TxDOT, Cintra-Zachry file suit to keep documents secret

Lawsuit filed to keep documents private

Jun. 25, 2005

Gordon Dickson
Fort Worth Star-Telegram
Copyright 2005

The Texas Transportation Department and private companies that it hired to build the Trans-Texas Corridor toll road sued Friday to keep part of their agreement confidential.

The toll road, proposed by Cintra-Zachry, would connect the Dallas-Fort Worth area to San Antonio, running roughly parallel to Interstate 35.

Cintra-Zachry contends that the release of financial and other information would give an advantage to competing companies for future projects.

The petition, filed in state district court in Travis County, seeks to overturn a ruling by Attorney General Greg Abbott this month that the documents should be public.

Abbott issued the ruling after the Houston Chronicle in March requested all documents related to Cintra-Zachry's proposal to build toll roads from the Dallas-Fort Worth area to San Antonio. A Houston law firm made a similar request in April. The Star-Telegram also has a standing open-records request for all documents related to the project.

Cintra-Zachry has offered to build the toll road, which is estimated to cost $6 billion, with private funding. In exchange, the company would keep all tolls collected on the road for 50 years.

Cintra-Zachry has also pledged to give $1.2 billion to the state for other improvements along the route.

Many documents in the development agreement between the Transportation Department and the firm have been released, but conceptual and financial plans have been kept secret.

According to the lawsuit, Cintra-Zachry and other contractors would be more reluctant to compete for state construction projects if they knew that such information would be released.

© 2006 Fort Worth Star-Telegram www.dfw.com/mld/dfw/

"Grand redevelopment schemes, cooked up by government officials, often lack a sound economic basis and carry the potential of becoming boondoggles."

Stealing home

Decision to let government take private property fordevelopment risks abuse of eminent domain .

06/25/05

Staff Editorial
Houston Chronicle Copyright 2005

It seems a bizarre anomaly. The government in China or Russia might take private property to hand over to wealthy developers to build shopping malls and office plazas, but it wouldn't happen in the United States. Yet, that is the practice the U.S. Supreme Court narrowly approved this week. Local governments, the court ruled, may seize private homes and businesses so that other private entities can develop the land into enterprises that generate higher taxes.

The Supreme Court found, 5-4, that local elected officials are not barred by the Constitution from condemning whole neighborhoods and small businesses if, in their view, doing so would lead to redevelopment that increases tax collections.

A majority on the court was convinced that the possibility of improving the tax base for the benefit of the wider community satisfies the Fifth Amendment's requirement that private property can be taken by eminent domain only for a public purpose.

Justice Sandra Day O'Connor, who dissented, pinpointed the problem with the majority's argument. It cedes "disproportionate influence and power" to a community's most powerful and well-connected residents.

Public parks, schools and right of way for thoroughfares traditionally have provided the sort of public purpose to justify government's use of eminent domain . Grand redevelopment schemes, especially when they are cooked up by government officials, often lack a sound economic basis and carry the potential of becoming boondoggles that hurt taxpayers.

Justice John Paul Stevens wrote for the majority that local officials are qualified judges of whether an economic development project will benefit the community. In this case, city officials in New London, Conn., plan to tear down private homes to make way for a riverfront hotel, offices and a fitness club.

"The city has carefully formulated an economic development that it believes will provide appreciable benefits to the community, including - but by no means limited to - new jobs and increased tax revenue," Stevens wrote.

But is that universally true? Municipal and county governing bodies frequently miscalculate or wildly overestimate the benefits of tax abatements and other incentives.

Besides that, individual taxpayers don't necessarily benefit from increased government revenues.

Sometimes the increased revenue proves insufficient to cover the cost of providing services to new development. Sometimes increased revenues are wasted on things other than essential services.

Now that the high court has cleared the way for elected officeholders to trump private property rights, abuse of eminent domain becomes more likely, particularly in neighborhoods populated by the least influential citizens. In Texas, lawmakers would do well to pass restrictions on this distasteful form of eminent domain.


Houston Chronicle: www.chron.com

"The government now has a license to transfer property from those with fewer resources to those with more."

Ruling supports eminent domain

6/24/05

By Michael Smith
The Facts (Brazoria County TX)
Copyright 2005

A split U.S. Supreme Court issued a 5-4 ruling Thursday that could put more wind in the sails of the Freeport marina project plan backed by city officials and developers.

In Kelo et al v. city of New London, the court upheld a March 2004 Connecticut state court ruling and ordered that a local government's power of eminent domain can trump individual property rights to seize land for economic development.

Eminent domain is a government entity's power to take or condemn property it
deems is necessary for "public use." Thursday's ruling is significant because it includes economic development in the definition of public use.

The decision comes at the end of a five-year legal journey. Susette Kelo and other homeowners filed suit against the city of New London, Conn., in 2000 to prevent it from taking their property to build a hotel and conference center complex.

New London city officials cited higher tax revenues and economic improvement as the project's goal.

