Saturday, February 18, 2006

"They are imposing the toll in addition to the gasoline taxes we already pay."

Letters to the Editor:

Corridor would raise Texas taxes

February 18, 2006

The Victoria Advocate
Copyright 2006

What is particularly disturbing about the nearly quarter-mile-wide system of highways, railroad lines, water lines and utility lines that may crisscross Texas called the Trans-Texas Corridor is that the thing is a method of taxing Texans under the guise of calling it a toll. Is it possible the corridor is more about raising taxes than it is about transportation?

I suppose that politicians who claim to be in favor of lower taxes think Texans won't know the difference. A toll is a tax, and if they start tolling our highways, they are raising our taxes, pure and simple. No amount of spin can change that. They are imposing the toll in addition to the gasoline taxes we already pay.

Of course, the taxation doesn't stop with the toll. I have read that upwards of 580,000 acres in Texas will be completely removed from the tax rolls of counties and school districts. At 1,200 feet wide, that amounts to 146 acres per road mile. I wonder if county governments and school districts can absorb this reduction in this tax base without increasing our taxes to offset the loss.

Another almost unbelievable aspect of the Trans-Texas Corridor is that our politicians, if they are finally able to push it through, plan to contract with a foreign company as majority partner to build the corridor, collect the tolls and manage it. Also, the state of Texas has to subsidize the foreign company and their partners until they become profitable. That would really be a sweet deal if it is true.

Let's ask candidates for public office what their position is on the Trans-Texas Corridor so we can know for sure whether they favor raising taxes or reducing them.

Copyright 2006 The Victoria Advocate:


Star-Telegram endorses Steve Smith for the Texas Supreme Court

A tale of two stories

Feb. 18, 2006
Fort Worth Star-Telegram
Copyright 2006

2006 PRIMARIES Texas Supreme Court (R) recommendation: Steve Smith

In terms of personal story, Steve Smith and Don Willett rate almost a tie.

Smith grew up in south Fort Worth, attended Everman public schools and graduated from the University of Texas at Arlington -- the first in his family to earn a college degree. He got his law degree from UT-Austin, clerked for a federal judge, worked for the Texas Legislature and, without the support of the Republican Party establishment, ousted an incumbent to win a seat on the Texas Supreme Court.

Willett grew up in tiny Talty, east of Dallas. He lost his father at age 6, learned values from a waitress mother and was the first in his family to, he said, "venture off from small-town life."

He graduated from Baylor University and Duke's law school and clerked for a federal appellate judge. He worked for Gov. George W. Bush, followed him to the White House, spent time at the Justice Department, left for the Texas attorney general's office and then was appointed by Gov. Rick Perry to the Supreme Court in August 2005.

Each man boasts "conservative" credentials. Smith initiated the Hopwood lawsuit that ended the UT law school's race-conscious admissions procedures. Willett worked on the 2000 Bush-Cheney campaign and then helped direct the administration's faith-based initiatives and vet federal court appointees.

Both claim to be textualists who take a restrained approach to judging.

On his Web site, Smith says that his judicial philosophy "mirrors that of United States Supreme Court Justice [Antonin] Scalia: textualism and rejection of the liberal 'living constitution' theory" and that "the Texas judiciary, in general, and the Texas Supreme Court, in particular, should not be creating new law."

In his application for the court appointment, Willett professes "an abiding reverence" for the law and expounds on judges' "not gratifying a personal political agenda" and needing to "resolutely resist the proclivity to assume the role of legislator."

Willett has a politician's polish, while Smith comes off as ... well, nerdy.

But what's the real difference?

Smith came to the court without judicial experience but wrote 16 majority opinions in his two years.

During his 2002 campaign, when he upset Perry appointee Xavier Rodriguez, Smith sounded agenda-driven on contentious issues such as school finance and parental notification. Now it seems that his two years on the court have given him perspective on the judges' role, the craft of statutory interpretation and the realities of electing judges known primarily to the lawyers and litigants who contribute to their campaigns.

"People are appreciative of judicial restraint, but they're more interested in judicial results," Smith says.

Smith is running a low-budget campaign using personal loans, finance reports show. This is significant in an elective system that takes money to run but has been criticized in the past, with good reason, for the disquieting appearances caused by big campaign contributions.

Willett, by contrast, has collected more than $595,000 since August, including $25,000 from Texans for Lawsuit Reform and donations from major homebuilding companies, oil and gas interests, pharmaceutical giant Pfizer, Dow Chemical and U.S. Reps. Kay Granger and Kenny Marchant. Willett's $250,000-plus from lawyers and their firms includes more than $26,000 each from Vinson & Elkins and Baker Botts.

Willett told the Editorial Board that "my ironclad, take-it-to-the-bank promise in this campaign is to judge each and every case before me with objectivity and impartiality and with a bottom-line goal to get it right."

But Willett came to the court with no litigation experience and no background in the kinds of cases that the court decides, such as commercial disputes, insurance coverage issues, consumer and tort law or the intricacies of civil procedure. He has not yet written any opinions on the court, so his assertions about independence and restraint can't be tested.

Although Smith has sounded ideologically driven in the past, he largely did not act as a crusader during most of his short time on the court.

The Star-Telegram Editorial Board recommends Steve Smith for the Texas Supreme Court in the March 7 Republican primary.

© 2006 Fort Worth Star-Telegram:


Nobody expects the Spanish Acquisition!

Leader of the Spanish acquisition

19 February 2006

The Business
Copyright 2006

The man who wants to buy Britain’s airports aims to keep his father’s business legacy flying high

The top brass at BAA should certainly be feeling nervous: if there were anyone actually born to buy Britain’s airport giant, it is Rafael del Pino, chairman of Spanish construction company Ferrovial. The eldest son of Ferrovial’s founder, Rafael del Pino senior, Spain’s second richest man, it sometimes seems young Rafael has been groomed for the task his entire life.

His training, from his civil engineering degree at the prestigious Escuela de Caminos and the MBA he took at Massachusetts Institute of Technology’s Sloan School of Management to his stint with the Boston Consulting Group in Paris, all points in one direction. It is to take the company his father built over 50 years in Spain and Latin America – starting by laying rail tracks and ending by building Bilbao’s shimmering Guggenheim Museum – and turn it into global construction giant big enough to rival anything internationally.

Del Pino senior’s charitable foundation aims to build Spain’s future leaders in everything from business to the media and politics, with the aim of spreading Spain’s influence abroad. His son is arguably his biggest project. In interviews, Del Pino junior has speculated about the big deal which could transform the company. A bid for BAA, which including debt could be worth £15bn (E21.9bn, $26bn) and may arrive within weeks, fits the criteria. A Spanish analyst says: “He was born rich, but having been born rich, as opposed to just lying in the sun and taking advantage, he’s aiming to replicate what his father did at a different scale. He’s aiming to build one of the largest construction companies in Europe.”

Anyone in BAA’s executive offices hoping that the Del Pino line has shed some business acumen in jumping a generation risks being proved very wrong indeed.

One UK financier who was pulled in to meet Del Pino a year ago says: “I went in thinking, ‘this is just the son of the guy who started everything’, and went away thinking, ‘this is one of the leaders in the European infrastructure business’. He’s incredibly smart.”

Another analyst adds: “The MBA in the States – with all his wealth, he didn’t really need to do it. We all remember his father, but he wants to be remembered as a tycoon as well.”

