Tuesday, April 10, 2012

Local transportation officials made a preliminary decision Monday night to direct most of a $136.6 million windfall to the MoPac Boulevard express lane project.

But the Capital Area Metropolitan Planning Organization board, anxious to have money for future Interstate 35 projects, conditioned its support for a final June vote on exacting better terms for what amounts to a loan to the local toll agency building the project. The board's executive committee will negotiate final terms of an agreement with the Central Texas Regional Mobility Authority.

Last week the authority suggested that the Texas Department of Transportation money be channeled to the toll agency's pending project to add a lane to each side of MoPac from Lady Bird Lake to Parmer Lane. They suggested that the agency could pay the money back over 22 years at 3 percent interest to the board, which would then use the money for other projects.

But Monday, some planning organization board members suggested that interest rate is too low, and the payoff too slow. Mike Heiligenstein, executive director of the mobility authority, said the agency welcomes discussion of changes. Final terms will be worked out in the coming weeks before a May public hearing and a final vote June 11.

The new lanes would be open only to those paying tolls, transit buses and emergency vehicles, and would have fluctuating tolls to keep congestion down and speeds reliably up in those lanes.

The authority has said the project would cost about $250 million. But that estimate was based on borrowing the bulk of the money on the bond market and thus included money to cover early debt payments and other bond requirements. Officials said that with the new cash from TxDOT, the project could be built for about $200 million and probably be commenced six months earlier than planned.

The project would fit criteria that top TxDOT officials outlined for distributing $2 billion in cash that the agency recently said was newly available. Primarily, the department requires projects ready for construction, or nearly so, because of a September federal deadline for deciding how to disburse the $2 billion, and that would address traffic tie-ups on the state's 100 most congested highways.

North MoPac is No. 35 on that list, according to planning organization documents. The project should get final environmental clearance by August, and the bidding process for final design and construction could begin later this week, Heiligenstein said.

_________________________________________________________________

Link to article here.

MoPac express toll lane project could get $137 million TxDOT windfall

By Ben Wear

AMERICAN-STATESMAN STAFF

Updated: 9:46 p.m. Monday, April 2, 2012

Published: 8:59 p.m. Monday, April 2, 2012

The MoPac toll lane project could get an additional $136.6 million from the Texas Department of Transportation, money that officials say would accelerate the start of the project by at least six months.

Under the proposal, the Central Texas Regional Mobility Authority would pay back the money at 3 percent interest over the next 22 years to the Capital Area Metropolitan Planning Organization, which would then parcel it out to other area road projects.

The unusual arrangement would secure highway money for the area that TxDOT might otherwise direct elsewhere in the state because of tight federal deadlines. This approach, mobility authority officials said Monday, could save the agency tens of millions of dollars in interest and other costs associated with borrowing money through the bond market.

But it also presents a public relations problem as the CAMPO board, which is made up of local elected officials, would be abetting the mobility authority as it charges tolls on a road that essentially would already be paid for.

Combining the new money with $70 million in taxpayer funds that TxDOT already committed to the project would mean that the added toll lanes on each side of MoPac Boulevard (Loop 1) would be built with cash.

Toll projects typically involve a substantial amount of borrowed money, which is then paid back by the tolls from drivers. Under this scenario, the toll money would all be profit initially, other than the relatively low percentage needed to cover operating costs.

Mobility authority officials said the terms are still in flux. "We've just thrown something very general on the table to open discussion," mobility authority Communications Director Steve Pustelnyk said. But the agency would be incurring debt in the formal of a written agreement with the governing board of CAMPO.

To meet federal and TxDOT deadlines, CAMPO Executive Director Maureen McCoy said, the CAMPO board would have to act on the MoPac proposal or an alternative by mid-June. The federally created agency creates Central Texas' long-range transportation plan and has some direct authority over distributing money.

"It's as if it were a mortgage," said Mike Heiligenstein, executive director of the mobility authority.

He added that the 3 percent suggested interest rate is half or less of what the agency would pay bond investors for an added fourth "express" lane on each side of MoPac from Lady Bird Lake to Parmer Lane.

The tolls on these lanes will have a second purpose. The mobility authority plans to make toll rates fluctuate minute-by-minute, charging more as the lanes begin to see congestion. Higher tolls at those time would, in theory, discourage some potential users and thus ensure that speeds remain at 50 mph or more in the express lanes for cars and Capital Metro buses.

The money became available several weeks ago when TxDOT's executive team determined that it had about $2 billion more for road projects that previously thought. About $750 million of that is federal funding, however, with a deadline of Sept. 30, the last day of Uncle Sam's current fiscal year. By then, TxDOT must decide which projects meet federal readiness criteria.

The TxDOT hierarchy has said it wants the money spent on a few large projects, preferably on the state's 100 most congested roads, McCoy said.

The Austin area is conspicuously short of such projects teed up for development. The exception is the MoPac express lane project, which is nearing the end of a federally required environmental assessment.

Officials expect to get approval of that document as soon as August, and that would trigger a six-month period in which approval may be challenged in court.

If the mobility authority were to borrow the bulk of the money on the bond market, it probably would have to wait until that lawsuit window has closed. But if the project is built purely with TxDOT funds, then the mobility authority might be able to begin construction during or shortly after that six-month period.

Heiligenstein said finding contractors to do the final design and build the project has just begun. He said construction could start as early as summer 2013. Earlier estimates had work beginning in 2014. Construction should take about two years.

If Austin misses the Sept. 30 deadline, officials said, that doesn't mean that the 11-county Austin district of TxDOT would forfeit rights to its share of the $2 billion windfall. The money would in effect be lent to other parts of the state, which would then owe the Austin district like amounts of future funding.

But officials said that the vagaries of TxDOT finances could mean a loss of some of Austin's share, or at least a delay in getting it, once the money leaves the area.

"The (CAMPO) board didn't seem very enthused with that option, and I don't blame them," said Carlos Lopez, TxDOT's Austin district engineer.

TexPIRG: Hidden Costs of road privatization

The hidden costs of road privatization
By Melissa Cubria, Advocate, Texas Public Interest Research Group
 
“When infrastructure is privatized (or corporatized), the decisions about its size, shape and placement are driven by market demand. The private partners are interested in elements of infrastructure that can yield the longest and strongest streams of privately capturable revenue not the ones that yield the largest public benefits.”[1]
 
A WORRISOME TREND

It is easy to see why many states are turning to infrastructure privatization in order to repair, build, modernize, and operate highways and other infrastructure. Cash-strapped states and cities are drawn by up-front payments or other ways to move costs “off budget,” such as shifting to private user fees rather than taxes to address their budget deficits. They may also see privatization as a way to shift future financial risks to private contractors.

In Texas, proposals for private toll roads have come under much criticism, prompting heated debates with most public attention paid to soaring toll rates, seizures of ranch land through eminent domain, and concerns about foreign corporations owning vital Texas roads. Largely neglected from these debates has been a discussion about the long-term effects of standard provisions of privatization contracts. The common terms of road privatization deals restrict the public’s ability to act on its own behalf, force the state to pay privatization companies when those companies claim they would have reaped more revenue if not for state actions, and reduce the public’s right to know information about how public functions are performed and how public dollars are spent.

NON-COMPETE CLAUSES

Eliminating competition would seem to undermine a basic argument for privatized roads that ongoing choice between competing products in the free market will spur better performance and reduce costs. However, investors in a particular privatization project are looking for profit, not competition. They seek to avoid competition, especially if the project will last for many years, because the threat of competition makes their future revenues less certain. For that reason, investors often demand “non-compete clauses” which, for instance, can restrict the public’s ability to build or upgrade transportation infrastructure near existing private roadways if the state’s structure will compete with the toll revenue on the existing private toll road.

The fact that in Texas private toll road contracts last as long as 52 years means that they create a state-sanctioned monopoly rather than competition among private companies. Private investors additionally seek to use non-compete clauses to eliminate potential competition from the public sector. For example, the contract for SH 130 Segments 5 & 6 in Central Texas includes a non-compete provision that requires that the Texas Department of Transportation (TxDOT) pay Cintra-Zachry for lost profits if state projects reduce toll traffic, such as from the widening or construction of competing roads.

As a result of concerns about these provisions, Texas lawmakers prompted state officials to hold hearings and convene legislative study groups to study private participation in toll roads. In 2008, a report by the Texas Legislative Study Committee on Private Participation in Toll Contracts subsequently explained that non-compete clauses help ensure that private toll road developers will generate a profit on their investments. If such a provision were not included, it explains, the state could easily build a free, competing roadway that would divert traffic from the private toll road and thus decrease the amount of toll revenue collected by the private entity.[2]
Texas lawmakers in 2007 revoked the state’s ability to enter into private toll road deals though several projects already in the works were exempt from what is known as the “moratorium bill” (SB 792). A partial ban on non-compete clauses was also included in the moratorium legislation, along with several other provisions governing the terms of the deals.[3] Unfortunately, the partial ban on non-compete provisions did not adequately protect the public since Texas lawmakers allowed compensation clauses to remain in road privatization contracts.
 