In his majority opinion, Justice John Paul Stevens wrote local officials should decide whether development projects benefit communities. States can pass additional laws restricting condemnations if necessary, he wrote.

"It is not for the courts to oversee the choice of the boundary line nor to sit in review on the size of a particular project area," Stevens wrote.

Justice Sandra Day O'Connor argued in the dissenting opinion that the ruling gives large corporations and developers a dangerous amount of influence in the political process.

"As for the victims, the government now has a license to transfer property from those with fewer resources to those with more," O'Connor wrote.

While the case is based in Connecticut, the ripple effect will be felt nationwide and in Freeport, where the city's marina project has been stalled by legal action.

Western Seafood Co. is battling the city of Freeport and the Freeport Economic development Corp. over 330 feet of the company's property along the Old Brazos River that the city wants for a marina.

Wright Gore III, son of the company's president, has said the land is crucial to his family business since shrimp boats offload their catch there.

The city and developers say the $7 million project - paid for by $6 million committed by the city and $1 million by private developer Walker Royall - will net eight times the $50,000 in revenue the city gains from the 1,800-foot strip of land.

Between 100 and 150 jobs will be produced by the first of the two-phased construction, said Lee Cameron, executive director for the Freeport Economic Development Corp.

O'Connor's dissent is on target in theory, but accountability of elected officials keeps the political process free of undue influence, Cameron said.

"If they were to exercise (eminent domain) to the extreme, then they wouldn't be in office for very long," Cameron said.

Gore filed suit to block Freeport in 2003. U.S. Southern District Judge Samuel Kent ruled in favor of the city in August, and the case has been stalled in the U.S. 5th Circuit Court awaiting the outcome of the Kelo case.

John Hightower, a Houston attorney who represents Freeport and its economic development group, said his office will notify the U.S. 5th Circuit Court of Appeals in New Orleans of the decision to get the case moving again.

The Kelo ruling gives his clients a little more weight going into the process, Hightower said. "The courts continued to hold that governmental entities have wide
discretion in how to use their condemnation powers," Hightower said.

Gore maintains the purpose of Western Seafood's suit is not meant to impede progress.

"We are for anything that could possibly bring prosperity to the city of Freeport, but not at the expense of losing our jobs and our businesses of over 50 years," Gore said.

The second phase of the project would double the size of the facility and future plans include a possible condominium complex nearby, Cameron said.

No condemnations are planned for the placement of the condos, he said. "We wouldn't have done these if we weren't forced to," Cameron said.

Freeport City Manager Ron Bottoms said the city is ready to move forward and hopes the ruling will encourage Western Seafood to negotiate.

"We would still rather settle this thing out of court but we've never gotten close before," Bottoms said. "Now, hopefully there's a little more motivation for them to sit down with us."

Gore said negotiation always has been an option, but Royall and the city haven't budged during previous talks.

While a disappointing setback, Gore said Western Seafood plans to continue the fight.

The city has other condemnation suits pending against the company, and Gore said the legal standoff is far from over. "The most important part at this juncture is the court of public opinion," he said.

Gore said O'Connor's dissenting opinion accurately captures what is happening in Freeport and leaves homes, businesses and churches vulnerable to the city's grab.

"In this case, it's purely for the benefit of a private developer who would be given title to our property," he said. "In that case, no one is safe."

The voting breakdown of the Supreme Court's 5-4 ruling in favor of allowing local governments to seize property through eminent domain for economic development projects.

IN FAVOR: Stevens, Souter, Ginsburg, Breyer, Kennedy

OPPOSED: O'Connor, Rehnquist, Scalia, Thomas

© 2005 The Facts: www.thefacts.com

"We think the governor's office and TxDOT have once again demonstrated their willingness to play word games with the citizens of Texas."

Spanish-led group seeks federal loan for corridor project

Critics say move breaks a vow not to use tax funds

By RAD SALLEE
Copyright 2005 Houston Chronicle

A Spanish-led consortium, chosen by state highway officials to privately develop a toll road through Central Texas and operate it for profit for 50 years, is seeking a $320 million low-interest federal loan for part of the job.

Although the company, Cintra-Zachry, and Texas Department of Transportation officials say the loan would be legal and would benefit Texans, critics of the $7.2 billion Trans-Texas Corridor project note Gov. Rick Perry said it would be built "at no cost to taxpayers."

"We think the governor's office and TxDOT have once again demonstrated their willingness to play word games with the citizens of Texas," said David Stall of CorridorWatch.com , which has campaigned statewide against the plan.

"Cintra seeking federal money seems contrary to the constant assurances ... that no taxpayer dollars were being spent on this project and that one advantage of the project was the exclusive use of private money," Stall said in a prepared statement.

Planned all along

A Cintra-Zachry statement says the company has planned to use a federal loan "from day one" and describes such a loan as "part of a broader array of financing to overcome gridlock on Texas roadways and get drivers and goods moving again."