Del Pino, 48, is more introverted than his father and intensely shy of media scrutiny. But those who have dealt with him say he is charming in person, with only a trace of a Spanish accent. He has a way with probing questions that allows him to soak up far more about others than he gives away about himself, and a direct style unusual among Spanish businessmen.

His outlook is doggedly global, and he devoted far more of his time scrutinising international opportunities than managing the company’s Spanish businesses. His father remains his mentor, Del Pino admitted to a Spanish newspaper a few years ago. There have unsurprisingly been some past differences of opinion, he said, especially given his father’s control of the family’s 58% stake. He told an interviewer a few years ago: “You have to make the most of the advantages of being ‘the son of’, and put up with the inconveniences.”

After serving as an artillery officer in the civil war, aged 17, Del Pino senior, now 86, also trained as a civil engineer at the elite Escuela de Caminos, along with many of the older generation of Spain’s business leaders. After travelling Europe picking up building techniques, he became known as “El Rey de Los Ladrillos” – the king of bricks.

“I doubt there are many people who have worked as hard as me,” he mused on retirement in 2000. “There may be some, but not many.”

The company expanded rapidly, taking advantage of Spain’s post-war reconstruction, and also picking up contracts to build motorways in North Africa and Latin America.

He says: “When one is beginning, one has to sweep the floors if necessary. You also have to know how to be humble. The leadership comes later.”

The son did exactly that, working on a Ferrovial project in Libya in 1983 in his first job for the company, before being promoted to chief executive in 1992 and taking control in 2000.

His brother Fernando and sister Maria sit on the Ferrovial board, but it has always been Rafael, the oldest, who was groomed to take over. A widower, his chief concern beyond building the business, is his three sons. He enjoys anything that takes him away from the world of business and into confrontation with the elements. In 2002, the four of them took their yacht across the Atlantic, a trip, Del Pino proudly recalls, that saw them braving Force 6 gales.

He’s also keen on cross-country skiing, decking out his skis with skins and pushing off into the unknown, although he complains that in the 15 times he’s visited the World Economic Forum in Davos, he’s only managed to make it to the slopes five times.

In his business life, though, Ferrovial’s bid for BAA is his biggest challenge. Ferrovial, with a market value of E9bn, is taking on a company with a market value of around £8.5bn. Del Pino is putting on the table everything his father painstakingly built up over 50 years.

That doesn’t surprise anyone in Spain. One analyst says: “He’s not managing this as a standard family company that doesn’t want to take risks.”

Del Pino junior proved this as far back as 1999 when he pushed hard to encourage his father to outbid Australia’s Macquarie Group in the $2.1bn deal to own and operate Highway 407, a 99-year lease for a toll road in Toronto, Canada. “People thought it was crazy,” says one analyst, “but it is one of the most profitable things they did.”

It was the son, rather than his father, who first realised the potential for infrastructure investments. Allan Moss, the boss of Australian bank Macquarie, is credited with the realisation in the 1990s that infrastructure such as roads, airports and utilities was perfectly matched to the investment needs of pension funds. But Del Pino was not far behind in seeing the opportunities this could bring the construction and asset management firms that partnered them. Ontario Teachers’ Pension Plan was a long-term investor in Macquarie’s funds, but Ferrovial has typically worked with the Francophone Caisse de Dépot et Placement du Québec, who backed them on the Highway 407 deal, and are reportedly the main backer on BAA.

Del Pino junior was also the moving force behind taking Ferrovial public back in 2000. Again, the move looked rocky at the time, as the shares halved from E22.85 to E13 once they hit the market, prompting accusations that the Del Pinos had been too greedy. But with the shares now trading above E64, Del Pino’s pricing looks entirely justified. His father may have built the company, but its share price has nearly tripled under the son’s tenure.

His father’s management style was based on force of personality, the son in contrast likes to give his managers a freer rein, fostering an entrepreneurial culture. Analysts say he shares his power with chief executive Joaquin Ayuso, vice chairman Santiago Bergareche, and chief financial officer Nicolas Villen. They, in turn, give considerable autonomy to the heads of the company’s four arms – construction, infrastructure, real estate and services.

Ferrovial has shown it can operate in the UK market. It has bought 50% stakes in Bristol and Belfast airports and bought UK construction firm Amey, turning the company around and gaining a stake in the Tube Lines consortium redeveloping the London Underground. It also has a contract to build schools in Bradford.

Elsewhere, its biggest investments have been done through its separately listed toll road subsidiary Cintra. The group has a 99-year concession to operate the Chicago Skyway and was this year awarded, in partnership with the Macquarie Infrastructure Group, a 75-year concession on the Indiana Toll Road. Cintra is also developing, with the state of Texas, a new cross-state corridor. Last year Ferrovial also bought Swissport International, the airport handling company that operates in more than 180 airports worldwide.

Although Del Pino senior’s life stands as one of the Spanish business world’s most striking success stories, his last years have been fraught with tragedy. He captured Spain’s imagination on retirement with his plans to retrace Jules Verne’s voyage around the world on his E12m luxury yacht Alcor, flying in friends to accompany him for the various legs of the trip. Articles compared the then 82-year-old adventurer to Magellan. But the trip was tragically cut short when he was left paralysed by a fall on board.

Now, his ambitions for his retirement sadly curtailed, his hopes are on his son’s efforts to take his legacy onwards. For the Del Pinos, BAA is more than just a deal.

© 2006 The Business


Friday, February 17, 2006

A tax by any other name...

Hwy. 42 work is moved up

Kilgore News-Herald
Copyright 2006

The upgrade of Texas Hwy. 42 is a twopart project, according to Jeff Austin III.

Austin, head of the Northeast Texas Regional Mobility Authority (NET RMA), said widening the highway is one project that will eventually play a role in the Texas Hourglass Project, a part of the regional highway system.

“The Hwy. 42 project is on our radar screen,” Austin said.

However, other work planned for Hwy. 42 hits closer to home.

The NET RMA is working with the Longview Metropolitan Planning Organization to find ways to assist funding the Hwy. 42 project from U.S. Hwy. 80 to I-20.

Karen Owen, senior transportation planner for the city of Longview and MPO director, said the city has earmarked $15 million for work on Hwy. 42 between U.S. 80 and I-20.

“The MPO has $15 million for the project, but the RMA is looking for ways to help us obtain more funding,” she said. “I can’t address the work (on Hwy 42) south of I-20, because it’s out of my planning area.”

Austin said the NET RMA wants to assist with finding funding for the Hwy. 42 project between White Oak and Kilgore.

“We hope we can help by coming up with some pass through financing options,” Austin said. “One way is to help them issue bonds.”

Austin said this “pass through toll” financing is “a method use to get the road built faster.”

Although described as a “toll,” drivers on this road would not pay a fee for use.

“This is not a cash toll road,” Austin said. “Money for the project comes from the Texas Department of Transportation (TxDOT) and is based on road usage.” Austin said with NET RMA involvement, the Hwy. 42 project “will have greater visibility and be able to gain traction in finding financing.”

TxDOT is doing the preliminary work on another part of the project, termed the Richey Road Expansion, Austin said.

“The importance of this portion of the project is that it will eventually connect with the regional highway (Texas Hourglass Project),” Owen said.

© 2006 Kilgore News-Herald


"Spain has been waiting a long time to get its land back."

How much does this job pay again?

February 18, 2006

Austin American-Statesman
Copyright 2006

Since Jan. 16, American-Statesman editorialists have been interviewing candidates running in the March 7 Democratic and Republican party primaries — scores of them. We've interviewed close to 70 candidates, and we're going to spend next week rounding up a few strays.