COMPENSATION PROVISIONS & ADVERSE ACTIONS

Rather than outright forbidding the public from promoting competition, road privatization contracts in Texas can instead stipulate that the public must pay steep compensation for the company’s loss of profits. According to contractual provisions in the CDA for the North Tarrant Express, competing transportation facilities may be built at any time by anyone including TxDOT. However, TxDOT must compensate NTE Mobility Partners if the state builds additional lanes within the right of way of the project that reduce the private partner’s revenues or increase their costs.[4] This compensation would add significantly to the cost of construction, limiting funds for other public projects. As an added cost, the exact level of these future payments may be subject to dispute and lawsuits.

Private infrastructure firms protect their profits and limit their exposure to risk by designating a wide range of state actions as potential “adverse actions,” for which they can claim to deserve compensation from the state. The contract for the now bankrupt[5] San Diego South Bay Expressway, gives the private contractor the right to compensation if the state legislature, CalTrans, any administrative body, or voters create a law in any form that leads to acquiring part of the road, negatively affects the private contractor’s rights, or regulates or interferes with its ability to collect tolls. It is also entitled to compensation if any of those results are caused by a court order, decree, or judgment.[6]

These clauses are particularly attractive for investors when long periods of time are needed to recoup costs and become commercially viable. It is understandable why an investor entering into a multi-decade contract with a government would want to limit the state’s power to alter the terms of the agreement or existing opportunities for making a profit by using its powers to legislate or adjudicate. However, these provisions effectively grant private firms governmental powers without adequate levels of public scrutiny or accountability to voters. They elevate private contractors to a quasi-governmental status, giving them power over new laws, judicial decisions, propositions voted on by the public, and other government actions that a contractor claims will affect toll roads and revenues through the life of the contract.[7]

Many compensation events would otherwise be normal governmental functions intended to advance the public’s interests through upkeep of infrastructure or public safety needs. Examples include, inspecting the quality of the roadbed or responding to emergencies. Compensation clauses force officials to view decisions related to these types of situations, which have a direct impact on the public interest, through the lens of what might impair a private operator’s profits. Public officials must consider the contractual constraints much the way an injured person should check their provider health care contract before seeking medical action. Even basic maintenance can create situations under which a government entity owes compensation to private contractors.

The complex legal analysis required to interpret compensation clauses produces an additional burden on state and local governments. Contracts can run more than a thousand pages largely because companies stipulate so many ways to insulate themselves against the risks of other public actions. The contract for SH 130 Segments 5 and 6 is more than 1100 pages long.[8] The contract for just the first 3 segments of the North Tarrant Express, a 13-mile project in the Dallas-Fort Worth metroplex, is more than 600 pages long.[9] Many of the terms have special meanings that require referring to the contract’s lengthy definition section. Such is the prevailing practice, and as “legal terms of art they are also highly subjective concepts. Thus, contract terms that are included to provide the contractor with certainty that it will receive its anticipated revenue create new uncertainties for the government and the public."[10]

As an added complication, the exact level of these future payments might be subject to dispute and lawsuits. To avoid being completely at the private operator’s mercy, the state must hire additional accountants and lawyers to defend the public purse from these claims.
An odd variant of the compensation clause provides incentives to the government, but in ways which are not necessarily good for the public. For example, some privatization deals include monetary incentives for the state to divert traffic to toll roads or decrease safety standards in an effort to boost profits. The Texas contract with a consortium led by Cintra for SH-130 Segments 5 and 6 contains “revenue-sharing provisions” that provide incentives for officials to raise the speed limit on the private road. For example, TxDOT would get an extra $67 million if the speed limit were 80 mph. If the state raises the speed limit to 85 mph, that premium rises to $100 million.
The logic is that a faster speed limit will draw more toll-paying drivers to the road and thus increase Cintra's revenue.[11]
 
LACK OF TRANSPARENCY
Given the profound implications of road privatization, no deal should be approved if the public lacks meaningful opportunities to review, question and comment upon it. Public transparency helps check that private and political interests do not enrich themselves at public expense and that proper procedures are followed. The public needs to have both raw information and also analysis written in language they can understand about the value of a proposed contract, which depends on forecasts for income, expenses, and other factors. Transparency should continue even after a deal is signed to show how much toll and other revenue a company receives, how much it is investing in future repairs, and how much is being charged for compensation events.
Texas legislation does not require transparency in private toll road projects, such as making proposals available to affected communities in an understandable manner. Despite the fact that private road contracts can last 52 years, there is no way for the public or even most state officials in Texas to verify, review or comment on the revenue predictions in order to ensure the public is getting a good deal. In fact, Texas law stipulates that many important terms of private toll road contracts such as revenue predictions may not be released to the public until after the contract has been finalized and the public has been locked into the deal. The state’s refusal to provide information has typically been justified on the basis that private road builders and operators regard their own analysis and proposals as “proprietary” business secrets The public’s interest in preventing a bad deal and bad implementation of a deal should trump the interest to retain these proprietary secrets.

In 2011, during the 82nd Legislative session, lawmakers pushed through a number of road privatization projects by adding them to a long, complex bill. This process discouraged public debate over traditionally controversial legislation and enabled some lawmakers to pass contentious transportation policies without much scrutiny. Furthermore, key lawmakers misrepresented the deals to their constituents, to the public at large and to their colleagues. Cloaked in the guise of local options for districts and counties facing transportation shortfalls and stagnate revenues, the private toll road projects authorized in bills passed during the 82nd Legislative session were nothing more than the same taxpayer-backed schemes that all Texans will subsidize and many Texans have protest for the past decade. As a result, the taxpayers of Texas will be saddled with billions of dollars of debt, which they will pay off through rising tolls for half a century, tolls that are not collected for public use or future reinvestment into the state's infrastructure needs.

Excluding the public from negotiations makes it easier for the process to become dictated by the interests of private contractors. Public officials representing the citizens of Texas in these negotiations may be more concerned with simply sealing the deal than whether or not the deal is in the best interest of Texas‟ taxpayers. After all, many of the problems that will emerge from a bad deal will not occur for many years, at which point the officials involved in the original negotiations may no longer serve in the public sector and the many long-term consequences the public will find themselves burdened by will never be traced to their failings. Public officials can only effectively demand adequate information and negotiate successfully on the public’s behalf if rules mandate that information must be publicly disclosed and the negotiation process is structured to serve the citizens.
 
CONCLUSION
Transportation policy should be made according to what is best for the public not conditioned by specific corporate interests. Non-compete clauses and adverse action events in privatization agreements give private contractors power over decisions that affect the public interest and are normally made by public officials and subject to oversight, disclosure, and accountability—none of which apply to private contractors.[12] Although public officials approving these agreements may seek to develop new transportation assets that will serve the public, private toll road contracts instead tend to hinder the state’s responsiveness to the needs of the public. These agreements can constrain the state’s options for addressing critical infrastructure problems and public needs for generations.

State and local governments must weigh the numerous long-term risks of bad road privatization deals against the potential upsides. Texas officials must ensure that the needs of the citizens of Texas come before the needs of any other special interest or investment entity. They must insist on the strongest possible public protections to protect public assets, ensure that transportation policy remains in the hands of the public and negotiate all privatization deals with the utmost transparency. Once the public has been given full information and the opportunity to weigh in, state officials must move to engage in truly open and honest dialogue about the long-term effects of privatization deals before leaving the consequences to their grandchildren.
 
 

[1] Elliott D. Sclar, “The Political-Economics of Private Infrastructure Finance: The New Sub Prime,” Paper Prepared for Annual Meeting Association of Collegiate Schools of Planning, Crystal City, VA: 2009.
[2] Report of the Legislative Study Committee on Private Participation in Toll Projects, December 2008, available at http://www.senate.state.tx.us/75r/senate/commit/c820/SB792Report.pdf.
[3] See Senate Bill 792, Sec. 371.103. PROHIBITION AGAINST LIMITING OR PROHIBITING CONSTRUCTION OF TRANSPORTATION PROJECTS.
[4] Maribel P. Chavez, P.E., Public Hearing Presentation by NTE Partners, 17 April 2009, available at ftp://ftp.dot.state.tx.us/pub/txdot-info/ftw/nte_presentation.pdf.
[5] Steve Schmidt, “Toll Road Operator Files for Chapter 11 - South Bay Expressway Use below Forecast,” San Diego Union-Tribune, 23 March 2010.
[6] Fed. Highway Admin., Agreement Review: South Bay Expressway (SR 125), Sept. 2005, available at http://www.fhwa.dot.gov/ipd/p3/agreements/sr125.htm. Quoted in Ellen Dannin, “Crumbling Infrastructure, Crumbling Democracy: Infrastructure Privatization Contracts and Their Effects on State and Local Governance,” Northwestern Journal of Law and Social Policy 6, no. 1 (Winter 2011)(6 Nw. J.L. & Soc. Policy 47): note 98 at 58.
[7] Dannin, supra, at 65.
[8] See Comprehensive Development Agreement for SH 130 Segments 5 & 6, available at http://www.txdot.gov/business/partnerships/sh_130.htm.
[9] Ibid.
[10] Dannin, supra, at 24. Referencing Pennsylvania Turnpike Contract Definition § 6 (2008).
[11] 11 Ben Wear, “Flap over speed limits in Trans Texas Corridor Repeal,” Austin American-Statesman, 17 April 2011.
[12] Dannin, supra, abstract.

Taxpayers to pony-up $7 million Euros to private toll operator

Link to article here.