Cintra-Zachry and TxDOT spokeswoman Gaby Garcia noted that the Texas Transportation Commission approved an order Dec. 16 allowing Trans-Texas Corridor projects to be funded "under appropriate circumstances" with money provided under the federal Transportation Infrastructure Finance and Innovation Act of 1998.

Garcia said there is no way taxpayers could be left holding the bag. "It is a loan," she said. "They (Cintra-Zachry) will repay its interest — not the state. The state by law is barred from backing any of their financial obligations."

Needed to complete route
On June 10, Cintra-Zachry sent the Federal Highway Administration a letter stating its interest in a $320 million loan to complete the Texas 130 toll road east of Austin.

TxDOT has built the northern half of the route, but Garcia said funding has not been obtained for the southern half.

The company would use the loan to continue the route to Seguin, at a cost of $1 billion.

Texas 130 may eventually become part of the Trans-Texas Corridor project that Cintra-Zachry was chosen by TxDOT on March 11 to develop from Dallas to San Antonio. Eventually the corridor could include freight and passenger rail and utilities, and stretch from Oklahoma to the Mexico border.

Garcia said the northern half of Texas 130 will be operated by the state. And the company is not guaranteed to develop the southern half, she said, although its agreement with TxDOT puts it first in line for the work.

A statement by TxDOT Executive Director Michael Behrens notes that the corridor project — designated TTC-35 because it generally parallels Interstate 35 — would be owned by the state. Contracting with Cintra-Zachry to build and operate it "allows the state to use tax dollars for other projects" along the corridor, Behrens said.

rad.sallee@chron.com

Houston Chronicle: www.chron.com

Supreme Court ruling doesn't play in Texas

Home seizure ruling doesn't play in Texas

After decision, an amendment is quickly proposed to limit powers of eminent domain

By MIKE SNYDER and MATT STILES
Copyright 2005 Houston Chronicle

Texas' cultural commitment to private property rights surfaced quickly Thursday as a state legislator moved to blunt the impact of a U.S. Supreme Court ruling that local governments may seize land for private development.

Hours after the court's 5-4 ruling came down, Rep. Frank Corte Jr., R-San Antonio, said he would seek "to defend the rights of property owners in Texas" by proposing a state constitutional amendment limiting local powers of eminent domain, or condemnation.

Houston Mayor Bill White and Harris County Judge Robert Eckels offered assurances that the city and county do not intend to condemn land for private development projects.

But officials in the beachfront town of Freeport, south of Houston, said they would move aggressively to condemn property owned by two seafood companies to clear the way for an $8 million private marina.

The Supreme Court ruled against a group of property owners in New London, Conn., who challenged a city plan to demolish their riverfront homes to make way for offices, a hotel and other commercial buildings.

Justice John Paul Stevens, in the majority opinion, said such projects are within the scope of a clause in the Fifth Amendment to the Constitution that authorizes condemning property for "public use."

Stevens wrote that promoting economic development, the stated goal of the New London project, "is a traditional and long accepted governmental function, and there is no principled way of distinguishing it from the other public purposes the court has recognized," such as taking land for roads, parks or libraries.

In a sharply worded dissent, Justice Sandra Day O'Connor said the majority's interpretation of "public use" was so broad that "the specter of condemnation hangs over all property. Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory."

Joining Stevens in the majority were Justices Anthony M. Kennedy, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer. Dissenting with O'Connor were Chief Justice William Rehnquist and Justices Antonin Scalia and Clarence Thomas.

The opinion said states concerned about excessive use of condemnation were free to pass laws restricting it, and Corte said he intended to do just that.

Corte said he would ask Gov. Rick Perry to add the condemnation issue to the agenda of the special legislative session now under way so that the proposed constitutional amendment could appear on the November ballot.

Perry spokeswoman Kathy Walt said the governor would consider requests to add items to the agenda, but probably not until legislators resolve the school finance issue. She said Perry supports property rights and was concerned about the Supreme Court ruling.

Corte said in a news release that his proposed amendment would "limit a local governmental entity's power of eminent domain, preventing them from bulldozing residences in favor of private developers."

White and Eckels said such concerns were unfounded in Houston and Harris County.

"The city of Houston has not, and likely never will, use eminent domain powers as aggressively as some cities simply for the purposes of economic development," White said in a statement. "We do respect property rights, and believe that eminent domain should not be used in a way that might simply benefit one economic interest versus another."

The mayor said, however, that he is pleased the court upheld the use of eminent domain to reduce blight.

Eckels said Commissioners Court has shown no inclination to condemn land for private development, and he would not support any move to do so.

The Metropolitan Transit Authority, empowered by the law that created it to condemn property within 1,500 feet of transit stations, is not "currently planning" to use that authority for projects along the Main Street light rail line or elsewhere, spokesman Ken Connaughton said.

Asked if the agency might exercise the authority in the future, Connaughton said, "Who knows what happens tomorrow? But there are no plans to do it."

Barry Klein, president of the Houston Property Rights Association, said he considers Metro's condemnation authority excessive. He said quasi-governmental agencies such as management districts and tax increment reinvestment zones might also try to take advantage of the court ruling.

