Saturday, June 24, 2006

Harris County plays Texas hold 'em

Texas’ toll route

Jun. 24, 2006
Fort Wayne Journal-Gazette
Copyright 2006

Indiana and Texas – traveling at dramatically different rates of speed on toll-road privatization – chose different routes this week. Which state made the better choice might not be known for many years, but it’s clear that Texas spent more time studying the road map.

In January, just a day after Gov. Mitch Daniels unveiled the “astounding sum” offered by the top bidder for the Indiana Toll Road, the Harris County (Texas) Board of Commissioners authorized a $1 million study of options for its own 83-mile toll road system. While that study was under way, Indiana lawmakers argued over how to spend $3.8 billion and approved the governor’s Major Moves plan. Objections from Democratic legislators and a lawsuit filed by lease opponents presented only minor roadblocks.

Tuesday, with results of the Texas study in hand, the Harris County commissioners voted unanimously to continue operating their toll road system instead of selling or leasing it to private investors. The investment consultant’s report advised that the county could increase profits by imitating a private firm’s practices.

“Now we can erect a sign on the toll roads: ‘Not for sale, not for lease,’ ” said Commissioner Steve Radack.

The study concluded that the Harris County Toll Road Authority would have to give up most of its control over rate increases to secure the best price for a sale or lease. JP Morgan and Popular Securities advised the county officials that they could have gotten as much as $20 billion for the Houston-area toll road system.

The same day Texas officials chose the exit ramp for privatization, the Indiana Supreme Court accelerated Daniels’ plan by rejecting legal arguments raised by opponents of the Indiana Toll Road lease. By upholding a ruling that says the plaintiffs must post a $1.9 billion bond to proceed, the court effectively killed the lawsuit. The state is now set to collect $3.8 billion from Cintra-Macquarie, the Spanish-Australian consortium that will run the Toll Road for the next 75 years.

The “astounding sum” will, indeed, present a major boost for the state’s long-delayed road-building and improvement efforts. Hoosiers can expect to see benefits soon – particularly given the interest Republican lawmakers have in proving to voters their Major Moves support was warranted.

But the deal’s success can’t be fairly judged before Nov. 7, or even in the 10 years it will take to spend the lease proceeds. The real test will come in the decades ahead. Will the private operator maintain the Toll Road without continual legal pressure by the state? Will the communities bordering the Toll Road face court battles each time they propose new roads or improvements to roads that might draw drivers away from the toll booths? Will northern Indiana residents ultimately bear the full cost of the deal in the form of toll increases?

The Harris County decision offers an interesting view of the road not taken. We’ll keep watching.

© 2006 Fort Wayne Journal Gazette:


"It's opening as a toll road; it's not opening as a free road."

Motorists can soon use 121's new lanes

Path from Coppell to The Colony to open in July, sans toll collection

June 24, 2006

The Dallas Morning News
Copyright 2006

Beyond the barricades that keep them on the access roads, Denton County commuters can see it: six miles of paved highway. Lanes of brand-new concrete running from Coppell to The Colony surely would ease their rush-hour woes.

Though the work looks finished, for weeks motorists have had to remain on the service road of the portion of State Highway 121. It's left them confused, frustrated and asking officials just when they'll be able to hop on the toll road.

The answer: next month.

That's when the Texas Department of Transportation will open the main lanes of that stretch of highway and allow commuters to use the new toll road. Officials haven't nailed down an exact date, but they're aiming to get rubber on the road in early July.

Tolls probably won't be collected until early September.

"We don't want to build an asset and not allow the public to use it," said Bob Brown, a deputy district engineer for the transportation agency. "That's our worst nightmare."

He said that although 121 may look finished, there are some small details that need attention. The construction, opening and eventual tolling of this portion of 121 have been mired as much in red tape as in orange barricades.

"There's a long story to this," Mr. Brown said.

State and federal officials approved the project years ago as a free highway. Construction began in 2003, and a year later, state and regional leaders decided to collect tolls on the highway.

The state transportation agency then said it would divert money already dedicated to 121 to other projects, including the widening of Interstate 35E through southern Denton County and FM423 in The Colony.

The decision to impose tolls on 121 required federal approval. As that worked its way through the bureaucratic pipeline, construction continued and was accelerated by several months of unusually low amounts of rainfall.

But even though construction neared completion this spring, state officials couldn't move forward with anything else until they received federal approval.

That came in April, and since then, officials have rushed to bring together all the final details, including highway signs, electronic toll collectors, guardrails and road striping.

Another wrinkle was that the electronic toll collectors probably won't be running until early September.

Regional leaders have a long-standing policy stipulating that any road that opens without tolls cannot be converted to a toll road. Such a conversion would also require countywide approval in an election.

But the state transportation agency says that when the main lanes open next month, 121 will technically be a toll road.

Mr. Brown said the first several weeks are a "marketing period" in which tolls will be waived for commuters.

"It's opening as a toll road; it's not opening as a free road," said Chris Behnke, an assistant area engineer for the transportation agency. "There just won't be any collection until the equipment is collecting."

Once collections begin, 121 will be the first toll road in the nation without tollbooths.

Motorists will be able to use their North Texas Tollway Authority TollTag in addition to the transportation agency's TxTag stickers and the Harris County Toll Road Authority's EZ TAG.

People who don't have toll tags, though, won't have to stop at a booth. Instead, video cameras will capture their license plate number and send them a bill, though that will cost about 33 percent more than toll tag users will have to pay.
The cost of tolls has not been decided.

The only progress commuters have seen on 121 is what they drive by every day. In recent weeks, they've contacted Carrollton, Lewisville and transportation agency officials to vent their frustrations and ask why they can't drive in the main lanes yet.

"We get call after call every day on this," said Sgt. Patrick Murphy, a Carrollton police spokesman. He said most callers complain that the access road gets congested near main lane exits, which force the left lanes of the service road traffic to merge. It angers people, Sgt. Murphy said, because they have to merge for an exit lane that isn't being used.

Mr. Brown said that's a design issue that won't be a problem once the road opens because there will be far fewer cars on the service roads.

Carrollton Mayor Becky Miller said people have been asking her about the road just about everywhere she goes.

"I think it's great they're going to go ahead and open it and let people drive on it," she said.

In Lewisville, the access road's construction in the 1990s drew developers, retail, businesses and what will soon be the city's first convention hotel to the city's southern sector. Lewisville spokesman James Kunke said the opening of the main lanes will probably create an additional economic spark.

"That area is already hot, and it's going to get hotter," he said. "And from a traffic standpoint, it's going to be a vast improvement."


© 2006 The Dallas Morning News Co


TTC Coal Road?


Toll roads and coal plants

June 24, 2006

Julia Whatley
The Waco Tribune Herald
Copyright 2006

Recently the Trib showed a map of the proposed 640-mile-long Trans-Texas Corridor-35 and the initial 316-mile toll road-and-rail segment between San Antonio and Dallas.

Notice the area through Williamson, Bell, Fall and McLennan counties, then deduce why TXU’s previous plans to build three coal-burning plants in Robertson and Milam counties were suddenly switched to McLennan County.

You will see, raising its ugly head, a 10-mile-wide “blue line” east of and roughly parallel to our Interstate 35. This marks the path of the TTC-35 tollway with its proposed electric-powered bullet train.

With 11 coal-burning plants planned in Texas, is corporate TXU interested only in lowering our electrical cost, as CEO John Wilder says?

Or, is the company actually expecting to reap more profits from three coal-burners concentrated in McLennan County?

These profits will come from the sale of TXU’s electricity to the tollway, which is to be financed by and contracted for 50 years to Cintra Concesiones de Infracstructuras de Transports, S.A. of Madrid, Spain.

Wilder mentions the lowering of “U.S. dependence on foreign energy sources and reductions of power prices” as a reason for the plants. Is the added pollution worth a bullet train’s expected necessary “shot” of electricity every 50 miles?