In the main, the hours are filled with recitations of candidates' backgrounds, political positions and expectations of success. But there are always a few political gems in the conversations, some contentious give-and-take and occasional moments of humor.

For instance, Terry Keel, a Republican state representative from Austin now running statewide for the Texas Court of Criminal Appeals, is always a lively interview. That's a tough race because few Texans know the court, fewer offer campaign contributions for judges who only decide criminal appeals and candidates must campaign across this vast state.

Judges often reach that court, Keel explained, "because they're dead Texas heroes or grocery store commodities." What's that? Well, Keel continued, Judge Sam Houston Clinton always admitted he won because he was named for a dead Texas hero. "Look at the names of some others who've been on the court: Baird, Onion, McCormack, Campbell . . . groceries. I can give you the whole list if you want."

Keel is a successful and savvy politician who knows his way around an interview. Others aren't so experienced. Like the candidate who said he was running for county judge because he had already lost a race for county commissioner and didn't want to lose the same race twice.

Another candidate, asked why he was running, said, "A county commissioner makes $50,000 a year. That's almost a thousand dollars a month."

State Rep. Mike Krusee, the Republican representing Williamson County, was grilled on his legislation that created toll road authorities. So you consider toll roads just a necessary evil, he was asked.

"I wouldn't call them 'evil'," he replied, straight-faced.

And on giving the contract for a Texas toll road to Cintra, a Spanish company with operations around the world, someone noted that Spain has been waiting a long time to get its land back.


Somebody should have told Ben. As good as the above gems are, those quotes don't shine as brightly as one offered up in Friday's editions by Dave Carney, chief political consultant to Gov. Rick Perry. Responding to criticism about a trip to the Bahamas that the governor took a couple of years ago to relax and talk about school finance with well-heeled contributors and supporters, Carney had this to say: "It gives the cranks something to attack, criticize and talk about without having to actually come up with a plan or an idea of their own. Negativity has never won an election."

Well, Carney should have offered that advice to the Republican Party of Texas, which spent tons of money attacking Democratic legislative candidate Donna Howard.

Carney got it right, though. Howard, running to represent a district that stretches from the Burnet County line to South Austin, easily trounced Republican Ben Bentzin in the District 48 special election. She captured 58 percent of the votes.

© 2005 Austin American-Statesman:


Toll roads: "Unfair and un-Texan."

Opponents: Toll Roads Create 'Second Class Citizens'


Jim Forsyth
WOAI (San Antonio)
Copyright 2006
Toll road opponents in Texas, emboldened by a strongly worded letter from Bexar County Commissioner Lyle Larsen to Governor Perry calling toll roads 'unfair and un-Texan,' are preparing a bold new strategy to expand opposition to tolls to all groups of people, 1200 WOAI news reported today.

Terri Hall, San Antonio coordinator of the anti toll group 'Texas Toll Party' says anti toll activists will claim that toll roads are a 'divisive' measure which will 'separate people by class and income.'

"This is going to create two classes of people in San Antonio, and will keep good working class and middle class people off the best roads in Bexar County," Hall said.

She said the toll road proposal is 'outrageous' because it will divide people based on their incomes.

"Our society is going to be basically segmented into two different categories, those who can afford to pay tolls and can have efficient travel, and those who can't afford to pay the tolls and will be stuck on congested highways as second class citizens for the rest of their lives."

Hall also cited a plan to prohibit construction of new free roads that would compete with toll roads.

Larsen is the latest public official to come out strongly against the plan to build toll roads, first on Highway 281 outside 1604, and then on 1604, Interstate 35 and other highways. The 281 plan has been held up due to environmental concerns.

"The State Legislature has continually cannibalized the state motor fuel tax to balance the state budget," Larsen wrote. "The Legislature needs to begin demonstrating stronger discipline while utilizing the state motor fuel exclusively for new highway construction and maintenance."

Larsen says any toll proposal on new lanes of existing highways, in his opinion, amounts to unconstitutional 'double taxation.' Send news tips/story ideas to WOAI...
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"Anyone who votes in the primary cannot sign a petition for an independent candidate."

Independents: To vote or not to vote


Isadora Vail
San Antonio Express-News
Copyright 2006

AUSTIN — With less than two weeks to go before the primary elections, independent gubernatorial hopefuls Carole Keeton Strayhorn and Kinky Friedman are preaching two different themes.

Friedman is using the catchy "Save yourself for Kinky" slogan to encourage voters not to vote in the March 7 primary election.

Anyone who votes in the primary cannot sign a petition for an independent candidate.

Strayhorn, however, is encouraging people to vote.

"We are telling voters that if you vote in the primary, you can still vote for (Strayhorn) in November in the general election," said Mark Sanders, spokesman for Strayhorn. "We still have that 9 (million) or 10 million people that can sign our petition."

Bruce Buchanan, government professor at the University of Texas at Austin, said getting signatures is expensive and the difference in the campaigns is probably because of money.

He said that Friedman is using his slogan because it might be less costly and it is an easy way for him to get votes.

Strayhorn had more than $8 million in her campaign war chest at the end of the year. Friedman had raised $1.5 million.

But just getting on the November ballot as an independent is daunting, which may explain why Sam Houston is the last independent to win the governor's race in Texas.

The main obstacle the candidates must overcome to be on that ballot is filing a petition with 45,540 signatures of registered voters, none of which voted in the primary elections or any run-off elections and none of which have signed a petition for another independent.

Friedman and Strayhorn will have from March 8 through May 11 to collect signatures, unless there is a run-off election, which would be held on April 11, leaving one month to collect signatures. "Verifying" the signatures will take up to two months, said spokesman Scott Haywood, for the secretary of state's office.

Friedman campaign spokeswoman Laura Stromberg said these extra two months may cause financial supporters or possible voters to lose their patience. "We are disappointed with the time frame and we are losing valuable time," she said.

Cal Jillson, professor of political science at Southern Methodist University, said the campaigns might need to get two or three times the minimum number of signatures to make sure they get enough valid names.

In the 2002 governor's race, there were about 12 million registered voters. Only 13.4 percent voted in the primaries, leaving more than 10 million voters eligible to sign petitions for independent candidates. In the general election, 36 percent voted.

The Friedman campaign has also criticized the secretary of state for advertisements encouraging Texans to vote.

Haywood said this advertisement had the sole purpose to inform people that there is new technology that will be used and voters shouldn't be intimidated.

"A secretary of state who didn't encourage voting would be derelict," Jillson said.
Staff Writer Gary Scharrer contributed to this report.

© 2006 San Antonio Express-News:


Thursday, February 16, 2006

Second Lone Star Infrastructure employee killed in SH-130 toll road construction project

Man killed during SH-130 work


By Kurt Johnson
Taylor Daily Press
Copyright 2006

The second death of an employee working on the SH-130 construction project occurred early Wednesday afternoon northeast of Georgetown.

According to Kevin Stofle of the Georgetown Police Department, Jorge Hernandez, 38, of Austin was working in front of a paving auger and was caught in the machine as the auger was rotating.

The accident happened at 1:30 p.m. at the toll road's intersection with FM 971, north of US 29.

Hernandez was employed by Lone Star Infrastructure (LSI), one of the companies working on the toll road in association with Fluor Daniel, Inc., the general contractor building the 49-mile toll road through a $1.4 billion contract with the Texas Department of Transportation (TxDot).

Construction on the project has been shut down temporarily while LSI performs a safety inspection, according to LSI spokesman Justin Keener.

