Tuesday, July 20, 2004

TxDOT will toll for thee

Ask not for whom TxDOT will toll, it will toll for thee

July 18, 2004

Carlos Guerra
San Antonio Express-News
Copyright 2004

Last week, citizens in Austin and San Antonio told their local and state officials what they think about toll roads. And from all reports, most of the 500-plus who went to each meeting were opposed - in degrees varying from thoughtful to apoplectic - to forcing taxpayers to pay to drive on their state's highways.

Not that it mattered. Toll road projects will soon kick off in both areas, and if state leaders have their way, there will be many more great, 15 cents-per-mile highways.

Gone are the days when Texans bragged about having the nation's finest highway system - free, efficient and well maintained. In every urban area, highways are in gridlock and traffic worsens daily.

Texas spends about $3 billion a year on roads, but state officials say three times that amount is needed. But after a decade during which successive Legislatures balanced budgets by "holding the line," "cutting the fat" and refusing to acknowledge that Texas ' population is growing rapidly and prices are rising, Texas now ranks 47th in what it spends, per capita, on highways.

And considering Texas ' expansiveness, this ranking understates the situation. If you drive from Orangeto Los Angeles, for example, 52 percent of your trip will be on Texas highways. And if you drive from Brownsville to Bismarck, N.D., you will be in Texas 53 percent of the way.

But the notion of raising taxes - any taxes - is unthinkable to Texas ' current regime.

Not that they are inalterably opposed to increasing what they take from our pockets, mind you. Between 1992 and 2002, while they raised no taxes - and even cut some - Texas ' indebtedness grew from $8 billion (or $461 per capita) to $24 billion ($1,104 per capita).

And virtually every fee charged to regular Joes and Juanitas was increased. Now, they are working to create new fees, such as tolls, and they're even thinking about charging them on existing roads.

The San Antonio and Austin projects will almost double Texas ' existing toll roads, and together with other planned toll roads, they will be a prelude to Gov. Rick Perry's Trans Texas Corridor , a 4,000-mile network of 1,000-foot-wide corridors that will have 10-lane highways, railroad tracks and utility easements for gas, water, electricity and fiber-optic lines.

This massive 50-year undertaking is now estimated to cost $180 billion. Some money will come from state appropriations. But most will come from state revenue bonds and federal loans that will be repaid with easement and rail fees, but primarily from tolls charged on passenger vehicles.

Though the San Antonio and Austin projects will allow drivers who won't - or can't - pay to travel toll-free on access roads with traffic lights, there is no such provision in Perry's proposal.

One key sales pitch for both the planned toll roads and the ambitious Perry plan is that 80 percent of NAFTA truck traffic now travels over Texas highways, and it will double in the next decade.

That being the case - and considering that, of necessity, most NAFTA trucks will travel significant distances on Texas highways - you would think that some wizard in the Austin politburo would propose raising the tax on diesel.

But this simple idea, I suspect, would be dismissed out of hand, because it would be a tax increase.

And besides, there are some Texans who drive pricey Mercedes-Benzes that run on diesel. It wouldn't be fair to target them!

To contact Carlos Guerra, call (210) 250-3545 or e-mail cguerra@express-news.net. His columns appear Sundays, Tuesdays and Thursdays.

San Antonio Express-News: www.mysanantonio.com


Monday, July 19, 2004

Meet the new 'Regional Mobility Authorities'

Texas Pushing Toll Road Projects, With Help From New Authorities


by Elizabeth Albanese
The Bond Buyer
Copyright 2004

DALLAS - A $2.2 billion toll road construction plan for the area near Austin in central Texas cleared a major hurdle last week with approval by a state planning organization, and similar proposals for other areas of the state continue to make progress.

Officials say Texas has fallen behind in keeping up with demand for highways. Part of the problem has been funding - lawmakers have been unwilling to hike the state's 20- cents-per-gallon gasoline tax, which historically has funded highway projects. In addition, population booms in major urban centers around Austin, San Antonio, Dallas, Fort Worth, and Houston have outpaced funding available for those areas.

Unable to rely solely on state funding, counties in those areas are working on plans to fund highways themselves, including formation of regional mobility authorities armed with legislative authority to plan, fund, and build mass transit systems, highways, and toll roads.

Although the state has had toll road authorities in place in some areas -the North Texas Tollway Authority near Dallas, the Fort Bend Toll Road Authority near Houston, and the Harris County Toll Road Authority in Houston - other areas had no authority to create such entities until 2001.

The Central Texas Regional Mobility Authority was the first regional mobility authority created and is one of several that have been set up since legislation permitting the authorities was passed.

In 2001, the state Legislature approved the creation of regional mobility authorities for the purpose of building roads and other transportation projects," said Brian Cassidy, a partner with Locke Liddell & Sapp. The firm serves as general counsel to the CTRMA, which will oversee the $2.2 billion plan approved last week. "However, they inadvertently left out two critical pieces - the ability to issue bonds and the ability to condemn land."