Our clean air can no more be replaced than our tons of black top soil can be rooted out to be concrete-covered with a toll highway-rail system. This land drew the forebears of today’s farmers and ranchers from Europe. We must stop such a travesty against our heritage of clean air and deep black soil just to enable a foreign- financed company to ship foreign goods through our state.

In this 50-year plan of toll road and rail, think of what this same burgeoning population will be breathing and eating and wearing when each mile of this folly will destroy 146 acres of productive land, plus fragmenting other farm or ranch acres, putting them out of use.

We must root out the officials who tout this unthinkable path of destruction through the Blackland Prairie, this “biggest land grab in Texas history” as Carole Keeton Strayhorn calls it.

Say “no” to Gov. Perry and his corporate backers who fail to respect the air we breathe and the productive soil we till.

Julia Whatley of Eddy is a retired teacher.

© 2006 The Waco Tribune-Herald:


Friday, June 23, 2006

Bush's Executive Order on E.D. needs Viagra

Bush Order Would Limit Property Seizures


Associated Press
Copyright 2006

President Bush ordered Friday that federal agencies cannot seize private property except for public projects such as hospitals or roads. The move occurred on the one-year anniversary of a controversial Supreme Court decision that gave local governments broad power to bulldoze people's homes for commercial development.

The majority opinion in the Supreme Court case involving New London, Conn., homeowners limited the homeowners' rights by saying local governments could take private property for purely economic development-related projects because the motive was to bring more jobs and tax revenue to a city.

But the court also noted that states are free to pass additional protections if they see fit. In a backlash to the decision, many have done so, prohibiting so-called takings for shopping malls or other private projects.

Many conservatives - particularly in the West - see the decision as a dangerous interpretation of the "takings clause" in the Constitution's Fifth Amendment, which allows the government to seize property for public use with just compensation. They have argued such takings are an unjustified governmental abuse of individual rights.

Cities, though, backed by some liberals, see the takings power as an important tool for urban renewal projects crucial to revitalizing cities.

Sen. John Cornyn, R-Texas, welcomed Bush's executive order. But since the federal government has only a limited role in such projects, he said Congress must do more. Cornyn has introduced legislation that would also bar federal funding for any state or local projects in which the land was obtained through eminent domain.

"The protection of homes and small businesses and other private property against government seizure or unreasonable government interference is a fundamental principle of American life and a distinctive aspect of our form of government," Cornyn said. "The Supreme Court's decision last year represented a radical departure from the decisions handed down interpreting that constitutional provision over the last 200 years, and the president's action was an important step toward righting that wrong."

Doug Kendall, executive director of the Community Rights Counsel, which backed the city's right to take the homes in the Connecticut case, said Bush's order is relatively benign precisely because it doesn't include the funding ban Cornyn and other property-rights advocates want.

"This order appears to apply to a null, or virtually null set of government actions. ... I'm not aware of any federal government agency that takes property for economic development," he said. "It's an effort to appease the property rights base, while ignoring the difficult question of when eminent domain should be used to help downtrodden communities."

The White House defended the president's approach.

"The president is a strong supporter of private property rights, and this executive order put the federal government on record opposing eminent domain for merely economic development purposes," said Dana Perino, a spokeswoman for Bush.

Bush's executive order directs the attorney general to make sure all federal agencies follow the new policy. The kinds of projects that Bush's order says justify the taking of private property include parks, roads, medical facilities, government office buildings and utilities. Takings also would be allowed to prevent land uses that are harmful to the environment or public safety or to acquire abandoned property.

On Capitol Hill, conservative property defenders and liberals - worried that it could become too easy to tear down poor neighborhoods - have joined to advance legislation.

And Bush's executive order tracks a trend being set in state legislatures.

Since the Supreme Court decision, 31 states have passed laws restricting the use of eminent domain for economic development, according to the National Conference of State Legislatures.

Governors in three states vetoed such legislation, but 21 state legislatures have passed measures that have been signed by their governors. Bills are still sitting on the governor's desk in three states. The remaining four states are letting voters decide the issue through constitutional amendments on the ballot.

Such measures also will be on the ballots in Florida and Georgia because those states required approval not only by lawmakers and the governor, but by the voters as well.

Larry Morandi, who follows state actions on eminent domain at the conference of state legislatures in Denver, called the president's executive order "middle-of-the road" compared with some state laws that are more stringent.

© 2006 The Associated Press:


Toll Roads on the Border

Transportation topic of discussion between Hidalgo County, Reynosa

June 23,2006

Victoria Hirschberg
The Monitor
Copyright 2006

PHARR — Officials from Reynosa and Hidalgo County are teaming up to tackle transportation needs on both sides of the border.

In a signed memorandum of understanding, officials from the Hidalgo County Metropolitan Planning Organization, City of Reynosa and Texas Department of Transportation agreed to exchange information, provide technical assistance during project planning phases and collaborate on transportation projects.

Officials signed the agreement Thursday evening at the county planning organization’s monthly board meeting.

"We’re trying to understand and be more mindful of the aspect of planning in Reynosa," said Andrew Canon, transportation director for the planning organization. "So many people come over here for entertainment, shopping."

Reynosa Mayor Francisco Javier Garcia Cabeza de Vaca echoed the sentiment.

He said the two areas are like a large amicable community.

"It’s important to have this (agreement) and share information," Cabeza de Vaca said before those board members present unanimously approved it.

"What’s good for Mexico is good for the United States and what’s good for the United States is good for Mexico."

The agreement is valid until Dec. 31, 2007, unless an entity decides to terminate it earlier.

With discussion about possible toll roads and expanded roadways in Hidalgo County and a new loop around Reynosa, Canon said the future projects affect commerce, travel plans and commercial and visitor traffic for both communities.

"Toll roads — that has a direct impact on the people that come over from Reynosa," Canon said.

In essence, the agreement is a method to open communication lines, said Mario Jorge, local district engineer with TxDOT.

The El Paso Metropolitan Planning Organization has an ex-officio member from its neighboring city of Juárez, Jorge said. Even with the agreement, United States officials could not physically work or finance projects in Mexico and vice versa, he said.

"We’re still going to have those restrictions, but the communication link is open between the planning organization and (Reynosa’s) planners," Jorge said.


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

© 2006 The Monitor:


Don't use the 'T' word

TxDOT officials slap a muzzle on toll road talk at public meet


Patrick Driscoll
San Antonio Express-News
Copyright 2006

State officials say tolls are important to fund new highway lanes, but when it comes to non-toll projects, they apparently don't want to hear about it.

In fact, they banned mention of the word at a public meeting this week.

At the meeting, held Tuesday to get input on plans to widen Texas 46, Terri Hall of San Antonio Toll Party was told to wrap up her comments because her three minutes were running out, said Laura Lopez, spokeswoman with the Texas Department of Transportation.

But then Hall began talking about tolls, so she was stopped.

"It was mentioned at the beginning of the meeting that this was not a meeting to discuss tolls because it's not part of the project," Lopez said. "And if there was any comments about us tolling, we would stop that person from ... you know ... we're not tolling."

Another speaker who brought up tolls was asked to drop the subject, but when he replied that TxDOT works for him, law enforcement officers approached to cut him off, Lopez said.

"Where will this suppression stop?" said Hall, a vocal critic of tolls. "I thought this was America, where protecting and defending our First Amendment constitutional rights are sacred."

About 200 people attended the meeting at New Braunfels High School and about 20 spoke.

The crux of the friction between Hall and TxDOT over Texas 46 has to do with whether the state is eying tolls for the highway.

Fueled by a study to determine the feasibility of tolling new lanes on Texas 46, and a financing agreement that says county officials and TxDOT would have to agree to any future tolls, Hall says she suspects that TxDOT intends to eventually put toll lanes there.

TxDOT flatly says there are no plans to toll Texas 46, and that the study showed tolls are not feasible.

The $47.7 million project will widen the highway to seven lanes near Bulverde and New Braunfels and three lanes between the cities, with construction possibly starting in 2008. Later, the whole road could be seven lanes.