Think public subsidies on the front end of these toll deals are bad, look what's happening on the public private partnerships (P3s) in Ireland. Not only are the Irish being gouged through property tax and toll hikes to pay for these projects, now they're paying the private operators more subsidies if they don't turn a BIG enough profit. These roads are already turning a profit, but the private interests are guaranteed a handsome profit, and whether the traffic shows up to pay them or not, they forcibly extract the money from unwilling taxpayers through P3s contracts signed by our public officials and bought-off politicians. Public money for private profits.

Taxpayers to stump up €7m to private toll-road operators

Fianna Fáil's ‘minimum payment clause’ means millions to be paid to operators annually for decades to come

Date: 10 April 2012

SEVEN MILLION EURO of taxpayers’ money will be handed over to two private toll road operators by the Fine Gael/Labour Government because there’s not as much traffic as they’d expected and despite the toll roads continuing to operate at a profit.

The two roads in question are the Limerick tunnel and the M3 motorway in Meath.

Sinn Féin Meath-West TD Peadar Toibín grilled Transport Minister Leo Varadkar in the Dáil earlier this year asking him why “County Meath residents are being forced to pay twice for the M3 firstly, through the increased toll on the M3 and secondly through income taxes that help service the subsidy paid to the private owners of the motorway?”. The minister responded saying there was “limited scope” to renegotiate the contracts.

If the contracts between the NRA and the toll companies are not renegotiated then taxpayers could be forced to pay out millions in subsidies each year for decades to come as the contracts do not expire until 2035 in the case of the Limerick Tunnel and 2052 for the M3.

Sinn Féin Transport spokesperson Dessie Ellis TD told An Phoblacht:

“This is an example of the disaster that has been Public Private Partnership.

“It is an outrage that hospitals beds are closing and €7million, an increase on last year, is being spent subsidising a company paid handsomely for a job they continue to charge motorists for daily.”

© 2012 An Phoblacht.

Tolls coming to Hwy 288 in Pearland

Link to article here.

This story also fails to inform the public that a controversial public private partnership (P3s) toll contract is being contemplated for this project. We've spoken to the folks in Brazoria County and they don't want their sovereign public roads being ceded to private corporations whom they cannot hold accountable for toll tax rates. In fact, just last year at a Tea Party meeting where TURF spoke about the 82nd legislative session, a county commissioner tried to allay public opposition to tolls on Hwy 288 by stating it would be a LONG time before tolls would ever be put on Hwy 288, yet a year later, here it is.

Toll lanes may soon be coming to Highway 288

Friday, April 06, 2012
 


Deborah Wrigley

HOUSTON (KTRK) -- There's finally talk about adding toll lanes on Highway 288. It's a proposal that's sure to excite a lot of folks who live in Pearland. We're talking about toll lanes from Highway 59, all the way down to near the Brazoria County line, so down to the Beltway area.

It is three lanes in each direction -- north and south that link Harris and Brazoria counties, carrying tens of thousands of commuters to and from Houston each workday. But during rush hours...

"Scary, it is; have to slam on brakes," said Crystal Meredith, who commutes from Pearland.

Since Pearland began growing, there's been talk about putting in a toll road on Highway 288. Harris County had the option given to it by the legislature, but in recent years, it didn't have the money to build it. Under the plan, the county will forego that option and the state would do the job.

"If you just look at 288, it was designed from the beginning to be able to have the toll lanes down the middle, so I think the state can move fairly quickly," Harris County Judge Ed Emmett said.

And yet, the toll lanes couldn't cross the Brazoria County line just outside the Beltway because that county has first claim on building a toll road, but no toll road authority. It also has property owners tired of tall he traffic on the only freeway in town. It's enough that one homeowner is considering moving.

"Matter of fact, the thought has crossed my mind going a little farther that way," said Dennis Meredith, who commutes from Pearland.

 

(Copyright ©2012 KTRK-TV/DT. All Rights Reserved.)

Texas Supreme Court rules in favor of property rights on public beaches

TURF filed an amicus brief in favor of the landowner, Carol Severance, in this case. We applaud the Texas Supreme Court's decision in favor of property rights. A homeowner should not be required to tear down their home simply because acts of nature move the water line on public beaches.

Texas Supreme Court limits Open Beaches Act

Associated Press

Published 08:53 p.m., Friday, March 30, 2012

AUSTIN — The Texas Supreme Court placed private property rights ahead of the state's Open Beaches Act in a new ruling Friday.

The decision says that if an act of nature erodes a beach, the landowner's right to the remaining property is not diminished by state law, even if it is now part of the beach. A federal appeals court questioned the high court's first ruling and asked it to clarify its decision while state officials asked for a rehearing. Friday's decision is essentially the same as the earlier one with clarifications.

The Open Beaches Act states that a beach up to the vegetation line is state property and therefore open to the public. The state had argued that the state's right to the land automatically shifts with the sands. The court disagreed.

“When a beachfront vegetation line is suddenly and dramatically pushed landward by acts of nature, an existing public easement on the public beach does not ‘roll' inland to other parts of the parcel or onto a new parcel of land,” Justice Dale Wainwright wrote on behalf of the majority of judges. He said the state must instead take legal action if it wants the property to become open to the public.

The lawsuit was filed after Hurricane Rita's winds and rain pounded the Texas shoreline in 2005, eroding the sand and leaving Carol Severance's home on a sandy beach along Galveston Island's West Beach. The state ordered her to demolish her home, saying her land was now considered a public beach. Instead, Severance took the state to court.

The high court ruled in November 2010 that the land on the beach could be considered private property, as it was when Texas was a republic. Critics said the decision disregarded decades of precedent allowing Texans access to beaches. Land Commissioner Jerry Patterson, backed by outraged advocacy groups and some municipalities, filed a motion for a rehearing.

____________________________________________________________

Link to article here.

Court: Public beach easement does not roll

By Christopher Smith Gonzalez
The Daily News
Published March 31, 2012

GALVESTON — In Texas, a public beach easement does not roll, the Texas Supreme Court ruled Friday.

And that means the general public’s right to access and the state and city’s ability to conduct restoration projects on Galveston’s West End beaches could be eroding away.

The ruling by the state’s highest court states that if a major weather event, such as a hurricane, erodes a beach, landowners retain their rights to the remaining property, even if it becomes part of the public beach.

The court issued the ruling in response to questions sent down from the U.S. Fifth Circuit Court of Appeals relating to litigation over enforcement of the Texas Open Beaches Act.

Supporters of the court’s ruling said it upheld private property rights. But opponents said it could mean the end of guaranteed public access to Galveston’s West End beaches.

“It seems that the Open Beaches Act — at least for Galveston’s West End — is dead, thanks to the Supreme Court,” Texas Land Commissioner Jerry Patterson said. “This is truly a sad day.”

It also means the land office will not spend any more money on beach renourishment projects on the West End, Patterson said.

Galveston spokeswoman Alicia Cahill said the ruling also will affect any of the city’s future beach nourishment projects.

Before the city would spend any public funds on a private beach, the city would want the property owners to sign an easement agreement with the city, Cahill said.

“That way we are preserving a public easement, and the money would only be spent within that area,” she said.

The End Of Rolling Easements

This is the second time the state Supreme Court has ruled on a lawsuit brought by California resident Carol Severance against the state of Texas. Severance sued to prevent the land office from enforcing a rolling public easement along the beach.

After Hurricane Rita, Severance’s West End house on Kennedy Drive ended up on the public beach.

Under state law, Texas beaches must remain accessible to the public through an easement that exists between the vegetation line and the mean low tide line. And state officials maintain that when the tide and vegetation lines move because of erosion or storm damage, the easement moves. The Open Beaches Act gives the Texas land commissioner the right to remove houses that end up in the easement.

But in 2010, the Texas Supreme Court ruled the state couldn’t condemn and take private property that ends up on the public beach as a result of erosion.

In the opinion authored Friday by Justice Dale Wainwright, in which four other justices joined, the court reaffirmed its earlier opinion by stating “Texas does not recognize a ‘rolling’ easement.”

Beach-front property lines might gradually change, but “they do not ‘roll’ onto previously unencumbered private beach-front parcels or onto new portions of previously encumbered private beach-front parcels when avulsive events cause dramatic changes in the coastline,” the court ruled.

J. David Breemer, an attorney with the Pacific Legal Foundation, which represents Severance, said the ruling was a great victory for all Texas property owners.

The court’s ruling “ends the rolling easement as we know it down there,” Breemer said.

He said Severance was gratified “that the court has once again recognized that she has private property rights that the state can’t take away simply because the vegetation moves.”

“The court confirmed that when the state wants to take private land for public use, it must use lawful means — like paying compensation — not clever theories that magically transform private land into public land,” Breemer said.

Dissenting Views

Friday’s ruling is far from being the last word on the matter — the case now goes back to the U.S. Fifth Circuit Court of Appeals.

In a dissenting opinion, Justice David Medina said Texas beaches always have been open to the public.

The state’s constitution and The Open Beaches Act establish that a beach is open to the public, Medina wrote.

But the court’s decision “jeopardizes the public’s right to free and open beaches,” Medina said in the dissenting opinion.

Meanwhile, the state’s Supreme Court rulings have caused the General Land Office to cancel a $40 million beach renourishment project last year.