"I'm sure there are some self-servingly creative people in the leadership of these organizations who will try to find a way to do this," Klein said.

Developer Ed Wulfe of Houston-based Wulfe & Co. said Houston's public entities have long resisted acquiring property through eminent domain unless it was for road improvements or other public uses.

Wulfe said, however, that governments and developers can use the type of condemnation cited in the New London case as a tool to redevelop inner-city neighborhoods that stand to benefit economically.

"I think on a very, very careful and selective basis it could be used to improve neighborhoods," said Wulfe. "Whether it's creating affordable housing or jobs, it could be an interesting way to remove blight."

Matthew Deal of Lewis Realty Advisors, a property appraisal and consulting firm that deals in condemnation, said Houston's new downtown sports arenas offer a good example of the benefits of local governments taking full advantage of their eminent domain powers.

The sports arenas energized parts of downtown that were "ridden with crime, boarded-up buildings and dangerous to be in," said Deal, calling the Supreme Court ruling "a score for governments and their development partners."

The case is Kelo et al v. City of New London, 04-108.

Chronicle reporters Nancy Sarnoff and Bill Murphy contributed to this report.

mike.snyder@chron.com

matt.stiles@chron.com

Houston Chronicle: www.chron.com

San Antonio Toll Party is born

Toll critics call in an out-of-town ally

06/24/2005

Patrick Driscoll
San Antonio Express-News
Copyright 2006

Grass-roots grumblings over proposed toll lanes on the North Side are like whimpers compared with fights against toll plans in other parts of Texas, but those whimpers have been heard all the way to Austin.

Battle-tested toll critics in Austin are vociferous, tireless, organized and willing to help activists here raise a ruckus.

Sal Costello of AustinTollParty.com and TexasTollParty.com, a takeoff of the historic Boston Tea Party tax revolt, met with more than two dozen people Wednesday at the Reagan High School library.

Costello was invited by Terri Hall, a resident of Spring Branch in Comal County, who facilitated what may turn out to be the beginning of SanAntonioTollParty.

"It's a good start," she said. "If we get enough of those rumblings, enough of those average folks working together, we can fight this."

The first toll roads in San Antonio could be built along 47 miles of Loop 1604 and U.S. 281 on the North Side. The Texas Department of Transportation recently backed off planned toll lanes on U.S. 281 through Comal County but now can't fund those express lanes.

Hall, who uses U.S. 281 to drive into San Antonio, said she has about 150 interested people so far on an e-mail distribution list, with most from Bexar County. She intends to hold two more meetings next month, one in Comal County and the other in Bexar County.

Officials with the Alamo Regional Mobility Authority, formed last year to build and operate toll roads, said they don't understand what the big deal is but nevertheless will listen and respond to concerns.

"I don't see the issues," said Tom Griebel, the authority's director. "We're adding capacity and we're speeding up projects."

Mobility Authority Chairman Bill Thornton said it's interesting that people from outside of Bexar County are leading efforts to oppose toll roads here.

"People that live here know that we need to do something now," he said.

But some local residents say a lot of people aren't familiar with local toll plans or don't feel they can make a difference.

"I don't think people really know that they need to be opposed," said Claudia McCoy, who lives on San Antonio's North Side and attended Wednesday's meeting.

There are many other opponents out there, said Bexar County Commissioner Lyle Larson, who frequently denounces state officials for pushing local communities to pay more for highway construction and for making tolls the main option to raise additional funds.

Most of San Antonio's first toll roads would be in Larson's precinct, and he hears the complaints at neighborhood meetings.

"The people in neighborhoods have never been supportive of this concept," he said. "At this point, they don't feel like they're getting a voice and I think that's what's generating the opposition."

There are many reasons motorists should fear toll roads, as they're proposed now, Hall and Costello said, including the perpetuity of toll fees, lack of control over fee increases, use of tax dollars and public rights of way to build toll roads, and restrictions on building free roads so that traffic congestion will persuade drivers to use toll lanes.

The bottom line is that tolls could end up being the largest tax increase in Texas history, Costello said.


pdriscoll@express-news.net

© 2006 San Antonio Express-News: www.mysanantonio.com

"The whole thing is, it was touted as using private funds."

Trans-Texas Corridor consortium seeks public money

Associated Press
Copyright 2005

The consortium that won a $7.2 billion deal to build the first part of the Trans-Texas Corridor, in part because it promoted use of private money, has inquired about public money.

Cintra-Zachry wrote a letter to the Federal Highway Administration saying it is interested in applying for a $320 million low-interest loan. The developer said in the letter that the loan would help build the 42-mile State Highway 130 extension from south of Austin to Seguin, estimated at $1 billion.

Some say the inquiry contradicts deal-breaking claims that no taxpayer money would be used on the project. The Gov.'s Office and the consortium say the deal didn't prohibit using federal money. Only state money was mentioned.

When the state and Cintra-Zachry signed the deal March 11, Gov. Rick Perry's office issued a news release saying that the construction would be done "at no cost to taxpayers."