© 2006 San Antonio Express-News:


Thursday, June 22, 2006

The earmarks of a scandal

Hastert's profits on earmarks $2 million, groups say

House speaker used his position to raise his own land value, the complaint claims

Washington Post
Copyright 2006

WASHINGTON - House Speaker Dennis Hastert, R-Ill., netted a close to $2 million profit last year on the sale of land near a highway project he helped to finance with targeted federal funds.

Hastert says he was securing funds his home district wanted badly, and that in no way did the earmark have any impact on the land values of his investment. But for watchdog groups, the case opened a fresh avenue for investigation in the ongoing controversy over earmarks, home-district projects funded through narrowly written legislative language.

"The sound bites from politicians have always been that they're doing what's best for their districts, but we're starting to see a pattern that looks like they might be doing what's best for their pocketbooks," said Keith Ashdown, vice president of the watchdog group Taxpayers for Common Sense.

Allegations that Hastert used a home-district "earmark" for his personal enrichment are now at the center of a tussle between the most powerful man in Congress and a new watchdog organization that uncovered the land deal this month. Hastert has strongly denied any wrongdoing, and has demanded a retraction from the Sunlight Foundation.

In 2002, Hastert was driving to a parade in Sycamore, Ill., when he saw a post-and-beam house he fell in love with, according to Dallas Ingemunson, a longtime friend. Hastert struck a deal with the owner on the spot, purchasing the house and 195 acres for $2.1 million.

In February 2004, Ingemunson, treasurer of Hastert's campaign committee, established Little Rock Trust 225. A week later, through the trust, Hastert and his business partners paid $340,000 for a 69-acre parcel, providing road access to part of Hastert's farm.

In May 2005, Hastert transferred the previously hemmed-in land from his farm to the land trust. That summer, Hastert personally intervened during negotiations over a huge transportation and infrastructure bill to secure two earmarks, $152 million to help build the Prairie Parkway through Kendall County and $55 million for an interchange 5.5 miles from his property. Bush signed the bill into law Aug. 10.

Then on Dec. 7, 2005, Little Rock Trust 225 sold Hastert's parcels to a subsidiary of the Robert Arthur Land Company for nearly $5 million.

© 2006 Washington Post:


Wednesday, June 21, 2006

"Interstate 69 is being developed under the Trans-Texas Corridor master plan."

Companies compete for I-69 construction

June 21, 2006

Nueces County Record-Star
Copyright 2006

Companies with Texas, U.S. and international experience are competing to develop the Trans-Texas Corridor-69 - one of the state's priority transportation projects.

Two private sector groups submitted proposals and qualifications to compete for the development of TTC-69, a multi-use transportation system stretching from Northeast Texas to Mexico.

"Inviting the private sector to invest in our transportation system is one of our strategies to meet the growing transportation needs of Texas," said Michael W. Behrens, TxDOT executive director. "We are focused on these five goals: reducing congestion, enhancing safety, expanding economic opportunity, improving air quality, and increasing the value of transportation assets."

One proposal was submitted by Bluebonnet Infrastructure Investors, led by Cintra. Team members include Citigroup, Earth Tech, Blanton & Associates, Maunsell, Othon and W.W. Webber.

A proposal was also submitted by Texas-based Zachry American Infrastructure and ACS Infrastructure Development Inc. Team members include Steer Davies Gleave, UBS Securities, Dannenbaum Engineering, ACI Consulting, Sociedad Ibercia de Construcciones Electricas, Dragados, and William Brothers Construction.

These proposals include statements detailing the groups experience in developing and financing transportation projects similar to TTC-69. Also included are conceptual proposals describing how the team would finance, design, construct, operate and maintain TTC-69.

The next step is for TxDOT to complete an initial review of the proposals, which could be completed next month. Teams with experience, qualifications and innovative engineering will be placed on a short list of potential strategic partners for TTC-69.

Once this is completed, approval by the Texas Transportation Commission is needed to continue with the competitive selection process. If approved, TxDOT will request detailed proposals from the short list of potential strategic partners. A selection of a strategic partner could be made by the commission by late 2007.

With no funding set aside for construction, a public-private partnership would allow development of the entire 600-mile multi-billion dollar project from Northeast Texas to Mexico to be accelerated. Even with private sector resources to fund the project, state transportation officials stress TTC-69 will remain a state-owned project.

On a parallel yet independent track, work continues on the initial environmental study that would narrow the current study area to approximately four miles wide. Subsequent studies will be needed to determine a final route for the project.

Interstate 69 is being developed under the Trans-Texas Corridor master plan. If environmentally approved, the project would be developed as needed and as private sector resources are available.

© 2007 Nueces County Record Star:

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Eminent domain cases jump after Kelo ruling

Eminent domain surges after ruling

June 21, 2006

By Joyce Howard Price
The Washington Times
Copyright 2006

The Supreme Court's decision last year to allow cities and states to seize property for private development "opened the floodgates" to eminent domain actions nationwide, a report says.
In the year since the Kelo decision, nearly 6,000 properties nationwide have been threatened or taken under that precedent, more than half the number that had been seized over a previous five-year period, said a report released yesterday by the Institute for Justice.

"There has been a huge rise in the number of threats to use eminent domain since Kelo. Cities are wielding eminent domain as a club," said Dana Berliner, a senior counsel with the Institute for Justice and the author of the 100-page report.

People threatened with eminent domain are vulnerable, she said, because they feel compelled to sell or have their home or business seized for a fire-sale price. At the same time, Ms. Berliner said, residents have become more active in trying to thwart land grabs and promoting changes to state law to bar the use of eminent domain.

Since the high court's 5-4 decision in Kelo v. City of New London, Conn., a year ago Friday, 5,783 properties nationwide have been either seized or threatened with seizure under eminent domain.

That number compares with 10,281 examples over the five-year period from 1998 to 2002, said the institute, a public-interest law firm that argued the Kelo case before the Supreme Court. During that period, threats were made to seize 6,560 properties, and 3,721 condemnation filings or authorizations were recorded.

In the past year, 5,429 property seizures have been threatened for economic redevelopment projects, plus 354 condemnation filings or authorizations, the institute said.

In the Kelo case, the institute represented nine Connecticut homeowners who tried unsuccessfully to halt New London's takeover of their properties for economic redevelopment. The court held that private development has a public purpose if it will increase jobs and tax receipts.

Ms. Berliner's report, "Opening the Floodgates: Eminent Domain Abuse in the Post-Kelo World," was one of five released yesterday by the Institute for Justice and its grass-roots activism project, the Castle Coalition.

"The court ruled that the U.S. Constitution allows government to use eminent domain to take and bulldoze existing homes and businesses for new private commercial development, holding that the mere possibility that a different private use could produce more taxes or jobs is enough reason for condemnation," the report said.

"Opening the Floodgates" documents 117 projects in the District and 27 states, including Maryland, that have involved the use or threatened use of eminent domain for private development in the past year.

"The vast majority ... involved the removal of lower-income residents and smaller businesses to attract wealthier people or more prominent businesses," Ms. Berliner wrote.

"Of the 117 projects, nearly half involved taking low-income houses, apartments and mobile home parks to construct upscale condominiums or other upscale residences and new retail development. Cities across America are working hard to drive out the working poor," she said.
She said the city of Baltimore is "on an eminent domain spree" because it intends to seize 75 properties for private development in this year alone.

© 2006 The Washington Times:


Tuesday, June 20, 2006

Harris County toll roads: "Not for sale. Not for lease."

Harris County's toll roads not for sale

June 20, 2006

Houston Chronicle
Copyright 2006

Rejecting the temptation of a multibillion windfall, Harris County Commissioners Court voted unanimously today to continue running the county's lucrative toll road system rather than selling or leasing it to a private entity.

"Now we can erect a sign on the toll roads: 'Not for sale, not for lease,'" said Commissioner Steve Radack, who had never been enthusiastic about the idea, even as the county conducted studies of the leasing and selling options.

The action means the system, which comprises the Hardy, Sam Houston and Westpark toll roads, will continue to be operated by the Harris County Toll Road Authority.

The county could have gotten as much as $20 billion if it sold the system and ceded all control over tolls, reported JP Morgan and Popular Securities, which studied that option for the county.