The accident that killed Hernandez was the second time an LSI employee was fatally injured on the toll road project. In June, Concepcion Figueroa, 22, was killed his first day on the job in eastern Travis County when he was hit by a trenching bucket.

Keener said LSI is investigating what caused Wednesday's accident in order to ensure steps are taken to avoid such accidents in the future.

According to Keener, LSI employees receive extensive safety training before starting work.

The fast pace of construction on the toll road has created a flurry of activity in the area. In addition to the work being performed in the new toll road's route, there is substantial truck traffic hauling construction materials to the various sites where work is occurring.

The northern portion of SH-130 stretches from north of Georgetown to Niederwald. The work on the northern half of the project is much further along that work on the south end. According to LSI, sections of the roadway will be opened as work is completed. The first section is expected to be open to traffic by mid-2007, and the entire 49-mile stretch is scheduled to be completed by the end of next year.

Copyright © 2006 Taylor Daily Press


"The problem is I can't look at anyone here and tell them I've seen the documentation and that it'll work because it's all done in secret."

Commissioners call for help on S.H. 121


McKinney Courier-Gazette
Copyright 2006

Collin County Commissioners may be forced to reconsider signing a comprehensive development agreement with a private company to build and operate S.H. 121, after their plan for the North Texas Tollway Authority to build and operate the road was overlooked Feb. 9 by regional transportation officials.

On Tuesday, they mulled asking state senators and representatives to draft legislation to limit the Texas Department of Transportation's ability to force cities and counties to accept CDAs with private companies to operate toll roads.

Last Thursday, the Regional Transportation Council voted to include the NTTA's proposal among other bids to operate the road from which the Texas Transportation Commission can choose. That means that the NTTA, a non-profit local tolling entity, is competing for the rights to build and manage the road with private, for profit companies, some of which are based outside the country. The Texas Department of Transportation will present competing proposals to the RTC in November.

"Our proposal to use NTTA to build and operate 121 wasn't rejected, it was just thrown into the mix with the comprehensive development agreements," said County Commissioner Jack Hatchell. "It's not going to delay the construction of that facility any further. It's just a matter of who submits the best bid to do that." Hatchell also chairs the RTC. In April, he said, TxDOT may release a "shortlist" of three of four possible bid winners.

While the RTC's decision is disappointing, he said, if TxDOT chooses to draft a CDA with one of the private companies, Collin County may still be allowed to set the toll rate.

"The main goal is to get the thing built in five years, and if we can set the toll rates and rate of inflation, then everything will be on equal footing," Hatchell said.

However, he said, what is frightening is that the CDAs are fast becoming the norm for toll road projects in Texas. Private firms are well-funded, and like they did Thursday, can offer TxDOT a big cash payment for the rights to operate toll roads.

At the RTC meeting, TxDOT revealed that companies were willing to pay up to $575 million upfront for the rights to S.H. 121. The NTTA proposal would pay $515 million over 50 years and gradually increase over time.

"They are so sold on this CDA process. I don't think they are going to let anybody do a toll road on their own," Hatchell said. "When they dangle that $575 million in front of people, it really makes a difference."

That $575 million would immediately add to TxDOT's coffers for projects in the Dallas District, which includes many of the RTC member counties and cities.

Hatchell said that while the NTTA proposal "is a better deal in the long run," operating the road through a private firm is seen as a better deal in the short run.

"It's a money-grab," said County Judge Ron Harris. "We're really going to have to follow the lead of our legislative delegation because this has kind of gone over what we can do."

Harris, Hatchell and Hoagland agreed that the county and its citizens should rally their state representatives and ask for legislation re-evaluating the focus of TxDOT and the RTC's near neighbor, near timeframe policy. TxDOT, they said, swayed the RTCs vote because the department favors CDAs.

"The four cities are absolutely against and our position has always been against CDAs," said Harris. "There's no local control, plus they're going to make a sizeable profit or else they wouldn't be doing this. I think the money should just stay here with the NTTA."

The county initially proposed forming a local government corporation to build and run the road, but that idea was rejected by state transportation officials. The county and four cities revoked their support for the LGC after learning that state officials would not approve of it. They instead endorsed the NTTA's proposal, and county officials were hopeful that their second choice would be accepted.

Harris said that other counties who have used CDAs have reported problems with them. "The problem is I can't look at anyone here and tell them I've seen the documentation and that it'll work because it's all done in secret," he said.

Hoagland said he would not support allowing a private company to build and operate S.H. 121 through a CDA, and called it "another Robin Hood.

"When the state sells out to the highest bidder, that automatically translates into the highest tolls for our citizens," he said. "I think that the Legislature ought to go in and change the focus of TxDOT. That's what's going to have to happen. We're going to have to pass a law saying that's not the way we finance roads."

Commissioner Joe Jaynes said that if a private company can keep the toll rates low and allow Collin County to set terms of the agreement, he'd be willing to look at the option.

The county's stance on S.H. 121 could tarnish its relationship with TxDOT and its neighbors and affect its ability to acquire funding for other projects.

"It's obvious that Austin wants it. They're doing it in other areas of the state. There might be some issues with it, but I think looking at those issues might resolve them one way or the other, so at least we have the NTTA proposal in there. With the money up front, if that was to work out, we'd have quicker funding for U.S. 75, 380 West and the Outer Loop," he said. "I'm not pro-CDA. "I'm just saying let's compare apples to apples so we can get a clear picture on where we're headed."

Contact Krystal De Los Santos at

© 2006 The Courier-Gazette.


Wednesday, February 15, 2006

"URS Corp. has a magnificent record of failed tollways and inflated traffic forecasts."


Toll numbers inflated

February 15, 2006
Austin American-Statesman
Copyright 2006

Austin City Council Member Brewster McCracken's tax-funded review of Austin's "freeway tolls" has been hijacked by tollers. The pro-toll committee is allowing the toll authority to hire a company to fluff traffic forecast numbers.

That company, URS Corp., has a magnificent record of failed tollways and inflated traffic forecasts. URS has inaccurately forecasted nearly a half-dozen failed projects in Florida. One of those, the Suncoast Parkway, was projected for $70 million in year one. It produced $7 million.

The failed Camino Colombia tollway promised to be a "generator of regional economic activity." URS forecasted $9 million for year one — but it produced $500,000, which was 6 percent of the URS forecast.

We can only memorize the names on the toll committee: McCracken, state Rep. Mike Krusee, state Rep. Mark Strama, Travis County Commissioner Gerald Daugherty, Austin City Council Member Betty Dunkerley and fire them in upcoming elections for a sham "review."


Founder of People for Efficient Transportation

© 2005 Austin American-Statesman:


"Toll roads manipulate congestion for profit."

Letters to the Editor

Focus: Toll Roads


San Antonio Express-News
Copyright 2006

They aren't the answer

Toll roads — lanes with a 24/7 user fee in addition to the gas tax — are not the answer to the issues cited by Joe Krier in his comment "Toll roads pave way to a better future" (Thursday). The efficient approach is tolls levied only on congested road segments during high-traffic periods.

The key economic principle is that wise use results from pricing that reflects what something costs. People who drive during high-traffic periods do not pay the cost of slowing other people. So a toll should exist for only a few road segments and only during high-traffic periods. Such tolls reduce high-traffic-period road use and pay for additional highway capacity.

Gasoline taxes should pay for capacity to handle off-peak traffic.

The alternatives are very costly. We'd have to choose between frequent, huge congestion delays and related costs cited by Krier — paying a gasoline tax to drive on roads fully financed by 24/7 toll or sitting in congested "free lanes" (e.g. Houston) — or suffering a massive tax increase to pay for enough road capacity to avoid rush hour congestion.