"I believe we always said state dollars" would not be used, said Texas Department of Transportation spokeswoman Gaby Garcia. "At the time Cintra-Zachry came on, we looked only at (whether there would be) the inclusion of state dollars. That's how we defined it."

When Cintra-Zachry officials presented some of their plans for the corridor in December, they emphasized private funding for the public project.

Perry was not surprised that the consortium would seek innovative forms of financing, according to Kathy Walt, spokeswoman for Perry. The request doesn't contradict Cintra-Zachry's previously stated goals about private funding, she said.

"I disagree that the perception is any different here," Walt said. "A loan is a loan. It's not a grant, and it will be paid back with interest."

Some state leaders remain skeptical.

"This is the first we've heard of them essentially seeking tax money for the project," said Mike Sizemore, press secretary for Sen. Ken Armbrister, D-Victoria, who has questioned the corridor project. "The whole thing is, it was touted as using private funds."

___

The Associated Press: www.ap.org

Costello: "These people must be high."

Austin's got a tricky toll road windfall

Pending agreements with state would save city $51.7 million but could create political nightmare for council


By Ben Wear
Austin American-Statesman
Copyright 2005

The Austin City Council suddenly has 51.7 million reasons to love toll roads.

The council, at its first meeting since new members Jennifer Kim and Lee Leffingwell were sworn in, on Thursday will consider giving after-the-fact approval to three contracts with the Texas Department of Transportation. Under those contracts, signed June 13 by City Manager Toby Futrell and state officials, the state would pick up an estimated $51.7 million of costs associated with three Austin toll roads that otherwise would have been the city's responsibility.

However, the agreements state that if at some point in the future the roads — new lanes on most of Ed Bluestein Boulevard (U.S. 183), Texas 71 near its confluence with U.S. 183, and U.S. 290 and Texas 71 in Oak Hill — were to be built instead as free roads, the city would have to pay the money back.

By signing the agreement one day ahead of Gov. Rick Perry's signature on a new transportation law, the city secured more than $23 million of the total. The money consists of $5.7 million for right-of-way purchases and $46 million for utility relocation costs. For now, the city plans to put the smaller amount into the general fund, which pays for basic services like police and parks, and move the $46 million to the Austin Water Utility and Austin Energy.

That windfall thus represents at once a powerful argument for charging tolls on those local highways and a significant disincentive from ever backing off from tolls. And the decision on the contracts could be a painful political baptism for Kim and Leffingwell, who said during their campaigns that they were against putting tolls on "existing roads."

The 23-member Capital Area Metropolitan Planning Organization board, which includes Mayor Will Wynn and three Austin City Council members, last July approved levying tolls on those three roads and others.

"If those are toll roads, then signing these contracts is smart because it saves the city $52 million," said political consultant Mike Blizzard, who didn't work for a candidate this spring but supported Leffingwell and Kim opponent Margot Clarke. "If they are taken out of the toll plan, then the city's just back to status quo. On the other hand, by signing those contracts, it may make council members on CAMPO less likely to oppose tolling those roads because then the city would lose $52 million."

Leffingwell, reached Tuesday just minutes into his first day on the job, said he is against conversion of free roads to toll roads. But as for the contracts on these three projects, which are not conversions per se but rather greatly expanded roads with both free lanes and toll lanes, Leffingwell said ratifying them is the best course.

"I just don't see any practical downside," Leffingwell said. "Now, if someone misunderstands what you're saying, there may be a political downside."

Council Member Betty Dunkerley, who during her just-completed re-election campaign took a stance comparable to Kim's and Leffingwell's, agreed with Leffingwell, as did Wynn. Kim said that her inclination is to oppose the contracts and that she will ask for a postponement.

"I'd rather not rush to judgment on approving this until we get more answers," she said. "And if there is a compelling case for approving this, a damned-if-you-do, damned-if-you-don't situation, we need a chance to explain it to our constituents."

Council Member Brewster McCracken, a CAMPO board member, said he will probably support the agreements to protect the city's interest should the roads remain tollways. But he said that, given the burden of toll road operations and maintenance to be borne locally, which he said runs in the hundreds of millions over the next generation, he would still support returning them to free status.

Council Members Raul Alvarez and Danny Thomas could not be reached for comment.

Sal Costello, who founded the Austin Toll Party group in reaction to CAMPO approval of the toll plan, was incredulous that the city would consider the contract weeks after approving spending $144,000 to study the toll road plan and possible alternatives.

"These people must be high," Costello said. "I would like to know who in their right mind would take a moment to work on these contracts."

City staff and the state have been working on them since the council told its staff to do so in August. Under an almost two-decade-old agreement with the Department of Transportation, the city has been liable for 10 percent of right-of-way prices on these highways and for the entire cost of moving utility facilities when the roads are expanded.

When city employees brought one of those payments to the council for approval last summer, just weeks after the controversial CAMPO toll road vote, the council suggested a renegotiation.