Goldman Sachs and Loop Capital, which studied the leasing prospects, concluded that a lease, depending on its length, could bring in $7.5 billion to $13 billion.

The third consulting group, Citigroup and Siebert Brandford Shank & Co., recommended that the county keep the system but study ways to better leverage its finances for other future expansion.

The toll road system had $373 million in revenues in fiscal year 2006.

The county's Office of Management Services and its financial consultant, First Southwest, oversaw the studies.

Private firms and investment banks have taken over a number of toll roads worldwide. The Spanish toll company Cintra paid $3.1 billion Canadian in 1999 to operate a 42-mile Toronto toll road. The Cintra-Macquarie Consortium last year paid $1.83 billion to lease operating rights to the eight-mile Chicago Skyway for 99 years.

A consortium led by Cintra is negotiating to develop a segment of the Trans-Texas Corridor, a proposed statewide system of toll roads, pipelines and railroads.

© 2006 Houston Chronicle:


Monday, June 19, 2006

"There are people out looking at all sorts of deals."

Corporate Road Warriors on the Move

Private Sector Seeks Stake in Highways


by Humberto Sanchez
The Bond Buyer
Copyright 2006

A burgeoning trend kicked off when private foreign firms started leasing toll roads from state and local governments around the nation has sent U.S. transportation infrastructure finance players scrambling - including funneling billions of dollars into infrastructure investment funds and rethinking their traditional roles - to get a piece of the action.

It all started with the Chicago Skyway, which was leased for 99 years by the city of Chicago to a consortium led by Australia-based Macquarie Infrastructure Group and Spain-based Cintra Concesiones de Infraestructuras de Transporte SA. The deal closed in January 2005. The 7.8-mile toll road was built in 1958 and connects the Dan Ryan Expressway on the west end to the Indiana Toll Road on the east end.

Under the deal, Chicago received a $1.83 billion cash payment from the Cintra-Macquarie group, which took over operation and maintenance of the road and keeps the toll revenue collected through 2104. The deal allows the private group to raise the tolls on a schedule negotiated with the city. Tolls for passenger cars are capped at $2.50 until 2008 and rise incrementally to $5.00 starting in 2017.

This transaction between the consortium and Chicago was the first privatization of an existing toll road anywhere in the United States.

Most recently, the same pair of companies is close to closing a deal with Indiana on a 75-year lease deal for its toll road, a 157-mile highway that runs east to west along the state's northern boarder, in exchange for a $3.8 billion upfront payment.

While it is too early to declare that the nation is in a new era of transportation infrastructure finance, several traditional transportation finance firms are betting that if we aren't yet, we ultimately will be.

Many companies, including investment banks Goldman, Sachs & Co., JPMorgan Chase & Co., Morgan Stanley, as well as the giant construction and engineering firm Parsons, are actively seeking out concession deals and Macquarie is exploring the possibility of leasing U.S. airports, according to recent interviews with company officials and representatives.

Their interest also comes as the Virginia Department of Transportation last month agreed in principle to a 99-year concession deal — including operations, maintenance, and collection of toll revenue - with Transurban Ltd., an Australia-based toll road operator, for the Richmond-area Pocahontas Parkway. Under the deal Transurban would pay VDOT $525 million.

Traditionally states and localities have relied on federal, state, and local gas taxes vehicle fees and other revenues, along with municipal bonds to finance transportation infrastructure. But those sources have not kept pace with the nation's growing infrastructure needs.


The private sector capital now interested in public infrastructure provides a third financing option "that should be considered as part of any funding process," said Mark Florian, chief operating officer of Goldman's municipal finance and infrastructure group.

'The gist of this business really grew up out of need, in places such as Europe and Australia, and other parts of the world where there is not a big, deep municipal bond market," he said. "Governments needed to build projects, but didn't necessarily have access to the very liquid municipal bond market that we have in the United States. What they would do is ask the private sector to come in and build facilities and give the private sector the ability to collect revenue as an enticement to get them to build it in the first place."

Following the Macquarie-Cintra group's execution of the Skyway concession in January 2005, Goldman reorganized its municipal finance group in March 2006. As part of the reorganization, Tracy Wolstencroft was brought in to head the group from Goldman's corporate investment banking team.

'The reorganization at Goldman Sachs took place with a couple of things in mind for the future," Florian said. "One is to grow our existing municipal finance business, which is a debt and derivatives business. The second is to focus on public-private partnerships and how can we grow that as well. "

The change was "is really about growing the existing business and as well as this new initiative," he said.

Henry M. Paulson Jr., Goldman's chairman and chief executive, was "very supportive" of the change towards moving into the private concession sector, according to Florian. Paulson was nominated late last month by President Bush to become Treasury secretary.

Florian does not believe that there are any tax rules or regulations that Paulson could change in order to help the private concession market grow.

"The federal government has been relatively accommodating to date -this administration has been supportive," he said. 'There is nothing that the federal government needs to do in order to push the business forward."

A sign of the administration's general support came last month when Transportation Secretary Norman Y. Mineta spoke before opening the day's trading at the Nasdaq stock exchange. He urged investment and engineering firms to lead the privatization charge.

“The time is now for United States investors - including our financial, construction, and engineering institutions - to get involved in transportation investments," Mineta said. 'Their involvement will be crucial if we ever hope to have the funds necessary to build the transportation network required by our rapidly growing economy. Private capital will give those communities willing to embrace it an opportunity to augment public funds in order to complete critical transit and highway projects."

Florian did, however, point out that loosening tolling restrictions on the Interstate highway system would be beneficial to expanding the public infrastructure privatization market. One initiative local governments could take that might attract private investment is to build new high-occupancy toll lanes on existing free roads, he suggested. HOT lanes, which are actively being planned in Virginia, Maryland, and other states, would increase capacity on the road and relieve congestion, while leaving a drive-for-free option.


Meanwhile, Goldman Sachs, the Carlyle Group, a private equity firm, and other investment companies are putting together funds - Goldman's is estimated to be worth about $3 billion and Carlyle's roughly $1 billion -that are designed to acquire transportation infrastructure assets around the nation, according to published reports.

In March, around the same time as the Goldman reorganization, Carlyle announced that it established a team to conduct investments in the infrastructure sector.

"Carlyle's Infrastructure team will invest primarily in U.S. infrastructure in transactions ranging from $100 million to more than $1 billion," the firm said in a release. 'The team will engage in public-private partnerships with governments at all levels as well as purchase projects outright or through long term concessions."

Morgan Stanley is putting together an infrastructure fund, which is part of its asset management business, firm officials said in an interview. But they did not provide any other details citing restrictions during fund raising.

Their interest in privatization comes as the firms increasingly see municipalities look to corporate finance frameworks to solve public finance problems, according to Robert Collins, a Chicago-based Morgan Stanley executive director who heads the mergers and acquisition group.

"We are having dialogues with those clients that have underfunded pension plans or vast budget deficits to explore unlocking any latent equity value within non-core assets," he said. 'These kinds of dialogues have been increasingly active across different sectors and across the country."

The firm is exploring private deals for both existing infrastructure, sometimes referred to a brownfields, and to build new infrastructure, known as greenfields.

"We are looking at both sides of it, the greenfield and the brownfield, we are looking at working with municipal entities to advise them on all alternatives across all asset classes," said Eugene Devlin, a Morgan Stanley managing director and head of the firms public finance department.

Devlin also noted that he was skeptical that the privatization trend would reduce the overall amount of tax-exempt debt that is issued. “I think this will supplement the projects that would not normally get done,” he said.

Banks are typically raising dollars primarily from foreign pension funds and insurance companies, which are seeking investments that yield more than municipal bonds, but are not as volatile as stocks and equities.

'These types of investments make a lot of sense for pension funds because a lot of these pension funds have very long liabilities where they are going to be paying out a lot of money for the next 30, 40, 50 years," said one observe. "For them to have a long duration asset that is generating cash flow that is pretty steady cash flow over a long period of time is perfect. It is a great vehicle for pension funds. "

"A lot of insurance companies have investment pools that last for a long, long time as well," the observer added. 'They have reserves they need to invest and they want steady investments as well."