It also ends any future possibility of much-needed beach renourishment projects for Galveston Island’s West End and will make it impossible for the state to step in quickly to clear the beach of debris after the next hurricane demolishes the front row of beach houses, the General Land Office said in a statement.

After hurricanes Ike and Dolly, the General Land Office spent $43 million to remove debris from the state’s beaches and bays, the statement said.

“This ruling is bad news for Galveston,” Patterson said.

Centuries Of Precedent

Babe Schwartz, a former state senator from Galveston who was in the legislature when the Open Beaches Act was passed in 1959, said the state’s supreme court is wrong in its decision and is abolishing a well-established right.

“The Severance case opinions are contrary to everything I have ever learned or taught,” said Schwartz, who taught coastal law at the University of Houston and the University of Texas at Austin.

The ruling goes against precedent set by Roman Law, English Common Law, Spanish Civil Law, Texas Common Law, as well as more modern cases, he said.

In his opinion, Schwartz said, the court set out to side with Severance, and she is the only person who will benefit from the ruling.

Severance already sold the property to the Federal Emergency Management Agency’s Hazard Mitigation Grant program but, Schwartz said, the state should condemn the property.

The Supreme Court’s ruling also goes against the will of the people of Texas, said Ellis Pickett, spokesman for the Surfrider Foundation’s Upper Coast Chapter.

Pickett, who said he comes down to Galveston beaches every chance he gets, said he helped with a 2009 constitutional amendment that gave Texans the right to access public beaches. That amendment gained about 77 percent of the votes statewide and more than 80 percent of votes in Galveston County, he said.

But now, that right could be going away.

“The Supreme Court just sold our beach and gave it to the front row people,” Pickett said.

And, Picket said, Supreme Court Justices are elected.

“The voters need to hold them responsible,” he said.

Cato scholar re-thinks toll roads in light of restrictions on freedom of travel

Link to article here.

Could it be that the Libertarian think tank, Cato Institute, one of the foremost advocates of privatizing public infrastructure (aside from the Libertarian Reason Foundation) with very anti-taxpayer, anti-property rights deals called public private partnerships, be re-thinking its position in light of reality? I never thought I'd live to see the day...

The Mirage of Free-Market Roads

By Megan McArdle, The Atlantic.com

Timothy B. Lee -- Writer with Ars Technica and the Cato Institute

If you're driving through certain West African countries, you'll be stopped every few miles by armed men--often in police uniforms--who will demand payment in exchange for letting you pass.

I have a somewhat similar experience every time I drive from my home in Philadelphia to Washington, DC. As I'm driving up Interstate 95, I'll periodically be stopped by people in uniforms (thankfully not armed) who will demand money in exchange for letting me through.

Obviously, there are important differences between these cases. In Africa, the roadblocks are mostly illegal and the payments are generally described as "bribes." In the United States, the practice is known as "collecting tolls" and is government-sanctioned. While no single payment in Africa is prohibitively expensive, the accumulation of charges over a long trip sometimes exceeds the value of the cargo being transported, stifling the flow of goods across Africa. In contrast, tolls in the US are mostly low enough to avoid significantly hampering trade.

These two stories illustrate two different ways to think about tolls. One way is as a "user fee" to cover the cost of constructing the road. The other is as a tax on mobility. There's no clear line between the two, but as tolls go up, they begin to look less like a user fee and more like a tax.

The dual character of tolls has important implications for the current debate over road privatization. A variety of metropolitan areas have undertaken ambitious projects to allow private firms to build and/or operate either entire roads or individual lanes, charging motorists tolls to use the land. This trend has been particularly cheered on by libertarians, who see it as a step toward a more general free market in roads.
While I'm generally sympathetic to the idea of privately-managed roads, I've become convinced that the broader vision of "free-market roads" is a conceptual confusion. In the abstract, the idea of competing, privately-owned roads has a lot of appeal. But the more I think about it, the less sense it makes. Roads are deeply intertwined with governments. They always have been and as far as I can see they always will be. This means that they'll never be truly private in the sense that other private companies like restaurants or shoe factors can be.

Assembling the land needed for a long-distance road is prohibitively expensive without government assistance. Unsurprisingly, private roads almost never come into existence without extensive government assistance. And that means that the profitability of a "private" road depends crucially on how many competing roads the government allows to exist.

It's unsurprising, then, that real-world privatization schemes are often explicitly protectionist. A 2004 GAO survey found that four of the five privately-funded toll road projects started or completed in the preceding 15 years included non-compete clauses that restricted the creation of competing freeways nearby. It's much easier to turn a profit when would-be competitors are barred from entering the market.

Supporters of free-market roads point to the experience of the United States and Great Britain in the 18th and 19th centuries as the golden age of private roads, but those roads were only private in a limited sense. This history is detailed in Street Smart, an edited collection published by the libertarian Independent Institute. Daniel Klein and John Majewski write that in the United States, "turnpikes were encouraged by government, sometimes by granting of exisitng trails or public roadbeds to turnpikes, sometimes guarantees against new parallel routes, and typically the granting of eminent domain powers." They write that they "cannot say" whether these privileges were important to the success of these turnpikes.

The basic pattern seems to have been the same for British toll roads. Most toll roads replaced previously-existing public roads; the book doesn't say if the new roads were built with eminent domain or other government privileges. Indeed, after thumbing through the entire 500-page book, I didn't find a single example of a country, now or in the past, where most roads were built using ordinary market transactions. The vast majority of "private" roads, around the world and throughout history, came into existence thanks to direct government assistance.

When a formerly-public road is privatized, the public loses the freedom to travel along a particular route that it previously enjoyed. This is true even when new roads are assembled using eminent domain. The Fifth Amendment specifies that property taken by eminent domain must be put to a "public use." So the public has a greater stake in even most privately-constructed roads than they would for an ordinary private structure. That means that even when they're collected by a nominally private company, tolls are partly a tax on freedom of movement.

To be clear, this isn't to say libertarians should oppose road privatization. To the contrary, private road management can be an excellent way to bring private capital and technical expertise to the provision of a public service. But it is to say that private road operators should be viewed as providing a service to the government, rather than operating an ordinary private business. The public has a right to freedom of movement along public roads, and this right can't be extinguished by transferring physical control of the road to a private firm. And libertarians should demand that private operators of public roads follow the same basic principles--non-discrimination, tolls not greatly exceeding the cost of building an operating the roads--that we'd apply if the government were operating those roads itself.

This article available online at:

http://www.theatlantic.com/business/archive/2012/03/the-mirage-of-free-market-roads/255167/

Copyright © 2012 by The Atlantic Monthly Group. All Rights Reserved.
__________________________________________________________________________

How “Free-Market Roads” Can Restrict Freedom

Joe Carter
posted by Joe Carter on Thursday, March 29, 2012, Acton Institute

In a political climate dominated by debates about individual mandates and restrictions on religious freedoms, an issue like road privatization isn’t likely to be on the top of anyone’s list of major concerns. But the excellent post on “The Mirage of Free-Market Roads” by Timothy B. Lee, a writer with Ars Technica and the Cato Institute, is worth reading even if you don’t care about toll roads. Lee provides an intriguing example of why we need to think clearly about how we apply principles to policy:

While I’m generally sympathetic to the idea of privately-managed roads, I’ve become convinced that the broader vision of “free-market roads” is a conceptual confusion. In the abstract, the idea of competing, privately-owned roads has a lot of appeal. But the more I think about it, the less sense it makes. Roads are deeply intertwined with governments. They always have been and as far as I can see they always will be. This means that they’ll never be truly private in the sense that other private companies like restaurants or shoe factors can be.

Assembling the land needed for a long-distance road is prohibitively expensive without government assistance. Unsurprisingly, private roads almost never come into existence without extensive government assistance. And that means that the profitability of a “private” road depends crucially on how many competing roads the government allows to exist.

It’s unsurprising, then, that real-world privatization schemes are often explicitly protectionist. A 2004 GAO survey found that four of the five privately-funded toll road projects started or completed in the preceding 15 years included non-compete clauses that restricted the creation of competing freeways nearby. It’s much easier to turn a profit when would-be competitors are barred from entering the market.

To be clear, this isn’t to say libertarians should oppose road privatization. To the contrary, private road management can be an excellent way to bring private capital and technical expertise to the provision of a public service. But it is to say that private road operators should be viewed as providing a service to the government, rather than operating an ordinary private business. [emphasis added]

Lee touches on one of the disturbing ironies of modern politics: purportedly “free-market” approaches can sometimes lead to more government involvement and greater restrictions on freedom. Those of us on the right side of the political spectrum have always been wary of government. But it’s refreshing to see that many of us are also becoming more aware of the dangers of rent-seeking behavior by crony capitalists.

Toll road raises civil rights question


Link to article here.

Tolls raising civil rights questions

Updated: Wednesday, 28 Mar 2012, 9:09 PM EDT
Published : Wednesday, 28 Mar 2012, 8:55 PM EDT

By Andy Fox
WAVY.com
Portsmouth, Virginia

PORTSMOUTH, Va. (WAVY) - Budget negotiators spent the day hammering out a compromise that considers an amendment to delay the proposed tolls on the Downtown and Midtown Tunnels .

Monday, Delegate Chris Jones, (R) Suffolk, asked the McDonnell administration to cut back the $2.1 billion road project the tolls would fund. So, WAVY.com went to the neighborhood that would be heavily impacted by Jones' proposed cut.