Studies have shown peak-period, congestion tolling reduces construction spending and disruption and yields enormous benefits in the form of reduced travel times, auto maintenance, accidents and pollution.

John Merrifield

Won't ease congestion

Joe Krier attempts to make the case for tolling freeways we've already paid for. Here are some points that seem lost on toll proponents.

We have a built-in system to address growth: more residents mean more taxpayers. We already have a user tax for roads — the gas tax. The more you use, the more you pay.

It's absurd to assert toll lanes on U.S. 281 will relieve congestion. Toll roads manipulate congestion for profit. Improvements to U.S. 281 have been in the works for six years, are paid for and should be completed by now, so it's patently false to assert that adding express toll lanes to U.S. 281 will speed up congestion relief.

In fact, the toll project has delayed congestion relief in favor of taking private land through eminent domain to hand it over to foreign toll operators for private gain. These public-private partnerships are being kept secret and will last up to 50 years with no cap on toll rates and no oversight by any elected official.

The only non-toll lanes will be downgraded to slower frontage lanes with stoplights. There would be no non-toll expressway option. Therefore, rather than install the no-toll original funded plan on U.S. 281 that would make traffic flow smoothly for all motorists, Krier and our politicians would rather force us to pay a toll for a freeway that's already paid for without a vote of the people.

Terri Hall, founder/director,

San Antonio Toll Party

Gas tax idea unrealistic

I am concerned with Carlos Guerra's columns of Jan. 29 and Jan. 31 ("Have we considered alternatives to ambitious toll-road plans?" and "Readers say toll road dispute points to troubles down the line").

Guerra implies there is an easier answer to reduce traffic congestion on area highways. I understand that paying for new highway lanes with tolls is a new idea to San Antonio; however, his suggestion of encouraging less driving by raising gas taxes is not realistic.

I have not heard an outcry from citizens for an increased mandatory fuel tax every time they fill up their gas tanks. Nor have I heard from local elected officials their willingness to file legislation that would increase our gas tax.

I am fully aware that reducing traffic congestion will not be easy. Our plan is to use new financial options to accelerate needed improvements, empower local leaders to solve regional problems, drive down cost through increased competition and demand consumer-driven decisions.

Hope Andrade,
Texas Transportation Commission,


© 2006 San Antonio Express-News:


"They're not looking at people, they're looking at the money."

Officials: Road won’t go through San Juan

February 15,2006

Victoria Hirschberg
The Monitor
Copyright 2006

EDINBURG — San Juan residents declared victory Tuesday when state and local officials agreed to not build a toll road through the small city.

While the Texas Department of Transportation still intends to build a toll road connecting U.S. Expressway 83 and Military Highway, a letter to Commissioners Court from TxDOT’s local district engineer, Mario Jorge, last week encourages the county to consider alternative routes west of San Juan.

Jorge wrote that San Juan’s public opposition was the impetus for the shift.

The agreement to not build a toll road in San Juan came after almost 45 minutes of back and forth between County Judge Ramon Garcia and commissioners Hector "Tito" Palacios and Oscar Garza about the proper wording for the motion. Those three men are running for office in the March primary.

San Juan Mayor San Juanita Sanchez and her "troops," about 30 residents who attended Tuesday’s Commissioners Court meeting, were ecstatic after the unanimous vote was cast to relocate the toll road.

"It’s the power of the people," Sanchez said. She plans to now focus efforts on planning for the city without a toll road.

Maribel Romero, a San Juan property owner, said she is relieved there will be no toll road in the city.

"They’re not looking at the people, they’re looking at the money," she said.

In the past, the county has funded studies of potential toll routes, something Jorge said is part of the normal procedure.

However, TxDOT will not build roads where people do not want them, he said, adding the region needs a connector road.

"Toll roads are a funding mechanism and we’re going to explore where they are applicable," he told Commissioners Court.

He urged the commissioners to appoint board members to the Regional Mobility Authority quickly so that entity could apply for reimbursement of future engineering studies.

The RMA, which TxDOT approved November 2005, will eventually study and create county transportation and infrastructure projects. Commissioners have not yet set a timeline to make those appointments.


Victoria Hirschberg covers Hidalgo County government and general assignments for The Monitor. You can reach her at (956) 683-4466.

© 2006 The Monitor and Freedom Interactive Newspapers of Texas,


Tuesday, February 14, 2006

"A wild political season in Texas."

Election 2006: Texas Governor

Strayhorn Gains Ground

Survey of 500 Likely Voters

February 14, 2006

Rasmussen Reports
Copyright 2006

Carole Keeton Strayhorn's defection from the GOP to run for Governor as an Independent is making things interesting in President Bush's home state.

In the six weeks since Strayhorn announced plans for an Independent challenge, her support has increased ten percentage points. She is now within single digits of catching Governor Rick Perry. Depending upon which Democrat is added in the mix, Perry leads Strayhorn either 40% to 31% or 38% to 29%.

In our January election poll for Texas, Strayhorn earned 21% of the vote.

Both Democratic contenders currently attract less than 20% of voters and a fourth competitor, Richard "Kinky" Friedman is in the high single digits. At the moment, the Democrats and Friedman appear as by-standers in a Republican civil war.

Perry does better among conservatives while Strayhorn draws more support from moderates and liberals.

Perry has a solid edge among Republican voters, but Strayhorn has a nearly 20-point advantage over the incumbent among unaffiliated voters.
Perry is still the favorite in this race, but the unusual dynamic of a Republican official bolting the party to challenge a Republican Governor could make for a wild political season in Texas.

© 2006 Rasmussen


TTC 35's environmental impact statement is being withheld from public by TxDOT

Some Trans Texas Corridor details are being kept very quiet


Carlos Guerra
San Antonio Express-News
Copyright 2006

Among the Trans Texas Corridor's most fervent opponents are farmers and ranchers who are closely tied to family land.

Many are like Susan Ridgeway Garry of Coupland, a small, rural community in the Austin area.

"When you say the Trans Texas Corridor 'will be built on state land handed to investors,' you leave out an important step," she wrote. "It is not currently state land, it is Texas citizens' land, some of which has been in the same family for generations."

Though they no longer farm, the Garrys live on land that has been in her husband's family for generations. But when the Texas Department of Transportation released a map of the planned corridor routes, they found their home within one of the corridor routes.

Like others throughout Texas, the Garrys joined neighbors in the Coupland Civic Organization.

"Little groups like ours are using the new technology to work together," she said. Through e-mails, they keep each other informed and reach out to educate others about what the corridor really is.

"People don't understand that (the Trans Texas Corridor) is not like the interstate, where there is access and communities along it prosper," she says. "This will cut off communities. It's a network of quarter-mile-wide dividing lines that will cut up the state, cut up agricultural areas and change the entire character of Texas."

Her points are amply detailed in "Crossroads of the Americas: Trans Texas Corridor," the Texas Department of Transportation's plans for the $184 billion project.

The state intends to take at least 548,000 acres of land — most of it from private owners through eminent domain — in swaths as wide as three football fields laid end to end. On the 4,000 miles of new right of way, the plans call for four sets of vehicular lanes, two rail lanes, and easements, both above and underground, for utilities.

The corridor will have no frontage roads, such as those along the interstate highway system that have fostered economic development in many communities.

Instead, vehicular access to the tollways will be only from interstate, U.S. and some state highways that intersect it through expensive interchanges.