The recent influx of available capital is coming from nations like Australia, where Macquarie and TransUrban are based. Australia introduced compulsory pensions 15 years ago.

"The Australians have an awful lot of pension money to put to work and they are looking for stable long-term investments that produce stable returns that match their investments goals and horizons," said Michael C. Finnegan, a managing director with JPMorgan.

JPMorgan is building a fund, but Finnegan did not have any other details about it. He noted that the bank's leaders keep Finnegan's group - which advises state and local governments on concession deals — separate from the side of the business that raises private dollars.

With capital in hand, the investment firms are actively seeking out concession projects.
For example, Goldman is currently working on several concession projects, including seven Texas greenfield toll road facilities.

JPMorgan has submitted a study to Harris County, which includes Houston, that explores a sale of its extensive toll network. The county is considering other financing studies and deciding what avenues to pursue.

Also in Texas, two groups of private firms last week submitted proposals to finance the extension of Interstate 69 through the state. Each one of the groups includes one of the two firms that worked together on the Chicago and Indiana deals.

Morgan Stanley is part of a consortium led by Spain-based FCC Construccion S.A. that is bidding to design, build operate and finance a tunnel that will improve access to the Port of Miami. The other two bidders include a group led by French firm Bouygues Travaux Publics, of which ABN AMRO Bank NV is a partner, and a team led by Spanish firm Dragados Concesiones de Infraestructuras SA.

Under the proposed deal, the Florida Department of Transportation, once the tunnel is built, would pay the winning team an annual payment over 35 years, instead of requiring drivers to pay a toll when using the tunnel. However, the so-called annual "availability payment" would be reduced by the number of hours that lanes are closed or the tunnel does not meet negotiated operating requirements. The technique has been used primarily in Europe.


Parsons is traditionally known as an engineering, design, and construction firm, but, as the privatization of the public infrastructure sector has appeared on the hoizon, they too intend to branch out from project design, development, and delivery.

"We are trying to stay current with new approaches to financing and ownership and operations," said Jeff Squires, a vice president with Parsons. "At this stage we are starting to talk to concessionaires about being a full partner, not just in the delivery of the project, but also in the long-term operation and management - having a financial stake."

Squires - a former aide to Sen. Jim Jeffords, 1-Vt., on the Senate Environment and Public Works Committee and the Senate Finance Committee - stressed that discussions are still in their early stages. He also did not specify what firms are involved or what projects were being considered.

"We are open to exploring a wide range of roles" beyond project delivery," he reiterated. But "as we expand the nature of our participation, it is going to have to be appropriate to what we do."

As an example of the firm's interest in the growing business, Squires pointed out that Parsons is part of a consortium building the Kicking Horse Canyon project in British Columbia.

The project involves phase two of the construction of the Kicking Horse Canyon roadway and bridge, and a 25-year concession for the operation, maintenance and rehabilitation of approximately 26 kilometers of the Trans-Canada Highway between the Highway 95 intersection in Golden, British Columbia, and the western boundary of Yoho National Park.

Squires noted that while foreign firms currently are the leaders private concession sector, "I think there are a lot of familiar domestic [firms] that think they need to get into this business."

He pointed out that the established foreign firms have an advantage because they have a portfolio of assets that allows them to mitigate risk associated with taking on these deals.

"Each of these projects has a different performance curve with different points in time that are expected to yield different outcomes and if you can blend that it helps you to advance more comfortably," Squires said.


Efforts by Congress to limit how states or cities could spend private concession dollars or protect consumers from unreasonable toll increase schedules could also pose risks for the fledgling business, sources said.

Sources said that Democrats on the House Transportation and Infrastructure Committee have been meeting with experts, but that it is unclear if the lawmakers will draft or introduce legislation that would regulate infrastructure privatization.

At a hearing last month on private transportation infrastructure financing before the committee's highway subcommittee, Rep. Peter DeFazio, D-Ore., raised concerns over allowing private firms to profit from the use of public infrastructure.

During the hearing, Gov. Mitch Daniels, who appeared before the panel, said that tolls on the Indiana Toll Road, which is run by the state, had not been raised since 1985, in part because no Indiana politicians wanted to back such a politically unpopular move.

DeFazio argued that by leasing the Indiana Toll Road, Daniels was "outsourcing political will" to raise tolls to the private sector.

In response, Daniels stressed that the $3.8 billion Indiana Toll Road concession deal would allow the state to finance nearly $5 billion of other badly needed road projects that it could not have done otherwise. The $5 billion figure includes the $3.8 billion upfront payment plus $900 million in interest the state expects to earn.

Opponents to the toll road deal last week argued before the state Supreme Court that the planned use of proceeds from the lease is unconstitutional and that the money should instead be used to pay off debt. A lower state court recently ruled that under state law the opponents would have to post a $1.9 billion bond in order to pursue the case on its merits. The lease deal is expected to close by June 30.

More recently, another observer raised the possibility that congressional partisan divisiveness could also rear its head in conjunction with privately financed greenfield projects because those projects would not have requirements that come with using federal dollars, for example, compliance with the Davis-Bacon Act requirements on prevailing wages.

"I think that the ability to do major projects without federal funding could represents a concern in some quarters that maybe some of the protections that are built into the federal program would be absent," the observer said. "As I listen to the early discussions I think it portends the potential for regulation."

Davis-Bacon is a Depression-era labor law that requires payment of prevailing wages on projects financed with federal funds.

The issue is controversial in Congress and often pits labor against management and the interests of Northern and Northeastern states, which have a heavily unionized labor forces, against Southern and Western states, where unions are not as entrenched.


Macquarie manages a $24 billion investment portfolio, which includes investments in more than 90 infrastructure facilities in more than 20 countries. The firm specializes in different types of infrastructure, including toll roads, airports and airport-related assets, telecommunications, water, rail, port, energy generation, transmission and distribution assets, as well as water and wastewater.

Given the scope of the types of infrastructure that have been privatized around the world, some are looking to expand the phenomenon in this country beyond toll roads.
For example "everyone is starting to look at power generation assets, health care assets, surplus real estate, and water and sewer facilities" JPMorgan's Finnegan said.

One area that the Macquarie hopes to develop in the U.S. is airport privatization, according to John Cline, a lobbyist with C2 Group, which represents the firm.

Macquarie believes that now is the right time to explore that avenue because the Vision 100-Century of Aviation Reauthorization Act expires at the end of fiscal 2007. Debate on renewing the law, which governs the Federal Aviation Administration and authorizes funding for its programs, is expected to intensify as lawmakers focus on the issue next year.

Cline said that the hurdles are higher for airport privatization than for highways. He cites language in current law that mandates that revenues generated from an airport have to be used on the airport. While a few airports have deals with private operators to run their facilities, such as

Indianapolis International Airport with airport firm BAA, the language in current law prevents private firms from owning or leasing U.S. airports on a long-term basis. "It makes it very difficult for a private entity to come in earn a profit, and not be able to take the money off of the airport," he said. 'That provision is a major barrier."

However, the firm sees an opportunity because airport infrastructure is crumbling and traditional financing sources - federal dollars and bonds -will not be adequate to make the needed improvements.

'The landscape is also changing on the airport side, there are insufficient resources for the capital investment that is needed, both for airport runway redesign and additions, as well as terminal developments, but then also the airspace," Cline said. "[The FAA wants] to move from a ground-based radar system to a satellite-based system, which is a $10 billion to $15 billion investment. There are lots of investments in the aviation world for which there are no obvious source of public money."

Cline said that Macquarie, which owns shares in airports in Copenhagen, Rome, Sydney, and Brussels, is well-positioned to privatize U.S. airports. The lobbyist said discussions with lawmakers and the U.S. Department of Transportation about the issue are underway.

One issue that has concerned some public airport operators and airlines over the prospect, according to Cline, is that cities would use the funds they make from a long-term lease deal to pay for pension or post-pension costs at the expense of growing airport and other transportation-related needs.