Jones' plan would remove the Martin Luther King extension from the project, saving $194 million.

"It will be destroyed," resident Paula Boone said. Boone lives near the proposed expansion project which would connect the Midtown Tunnel to I-264 at Frederick Boulevard.

Boone's neighborhood, known as Arcadia Heights, was decimated 50 years ago when I-264 was built, dividing the neighborhood.

With the MLK extension, history would repeat itself.

"The original plan was taking five homes...this is my house, the one I grew up in," Boone said pointing to the homes that would be impacted by the interchange.

After neighbors cried foul, the Downtown-Midtown Tunnel toll plan was changed to take only two of the homes.

Boone was delighted when she heard Jones' request to the Governor's Office.

"I said, 'Great. That's going to be good.' At least I will have my home, and the neighbors will have their homes," Boone said.

Another local leader looking to find another answer for the toll dilemma is Portsmouth Senator Louise Lucas.

Lucas has contacted the ACLU and the NAACP about the impact the tolls would have on the community she serves.

"We may be in violation of the 1964 Civil Rights Act...they seem to think this deserves another look, and that is why they (local members of the ACLU and the NAACP) are going to the national level with it," Lucas explained.

She said the proposed tolls create a wall segregating Portsmouth, whose population is about 59 percent minority.

"Portsmouth is being segregated from Norfolk and Virginia Beach, which is where the jobs are, where medical care takes place, where education takes place at Norfolk State and ODU and places east," said Lucas.

There is also the question of whether acquiring an EZ Pass transponder, which requires credit cards or a checking account, could place an undue burden on Portsmouth's poor and underserved residents.

The Justice Department may also be asked to investigate the VDOT - Elizabeth River Crossings Public Private Partnership.

While how all this will play out is unknown, it is clear the end will not be the easy one Governor Bob McDonnell, Secretary of Transportation Sean Connaughton, VDOT and the Elizabeth River Crossings hoped for.

Hall rebuttal to pro-toll editorial on KSAT 12-TV

The toll road wars are taking it to the airwaves in San Antonio as KSAT 12-TV aired a pro-toll editorial inviting feedback. So Terri Hall, Founder/Director of Texans Uniting for Reform and Freedom, filmed a rebuttal. Then the tolling authority, Alamo Regional Mobility Authority, Chairman Bill Thornton, did yet another pro-toll reply. Get the feeling whose side is NOT sitting well with taxpayers if it warrants repeated pleas for higher taxes?

Check them out below...

Terri Hall's anti-toll rebuttal to KSAT 12-TV's pro-toll editorial here.

Bill Thornton's pro-toll rebuttal to Hall's rebuttal here

Wentworth wants ATD road money returned to roads

Wentworth asks AG to weigh in on streetcar spending

By Vianna Davila

Updated 12:35 a.m., Wednesday, March 28, 2012

State Sen. Jeff Wentworth has requested a formal opinion from Texas Attorney General Greg Abbott regarding the use of Advanced Transportation District funds for VIA Metropolitan Transit's downtown streetcar project.

In the filing, submitted Monday afternoon, Wentworth asks for consideration of three points:

• Whether VIA entered into a contract with the voters when its campaign literature, supporting the 2004 election to create the ATD quarter-cent sales tax, promised the money would never go to light rail. Streetcar, the letter states, is the same as light rail. VIA has said the two types of transit are different — that a streetcar system doesn't constitute light rail.

• Whether VIA and Bexar County may use ATD revenue to pay for a streetcar project when the transit agency said only half the money would go toward public transit. The amount of ATD-related revenue that VIA and the county are proposing to use for streetcars, the letter states, would mean more than half the overall ATD money would go to public transportation.


Read more: http://www.mysanantonio.com/news/local_news/article/Wentworth-asks-Abbott-to-weigh-in-on-spending-3438566.php#ixzz1qXWbkaji

House passes another short-term extension to federal highway bill

Link to article here.

Senate bows to House to extend transportation funding for 90 days

By Ashley Halsey III, Thursday, March 29, 11:24 AM

Angry Senators on Thursday bowed to the will of the House with a 90-day extension of transportation funding two days before a deadline that could have shutdown highway and transit projects across the nation.

“They run off on their vacation and leave the people twisting in the wind,” Sen. Barbara Boxer (D-Calif.) said in a condemnation from the Senate floor.

Despite several efforts to advance a bipartisan Senate bill championed by Boxer, House leaders opted for a three-month extension while they try to break a deadlock that has stalled their own proposal to fund transportation by expanding offshore oil drilling.

The extension leaves transportation financing in an increasingly precarious position.

After a morning of angry, finger-pointing debate, the House voted to extend the nation’s transportation funding at current levels for 90 days, counting on the Senate to follow suit before the money runs out at midnight Saturday.

Undaunted, Rep. Peter A. DeFazio (D-Ore.) rose to repeat the charge that Republicans had behaved like circus clowns in fumbling their own five-year transportation funding bill, which stalled in the face of bipartisan opposition and a hail of outside condemnation.

The vote came at the critical moment in the annual construction cycle, the eve of the launch season for highway projects.

Finally non-toll fix to 281 & 1604 approved by MPO


Funding proposal approved; no tolls — for now

By Vianna Davila

Updated 12:11 a.m., Tuesday, March 27, 2012

Toll road foes cheered on an ecstatic Bexar County Commissioner Tommy Adkisson on Monday, as he lauded a funding proposal to expand parts of U.S. 281 and Loop 1604 without tolls.

“If you are persistent, you can get it done,” said Terri Hall, founder of the toll road opposition group Texans Uniting for Reform and Freedom, and an activist known to have Adkisson's ear. He invited Hall to speak at a press conference on the issue following remarks by several elected officials, including County Commissioner Kevin Wolff, who came up with the proposal to fund 16 miles of expressways.

As approved by the San Antonio Bexar County Metropolitan Planning Organization later Monday, Loop 1604 from Bandera Road to U.S. 90, and U.S. 281 from Loop 1604 to Stone Oak Parkway would be expanded without tolls.


Read more: http://www.mysanantonio.com/news/local_news/article/Funding-proposal-approved-no-tolls-for-now-3436057.php#ixzz1qXVTxW3h

Executive Order to takeover ‘civil transportation’

Executive Order to takeover ‘civil transportation’
By Terri Hall
March 25, 2012
The Examiner.com

March 16, President Barack Obama signed an Executive Order entitled the National Defense Resources Preparedness Act, which effectively gives the President and members of his cabinet the power to confiscate ‘civil transportation,’ even in peacetime, under the guise of national security. It relates to the Defense Production Act of 1950 and builds on a Presidential Directive, PD 51, signed by George W. Bush. Obama takes it further in shocking detail.

In short, the Order authorizes a government takeover of virtually all resources, both natural resources and industrial resources, in the name of ‘national defense’ -- civil transportation, emerging technologies, all energy resources including oil, gas, solid fuels, renewable energy (even solar and wind!), pipelines, electricity, agriculture, food, farm equipment, fertilizer, and health resources (all drugs, medical devices, and facilities), and WATER.

Considering Communist and other anti-democratic regimes believe all resources belong to the State, the power this grants the President and his un-elected cabinet is staggeringly anti-American and anti-freedom. He can takeover all national resources, including labor and the private sector economy, and re-allocate them and ration them back to us however he sees fit.


Continue reading on Examiner.com Executive Order to takeover ‘civil transportation’ - San Antonio Transportation Policy | Examiner.com http://www.examiner.com/transportation-policy-in-san-antonio/executive-order-to-takeover-civil-transportation#ixzz1qAMi9kDR

Proposal to fix Hwy 281 North without tolls on horizon

Expansion of U.S. 281 and Loop 1604 looking brighter
Proposal without tolls aims to ease congestion
By Vianna Davila
Updated 04:58 a.m., Friday, March 23, 2012

A solution to worsening congestion on North U.S. 281 and on Northwest Loop 1604 might finally be in sight, but without tolls.

Sections of both would be widened into expressways, eliminating traffic lights and adding ramps and frontage roads, maybe as early as 2015, if a plan forged by Bexar County Commissioner Kevin Wolff comes together.

Wolff has suggested using San Antonio's share of newly found state transportation money, combined with local dollars, to build 3½ miles of expressway on U.S. 281 from Loop 1604 to Stone Oak Parkway and 12½ miles on 1604 between U.S. 90 and Bandera Road.

The corridors' existing “superstreets” would be removed. The superstreets, which cost a combined $13.1 million, expedite traffic flow through the use of synchronized lights and turnarounds. They were designed as temporary congestion solutions.

But Wolff's plan must first clear several hurdles. Local authorities don't know how much of the $2 billion in state money San Antonio will get and whether it will be restricted. They also have to work out how to pull together the local share. The cost to expand portions of the two highways is also unknown. Still, if the plan works out, no tolls would be required for one of the biggest highway expansion projects in San Antonio in more than two decades.

Read more: http://www.mysanantonio.com/news/local_news/article/Expansion-of-U-S-281-and-Loop-1604-looking-3428717.php#ixzz1qAHxFQ4s
 

Couple's fight with pipeline company pits Texans' love of oil vs love of land

Link to article here.

It appears TransCanada, the Keystone pipeline company out of Canada, is not the only pipeline company bullying Texans with eminent domain.