The flaws in the enabling legislation were resolved during the regular 2003 legislative session, when HB 3588 gave those powers to the regional mobility authorities. But unlike the stand-alone toll road authorities, regional mobility authorities must get approval from state transportation officials before embarking on a project.

With the passage of that bill, the CTRMA now had the tools to do the $2.2 billion program," Cassidy said, adding that the new legislation is a standalone chapter in the state's transportation code. "And we work very closely with [the Texas Department of Transportation] - in effect, we are partnering with TexDOT to develop these projects."

The timing of discussions of the plan is geared to meet 2004 deadlines to qualify for debt service assistance through the Texas Mobility Fund, which was created by the Legislature in 2001 to back highway bond issues.

"Everybody wants a piece of the Mobility Fund pie," Cassidy said. "If we didn't get our plan in on time, we'd miss a chance at some of that money."

He said that the central Texas authority would be eligible for about $161 million of assistance on its $2.2 billion financing plan.

The $2.2 billion proposal approved last week by the Capital Area Metropolitan Planning Organization could help create as many as 11 toll roads or toll road segments in Travis and Williamson counties in the next decade.

CAMPO, a unit of the TexDOT, is a regional planning group responsible for working with transportation providers in Williamson, Travis, and Hays counties to ensure that the Austin metropolitan area's planning process is "cooperative, continuing, and comprehensive," according to its mission statement.

The organization's approval was necessary before the CTRMA, which will oversee financing, construction, and operation of the mammoth slate of projects, can move forward to determine the final details of the $2.2 billion plan. The plan will likely include an as-yet-undetermined amount of bonds in addition to other funding.

"There are nine projects that are encompassed within the plan that were slated as necessary improvements by CAMPO," Cassidy said. "However, CAMPO has no funding mechanism. That's where TexDOT and the CTRMA come in. We can use tolling to build these projects and to add new capacity to existing highways with the addition of toll lanes."

The Harris County Toll Road Authority last year embarked on a plan to expand the capacity of the Katy Freeway - a stretch of Interstate 10 from Houston north to the city of Katy - by adding toll lanes alongside non-toll lanes. Without funding provided by tolls, the project could have been delayed as long as 10 years, officials have said. However, by partnering with TexDOT, Harris County officials were able to jump-start construction.

That project has served as a model for other Texas projects in the works. The $1 billion price tag is covered by a combination of toll revenues, state funding, and federal money.

The central Texas project would not involve expansion of existing highways into toll roads.
"Unlike the Katy project, the highways that would be expanded under the CTRMA plan are not really highways - right now, people are traveling on what are basically frontage roads, with street lights," Cassidy said. "This plan doesn't add any more street lights on those sections of road, but it doesn't take out any, either."

Authority officials hope that, given the choice, drivers would choose to pay tolls during peak travel hours to avoid heavy traffic. Tolls would be in the 50-cent to 75- cent range.

Although revenue bonds backed by toll revenues will finance part of the project's cost, federal and state money is also expected to finance part of the project.

"At least two and possibly three of the projects included in this plan will intersect with projects included in the Central Texas Turnpike Project," Cassidy said, referring to a project begun in 2002 by the Texas Turnpike Authority, a division of TexDOT.

The financing of that project - which was the 2002 Southwest regional winner in The Bond Buyer's annual Deal of the Year competition - included multi-tiered toll revenue bonds, notes, cash funding, and $900 million of debt backed by a loan authorized by the federal Transportation Infrastructure Finance and Innovation Act of 1998, or TIFIA.

That deal marked the first issuance of state toll debt since the 1950s.

The CTRMA will help finance a portion of a project separate from the toll road project approved last week when it sells its first-ever bond issue this fall. It also will be the first issue ever sold by a regional mobility authority.

"The CTRMA's plan also includes a project along U.S. 183A that was deleted from the CTTP when they went to market," Cassidy said.

The central Texas authority is slated to go to market this fall with approximately $200 million of toll revenue bonds to finance the project, a 12-mile stretch of road built parallel to U.S. 183 east of the fast-growing Texas towns of Cedar Park and Leander.

The authority has already put in a request for a TIFIA loan worth $66 million to help finance the project.

"We have submitted that application, and, in conjunction with that request, we have also talked to the rating agencies about that project," Cassidy said, adding that rating analyses were a mandatory precursor of a TIFIA loan application.

The CTRMA has also hired a bond team to oversee the issue to finance the U.S. 183A project. First Southwest Co. and Ladd Patillo & Associates are the authority's co- financial advisers, and its bond counsel is Vinson & Elkins. UBS Financial Services Inc. will be the lead manager for the deal.

Cassidy said that the CTRMA was the first regional mobility authority created in Texas, but by no means the only one working on large-scale projects.

"This is a structure you will see in other areas of the state," he said.

© 2004 The Bond Buyer: www.bondbuyer.com