Other intersecting roads — such as farm-to-market roads, county roads, local highways and two-lane state highways — will not provide access to the corridor. Instead, expensive "flyovers" will have to be built over the wide corridor for the larger roads, and smaller roads will simply end at the corridor's edge.

As planned, corridor routes will be leased to private-sector interests that will not only collect the vehicular tolls, but will also benefit from railway and utility leases and from real estate development within the right of way, such as motels, gas stations and eateries.

And even though decisions are being made and deals are being cut, many important details about the project are very hard to get.

"The corridor's Draft Environmental Impact Statement was due in December and it's not out," Garry said, explaining that it will more precisely plot the final route of the corridor. "My husband and I filed an open records request to see it," she says, "and TxDOT sent a letter saying they referred our request to the attorney general for an opinion on whether they must let us see it."

I know how frustrating that can be. And I hope the Garrys aren't too surprised if they don't see it until after the November election.

© 2006 San Antonio Express-News:


Sunday, February 12, 2006

"Design-build has proven in California and elsewhere as a way to waste money."

A Feeding Frenzy for Lobbyists

The governor's proposed $222-billion public works bond has advocates for firms and unions lining up for a piece of the action.

February 12, 2006

By Jordan Rau,
Los Angeles Times
Copyright 2006

SACRAMENTO � Richard Gephardt, the former congressional leader and two-time presidential candidate, recently dropped by California's Capitol to chat with a fellow Democrat, Senate President Pro Tem Don Perata. The subject was not politics but private toll roads, according to people familiar with the meeting.

Gephardt works for Goldman Sachs, the investment bank that is making millions advising Chicago and Indiana on how to sell toll roads to private companies. That idea, largely resisted in California, is now back on center stage here as part of Gov. Arnold Schwarzenegger's $222-billion proposal to revamp roads, levees and schools across the state.

His plan includes $16 billion for privately run toll roads, mostly for commercial traffic. It was crafted with advice from a Goldman Sachs senior advisor, Kathleen Brown, a former state treasurer.

As the governor's aides and legislative negotiators hammer out the details in the Capitol, the largest public works project in state history has launched a frenzy of lobbying, already a $215-million annual business in Sacramento.

Many members of the Third House, as the state's lobbying corps is known (the Assembly and Senate being the first two houses), are fully engaged � much as California's political consultants were last year during the $250-million-plus special election.

"Any time you begin to divvy money up, everyone thinks they should get more," said Dave Ackerman, a lobbyist for Associated General Contractors. "Groups know what they want to try to protect and what they want to do. They're staking their turf out."

Individual projects so far are not named in the bonds, but advocates are positioning themselves to be first to obtain money from state agencies if voters approve the plan. More urgently, lobbyists hope to influence the criteria written into the bond initiatives that will direct how the money will be doled out.

Private toll roads, water storage projects, new jails, parks, retrofitted hospitals � all have active lobbyists pushing to be included in the massive bond issue. Many of the ideas also have well-financed opponents.

Water storage projects � including off-river dams � are an idea that the governor wants to back to the tune of $1.25 billion. Environmentalists think the public should not subsidize such projects, and some Democratic legislators want to take the money out of the bond proposal.

Republican senators who represent districts where the projects would be located are making them a priority.

"People are currently trying to assess which projects have the most promise, and anybody who has an interest in that is just weighing in on that part of the debate," said Anson Moran, manager of the Delta Wetlands Project, which would turn two below-sea-level islands in the Sacramento-San Joaquin Delta into reservoirs. Edelstein & Gilbert, a Sacramento lobbying firm, is pushing the project on behalf of the private owners of the islands.

Unions for prison guards and police officers are battling county sheriffs over Schwarzenegger's proposal to spend $2 billion expanding local jails. The California Correctional Peace Officers Assn. and the Peace Officers Research Assn. of California complain that the proposals are poorly thought out and would not prohibit private companies from running the jails. The guards union objects to the idea of shifting state prisoners to the new cells that would be built in local jails.

The break in law and order's united front is rare, but there is little love lost between the unions and Schwarzenegger, who unsuccessfully pushed an initiative last year that would have restricted the way unions could collect dues from members.

Opposition is so intense among lawmakers, many of whom place jails as a low priority anyway, that the administration has not been able to find a Senate sponsor from either party for that section of his plan.

Many Sacramento interests are busy trying to persuade legislators to broaden the governor's proposal beyond bricks and mortar.

Environmentalists are pressing for money to be set aside for parks, saying otherwise they may back a competing $5.4-billion bond measure that would devote much of the money for conservation and park improvements. Perata (D-Oakland) has listed parks as an important component of whatever deal is ultimately worked out.

The Service Employees International Union, which represents many medical workers, wants money to retrofit older hospitals so they will be protected from earthquakes. Assembly Speaker Fabian Nu�ez (D-Los Angeles) has listed this as one of his priorities.

"We do think there are some hospitals that need some help with the financing, although many hospitals are well able to afford this themselves," said Beth Capell, a union lobbyist.

One might expect hospital owners to be joining that push. In fact, however, the state's hospitals have been lukewarm to the idea. They have been lobbying to delay a 2008 deadline for hospitals to make many of their buildings earthquake-proof. Hospital officials fear that lawmakers will retain the mandate but put up only a small amount toward the cost of the retrofits, which hospital lobbyists say could total more than $40 billion.

"If the Legislature were to allocate a little bit of money, like $1 billion or $2 billion, and think that is going to solve the problem, that is not a good thing," said Jan Emerson, a vice president of the California Hospital Assn.

Much of the lobbying revolves around smaller but politically charged components of the governor's plan. For example, the Professional Engineers in California Government, a union with 9,300 members, is trying to kill provisions that could take work away from Caltrans engineers by allowing the contractors that build bridges and roads to design them as well. Such methods are called "design-build."

"We don't want to see the money wasted, and design-build has proven in California and elsewhere as a way to waste money," said Bruce Blanning, the union's executive assistant.

Schwarzenegger's proposal to use private-public partnerships to expand the routes used for transporting goods from California's ports has drawn international attention.

One firm expressing interest is the Macquarie Infrastructure Group, an Australia-based company. The firm is part of a consortium that last month won a $3.8-billion contract to maintain and run a 157-mile toll road in Indiana. The consortium also leased the Chicago Skyway last year for $1.8 billion, a deal in which Goldman Sachs earned $9 million for giving financial advice to the city.

Macquarie hadn't employed a Sacramento lobbyist since 2001. But last April it retained California Strategies & Advocacy, a firm led by Bob White, a longtime Republican operative who advised Schwarzenegger in his 2003 recall campaign.

Among Democrats, who hold the majority in both houses of the Legislature, the idea of private toll roads is one of the most controversial parts of the governor's plan. Gephardt and a Macquarie executive hope to convince legislators that the idea makes sense when they testify before a state Senate panel Tuesday.

Richard Costigan, Schwarzenegger's legislative secretary, said the governor's proposal was modest and aimed primarily at commercial users of roads, such as trucks that carry goods shipped into ports.

"It's not like we're going to turn Interstate 80 into a toll road," he said.

� 2006 Copyright Los Angeles Times


"While radically changing how Texas builds roads, lawmakers decided that road building is too important to let those who pay for them have a say."

Are toll roads really about traffic, or perhaps about big contracts?


Carlos Guerra
San Antonio Express-News
Copyright 2006

It has taken awhile for people to understand what elected — and unelected — officials have planned for them, which is why only now are the Texas Department of Transportation's toll-road plans coming under intense fire.