Couple's fight with pipeline company pits Texans' love of oil vs. love of land (Video)

Story by Dianna Wray

The Victoria Advocate

January 28, 2012 at 12:00 a.m., updated January 29, 2012 at 8:38 a.m.


After construction has ended for the day, a large hole that will be used to run a Kinder Morgan pipeline under the road lies on Jimmy and Kathy Gips' land in Cuero. Although no agreement has been signed by either party and the couple is in litigation with the company, work has begun on the couple's land, which was seized using the company's right of eminent domain.

CUERO - Blue eyes narrowed, Kathy Gips lifted her chin and stepped closer to the barbed wire fence lining her pasture land.

Eyeing the workmen on her land, she crossed her arms, a petite blond woman perched ramrod straight in the long shadow of her husband.

"It feels like we're being run over," she said, stopping to press her lips together.

Jimmy Gips looked down at his wife of 24 years and the laugh lines on his face sagged into lines of frustration.

"It is our land after all. Don't we matter?" he said, ruffling his sandy hair.

The Gipses are one of hundreds in the Crossroads with pipelines crisscrossing their property. For the Gipses and others, their worries aren't about fracking or possible pollutants. For them, the problems start with two legal words: eminent domain.
The Eagle Ford Shale play has unlocked thousands of barrels of oil from the dense brittle rock formation that lies in the depths below their feet. But the oil has to make it to market, and to do that efficiently companies need pipelines. They will buy the right to put in the steel lines, but if you don't cooperate, these private companies use their power of eminent domain - the legal authority to take privately owned land for the public good.

The Eagle Ford Shale play is booming, but the pipelines being laid to get the glut of oil to market have put those two Texas passions - landownership and the oil business - on a collision course.



THE FIGHT BEGINS

The sky glittered blue, and a northern wind tugged at the Gipses' clothes, pulled at their hair and sent the smell of the land, a mix of dried grass and the sweet stench of cow manure, into their nostrils.

In May, the Gipses got a call from a Kinder Morgan landman. The company wanted to run a pipeline through their property and wanted to start negotiations. But negotiations skidded to a halt when the company offer came in for $23.98 a foot, 15 percent less than what the Gipses got for a pipeline crossing the same stretch of land before.

Kathy Gips got a certified letter informing her she was being sued. Kinder Morgan was going to use eminent domain to condemn the land it wanted for the pipeline.

The deck was stacked against the couple. Kinder Morgan held all the cards, and the multimillion dollar company knew it. There was one thing they hadn't counted on - the Gipses aren't the kind of people used to being run over. They decided to fight.



THE ATTORNEY

Michael Sheppard is a tall man with a sharply cut profile and a ready smile that belies his years of legal experience. Sheppard, the district attorney covering DeWitt, Goliad and Refugio counties since 1997, cut his legal teeth on oil and gas law in the 1980s, and he knows his business. He was the obvious choice to represent Kathy and Jimmy Gips.


His firm, Crain and Sheppard, has handled more than 1,200 pipeline negotiations in the past three years, dozens of them with Kinder Morgan. Sheppard handled two other eminent domain cases with Kinder Morgan, but both were settled after being heard by special commissioners, one of the first steps in condemnation proceedings. Working as the DA, Sheppard has his hands full, so he limits the number of civil cases he'll take on, examining the quality of the case to weigh out if it's worth the trouble.

He took the Gipses' case.

Eminent domain is the big hammer pipeline companies use, but most try to keep things friendly.

Kinder Morgan is different, Sheppard contends.

"They use the power of eminent domain to strong-arm people. They've got so much money they want to spend and they aren't going to spend any more. They use the process and what the landowner has to go through - which is very expensive for the landowner - and they use it to their advantage," he said.



WHAT KINDER MORGAN SAYS

When a deal closes later this year, the Houston-based company, Kinder Morgan, will be the largest pipeline company in the United States and the fourth largest in North America. The company, formed by former Enron executives in 1997, will own more than 67,000 miles of pipeline across the United States.


The pipeline being laid across the Gipses' land will have the capacity to run more than 300,000 barrels of oil a day from Cuero to the Houston Ship Channel. It will cost $220 million and includes 61 miles of newly constructed pipeline and 109 miles of existing natural gas pipeline, crossing the land of 49 tracts in DeWitt County.

Only three lawsuits have gone all the way through the condemnation process, but the company started condemnation proceedings against the owners of 14 tracts the pipeline will cross in DeWitt County.

Kinder Morgan representatives filed most of these claims in mid-August.

In fact, a flurry of activity happened in the district clerk's office that month. A new law went into effect Sept. 1 changing how pipeline companies have to deal with landowners. The law requires the company to make good-faith offers to landowners before filing a lawsuit and gives landowners more time to respond to the pipeline company offers.

Larry Pierce, a spokesman for Kinder Morgan, said the company uses eminent domain rights only after all reasonable efforts have been made to make a deal with the landowner.

Despite having a reputation for rough tactics, Kinder Morgan hasn't filed as many condemnation proceedings as other companies in the area. Both ETC and Enterprise Pipeline have filed more than 40 eminent domain claims in DeWitt County to make way for their respective lines.

It is Kinder Morgan's approach to making deals with landowners that singles them out.

The same pipeline now being laid in the Gipses' property will be put into Ed Southern's land in the coming days in Cuero. The line was mapped to barrel straight through a grove of live oaks on the retired Navy man's property. Southern knew he was dealing with a tough company - "Do you know what eminent domain is?" were the first words out of the Kinder Morgan landman's mouth when they met to negotiate - and he couldn't afford a legal battle to keep the pipeline off his land. But he decided to fight to save some of his trees and Kinder Morgan rerouted the line to spare some trees after Southern's story appeared in the Victoria Advocate.

Pierce declined to comment on either Southern or the Gipses' condemnation proceedings.

When it comes down to it, and the legal paperwork is in their hands, most landowners choose to settle out of court. Choosing to fight is a difficult, time-consuming and expensive endeavor.

"For every Jimmy Gips there is who chooses to fight them, there are 50 landowners who don't," Sheppard said.



THE LAW OF THE LAND (AND WHICH WAY IT LEANS)

The law in Texas leans toward oil and gas interests, Sheppard said.

"The Supreme Court of Texas has not rendered an opinion contrary to the interests of oil companies in probably more than a decade, and that's a source of much discussion and debate within the legal community," Sheppard said, leaning forward in his leather desk chair to make the point. "I don't think we have a Supreme Court that looks out for the interests of landowners."


Decades ago when conservative Democrats held political power in Texas, the state supreme court routinely ruled in favor of landowners rights. That changed about 20 years ago when corporate energy companies stepped up and shifted the court's focus. The justices to the state's High Court are elected to their seats, and oil companies started pouring money into election coffers.

The companies know their power. During condemnation proceedings, companies will simply appeal the case all the way to the state Supreme Court in Austin, certain in the knowledge that the court will side with them, Sheppard said.

The O'Connor vs. Exxon case is a good recent example.

T. Michael O'Connor, the Victoria County sheriff, was part of one of the more recent battles duked out between oil companies and landowners. In the early 1990s, Exxon ended a lease on the O'Connor family ranch in Refugio County. But before the company left, someone trashed the wells, throwing enough junk down the holes that when another company tried to reopen the wells a few years later, they were unusable.

The O'Connor family embarked on an 18-year legal odyssey. Court after court ruled in their favor. Each time Exxon appealed the ruling. Finally, the case was heard by the state Supreme Court. After delaying their ruling for two years, the court sided with Exxon in 2009.

Kinder Morgan filed a lawsuit against Kathy Gips in July. According to eminent domain law, once condemnation proceedings have begun, there's no going back for the landowner, aside from striking a deal with the company outside of court. The land will be taken one way or another. The only question is how much the land is worth.

The district judges appointed three special commissioners, all local landowners, to decide the value of the Gipses' land: John Schlinger, of Yoakum, Ron Ledbetter, and Jim Mann, both of Cuero.

On a hot morning in September, they met at the district court annex, a small squat building across the street from the elegant red brick of the DeWitt County Courthouse. The commissioners sat on one side of the table while Kinder Morgan representatives, their lawyer, the Gipses and Sheppard pulled chairs up to the other side.

By the time the commissioners asked to be alone to discuss what they'd heard, the sun was high overhead.

The Gipses were hopeful. They felt local landowners would understand where they were coming from, what the land that has been in their family for generations was worth.

After an hour, the commissioners called everyone back to announce their decision. They agreed with the Gipses; the amount Kinder Morgan had offered to pay wasn't enough. They ordered Kinder Morgan to pay the Gipses $42.50 a foot for the easement.

The couple left the courthouse smiling. It seemed the fight was over.

Then Kinder Morgan appealed the decision to district court.

The Gipses sighed, met with Sheppard, and prepared to continue the fight. They didn't want to go to court, Kathy Gips said. They sent another offer to the company, trying to settle the issue, sign a contract and be done with it.

Kinder Morgan sent back a brief reply, declining the offer.

Then the company cut the barbed wire fence on the property and started planning for the pipeline.

"Land ownership is sacred in Texas. You don't mess with somebody else's property unless you want to take your life in your hands," Sheppard said, shaking his head.



