"The citizens of Texas have a right to know what they're being obligated to.”
September 06, 2005
By Matt Joyce
The Texas Department of Transportation's fight to guard the financial details of the Trans-Texas Corridor has sparked a rallying cry for corridor opponents and resulted in a court battle over open records.
Corridor watchdogs argue that the state should make public its financial and development master plans with Cintra Zachry LP, the group chosen by the state to help plan and build the first section of a proposed transportation network that would criss-cross the state with roads, railways and utility infrastructure.
“This is the largest land grab in Texas history, and to not let the people see the financial details and the developmental details of this is unconscionable,” said Carole Keeton Strayhorn, state comptroller and a Republican primary candidate in next year's gubernatorial election.
State transportation officials counter that release of the documents would have a “chilling effect” on the state's ability to attract private sector ideas and capital as it seeks to build the massive project aimed at meeting the state's current and future trade and transportation needs.
Department officials say it would be unfair to release the company's proprietary information, such as how it would finance the tollway's construction or charge its users.
“The public obviously has a need to know,” said Phillip Russell, director of the department's turnpike authority division. “But internally we have to have some flexibility in discussing the concepts and proposals with those developers. The private sector is very competitive, and we may put them in a competitive disadvantage on the next project if we've already opened up all of their business plan. That's the balancing act we have to work with.”
The dispute came to a head this summer when Texas Attorney General Greg Abbott ruled in response to open records requests that the state's open record laws outweighed confidentiality claims by the transportation department and Cintra Zachry.
In response, the state and Cintra Zachry sued the Attorney General's Office in 200th Civil District Court in Austin to keep the documents closed. No hearings have been scheduled for the case, according to a court administrator.
In March, the transportation department signed a “comprehensive development agreement” with Cintra Zachry laying out the basics of an agreement for the consortium to build the Trans-Texas Corridor's first section, known as TTC-35. The tollway would generally follow Interstate 35 from the Mexican border to Oklahoma, with a likely path through McLennan County.
While the agreement was released publicly, it does not contain the nuts and bolts of the company's plans to spend $6 billion to build and operate the Dallas to San Antonio portion of the corridor in exchange for a lease to operate the tollway for 50 years.
Corridor critics argue that the details should be visible to taxpayers – the people who would be held liable if the project somehow went wrong, such as if Cintra Zachry abandoned the project before completion.
Prominent corridor critic David Stall, co-founder of the group Corridor Watch, based in Fayetteville, said the size and scope of the agreement raises the stakes for the state.
“I think (the transportation department) will do their best to make sure that all the financial protections for the state of Texas that they can anticipate are included in the agreement,” Stall said. “That said, they have never negotiated any agreement of this scale or this duration ever.”
Stall downplayed a frequently cited concern among critics that the state treasury would be exposed if the project somehow failed. The 2003 law authorizing the corridor's creation removed such liability from the state.
But Stall said the state could find itself “holding the bag if the project were to fail or collapse.”
Department spokeswoman Gaby Garcia said the state would not be involved if Cintra Zachry chooses to issue bonds to fund the project.
“If Cintra or any other private entity were to issue bonds, it would be in their name,” she said. “The state would not be in any way, shape or form financially liable for those obligations.”
Strayhorn, a vocal critic of what she calls the “trans-Texas catastrophe,” said she is not privy to negotiations of the financial and development plans in her capacity as state comptroller.
She declined to speculate on specific financial safeguards that the transportation department should address when negotiating the contract.
“Any time there is any contract (in the comptroller's office), I have a battery of folks that look through that contract, and I share all this publicly,” she said. “I'm not an attorney, but I have good contract attorneys, and we're looking out for the public interest.”
Amadeo Saenz, the transportation department's assistant executive director for engineering operations, said the state will incorporate such safety measures. He said the transportation department will conduct its own studies before signing any deals. For example, the state will conduct its own traffic and toll revenue predictions, and will have its own financial advisers and bond lawyers.
“We'll compare it to what Cintra tells us, and then decide at that point if we want to go with Cintra or do we want to open it up to the market and go with someone else,” he said.
Transportation officials also point out that the comprehensive development agreement does not authorize any construction of the Trans-Texas Corridor. Rather, it lays out the framework for how the state will approach various segments of the project. The state and private developers will then negotiate the development and financing of each individual segment. And while Cintra Zachry has the first shot at developing the corridor's initial segments, the state retains the option to work with other private developers.
Mike Behrens, executive director of the transportation department, said the public will be able to see the contracts to build individual segments of the corridor once they are finalized between the department and private developers, be it Cintra Zachry or others.
He sought to allay fears of the financial risk by pointing out that the exorbitant cost of building highways means the state and private developers like Cintra Zachry will study their options extensively and ensure a project's financial viability before committing to build it.
"It's got to be built where a need exists,” he said. “We're not about just building roads to nowhere, just to go out there and build a road.”
Still, Stall said the influential financial and developmental plans should be opened to the public.
“There's no outside evaluation (of the contracts),” he said. “It creates a tremendous obligation on the citizens of Texas, and as the ones being obligated, I believe they have a right to know what they're being obligated to.”