When Gov. Rick Perry unveiled the Trans Texas Corridor, I warned that it could turn into a huge boondoggle. But few readers responded, and some called me an alarmist. And even in late 2004, Texas Transportation Commission Chairman Ric Williamson said that "in your lifetime, most roads will have tolls," and Time magazine asked if our state's plans weren't "a Big, Fat Texas Boondoggle." But only a few more people wrote in.

Recent columns about toll roads in the far North Side, however, triggered waves of e-mails from all over Texas expressing strong opposition to tollways and anger that voters are powerless to stop them.

"Why don't they put it out in the marketplace of ideas?" asked one. "If (toll roads) are really that great, people will vote for them."

It won't happen. While radically changing how Texas builds roads, lawmakers decided that road building is too important to let those who pay for them have a say.

TxDOT will turn some existing roads into tollways, and add toll lanes to other existing roads. You will have zip to say about it, or about plans for 4,000 miles of new toll roads — with railway and utility easements — that will be built on state land handed to private investors. The Trans Texas Corridor will take 584,000 acres of land in quarter-mile-wide swaths at a cost of an estimated $183.5 billion.

These projects are well on their way. But only now are many realizing that the "small" tollway proposals close to them are not isolated, one-of-a-kind projects, but part of a bigger scheme. Controversies are erupting throughout Texas, and very diverse constituencies are coalescing in opposition. Their only recourse may be at the ballot box, however.

And toll roads do have supporters. My columns about tolling U.S. 281, for example, triggered some prominent proponents to dispute what I wrote, and I will explore these in a future column.

I must, however, address some assertions made last week in an op/ed piece by Greater San Antonio Chamber of Commerce President Joe Krier. Toll roads, he wrote, are needed to keep our air and water clean, and shouldn't be like Austin, which, by letting its growth get ahead of its highway building, made "its residents suffer painfully long commuting times."

Can anyone explain how building more highways over the Edwards Aquifer recharge zone will not increase the chances of catastrophic spills? And why is there such a rush to build more highway miles when both San Antonio's and Austin's commute times are still way below the national average?

Environmentalist Krier did write that as TxDOT "revisits the environmental assessment ..., all critical environmental issues with this project (must) be fully addressed." What he didn't mention is that this more extensive assessment is required by federal law, and it is only now being conducted because a lawsuit forced TxDOT to do it.

It should also be pointed out that Krier did not submit his op/ed in his capacity as chamber president, but as chairman of the San Antonio Mobility Coalition.

Check that group's Web site, and you will see that its membership is a veritable who's who of big construction interests. Could it be that these projects are more about fat construction contracts than about improving transportation?

To contact Carlos Guerra, call (210) 250-3545 or e-mail

© 2006 San Antonio Express-News:


Trans-Texas Corridor dollars: Tribute to Spain's "King of the Bricks."

The battle of Britain's airports

February 12, 2006

The Sunday Times
Copyright 2006

Ferrovial’s daring raid on BAA sent the airport group’s shares soaring as it fights the threat of Heathrow and Gatwick falling into foreign hands, reports Dominic O’Connell

Mike Clasper, BAA’s genial chief executive, spent last Saturday afternoon in a corporate box at Twickenham, roaring on the England rugby team as they thrashed Wales. In business terms, it was the equivalent of Sir Francis Drake’s famous game of bowls before the arrival of the Spanish Armada.

Unbeknown to Clasper as he sang Swing Low, Sweet Chariot during the England victory, an invasion force was gathering with his company as the target.

Ferrovial, an aggressive construction and infrastructure group run by one of Spain’s richest families, had decided to do what many in the business world had thought nigh impossible: mount a bid for BAA, the group that owns seven of the UK’s largest airports, including Heathrow, Gatwick and Stansted.

Instructed by chairman Rafael del Pino, a group of Ferrovial executives had for months studied a host of possible airport deals. Del Pino and his fellow directors were convinced that the current global wave of airport privatisations and sales presented a once-in-a-lifetime opportunity to grab prime position in what would be a rapidly consolidating and lucrative industry.

Ferrovial’s resolve hardened at the end of last year after it lost out to BAA in a tough bidding battle for Budapest airport. The British group paid top dollar to win, the price of £1.2 billion setting a new international benchmark for airport valuations. With its adviser, the global banking giant Citigroup, Ferrovial decided to go straight for the biggest airport deal of all, BAA.

Unfortunately for the Spanish, their secret got out. On Tuesday afternoon Clasper was attending a parliamentary reception thrown by Singapore Airlines. As he mingled with MPs and airline executives in a Commons dining room, dealers in City trading rooms a few miles to the east were watching with astonishment as BAA shares began to soar.

The following morning, fuelled by rumours sweeping the Madrid bourse, BAA shot up again in the first hour of trading. At 9.30am Ferrovial was forced to issue a statement to the Stock Exchange. It said it was looking at a consortium bid, and if it went ahead it would pay cash. BAA shares took off, putting on nearly 20% that day, and closing last week at 779p, having started the week at 642p.

Even if Ferrovial did not bid, analysts said, BAA was now in play, with cash-rich private-equity groups circling. Star Capital, KKR and the Australian bank Macquarie were all mentioned as potential suitors.

BAA executives were stunned, and they were not alone. Aviation analysts, airline bosses and rival airport chiefs freely confessed their amazement at the Spanish group’s audacity. Not only was there a mismatch in terms of size — Ferrovial’s market capitalisation was just £6.2 billion compared with BAA’s £8.4 billion — but there was an implicit assumption that BAA was somehow immune to takeover.

Not only was the company heavily regulated, with price caps in place at its three showcase London airports, but it had a gargantuan capital-expenditure programme that should have made it unattractive to raiders.

To set the seal on the defence, much of that capital expenditure resulted from the company putting into action the government’s airports policy. BAA and the government were moving hand in hand, the industry wisdom said, which meant the company was the corporate equivalent of the mafia’s “made man” — an untouchable.

Industry wisdom was wrong. As some analysts and bankers perceptively pointed out, BAA had been a takeover target ever since the government relinquished its golden share in the company in 2003.

In September of that year, one week after the golden share was given up, The Sunday Times revealed that several City banks were drawing up proposals for a leveraged buyout of the airports group. The plans differed in detail, but had one unifying theme — that BAA’s finances were not stretched, as some claimed, but in fact were very conservative. By loading it up with debt, in the way water companies and other utilities have been increasingly leveraged, billions of pounds could be returned to grateful shareholders.

At the time, Clasper did not agree. “We are too heavily regulated and have too onerous a capital investment programme ahead of us to make a bid likely,” he told The Sunday Times. But company sources say the recent run of bids for British infrastructure companies, such as the Dubai offer for ports group P&O, had put the company on its guard. Clasper, who declined a request for an interview last week, will hope that, like Drake, he is able to fight off the Armada after fulfilling his sporting engagement.

ON a clear night the skies above London provide graphic evidence of the attractiveness and earning power of BAA’s assets. Aircraft circle like fireflies above the capital, waiting their turn to land at Heathrow, the world’s busiest international airport and the jewel in BAA’s crown.

For most of the day, an aircraft lands and takes off at the London hub every 90 seconds. Runway slots — the right to take off and land at a particular time of day — change hands for more than £4m a pair.

For the past 50 years Heathrow has been the crossroads of international aviation, ideally placed to connect Europe with Asia, America and Africa, and to suck up big-spending business passengers from London’s financial powerhouses. Airlines love it. According to some estimates, yields at the airport are often six times those on comparable routes from other hubs; BAA’s regulatory accounts show that Heathrow represented 63% of the group’s profit’s in the 2004-5 financial year.