POWER OF THE PUBLIC GOOD

In early December, the Gipses got a notice that Kinder Morgan had paid a bond allowing the company to continue pipeline construction on their land. At first they didn't believe it, that a company could get the power to come on their property while they were still in the middle of a legal dispute.

Jimmy Gips drove out that day, stepped from his truck and asked the men what they were doing on his land. Workmen were staking the easement to designate where the pipeline would be laid.

He tried to stay calm, telling them the issue was still in litigation, that nothing had been decided yet, and they needed to leave his property. The men were polite and packed up and left.

But they came back. One month later, workmen clipped the barbed-wire fence and started bulldozing the property.

Gips drove out again and found a Kinder Morgan landman on the site. Sharp words were exchanged, but the Kinder Morgan pipeline continued to be built.

Once, cutting a fence in Texas was a felony, but Kinder Morgan had eminent domain. They had the power to be on the land, and, suddenly, Jimmy realized the hard truth - there was nothing he nor his wife could do about it.



OTHER EXPERIENCES

The Gipses' experiences with most other companies have been good. Hawk Field Services, a subsidiary of Petrohawk, put in a pipeline on that same stretch of land last year. While the company was putting the line in, one of the Gipses' cattle escaped from the pasture. The workmen tried to get the heifer back into the pasture, but the frantic animal ran, terrified. They finally maneuvered her back into the fenced area, but she had run too hard and dropped dead a few hours later. The landman called Jimmy Gips to apologize. Their contract with the company didn't have any requirements about the cattle, but the man insisted on paying for the loss. Gips donated the $1,500 Petrohawk paid him to St. Michael's Catholic School; Petrohawk then matched his donation.

"They stepped up and did the right thing, even though, legally, they didn't have to," Jimmy Gips said.



WHY THEY FIGHT

The Gipses stood on the roadside, watching the men work. The mint green steel hulls of the line already had been delivered to the site and would be in the ground in a matter of days.

Because the Gipses are still in a legal dispute with Kinder Morgan, they don't have a contract written by Sheppard to protect them. Unlike the other lines on their place, this one will be buried 36 inches, instead of the 48 inches they prefer.

A red pickup motored by them slowly, heading to the pipeline site. The workers inside looked down, avoiding Jimmy Gips' eyes.

"Tree killers!" Jimmy Gips called merrily, with a wave of his hand. "I like to have fun with them. The problem is they just don't get my sense of humor."

Back at their office in Cuero, Kathy Gips hauled out a manila folder, thick with papers.

They have dealt with pipeline companies before - already two pipelines are buried on one side of the pasture and three on the other side across the road. They also have leased their mineral rights, and a rig on the horizon will pay them royalties when the oil starts flowing.

She keeps track of everything. Every phone call, every conversation and every bit of legal paperwork that is involved in these deals ends up in one of these folders.

Kathy Gips paused for a moment and stared down at the papers in her hands.

They never wanted to be noticed or known. It wasn't their goal to become crusaders. But now they are taking on the largest pipeline company in America.

The next step will be a trial in district court. The case already is on the docket, and Sheppard expects to be representing the Gipses sometime this year. If either side chooses to appeal, the case will go to the 13th Court of Appeals in Corpus Christi. If there is an appeal of that court's ruling, it'll be in the hands of the state Supreme Court, if the justices choose to hear it.

"We won't make any money in this deal. We're probably going to come out losing money on this thing, but it's what we have to do," Jimmy Gips said.

Kathy Gips nodded.

"If we back down from this, what are our kids going to say? If you're going to stand for something, you've got to stand to the end, and that's what we're doing," she said. "This could drag on for years. We could be 100 years old and still be dealing with Kinder Morgan, but it's the right thing to do."

History of private investment in roads not the same thing as today's hybrid

Link to article here.

To compare a truly private road done in the 1790s with today's public private partnership hybrids that exploit the governmental power of eminent domain, that heist massive sums of public money to subsidize private profits, that put the toll tax rate in the hands of private corporations, that include non-compete provisions that prohibit or penalize the expansion of free routes surrounding the privatized toll roads, and that guarantee profits at taxpayers' expense, just isn't a valid argument in favor of road privatization. The two are NOT the same, the later has already required taxpayer bailouts (South Bay Expressway in San Diego).

_____________________________________________________________________


Friday, 02 March 2012 00:01

Proposed Red Line funding model not a new concept

Written by  Andrew Warfield
Lake Norman Citizen.com

First public infrastructure financed by private investors in the United States began in 1792. The Philadelphia-Lancaster Turnpike lasted more than 100 years.

In a country suffering economic hardship and without the funds to invest in infrastructure, the government turns to the private sector to help pay for road and railroad projects.

Sound familiar? Sure, but the first recorded public-private partnership (or P3, as local commuter rail proponents refer to it) began in 1792, when the nation's first turnpike, the Philadelphia and Lancaster Turnpike, was chartered in Pennsylvania. A new nation had no money to build infrastructure, so the first long-distance broken-stone-and-gravel surface was built, opening the territory northwest of the Ohio River.

The private owner of the road was repaid from tolls. The road literally was blocked by wooden gates, or "pikes," that would be "turned" to open the road after the tolls were paid. Thus the term, "turnpike."

The tollgates were located about every seven miles of the 62-mile road. The turnpike remained in use until the early 1900s.

"Early in the United States, the country didn't have money and relied on the private sector to build infrastructure, including roads and railroads," said Patrick DeCorla-Souza of the Federal Highway Administration's Office of Program Delivery, during an online presentation about P3 projects Feb. 16. The presentation was viewed in the Rotunda at Huntersville Town Center, as well as in other locations, by town planners, elected officials and others studying the Red Line Regional Rail Project proposal.

As discussions about the proposal have continued through the first 90 days of 2012, P3 has emerged as the likely scenario through which the project, if approved by all stakeholders along the Charlotte-to-Mooresville corridor, could be built. A combination of state funding and local transit tax money, along with private investment — repaid by special assessment district fees and tax-increment financing — would fund the estimated $452 million to upfit the track, purchase trains, build passenger stations and complete related road improvements along the 25-mile commuter and freight rail project.

It's a term that will be used more frequently here as well. Studies are currently under way to employ the P3 model for the widening of I-77, and a form of P3 is being used for the completion of I-485. In that project, the contractors are actually financing the project for the state, with the promise of repayment plus interest when the funds were originally scheduled to be available. This allowed the project to move up years on the calendar rather than waiting for the state's funding schedule.

'Infinitely financeable'

Among other meetings — and set against the backdrop of a recent letter from Norfolk Southern Railroad outlining its concerns with the project, which would utilize its rail bed — those discussions continued on Thursday, Feb. 23, with a P3 workshop at Huntersville Town Hall. At that meeting, Mark Briggs of Parsons Brinckerhoff, a consultant to the North Carolina Department of Transportation, produced a list of potential private entities from which he expected proposals to be generated if the project were to move forward. He also introduced executives from international investment firm Guggenheim Securities to explain why the industrial revenue bonds to finance the half of the capital expenses of the project not potentially covered by the state and Charlotte Area Transit System will be an easy sell.

"These companies specialize in public-private partnerships and they are worth many times more than what they would invest in this project," Briggs said by telephone from his California office on the Monday before that workshop. A complete list of these firms follows at the end of this story.

Dan Gangwish of Guggenheim told the group last Thursday that he has overseen some $5 billion worth of P3 investments during his career, and he has "seen a lot."

"It's very clear this financing works well with the state backstop," said Gangwish, adding that private investors — which typically invest in rail infrastructure in chunks of at least $10 million to $20 million — can expect a return of more than four percent. "This is infinitely financeable."

The investment and project delivery firms represent the modern-day cream of a centuries-old P3 crop, a model that has gained favor in the past two decades as some regions of the country began to shift away from only publicly financed infrastructure development.

With not enough money from local transit tax dollars to fund the Blue Line Extension light rail project from downtown Charlotte to University City and the Red Line Commuter Rail — and with the Red Line not qualifying for any federal dollars — NCDOT officials, interested in expanding the state's freight movement capacity, re-tooled and repackaged the Red Line, complete with the new, and yet centuries-old, methodology for paying for it.

Private equity, public rail

Since formally unveiling the proposal in December and scheduling a 180-day time frame for meeting, vetting, refining and completing what must be a unanimously approved business and financing plan among a number of governmental jurisdictions and agencies, there have been a number of issues raised.

Among the most controversial of those issues is whether smaller commercial property owners within the special assessment districts will see a return worthy of the increased taxes they would pay, and whether that district should be expanded to include more revenue-generating properties farther from the tracks. The private investment would be repaid by a combination of special assessments upwards of 75 cents per $100 valuation for commercial properties within the unified benefits district along the corridor, and on tax increment financing on 75 percent of the improved value of developed or redeveloped property.

Meanwhile, the NCDOT continues its vetting process and necessary talks must continue with the owner of the tracks on which the Red Line would run, Norfolk Southern.

Central to all that talk is just what form the construction, operations and maintenance might take. In recent weeks, talk of design/build/finance/operate/maintain (DFBOM) has been prevalent, whereby a single entity or a team would take on the whole project and be responsible for coming in on time and within budget.

"Exactly what form of delivery the project takes is still under development, but I would imagine it would be some sort of hybrid," said Briggs by telephone. "Typically you get a team that represents all four (disciplines) of those who come in with a unified plan. So far, in places we have taken these types of projects, we have had at least three teams of bidders who have come in and looked at these projects."