While those talks continued, the Legislature this spring approved a measure that would have obligated the city to pay 50 percent of the utility relocation costs — $23 million. With Perry on the verge of signing that bill into law — he did so June 14 — the city and state inked the three contracts the day before.

If the council were to vote against ratification, city real estate manager Lauraine Rizer said, those signatures would become meaningless and the agreements would not go into effect.

Austin American-Statesman: www.statesman.com

"Privately funded?" Cintra-Zachry asks Uncle Sam for a Loan

Texas corridor developer now seeks public funding

Deal had been sealed largely on plan to use private money

Related Article: TTC Project Manager:"Cintra will not ask for local, state or federal contributions."

June 22, 2005

By TONY HARTZEL
The Dallas Morning News
Copyright 2005

Cintra-Zachry, the consortium that won a $7.2 billion development deal from the state for the first part of the Trans-Texas Corridor largely because it said it would use private money on the massive project, is looking for public funds to help subsidize the corridor's first segments.

The partnership has filed a letter with the Federal Highway Administration stating its interest in applying for a $320 million low-interest loan. If approved, it would help pay for the estimated $1 billion, 42-mile State Highway 130 extension from south of Austin to Seguin that the company identified as a potential corridor project in its letter to federal officials.

For months, state officials have touted the Trans-Texas Corridor as a way to get 316 miles of needed toll roads and rail lines built from North Texas to San Antonio without the use of public funds. And when the state and Cintra-Zachry signed the deal March 11, Gov. Rick Perry's office issued a news release saying that the construction would be done "at no cost to taxpayers."

"I believe we always said state dollars" would not be used, said Texas Department of Transportation spokeswoman Gaby Garcia, drawing a distinction between federal and state money. "At the time Cintra-Zachry came on, we looked only at [whether there would be] the inclusion of state dollars. That's how we defined it."

In December, Cintra-Zachry officials outlined some of their financial and development plans for the corridor, which prominently included private funding for the public project.

José López, director of Madrid, Spain-based Cintra's U.S. and Latin American operations, said at the time that federal loans, known as Transportation Infrastructure Finance and Innovation Act loans, could be used. The loans are used to entice public and private investment in major transportation projects.

"This is part of our normal research in preparing for any eventuality to get needed roads built more quickly," Rossanna Salazar, a spokeswoman for Cintra-Zachry, said Wednesday.

Cintra teamed with San Antonio-based Zachry Construction Corp. and other firms to design and build the corridor project.

If Cintra-Zachry's federal loan request is eventually approved, it would mark only the second such loan given to a private entity for a large road project. An Australian firm received a $140 million loan for a toll road project near San Diego that broke ground in 2003.

Not surprised

Kathy Walt, spokeswoman for Mr. Perry, said he was not surprised that Cintra-Zachry would have to seek innovative forms of financing to help it build billions of dollars of new highways. The request is not a reversal of any of the consortium's previously stated goals about using private funds, she said.

"I disagree that the perception is any different here," Ms. Walt said. "A loan is a loan. It's not a grant, and it will be paid back with interest."

Still, the news that any government money could be used on the project dismayed some state leaders.

"This is the first we've heard of them essentially seeking tax money for the project," said Mike Sizemore, press secretary for Sen. Ken Armbrister, D-Victoria, who has publicly questioned the corridor project. "The whole thing is, it was touted as using private funds."

So does a low-interest federal loan use public money? It can be viewed both ways.

Opponents argue that the funds are coming from the U.S. Treasury, which could use the money for other purposes.

"I didn't think the federal budget has enough money to loan right now," Mr. Sizemore said.

Loan's terms

Federal officials who oversee the program also pointed out that the loan would be repaid with interest. But the terms on such loans usually are favorable to the borrower.

In general, the terms of such loans allow for repayment over 35 years. A recent loan for a Louisiana project featured the government's 4.45 percent interest rate. The loans typically don't require payments to begin until the project is substantially complete, an important point for a proposed toll road that would not generate revenue until it was opened to traffic.

Because it is part of a separate funding program, the loan would not affect the amount of federal highway money Texas regularly receives.

In debating whether public funds are going toward the corridor project, the state Transportation Department also makes a distinction on State Highway 130 itself. Technically, Ms. Garcia said, it is not considered part of the corridor because it received federal approval for construction before the Trans-Texas Corridor development deal was awarded.

In addition, Highway 130 also may not have room for roads, rail lines and utility lines all in one place, one of the key selling points the state has touted.

"If the corridor never moves forward, Highway 130 would be built on its own," Ms. Garcia said. "130 is a stand-alone project from the corridor."

But when the corridor deal was announced in December, the Highway 130 project was the first of six potential road projects listed in a presentation as links in the corridor. In addition, a Federal Highway Administration lists the proposed project name as "Trans Texas Corridor (SH 130 Segments 5 & 6)."

Federal officials could notify Cintra-Zachry within a few weeks whether it can file a formal loan request.

"We know this project is needed," Ms. Garcia said. "We've got to make it happen. The question is how to finance it" with either state funds or a private development deal.