But the company’s ownership of such assets comes at a price. With Heathrow, Gatwick and Stansted in its portfolio, it is all but a monopoly provider of airport infrastructure in the southeast. When BAA was floated on the stock market in 1987, a regulatory regime was put in place to stop the company using its powerful position to overcharge its airline customers. The regime is still in place, and may play a decisive role in the looming takeover battle.

Every five years, the Civil Aviation Authority (CAA) sets strict price limits on how much BAA can charge customers at the three “designated” London airports, Heathrow, Gatwick and Stansted. Prices are linked to movements in inflation; at Heathrow, for example, BAA was last year able to raise its prices by 6 percentage points above the Retail Prices Index (RPI), a large increase to reflect heavy spending on a new fifth terminal at the airport.

This regulatory lockstep has left BAA closely linked to government airport policy. As one senior BAA manager said last week, the group has become “a private company with some public duties”. When the government’s landmark white paper on aviation policy was published in 2003, BAA’s role was seen as vital — and the company duly signalled its commitment to deliver the cornerstone of the plan, a new runway at Stansted.

The close relationship with Whitehall led some to pour scorn on the idea of a bid for BAA. But aviation experts point out that the removal of the golden share, which coincidentally came just two months before the white paper, removed the airports group’s last shred of protection against an aggressor.

With the next price review already in motion, Clasper and his fellow directors will find it difficult to mount a normal bid defence. “The review is all about BAA trying to convince the CAA it has done all it can in terms of efficiencies and capital investment — in the nicest possible way, they have to mug the regulator,” said one transport banker.

But a defence against Ferrovial will require Clasper to go for broke, cutting costs to the bone and trimming capital expenditure in an attempt to give more value to the group’s shareholders.

The CAA will be watching like a hawk, and hold BAA to any such promises when it comes to calculating its next set of airport prices. “It is a Catch-22 situation. BAA wants the regulator to be as generous as possible, but it needs to show its shareholders it can be just as tough as Ferrovial or any other bidder. They are damned if they do, and damned if they don’t,” said the banker.

FERROVIAL has happy memories of airport investments in the UK. In 2001 it teamed up with Australian bank Macquarie to buy Bristol airport. That has turned out to be one of the pair’s best ever investments; a recent refinancing has left them sitting on an 180% return on their original investment, and still owning the freehold on the airport.

Analysts expect they will try some similar financial wizardry at BAA.

Merrill Lynch, the investment bank, said in a report that it believed there was “potential for significant financial leverage”.

In particular, analysts say, the new owner would look to borrow against BAA’s future airport revenues, a process known as securitisation.

If the Ferrovial consortium were to make a bid financed 80% through debt and 20% in equity, it could pay 850p a share, according to Merrill Lynch analysis.

The bank notes also that Ferrovial has considerable experience in using more aggressive and “innovative” capital structures that could potentially free millions more to be given back to shareholders.

Ferrovial was this weekend tight-lipped on the possible membership of its bidding consortium, but airport insiders say Macquarie is not likely to join. Hochtief, the German infrastructure group, is a possible candidate, as are a host of infrastructure investment funds recently set up by leading financial institutions.

THERE is also the possibility of a break-up. Some bankers think Ferrovial would be tempted to sell Stansted or Gatwick, or both, in order to return value to shareholders. BAA may eventually be forced to consider the same tactic.

BAA is unlikely to receive much succour from its airline customers. Although they will not comment publicly, big airlines such as British Airways, BMI British Midland and Virgin have privately railed against its southeast monopoly, and would welcome a break-up.

Ryanair chief executive Michael O’Leary, BAA’s biggest critic, says he would support a bid for BAA, noting that Ferrovial has a record of building airport facilities that airlines want.

“I’m sure a new owner would build a new runway and terminal at Stansted for about £1 billion, not the £3 billion BAA is talking about,” he said.

Tim Jeans, the chief executive of Monarch Airlines, is more emollient. “BAA has become a lot more customer-friendly in recent years,” he said.

But for Clasper and his fellow directors, the immediate problem is how best to react to a bid. Shareholders were yesterday indicating that they would be happy to sell out for 900p a share.

If Ferrovial can come up with that price, BAA will have to abandon all thoughts of appeasing the regulator, and fight back tooth and claw.

How Spain’s ‘ king of bricks’ set out on the road to be a giant of infrastructure

FERROVIAL, the Spanish group that is stalking BAA, got its start in railways. Rafael del Pino, father of the current chairman, set up the company as a track contractor to Renfe, the state-owned Spanish railway. Del Pino’s ambitions were not limited to track work, however, and Ferrovial diversified into a general contracting group.

Fuelled by the booming Spanish economy, the company took off in the 1990s. In 1999 it floated on the Madrid stock exchange, but remains — unlike BAA, run by chief executive Mike Clasper, pictured right — a family-controlled group, with the Del Pino stake at 58%. That stock, and other family investments, puts Rafael del Pino Sr, who is now aged 88, on the Forbes billionaires list, and at 43rd place on The Sunday Times Rich List for Europe, with a fortune estimated at £2.6 billion.

Using its construction business as a cash-cow, Ferrovial has pushed hard into the public-private infrastructure field, funding airport, road and rail deals in Europe, America and Asia.

“Like many of the big Spanish companies it realised that if it wanted to continue to grow, it had not only to diversify but to expand internationally,” said one Spanish analyst. Foreign operations now account for about 60% of the company’s turnover.

It has two airports in the UK, Belfast and Bristol (which it owns in a joint venture with Macquarie, the Australian bank). It is also a big player in the running of London Underground, having picked up a one-third stake in the Tubelines consortium when it bought the troubled contractor Amey in 2003.

Tubelines is responsible under a 30-year contract for the operation and refurbishment of the track, signalling and stations on three Tube lines, the Jubilee, Northern and Piccadilly.

Since the purchase of Amey, Ferrovial has increased its stake in Tubelines, and now holds 66%. The other shareholder is Bechtel, the influential American project-management group.

The purchase of Amey also brought Ferrovial a beach-head in the UK private finance initiative (PFI) market, the largest in Europe. Amey last month won a project to refurbish and maintain 400 schools in West Yorkshire.

Ferrovial itself has pushed into America through Cintra, its toll-road subsidiary, which has a separate listing from the main group. It has the concession to run the Chicago Skyway, and is working with the state of Texas on ambitious plans for a new trans-state corridor. The company’s early prowess in construction led to Del Pino Sr being dubbed “El Rey de Los Ladrillos” — King of the Bricks.

He handed over the reins to his son in 2000, and the company has retained its reputation in its core construction business. It was responsible for the Guggenheim art museum in Bilbao, one of the iconic buildings of modern Europe.

Rivals describe Del Pino Jr as a “hands-on” chairman. “I would describe him as an executive chairman, and I would also say he is incredibly smart.

“There is no doubt he sees this deal (the potential purchase of BAA) as the next big step forward, a way to turn Ferrovial into the world’s biggest airport group at a single stroke,” said the chief executive of a rival infrastructure group.

The Ferrovial approach sent BAA’s shares soaring, but Del Pino’s reputation means he is unlikely to be short of partners in assembling his bid consortium, the rival executive said. “I think his biggest problem will be demonstrating that he has a credible plan for dealing with BAA’s regulatory structure.”


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© 2006 Times Newspapers Ltd.