Those "teams" are typically made up of concessionnaires/contractors, equity fund investment firms, operators and vehicle (train car) manufacturers. They form consortiums to assemble their bid and, if awarded, run the project from start through delivery of the product.

"We want to be in a position if we can structure (the P3 contract) in such a way that they have to build it, buy the rolling stock and get (the rail corridor) tested and certified before they get paid a penny," said Briggs. "How this agreement gets structured is partially what makes best sense in terms of financing, because if the state provides the backstop, we will get very good interest rates."

The P3 approach, DeCorla-Souza said during his prior presentation, is usually faster and more efficient than the traditional public sector process because, while government-run projects must accept the lowest qualifying bid for a project, a P3 approach can secure the "best suited" vendor for its various aspects. An additional benefit, he said, is that all financial risk is borne by the private sector in a P3 project.

But that doesn't mean, he said, that the public sector can wash its hands of the Red Line. "The public sector must make sure the project is performing to standards, but the P3 model reduces the amount of oversight the public sector has to do and has to be involved with," said DeCorla-Souza.

The oft-repeated question regarding cost overruns and who bears that responsibility was asked again last Thursday, this time by Davidson Commissioner Laurie Venzon. "This is a legitimate concern," replied Briggs, adding that liability for extra costs are borne by the P3 team. "It is (their) risk to build it, buy the rolling stock, etc., and only when that happens do you get an availability payment. The main reason for a P3 approach is you have to put that risk on the private sector side instead of the public side because there are too many examples of cost overruns (in government-run infrastructure projects)."

So why would private investors become involved in building government-owned infrastructure? They wouldn't, Briggs and others have stated, unless they knew they could deliver the project on budget and earn a profit.

"Private concessionnaires are looking for a return on investment that is long-term, stable and predictable, and has a moderate risk," said DeCorla-Souza.

But, he added, P3s are not easy. "A lot of groundwork is required before you can secure a P3 partnership," DeCorla-Souza said.

Red Line proponents can certainly attest to that.

P3 players

Global companies that typically become involved in P3 public infrastructure projects.

Concessionnaires/Contractors

• ACS/Hochtief/Flatiron

• Acciona

• Balfour Beatty

• Bechtel

• Bouygues

• Fluor

• GlovalVia

• Kiewit

• SNC Lavalin

• Skanska

• Vinci

Equity Funds

• InfraRed

• Laing

• Macquarie

• Meridiam

• Uberior (Lloyds Bank)

Operators

• ACI

• Herzog

• National Express

• Serco

• Stagecoach

• Veolia

Vehicle Manufacturers

• Alstom

• Ansaldo/Breda

• Bombardier

• CAF

• Kawasaki

• Siemens

• Rotem/Hyundai

— Source: Parsons Brinckerhoff

Ranchers rise-up against Keystone pipeline


Link to article here.

Property rights is still the big 10,000 pound gorilla when it comes to the Keystone pipeline. Trampling on landowners using eminent domain as a club to force property owners to settle to terms unfavorable to them and their livelihoods is un-American. BTW, county records in Texas show that TransCanada has nearly 90 eminent domain proceedings RIGHT NOW in Texas, not 19 as this article states. That's like averaging one eminent domain condemnation for every 3-4 miles of proposed pipeline. This isn't a few "hold outs," it's eminent domain abuse by a foreign company for its own private profits, not a genuine public use.

Ranchers Tell Keystone: Not Under My Backyard

By David Mildenberg and Jim Efstathiou Jr. on March 08, 2012

Oil has put bread on Eleanor Fairchild’s table in Wood County, Tex., for more than 50 years. Her late husband was a geologist who worked on exploration for different energy companies, and was part of a team that discovered oil in Yemen in the 1980s. That doesn’t mean she welcomed a TransCanada (TRP) worker who appeared on her doorstep in March 2009. The company wanted to run nearly a mile of its 1,700-mile Keystone XL pipeline across Fairchild’s 350-acre farm 90 miles east of Dallas, the representative explained, and was willing to pay her $43,000 for an easement on five acres. Fairchild pondered the offer for several weeks. She says the company upped it to $60,000, but “they were really pushy, and that doesn’t go over well with me,” Fairchild says. “It’s my land.”

TransCanada announced it will soon reapply for the federal permit it needs to build a northern portion of Keystone, from Hardisty, Alberta, to Steele City, Neb.; the Obama administration denied its first application in January. The southern leg running from Cushing, Okla., to the Texas coast doesn’t require Washington to sign off because it doesn’t cross an international border; the company plans to start work on that leg in June. Another force delaying TransCanada from breaking ground: The company needs rights of way on about 2,150 properties in five states.

Along the route a handful of landowners refuse to grant those easements. They’re fighting the company’s efforts to seize land using state eminent-domain laws, which allow a business to seek court approval to take over private property as long as it’s for public use and the owner is compensated. “Most of the landowners already have pipelines on their land, so they aren’t against pipelines,” says Roberta Colkin, a city council member in Gallatin, Tex., who’s organized a group that’s fighting the project. “But they’re upset about being bullied by TransCanada.”
Terry Cunha, a spokesman for the company, says: “We’re listening to the needs of the landowners, trying to find out what we can achieve together, and also providing them with the full market value of their property in obtaining the easements.” He points out that TransCanada has successfully negotiated all but 19 of the 1,200 easements it sought in Oklahoma and Texas.

'I've never considered myself a bunny hugger'—John Harter'I've never considered myself a bunny hugger'—John Harter

TransCanada staff began visiting landowners four years ago, trying to strike deals and avoid court battles. That didn’t work with John Harter in Winner, S.D. The rancher says TransCanada offered him a one-time payment of $13,300 to snake the line across a half-mile of his 280-acre cattle pasture. Harter demanded an additional $70,000 annually to compensate for the fact that he wouldn’t be able to graze his herd on the land for several years. The company refused his request and instead filed a lawsuit to seize the land through eminent domain, arguing the access to Harter’s land is worth just over $6,000. “They’re doing it with no regard to human life, let alone the earth,” complains Harter, whose case will be heard by a state court in June. “I’ve never considered myself a bunny hugger, but I guess if that’s what I’ve got to be called now, I’m OK with it.” Says Cunha: “Eminent domain is allowing us to obtain the easement and compensate the landowner.”

The Keystone pipeline would be buried three feet underground, and environmental activists worry that leaks would taint water sources along the route. David Daniel, a carpenter who lives near Winnsboro, Tex., wishes he’d asked more questions about that possibility before accepting almost $14,000 from TransCanada in 2010 for an easement across 20 acres of his land. Daniel says he felt pressured into the deal: “TransCanada said this is our final offer; otherwise we’ll take you to court.”

Montana landowners have banded together to try negotiating better terms for the 217 easements TransCanada is seeking. The state, which requires pipeline builders to obtain a permit prior to construction, also has conditions it wants TransCanada to meet. “The idea is that we can allow certain development-type activities but still try to reduce the environmental effects,” says Greg Hallsten, an official at the Montana Department of Environmental Quality. The agency is “getting close” to making a decision on the permit, Hallsten says.

In Texas, Fairchild says her lawyers have advised her to wait for TransCanada to break ground before deciding whether to fight the company if it tries to come onto her land. She knows a resolution “could take years,” she says. “Some of my neighbors who have signed with TransCanada are now against the pipeline too, but some of them work in the oil business, and they can’t fight it like I can.”

The bottom line: TransCanada must still persuade 19 landowners to let it build the southern leg of its Keystone pipeline in Oklahoma and Texas.

Senate punts on long-term fix to federal highway program

Senate punts on long-term fix to federal highway program
By Terri Hall
March 19, 2012

With the next continuing resolution for the federal highway program coming to an end March 31, lawmakers in the nation’s Capitol have been scrambling to address systemic shortfalls in the Federal Highway Trust Fund before they run out of time. Though making some structural changes to consolidate programs, the U.S. Senate chose to kick the can down the road once more, passing a short-term extension bill, S 1813 also referred to as MAP-21, last week.

Meanwhile John Mica (R-FL), Chair of the House Committee on Transportation and Infrastructure has been pushing for a 5 year bill and a more long-term solution, but has struggled to gain the votes necessary for passage. They have until March 31 to either pass the House bill or take up the Senate bill and, in either scenario, they’ll need to work out the differences in conference at lightning speed.

Both versions would increase -- by nearly ten times -- the borrowing of money we don’t have from the Federal Reserve to loan to states through the TIFIA program. TIFIA loans gets doled out almost exclusively to private corporations in contracts called public private partnerships (or P3s) in order to federally subsidize an unaccountable toll road boom across the country. The first TIFIA loan went to a private corporation in a P3, and the project went bankrupt less than three years after the ill-conceived toll road opened, forcing the taxpayers to write-down nearly $80 million.

Most notable in the Senate version are two provisions authored by Senator Jeff Bingaman (D - NM). One limits the tax breaks for the private corporations in these controversial P3s, and the other reduces the amount of federal dollars a state receives if the state chooses to sell-off the public’s highways to private toll operators using P3s.  Bingaman’s goal is to remove incentives for states to turn sovereign public highways into unaccountable cash cows in the hands of private corporations.


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