But restricting the use of proceeds from a concession deal to reinvestment in infrastructure could alleviate the issue. Along with seeking airport deregulation, Macquarie plans to continue to seek out concessions for highways, Cline said.

"Certainly this [privatization movement] cannot be depicted yet as a tidal wave of change that is occurring," he said. The majority of "infrastructure projects are going forward as publicly financed traditional government supported projects."

"But there is no doubt that with the Skyway and the Indiana toll road transactions there are people out looking at all sort of deals," Cline said.

© 2006 The Bond Buyer:


"Shadow government" of federal contractors explodes

Federal contracts up 86% under Bush; Halliburton rises 600%

Top contractor Lockheed got contracts larger than budget of Congress, Dept. of Interior


The Raw Story
Copyright 2006

WASHINGTON -- A new report claims that a "shadow government" of federal contractors has exploded in size over the last five years.

The document, compiled at the request of Rep. Henry Waxman (D-CA) and distributed to RAW STORY, indicates that procurement spending increased by over $275 billion between 2000 and 2005, making federal contracts the fastest growing component of federal discretionary spending.

500 reports, audits and investigations by government and independent bodies, including the Government Accountability Office and the Defense Contract Audit Agency, were used to compile the data.

That spending increase -- an astonishing 86 percent -- puts total US federal procurement at $377.5 billion annually. The increase means spending on federal contracts has grown more than two times as fast as other forms of discretionary government spending.

Nearly $800b in contracts questioned

Waxman claims that overcharging -- by mistake or outright fraud -- has been a frequent occurrance. In all, the report identifies 118 federal contracts worth $745.5 billion that have been found by government officials to include significant waste, fraud, abuse or mismanagement.

Each of the Bush Administration's three signature initiatives -- Homeland Security, the Iraq war and reconstruction in Iraq and Hurricane Katrina recovery -- has been linked to wasteful contract spending.

Spending is categorized in the report as highly concentrated on a few large contractors, with the five largest contractors receiving over 20 percent of contract dollars awarded in 2005. Last year, the largest federal contractor, Lockheed Martin, received contracts worth more than the total combined budgets of the Department of Commerce, the Department of the Interior, the Small Business Administration and the U.S. Congress.

But the fastest growing contractor under the Bush Administration has been Halliburton. Federal spending on Halliburton contracts shot up an astonishing 600% between 2000 and 2005.

Waxman plans to make all 118 "problem contracts" available on the Internet as part of a searchable database with Internet links to government audits.


© 2008 The Raw Story:

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To view the Trans-Texas Corridor Blog click HERE


"NAFTA investors and corporations to challenge the sovereignty of U.S. law in the United States."

North American Union Would Trump U.S. Supreme Court

Jun 19, 2006

by Jerome R. Corsi
Human Events
Copyright 2006

The Bush Administration is pushing to create a North American Union out of the work on-going in the Department of Commerce under the Security and Prosperity Partnership of North America in the NAFTA office headed by Geri Word. A key part of the plan is to expand the NAFTA tribunals into a North American Union court system that would have supremacy over all U.S. law, even over the U.S. Supreme Court, in any matter related to the trilateral political and economic integration of the United States, Canada and Mexico.

Right now, Chapter 11 of the NAFTA agreement allows a private NAFTA foreign investor to sue the U.S. government if the investor believes a state or federal law damages the investor’s NAFTA business.

Under Chapter 11, NAFTA establishes a tribunal that conducts a behind closed-doors “trial” to decide the case according to the legal principals established by either the World Bank’s International Centre for the Settlement of Investment Disputes or the UN’s Commission for International Trade Law. If the decision is adverse to the U.S., the NAFTA tribunal can impose its decision as final, trumping U.S. law, even as decided by the U.S. Supreme Court. U.S. laws can be effectively overturned and the NAFTA Chapter 11 tribunal can impose millions or billions of dollars in fines on the U.S. government, to be paid ultimately by the U.S. taxpayer.

On Aug. 9, 2005, a three-member NAFTA tribunal dismissed a $970 million claim filed by Methanex Corp., a Canadian methanol producer challenging California laws that regulate against the gasoline additive MTBE. The additive MTBE was introduced into gasoline to reduce air pollution from motor vehicle emissions. California regulations restricted the use of MTBE after the additive was found to contaminate drinking water and produce a health hazard. Had the case been decided differently, California’s MTBE regulations would have been overturned and U.S. taxpayers forced to pay Methanex millions in damages.

While this case was decided favorably to U.S. laws, we can rest assured that sooner or later a U.S. law will be overruled by the NAFTA Chapter 11 adjudicative procedure, as long as the determinant law adjudicated by the NAFTA Chapter 11 tribunals continues to derive from World Court or UN law. Once a North American Union court structure is in place can almost certainly predict that a 2nd Amendment challenge to the right to bear arms is as inevitable under a North American Union court structure as is a challenge to our 1st Amendment free speech laws. Citizens of both Canada and Mexico cannot freely own firearms. Nor can Canadians or Mexicans speak out freely without worrying about “hate crimes” legislation or other political restrictions on what they may choose to say.

Like it or not, NAFTA Chapter 11 tribunals already empower foreign NAFTA investors and corporations to challenge the sovereignty of U.S. law in the United States. Sen. John Kerry (D.-Mass.) has been quoted as saying, “When we debated NAFTA, not a single word was uttered in discussing Chapter 11. Why? Because we didn’t know how this provision would play out. No one really knew just how high the stakes would get.” Again, we have abundant proof that Congress is unbelievably lax when it comes to something as fundamental as reading or understanding the complex laws our elected legislators typically pass.

Under the Council on Foreign Relations (CFR) plan expressed in May 2005 for building NAFTA into a North American Union, the stakes are about to get even higher. A task force report titled “Building a North American Community” was written to provide a blueprint for the Security and Prosperity Partnership of North America agreement signed by President Bush in his meeting with President Fox and Canada’s then-Prime Minister Paul Martin in Waco, Tex., on March 23, 2005.

The CFR plan clearly calls for the establishment of a “permanent tribunal for North American dispute resolution” as part of the new regional North American Union (NAU) governmental structure that is proposed to go into place in 2010. As the CFR report details on page 22:

The current NAFTA dispute-resolution process is founded on ad hoc panels that are not capable of building institutional memory or establishing precedent, may be subject to conflicts of interest, and are appointed by authorities who may have an incentive to delay a given proceeding. As demonstrated by the efficiency of the World Trade Organization (WTO) appeal process, a permanent tribunal would likely encourage faster, more consistent and more predictable resolution of disputes. In addition, there is a need to review the workings of NAFTA’s dispute-settlement mechanism to make it more efficient, transparent, and effective.

Robert Pastor of American University, the vice chairman of the CFR task force report, provided much of the intellectual justification for the formation of the North American Union. He has repeatedly argued for the creation of a North American Union “Permanent Tribunal on Trade and Investment.” Pastor understands that a “permanent court would permit the accumulation of precedent and lay the groundwork for North American business law.” Notice, Pastor says nothing about U.S. business law or the U.S. Supreme Court. In the view of the globalists pushing toward the formation of the North American Union, the U.S. is a partisan nation-state whose limitations of economic protectionism and provincial self-interest are outdated and as such must be transcended, even if the price involves sacrificing U.S. national sovereignty.

When it comes to the question of illegal immigrants, Pastor’s solution is to erase our borders with Mexico and Canada so we can issue North American Union passports to all citizens. In his testimony to the Subcommittee on the Western Hemisphere of the U.S. Senate Foreign Relations Committee on June 9, 2005, Pastor made this exact argument: “Instead of stopping North Americans on the borders, we ought to provide them with a secure, biometric Border Pass that would ease transit across the border like an E-Z pass permits our cars to speed though toll booths.”