Dallas Morning News: www.dallasnews.com

E-mail thartzel@dallasnews.com

Related Article: TTC Project Manager:"Cintra will not ask for local, state or federal contributions."

Anti-toll insurgency has had considerable political success.

For politicians, it's now cool to hate tolls

Ben Wear
Austin American Statesman
Copyright 2005

At one point, May 7 was going to be all about tolls.

A sitting Austin mayor and two City Council members facing recall over their votes to make toll roads out of existing highways. Three other council slots up for grabs. Toll opponents sitting on a database of 40,000 people who signed recall petitions. The balance of power of Austin government resting on the fulcrum of public resentment over toll roads.

Didn't happen.

The recall fell several thousand John Hancocks short of forcing an election on Will Wynn, Brewster McCracken and Danny Thomas.

In the election that did occur, the three candidates endorsed by Sal Costello and his Austin Toll Party all went down. And in November, Republican state Rep. Jack Stick, who voted against the toll road plan, nonetheless lost his Northeast Travis County seat to Democrat Mark Strama.

So much for the potency of the toll road issue. People must not really care, right?

Perhaps Gov. Rick Perry doesn't stand to pay any price for jerking the wheel of Texas road construction toward tollways.

Yes, that recitation of events would seem to indicate that toll opponents frittered away whatever political capital they had. But Costello begs to differ. And a look at the broader picture indicates that though toll opponents haven't elected or defeated anyone, the anti-toll insurgency has had considerable political success.

The allegedly immutable seven-road Austin toll plan introduced last year lost one road entirely in January, tolls on two others were put off for two or three years, and a fourth road was left in purgatory with no funding.

And numerous other toll roads suggested in an early draft of the area's next long-range transportation plan morphed into studies by the time the plan passed this month.

Meanwhile, over the past year, expressing distaste for toll roads has become de rigueur in local elections. The new template: Barton Springs, good; toll plan, bad.

Statewide, even Perry is now against converting free roads to toll roads.

If Costello's slate of council candidates lost May 7 and in the June 11 runoff, that's due at least in part to anti-toll positions taken by their vanquishers. Voters decided based on other issues.

"We've yet to see a toller vs. non-toller race," Costello says.

Furthermore, someone familiar with negotiations on a toll road study endorsed this month by transportation leaders said that toll supporters came to the table precisely because they are chilled by the ill political winds blowing through Austin.

A compromise is afoot, we're told, that could transform the remaining second wave of tollways into expressways with both free lanes and toll lanes.

You may have heard that Carole Keeton Strayhorn announced for her candidacy for governor Saturday.

Guess we'll get that definitive non-toller/toller race.

Getting There appears Mondays. For questions, tips or story ideas, contact Getting There at 445-3698 or bwear@statesman.com.

Austin American-Statesman: www.statesman.com

Chronicle files freedom of information request with TxDot

OPEN THE FILES

Texas transportation officials should follow Attorney General's opinion and release secret Trans-Texas Corridor contract provisions.

June 19, 2005
Copyright 2005 Houston Chronicle

The Houston Chronicle filed a freedom of information request with the Texas Department of Transportation seeking secret provisions of a state contract with a Spanish consortium to build and operate the Trans-Texas Corridor, a web of tolled transitways across the state.

In response, officials from TxDOT and the consortium, Cintra-Zachry, appealed to Texas Attorney General Greg Abbott to allow them to withhold the documents from the Chronicle and other newspapers that filed requests. Even after a sweeping rejection of the claims in an opinion from Abbott on May 31, TxDOT officials are considering going to court to prevent the release of the information.

The public has a right to know on what terms a consortium is being given a contract to build and operate toll roads in the state for the next 50 years. Abbott's opinion left no doubt that TxDOT and Cintra-Zachry's arguments lack a valid basis.

The opinion said TxDOT failed to demonstrate how disclosing the contract terms harmed it. Although state officials claimed the pact with Cintra-Zachry was not completed, the opinion found that for legal purposes it was a final contract. Cintra-Zachry argued that trade secrets would be revealed by release of the contract provisions, but the Attorney General found that the company had failed to provide any evidence to back up its allegations.

In order to challenge the opinion, TxDOT officials have until the end of the month to file suit in a Travis County court. The agency has already missed a state-mandated 10-day deadline in which to file a lawsuit and get the full benefit of such an appeal.

A spokeswoman for TxDOT says its officials are still trying to decide on a course of action. If they continue to withhold the information but file no suit, newspapers that filed freedom of information requests can take legal action to force release of the contract.

The solution is simple. Instead of going to court and spending taxpayer dollars on an attempt to keep citizens in the dark about public business, TxDOT should immediately release the documents. Continuing to deny journalists the information only fuels suspicion that there's something in the Trans-Texas Corridor contract that state bureaucrats don't want us to know.

Houston Chronicle: www.chron.com

Vehicles taking part in British trials have been fitted with electronic tagging devices similar to those proposed for a huge toll network in Texas.

