Monday, October 31, 2005

TxDOT pushes for RMA and 'pass through ' financing in Del Rio

Toll roads unlikely in area

October 31, 2005

By Bill Sontag
Del Rio News-Herald
Copyright 2005

Two professional engineers, both with keen interests in Del Rio’s proposed loop road around the eastern half of the city, strove Wednesday to dispel notions of toll collections here.

At the monthly meeting of the Val Verde County Transportation Task Force, Gerry Pate, president, Pate Engineers, Inc., Houston, told 20 representatives of the business community, government and chamber of commerce that charging tolls for highway use will do little to pay for costs of roadway development.

“The project you have here is not going to be even 10 percent toll-viable,” said Pate, adding that an answer to highway construction costs and reduced Texas Department of Transportation funding might be “pass-through financing.”

Toll viability, Pate said, might require up to 25,000 vehicles per day using a proposed roadway.

“You need to be in an area with significant potential for increased traffic, and lot of traffic to begin with,” he cautioned.

Robert B. “Robbie” Stone, TxDOT director of turnpike design, Austin, used a Powerpoint© program to lead task force members through a range of options for both organization and funding sources in highway development.

All were based on Pate’s remark that “traditional sources,” i.e. legislative appropriations and “gas tax” revenues that funded Texas highways in recent decades, are nowhere sufficient to the demands of burgeoning populations and increased traffic.

“The state simply cannot fund all the projects the transportation users need to have funded,” said Pate.

Stone discussed statewide mobility bonds, the Texas Mobility Fund, comprehensive development agreements, pass-through financing, and tolling. He explained that his department conducts economic and traffic-based feasibility studies for all of these to help communities select appropriate options.

Stone shared Pate’s feeling that tolling is probably not a feasible procedure in Del Rio’s near future.

But, he stressed, nearly all proposals must be “deemed a toll-viable project” to receive favorable consideration from the Texas Highway Commission, the arbiter and judge of creative financing agreements explained by Stone.

TxDOT officials have repeatedly urged the task force membership to consider creation of a Regional Mobility Authority to coordinate funding, planning, design, and construction of the much-discussed “reliever route.”

Variously called a bypass, or loop connecting U.S. Highway 277 South, U.S. Highway 90 East, and U.S. Highway 90 West, the estimated costs have now risen above TxDOT funding capabilities.

Jo Ann Garcia, director of transportation and development for TxDOT’s eight-county Laredo District, told task force members on Sept. 7 that they won’t see completion of this much-needed project in the foreseeable future without alternative financing. Garcia reiterated this position Wednesday.

Pate and his associate, Richard Zamora, professional engineer and project manager for Pate Engineers, Inc., repeated an outline of pass-through financing, shepherded by private engineering firms such as their own, recently presented to Val Verde County Commissioners Court and Del Rio City Council.

Pate Engineers, Inc. has developed water supply, waste water, land development, transportation, site design, and flood control and drainage projects.

Pate calls his firm’s recent transportation thrust in Montgomery County, Texas, “the first pass-through toll program to be approved by the State of Texas.”

The “toll” terminology in that often-used reference to what Stone called pass-through financing confuses many who object to the concept of travelers paying tolls, but it is actually a reference to state measurement of traffic volumes.

The procedure proposed by Pate and Zamora is for an agreement with county officials to permit a private engineering firm to make arrangements with TxDOT for pass-through financing of the Del Rio loop road.

The pass-through agreement defines the project to be constructed, delegates authority from TxDOT to local government to implement the project, sets a schedule of pass-through payments, and requires local governments to either demonstrate experience in implementing TxDOT projects or to outsource to a program manager with appropriate experience.

This program manager, Pate explained, would do all program management and designs, bids, and provide project financing.

The schedule of pass-through payments is where the “toll” concept resurfaces. In return for local, up front financing of the project, rather than reliance on TxDOT funding, the agency will pay the developer in installments based on an agreed-upon rate.

Pate explained that the rate is set at measured numbers of actual vehicles or vehicles-per-mile of the roadway, and includes maximum and minimum payments during the payout period.

Over the life of that period, vehicle rates are expected to begin below the minimum payment, but will be paid nonetheless by the state.

Gradually, as roadway traffic increases, payouts to the developer are expected to climb toward the difference, or gap, between minimum and maximum payments, and finally exceed the maximum payment per year.

Viewed as a method of financing Del Rio’s loop without the need for hands-on involvement by county officials inexperienced in developing major thoroughfares, pass-through financing received rapt attention Wednesday from task force members.

Pate added that, with a project executed with pass-through financing, maintenance and upkeep of the new roadway would devolve upon TxDOT in perpetuity.

Task force member Beau Nettleton, Val Verde County commissioner, asked Garcia, “Is this something the TxDOT (Laredo) district would support?”

Garcia: “Yes, sir. Definitely.”

Discussion flourished among members about how to convey the task force interest in Stone’s observations and Pate’s proposals. Finally, it was moved, seconded and approved for Task Force Chairman Sid Cauthorn, CEO and president of The Bank & Trust, to send a letter to Val Verde County Judge Mike L. Fernandez.

Cauthorn’s letter will urge county commissioners to consider contracting with a professional with expertise to assess the feasibility of a pass-through financing program here, including all pertinent financial obligations.

© 2005 Del Rio News-Herald