Even Pastor worries about the potential for North American Unions to overturn U.S. laws that he likes. Regarding environmental laws, Pastor’s testimony to the Trilateral Commission in November 2002 was clear on this point: “Some narrowing or clarification of the scope of Chapter 11 panels on foreign investment is also needed to permit the erosion of environmental rules.” Evidently it did not occur to Pastor that the way to achieve the protection he sought was to leave the sovereignty of U.S. and the supremacy of the U.S. Supreme Court intact.

The executive branch under the Bush Administration is quietly putting in place a behind-the-scenes trilateral regulatory scheme, evidently without any direct congressional input, that should provide the rules by which any NAFTA or NAU court would examine when adjudicating NAU trade disputes. The June 2005 report by the SPP working groups organized in the U.S. Department of Commerce, clearly states the goal:

We will develop a trilateral Regulatory Cooperative Framework by 2007 to support and enhance existing, as well as encourage new cooperation among regulators, including at the outset of the regulatory process.

We wonder if the Bush Administration intends to present the Trilateral Regulatory Cooperative Framework now being constructed by to Congress for review in 2007, or will the administration simply continue along the path of knitting together the new NAU regional governmental structure behind closed doors by executive fiat? Ms. Word affirms that the membership of the various SPP working group committees has not been published. Nor have the many memorandums of understanding and other trilateral agreements created by these SPP working groups been published, not even on the Internet.

© 2006 Human Events:


"Bureaucrats today have a hard time distinguishing the genuine public interest from the private interests of powerful developers."

Eminent domain blinds bureaucrats to their duty

June 19, 2006

Timothy Sandefur
The Providence Journal
Copyright 2006

One year after the Supreme Court shocked Americans with its eminent-domain decision, Kelo v. New London, officials in Riviera Beach, Fla., announced their intention to seize 400 acres of land, including hundreds of homes and businesses, and transfer the property to a developer, to build stores and condominiums.

Although on May 11 Gov. Jeb Bush signed a law prohibiting such property seizures, the city had rushed to approve its plan in an emergency meeting on May 10. Asked about these shady tactics, Riviera Beach Mayor Michael Brown insisted that the city had acted legally.

"We're comfortable," he said, "with everything we've done."

Unfortunately, Brown's audacity is typical of bureaucrats who see Kelo as signaling open season on landowners. Such officials perceive themselves as sculptors of neighborhoods, who mold their ideal city from the property that people have worked hard to buy. They don't see property as a right, but as a privilege, which can be revoked or altered in the name of "progress."

Our Founding Fathers believed that government exists to protect property rights. But to "progressives" such as Mayor Brown, private property and the people who own it exist for the government's purposes.

Another "progressive," Louis Brandeis, described this interpretation of property rights thus: "[R]ights of property and the liberty of the individual must be remolded, from time to time, to meet the changing needs of society."

This attitude is shared by the Los Angeles City Council, which is now condemning the 70-year-old Bernard Luggage Store, at Hollywood and Vine, so that it can replace the store with a luxury hotel . . . and by officials in Freeport, Texas, who are taking a small shrimping business so that a developer can build a shopping center . . . and by bureaucrats in Norwood, Ohio, who are seizing a neighborhood of pretty middle-class homes to make way for an industrial park.

In the past year, several states have passed laws aimed at restricting the use of eminent domain. Alas, many of these laws include loopholes allowing government to take property for developers if the land is declared "blighted." Since most states define "blighted" in extremely vague terms, such exceptions essentially nullify these new laws.

A new Alabama law, for example, prohibits land seizures for private development -- unless bureaucrats believe it suffers from "dilapidation, obsolescence, overcrowding, faulty arrangement or design, lack of ventilation, light, and sanitary facilities, excessive land coverage, deleterious land use or obsolete layout, or any combination of these or other factors." Such ambiguous terms allow practically any property in Alabama to be taken.

Other states, including Florida, have enacted strong new protections for property owners. Florida's -- the one that Mayor Brown is shamelessly trying to evade -- not only prohibits eminent domain for development but also forbids government to seize "blighted areas."

If Mayor Brown or other Florida officials want to bolster the economy, the law requires them to do so in ways that respect property rights, such as lowering taxes, or eliminating regulations that discourage entrepreneurs. In fact, the best way to cure economic stagnation is to increase -- not decrease -- security for property rights.

Nobody's going to invest in a place where property can be condemned or stolen at any moment. In fact, experience shows that redevelopment doesn't require the use of eminent domain. Seattle recently completed a major redevelopment project without it. Even the Disney theme parks were built without eminent domain.

Unfortunately, eminent-domain abuse not only blinds officials to the possibilities of free-market development; it also distracts them from their legal and ethical duties.

Bureaucrats today have a hard time distinguishing the genuine public interest from the private interests of powerful developers. There's really only one thing that's in the genuine public interest: the equal protection of individual rights. But officials such as Mayor Brown think that seizing land for shopping centers is good for society because it "creates jobs."

As the Michigan Supreme Court recently noted, this theory "would validate practically any exercise of the power of eminent domain on behalf of a private entity. After all, if one's ownership of private property is forever subject to the government's determination that another private party would put one's land to better use, then the ownership of real property is perpetually threatened by the expansion plans of any large discount retailer."

Mayor Brown's actions prove that citizens must be willing to stand up to their elected officials if they want their property rights respected. That's why the Pacific Legal Foundation, a national organization, has filed a lawsuit against Riviera Beach in defense of the rights of the city's property owners.

But real reform requires more than court decisions. It requires all Americans to return to our founding principles, and to recognize that government doesn't exist to "remold" our rights. It exists to protect our rights to life, liberty, and the pursuit of happiness.

Timothy Sandefur is a staff lawyer with the Pacific Legal Foundation. His book, Cornerstone of Liberty: Property Rights in 21st Century America, will be published this month, by the Cato Institute.

© 2006 The Providence Journal Co:


Pass-through tolls bypass Travis County

For Travis, the pass-through bucks stop here

June 19, 2006

Ben Wear
Austin Amaerican-Statesman
Copyright 2006

Travis County, at least so far, is taking a pass on pass-through highway financing. It's a relatively new way of building roads and improvements without tolls: Locals pay for projects, and the state, over time, partially pays them back.

Williamson County, Hays County, San Marcos and about a dozen other Texas localities have lined up for the program over the past year. Travis County, conspicuously, hasn't joined the game.

Anti-toll activists in the past few weeks have taken note of this and begun to call for the county to use pass-through financing rather than putting tolls on five roads in the controversial Phase II turnpike plan. For a number of reasons — including the $1.4 billion cost, political resistance from the state transportation commission, which likes Phase II — that's highly unlikely to happen.

But it isn't like the county doesn't have plenty of other roads on the state system that could use more lanes or wider shoulders or overpasses. The growing slog through stoplights on RM 620 comes to mind, along with the increasingly congested RM 2222 and Loop 360, and a number of rural two-lane roads leading to and from the Texas 130 toll road.

So why is Travis County cool to the idea?

Well, first, you have to know how pass-through financing works. A local government (or even a private company, like Zachry Construction Co.) identifies needed projects on state roads and then applies to the Texas Transportation Commission for a pass-through agreement. In general, the local government would pay for the improvements up front and then over 10 to 20 years get annual payments — based on traffic loads — from the transportation commission to cover about 80 percent of the original cost.

The uncovered 20 percent, Travis County officials say, is a big problem for them. The state payments would not cover the interest costs if the county had to borrow the construction money (as it would surely have to), and those interest costs can be steep over a 20-year repayment plan. Like 50 percent.

Joe Gieselman, longtime head of the county's transportation department, has been discouraging his political bosses from signing on for a couple of reasons. First of all, he sees pass-through financing as a way for the state to slough off needed road spending from state gas taxes to local property taxes. Secondly, he said it's by no means clear that the county could, without raising taxes, pay off that 60 percent to 70 percent gap between what it would owe and what the state would pay back.

Of course, this same logic applies to Williamson County and the other governments that have pass-through agreements or are seeking them. Consultant Mike Weaver, who represents Williamson, says most of the areas seeking pass-through deals are suburban and fast-growing.

"You've got to really, really want the roads," Weaver said. "If you do, you'll find a way to pay for it."