Road Charging

Car tags to be the enforcer

By Emma Smith of The Sunday Times
Copyright 2005

Black boxes are being sidelined as ‘too intrusive’ for Britain’s road-charge system

Government plans to force drivers to carry satellite-linked “black boxes” in their cars as part of a national pay-as-you-drive scheme are unlikely ever to be introduced because ministers fear a public backlash on privacy grounds.

Instead, the government is planning to introduce a system of “car tagging” which will be less intrusive and charge drivers only on a limited number of toll roads. When a vehicle passes a roadside beacon a tag installed in the car would trigger a charge for the use of that section of road.

Recent reports have suggested that Alistair Darling, the transport secretary, is planning to “tax” drivers on a per mile basis by tracking cars with GPS (global positioning system) technology. The government is likely to back away from these proposals nearer the time road charging is introduced, according to Department for Transport (DfT) sources.

The DfT has appointed an American contractor to head trials of its favoured system of car tagging. Kellogg Brown & Root (KBR), part of the Halliburton group, based in Houston, Texas, is in charge of a £23m project codenamed Directs (Demonstration of Interoperable Road-User End-to-End Charging and Telematics Systems).

The choice of KBR as the head contractor gives a strong indication that the government prefers the American-style charging scheme. Of the 550 vehicles taking part in the British trials 500 have been fitted with electronic tagging devices similar to those which have been proposed for a huge network of tolled freeways in Texas. Only 50 vehicles are using GPS technology.

Devices the size of audio cassettes have been installed on the dashboards of the cars of the 500 volunteers in Yorkshire. Seven pairs of 25ft steel gantries have been erected on the M621 between junctions 5 and 6; on the A639 link between the M1 and the M621; the A61 between Leeds and Wakefield and on local roads south of Leeds.

The gantries also carry cameras that record numberplates. The results will be monitored from KBR’s UK headquarters in Leatherhead, Surrey, with plans to issue dummy bills and penalty notices later in the year.

Transport for London (TfL), the mayor’s transport arm, plans to carry out similar trials this summer using the same tagging technology. It hopes to install the technology in the current congestion charging zone from 2009. The tag being tested by TfL could also be used like a mobile-phone SIM card, storing cash credits which could be deducted automatically when cars pass a charge beacon.

In Texas — where KBR was involved in proposals for tolled freeways — there have been widespread protests at plans to introduce car tagging on the grounds that the state is taxing people to use roads the public has already paid to build.

Motorists have been told that under the scheme they will have to pay up to one dollar per mile in electronic road tolls, a similar concept to the British government’s proposals for charges of up to £1.34 per mile. Protest groups have united under the banner of the Texas Toll Party, which has rallied popular support among thousands of motorists.

Opposition is gathering such momentum in Texas — President George Bush’s home state — that the authorities may be forced to think again. The objections raised are almost identical to those levelled against Britain’s road charging plans.

“We already have a gas tax; we don’t need another tax,” said Sal Costello, founder of the Texas Toll Party. “They (the Texan governors) claim because of congestion and because there is not enough money coming from the gas (petrol) tax they need to charge us tolls as well.

But tolling is a sloppy tax. Most of the money goes into collecting the money and it is a new way of taxing people for something they’ve already paid for.

“This is an experiment for the whole country and all the other states are watching. It’s happening throughout Texas, and other states — Georgia, Michigan, California and others — are talking about it. Our fight here can make a difference.”

KBR has been at the centre of controversy in the US for other reasons. Brown & Root, which merged with MW Kellogg in 1998, was accused of “buying” political influence, and KBR has been investigated for overcharging the American military.

During the Iraq conflict in 2003 KBR allegedly purchased petrol in Kuwait and sold it at a profit to the US armed forces. The American defence department claimed the firm had overbilled by $61m (£33.5m). The company also allegedly overcharged for meals it provided in Iraq to US soldiers. It agreed to pay back $27.4m (£15m) to settle the issue.

Road pricing only recently hit the headlines in Britain but the government has been quietly planning it for years. In 2001 the DfT hired Fareway Alliance for the first phase of the Directs project and in 2002 drew up detailed plans for the installation of the pilot road charging scheme. The trials were scheduled originally to begin in 2004. Fareway Alliance is a consortium led by KBR with WS Atkins, a design consultancy, and Thales Translink, which provides electronic services.

In April the government hired Derek Turner, the man credited with designing and implementing congestion charging on behalf of Ken Livingstone, the mayor of London, to head up the Highways Agency, the body responsible for motorways and trunk roads in Britain.

Asked whether his appointment as national traffic director was linked to the government’s plans to bring in a tagging system for road charging, Turner said: “As a civil servant I am unable to comment.”

A spokesman for KBR said claims it had overcharged the American government for fuel were “misinformed”.

“KBR’s reputation is that of a company that continues to deliver for its government and military customers despite the challenges it faces while undertaking difficult tasks under some of the most dangerous and hostile conditions anywhere in the world,” the spokesman said.

The Sunday Times: www.driving.timesonline.co.uk