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

© 2006 Austin American-Statesman:


North Texas legislators waver in their support of Trans-Texas Corridor


A road project for which the Lege tolls


By Gordon Dickson
Fort Worth Star-Telegram
Copyright 2006

North Texas legislators may be teetering in their support for the Texas Department of Transportation's plan to build a statewide web of toll roads.

State Sen. Kim Brimer, R-Fort Worth, threatened last week to pull his support for the proposed Trans-Texas Corridor toll-road system unless the agency finds a way to make the project fit better into the Metroplex's regional plan. Area leaders say they want a new outer loop around Dallas-Fort Worth, but the private team Cintra Zachry wants to bypass the area instead.

Brimer reminded Transportation Commission Chairman Ric Williamson of Weatherford of the opposition to Trans-Texas in less congested areas.

"What recourse does the Metroplex have except to join the rural folks in seeing that it doesn't happen?"

Williamson and Assistant Director Amadeo Saenz attempted to soothe nerves, saying there's plenty of time in the next year to change the route, as part of a federal environmental study.

State Sen. Florence Shapiro, R-Plano, jumped on Williamson for not inviting the North Texas Tollway Authority, which already runs toll roads in the Dallas area, to help build Trans-Texas.

© 2006 Fort Worth Star-Telegram:


Sunday, June 18, 2006

"We must do everything we can to prevent this bad idea from becoming a reality."

'We are opposed to TxDOT's vision'

Fort Worth Star-Telegram
Copyright 2006

There is great consternation among North Texas officials -- including those from Fort Worth and Dallas -- to a preliminary proposal by the Texas Department of Transportation for the route of TTC-35, a privately financed toll road that would relieve congestion on Interstate 35 and be part of the statewide Trans-Texas Corridor system touted by Gov. Rick Perry.

A Spanish firm, Cintra, and Zachry Construction of San Antonio are proposing to use $6 billion in private investment to build TTC-35 as a 316-mile, four-lane road running from the D-FW area to San Antonio and collect tolls on it for 50 years.

Cintra favors running TTC-35 around the east edge of Dallas County, the preliminary proposal of TxDOT. But D-FW elected officials, business leaders and transportation experts strongly favor running the corridor up the Metroplex's middle, along the path of an extended Texas 360 and on to D/FW Airport.

Local leaders also favor constructing, as part of the TTC-35 system, an east-west corridor at the southern edge of the Metroplex looping northward around the west edge of Fort Worth and the east edge of Dallas.

Fort Worth Mayor Mike Moncrief spoke forcefully in favor of the TTC-35 plan favored by Metroplex officials at a hearing of the Texas Senate Transportation and Homeland Security Committee in Fort Worth that occurred Tuesday.

Following is the prepared text of his remarks. Material in brackets has been inserted; remarks delivered may have varied slightly.

To begin, I want to praise our Gov. Rick Perry for having the vision to realize the need for such an ambitious improvement to our state's infrastructure.

I also want to applaud [state] Sen. [Florence] Shapiro, with whom I had the pleasure of working with as she led the effort to establish the Texas Mobility Fund, without which the Trans-Texas Corridor would not be possible.

A river of trade is flowing and flourishing through Texas, with the Fort Worth/Dallas area constituting a major component, and proper infrastructure is the key to ensuring our continued prosperity.

Speaking for my fellow elected officials in North Texas, we applaud and welcome the Trans-Texas Corridor.

However, we are opposed to TxDOT's vision for the North Texas portion, and we are disheartened by TxDOT's refusal to partner with local government.

As you just heard [Tarrant County] Commissioner [Glen] Whitley explain, the D-FW Metroplex has a different vision for the Corridor's route through our region.

I want to spend a moment to briefly explain why our vision is the better alternative.

I could spend all afternoon describing the absolutely devastating long-term economic consequences of the TxDOT plan, which includes the loss of business, loss of tax base and loss of jobs.

But beyond this obvious consequence, there are some other fundamental problems with TxDOT's proposal.

TxDOT's proposal does not provide optimal truck flow through our region, which is the intended purpose of the Trans-Texas Corridor.

Seventy percent of trucks which pass through North Texas need to make at least one stop within the heart of D-FW and do business. The vast majority of the trucks will not take advantage of the bypass.

Thus, a complete bypass would do little to: One, increase the speed and efficiency of the flow of goods to the rest of the country; and, Two, decrease the amount of traffic and congestion in the D-FW region.

In fact, it may actually make traffic worse by adding stress on our East-West thoroughfares. Remember, under TxDOT's proposal, the vast majority of trucks are going to have to make a left and drive west into the D-FW Metroplex.

Members, we also do not want to artificially invite sprawl.

Sprawl creates traffic gridlock and discourages the use of public transportation. These new populations will not have access to public transportation.

The result is bad air and a worsening of our quality of life.

Right now, we suffer from traffic congestion and poor air quality, and we are working hard to address these problems through regional rail and expanded road capacity.

TxDOT's proposal will undermine this hard work.

Let me spend a moment on why bad air is bad.

Not only is it a health concern; our Metroplex is in a nonattainment status relative to the Clean Air Act. If we do not meet the standards within the next three years, then we are at significant risk of no longer receiving federal transportation dollars.

(Note: We must be in compliance during 2009 to meet the 2010 deadline.)

I don't know if this is on the Legislature's radar screen, but I wake up every day aware of what nonattainment will mean for my city and our region.

If we do not get more regional rail and do not prevent sprawl like the kind TxDOT wants to cause, then we will have to take drastic control measures that at the end of the day still may not be enough.

Some of these control measures include restrictions on morning construction activity and shutting down drive-in windows at banks and pharmacies throughout the summer. We may even see "even driving days" like they have in Mexico City.

This is not hyperbole; this is a very real risk.

The TxDOT proposal will add to our air quality problem by increasing sprawl, increasing East/West traffic, and by placing more trucks to the far Eastern side of the Metroplex, which, due to wind patterns, will worsen our federal air quality scores.

The D-FW solution does not contribute to these air quality problems.

In fact, the D-FW proposal will improve our air quality.

By far, however, the worst consequence of the TxDOT's approach to the TTC is their radical departure from the traditional partnership with the Legislature and with local government.

You just heard Commissioner Whitley describe the extent to which local government has attempted to express their concerns to no avail.

TxDOT's understanding of the new CDA [Comprehensive Development Agreement] approach to road building is that local branches of government and the Legislature are no longer part of the process.

According to the TxDOT view, once an agreement is made with a private partner, TxDOT and the provider alone are empowered to makes decisions concerning road alignments.

This is a staggering change from the way we have historically made these decisions.

These projects are too important to not allow the citizens to participate through their various voices in government.

This is a fundamental issue of the separation of powers and checks and balances in the system.

I have had the unique honor of serving the citizens of Fort Worth and Tarrant County as county judge, state senator and now mayor of Fort Worth.

What I have learned through serving in these various capacities is that this fundamental issue of separation of powers should not so casually be cast aside.

Every level of government has a unique perspective, which serves to express the complex voice of our citizenry.

The elected officials of North Texas have made our opinions regarding these competing visions plain from the start.

We have emphatically expressed our concerns with TxDOT.

Unfortunately, TxDOT has cynically attempted to placate us for months now with assurances that there is still time to consider our alternative.

However, we fear that we have been "slow-played" and that we will soon be told that "the die is cast" -- that it is too late to consider the North Texas 360 alternative.

Members, we need your help to make sure the Trans-Texas Corridor does not bypass our region.

It doesn't make sense for our economy, our environment and even our private partners who are providing this facility.

We must do everything we can to prevent this bad idea from becoming a reality.

You can help realize a better solution for all stakeholders.

May I suggest that during the interim, you conduct more hearings on this issue.

Through your leadership, we can ensure that we maintain the traditional partnership between all branches and subdivisions of our government--especially when we construct such important infrastructure in this state.

I again thank you, Chairman and members, for having this hearing and for your willingness to roll up your sleeves and find the best North Texas alternative for the Trans-Texas Corridor.

© 2006 Fort Worth Star-Telegram: