Thursday, June 29, 2006

Johanna Zmud's business interests should have prevented her appointment to CTRMA in the first place.

Founding board member of CTRMA steps down


Austin Business Journal
Copyright 2006

Johanna Zmud, one of the founding members of the Central Texas Regional Mobility Authority board, is stepping down.

Zmud has served on the transportation authority's board since it was formed in 2002.

Zmud cited changes at her research and consulting company, NuStats, as her reason for leaving. NuStats was recently acquired by a European-based traffic and mobility firm, PTV-AG.

In a statement, Zmud says: "To fulfill my obligations to my firm's new owner, I need to be able to pursue contract opportunities in Texas that I currently cannot and will also need to dedicate significant time to domestic and international business travel, which prevents me from devoting the time necessary to fulfill my responsibilities as an active board member."

Zmud served as chair of the CTRMA's planning committee and played a crucial part in the agency's first project, the 11.6-mile, $238 million 183A toll road.

Zmud hasn't set an official resignation date and expects to continue her service until the Travis County Commissioners Court appoints her replacement.

About a year ago, Texas Comptroller Carole Keeton Strayhorn called for the resignation of Chairman Robert Tesch and Zmud because of conflict of interest. The CTRMA rebutted saying there were no conflicts of interest. [Link]

© 2006 American City Business Journals, Inc.:


"New roads will be built with 'alternative financing,' namely toll roads."

Life in the Fast Lane

Creation of the interstate system transformed nation

Fort Worth Star-Telegram
Copyright 2006

American life as we know it began 50 years ago today, when President Eisenhower signed a law creating the interstate highway system.

The ribbons of concrete that now crisscross the nation not only made it possible to drive coast-to-coast without stopping -- except to fill 'er up -- but also changed where people live, work and play.

"It invented Texas," said Alan Pisarski, a Virginia-based transportation trend expert. "What would the population of Texas be without interstates? Between the interstates and air conditioning, somewhere in there belongs the credit for the social and economic emergence of the South and the West."

While many people believe the main purpose for creating interstates was national defense -- so the military could respond, and civilians could evacuate, if the commies invaded -- decision-makers in the 1950s knew that the biggest impact would be on job growth, said Jim Carvell, a senior research engineer with Texas A&M University's Texas Transportation Institute.

It took four decades -- twice as long as originally expected -- for the system's more than 40,000 miles of highways to be completed. The final tab was $129 billion, according to a 1991 federal estimate, or nearly five times the original 1956 estimate of $27 billion.

The idea of federally funded roads wasn't unique even then. Federal aid for highways predates World War I. But the interstate act was revolutionary in that it:

Provided a uniform design for states to follow in building the safest possible roads and seamlessly connecting them across political boundaries.

Gave states 90 percent of the money needed to build the roads. The previous federal-local ratio was 50-50.

"The funding was a tremendous help," said retired highway engineer Burton Clifton, who oversaw construction of most western Metroplex highways during his 54-year career. "We already knew how to build better roads. We were already using the interstate design. We just didn't have the money to build them fast enough."

Without the "National System of Interstate and Defense Highways," as Eisenhower called it, the phenomenal growth that has transformed Tarrant County would likely have come more slowly. The highway money transformed U.S. 81 into Interstate 35W, opening up north Tarrant County for development.

"You could go 20 miles and be back in 20 minutes," Pisarski said of the interstate system.

"You could move to the outer suburbs, but if you wanted something in the city center, you could go back for it."

One of the region's key economic engines might not exist without interstates, either.

"If we didn't have the interstate highway system, we wouldn't have had D/FW Airport," said Michael Morris, transportation director for the North Central Texas Council of Governments. "The interstate highway system made it possible to blend traffic, north and south, east and west. It created the largest inland metropolitan port in the U.S."

Not all of the change was positive. Interstates 20 and 30 cut the drive time between Dallas and Fort Worth to 30 minutes.

But as traffic moved to the interstate, the business corridor along U.S. 80, Lancaster Avenue in Fort Worth and Division Street in Arlington, withered.

The Boaz Trading Post in Fort Worth, near the triangular corner of Camp Bowie Boulevard and Weatherford Highway, was the place to shop in the 1950s and '60s, Clifton said.

But by the 1970s, Boaz began to fade in popularity as people made their way to malls.

The era of federal dollars covering highway projects is nearing an end, Morris said. Future federal funding, which comes mostly from gasoline taxes, will be used primarily to maintain the mammoth interstate system -- which covers every state but Alaska.

New roads will be built with "alternative financing," namely toll roads, he said.

Because of the growing cost of road construction and the public's aversion to raising taxes, the window of opportunity to build interstates has passed.

For that reason, Metroplex leaders say, it's all the more important to recognize how special it was that Eisenhower and members of Congress did what they did exactly 50 years ago today.

  • Texas 3,233
  • California 2,456
  • Illinois 2,169
  • Ohio 1,759
  • Pennsylvania 1,572


Interstates have forever changed Tarrant County, which has seen its population more than triple to 1.7 million thanks to improved mobility during the last 50 years.

Tarrant County highways - then and now


President Eisenhower

The Denison native made better highways a national priority. In 1919, as a lieutenant colonel, he moved troops from Washington to San Francisco -- and was enraged that it took 62 days.

Frank Turner

The 1929 graduate of what is now Texas A&M University is widely regarded as the father of the interstates. The man known for soothing nerves in Congress during debates over highway funding ruled the roost at the Federal Highway Administration until 1972.

Richard Oliver

The Texas highway engineer submitted the winning design of the interstate logo -- the red, white and blue shield -- in a national contest. Oliver's first version was black and white because he didn't think the federal government would allow colors.


1956 President Eisenhower signed interstate highway act.

1957 Texas 550 designated Interstate 20 (now Interstate 30) in west Fort Worth.

1958 Original Fort Worth Mixmaster at present-day I-30 and I-35W completed.

1959 Elevated expressway of present-day I-30 completed from Summit Avenue to I-35W.

1960 I-35W completed from downtown Fort Worth to Belknap Street.

1965 Southeast Loop 820 from Hemphill Street to Texas 121 completed.

1966 I-35W completed to north Loop 820; Northeast Loop 820 completed from Texas 121 to I-35W.

1967 I-35W completed from Loop 820 to Denton County.

1969 Northwest Loop 820 completed from I-35W to present-day Business 287.

1973 I-20/Loop 820 east interchange completed.

1975 I-30/Loop 820 west interchange completed.

1978 Dallas-Fort Worth Turnpike changed to freeway and renamed I-30.

1982 Southwest Loop 820 completed from Spur 580 to Hulen Street.

1991 New I-20/I-35W interchange completed, I-30/Loop 820 east interchange completed.

2001 Northeast Loop 820/Airport Freeway "Vortex" interchange completed.

2003 New Fort Worth Mixmaster interchange completed.

SOURCES: Texas Transportation Institute, Federal Highway Administration,

Smithsonian's National Museum of American History, Texas Department of Transportation
Gordon Dickson, 817-685-3816

© 2006 Fort Worth Star-Telegram:


Cintra-Zachry seals deal on the remainder of Texas 130

Details on private turnpike emerge

Transportation commission expected to approve 50-year agreement on Texas 130 today.

June 29, 2006

By Ben Wear
Austin American-Statesman
Copyright 2006

The Texas Transportation Commission today is likely to give a Spanish-American partnership a 50-year contract to build and operate the southern 40 miles of the Texas 130 toll road.

Wednesday, commission Chairman Ric Williamson and agency staff members filled in details about how this partnership will work. The deal marks the first time the state has handed over construction and operation of a state highway to a private company.

The cost to the private builder, Cintra-Zachry, will be about $1.35 billion for design, right-of-way purchase (although the state would have title to the land) and construction of the divided four-lane road from Mustang Ridge to Seguin.

Officials also said Wednesday that the new road would open in about 2012 and that tolls will start at about 12 cents a mile.

The project would complete a loop around Central Texas' Interstate 35 congestion, which begins at Georgetown.

The upper 49 miles of Texas 130 are being built by another company, Lone Star Infrastructure, which at the state's option may maintain the road for several years after it opens in segments late this year and in 2007. But the state Transportation Department and the commission would be fully in charge on that section.

Not so with the southern 40 miles. Cintra-Zachry, which under a separate contract signed last year may end up building a turnpike paralleling I-35 from Oklahoma to Laredo, would run the toll operations and set the toll rates. But there will be a ceiling to those tolls.

When the road opens, tolls should be comparable to those on the northern 49 miles, about 12 cents a mile for cars and light trucks and up to 50 cents a mile for 18-wheelers. The rate could be raised annually, but under the agreement (to be released today after the commission vote, officials said) that percentage increase would be tied to inflation.

Cintra-Zachry, could, if it wants, charge tolls lower than that ceiling. The agency will get an as-yet-undisclosed percentage of those tolls from day one, increasing in two steps based on total revenue to a 50-50 split of revenue.

The agency estimates that over 50 years it will get about $1.6 billion from the revenue sharing.

The state Transportation Department will get a $25 million payment as soon as the project has environmental clearance, probably late this year. Amadeo Saenz, the agen- cy's engineering director, said that under state law that money must go to areas of the state adjacent to the road and that it would be used by the Austin and San Antonio districts of the Transportation Department.

Saenz said that the agreement will spell out road condition standards that Cintra-Zachry will be required to maintain over the five decades it controls the road. The agreement, Saenz said, will not require that the road be constructed of concrete (like the northern 40 miles), which is more durable than asphalt.

What if the road has unexpectedly low traffic and the project goes bankrupt?

James Bass, the Transportation Department's chief financial officer, said the state would have the option to take over the road for 80 percent of the debt still owed or fair market value, whichever is lower, and continue to operate it as a toll road.; 445-3698

© 2006 Austin American-Statesman:


“If Perry wins, it’s coming.”

Coalition discusses campaign

June 29, 2006

by Clay Coppedge
Temple Daily Telegram
Copyright 2006

HOLLAND - Opponents of the proposed Trans-Texas Corridor agree on one thing - their best chance to stop or stall the massive transportation project depends on the defeat of Gov. Rick Perry in the November governor’s race.

About a hundred members of the Blackland Coalition and the Blackland Political Action Committee gathered at the SPJST hall in Holland to continue the process of endorsing one of two independents - Carole Keeton Strayhorn or Kinky Friedman - or Democrat Chris Bell for governor.

Members of the political action committee filled out ballots while speakers from the floor spoke against Perry.

“If Perry wins, it’s coming,” Linda Glasscock said.

“We have the guns to defeat it, but we’re running out of ammunition. What you do Nov. 7 will determine what happens with this project.”

Linda Curtis of Independent Texans pointed out that in the November election, the winner would not need more than 50 percent of the vote to win. “It’s a plurality vote,” she said. “The candidate with the most votes wins.” She then offered her personal endorsement of Strayhorn.

Bell was not at the meeting but campaign workers handed out a written statement in which he accused Ms. Strayhorn of recommending toll roads in 2001 in her present job as state comptroller but turning against them as an opponent of Perry’s.

“The Trans-Texas Corridor is a case study in corruption and cronyism, and one of my first acts as governor would be slamming the brakes on the whole plan and dragging it back into the public light,” Bell said in the handout.

The first phase of the corridor would run north-south several miles east of Interstate 35, from Laredo to the Oklahoma border. The plan calls for a 4,000-mile long, 120-feet wide six-lane highway, two freight rails, two passenger rails, two high-speed rail lines, a natural gas pipeline and fiber optic and water utilities zone.

© 2006 Temple Daily Telegram:


Wednesday, June 28, 2006

Ferrell Pork


Road funding raises disturbing questions


San Antonio Express-News
Copyright 2006

The Texas Department of Transportation should re-allocate $305,000 earmarked for a river crossing on a county road with limited public use in the Hill Country town of Vanderpool.

Funding for the crossing suddenly appeared in the state's budget for expansion work on FM 187.

The appropriation was never mentioned at a May 30 public hearing on the project.

Bandera County officials are upset they were not consulted on the project, the Express-News reported. They say it's a waste of taxpayer money to spend funds on a road that leads to private property.

Midland gas and oil businessman Ferrell Davis, who will benefit directly from the project, told Express-News reporter Zeke MacCormack he did not ask the state for a river crossing on the road leading to his part-time home and full-time ranch.

If no one asked for the crossing, why did it end up as part of a $13 million state project to widen 14 miles of FM 187 between Garner State Park and Vanderpool?

Improvements to the county road are a significant part of a $735,000 budget the department will use to adjust and repair 112 roads and driveways that will be affected by the road-widening project.

The allocation for Bush Creek Road makes no fiscal sense. The dead-end caliche road runs for 1.6 miles across the Sabinal River bed to five homes.

In the past, Davis lobbied county commissioners to improve the road, but his request was rejected. Bandera County officials said they couldn't justify the expense.

Texas transportation officials deny being under political pressure or giving preferential treatment to Davis, who has friends in state and national political circles, MacCormack reported. However, they have failed to provide an explanation justifying this project.

The funding raises questions about funding priorities in the Texas Department of Transportation. Better uses can be found for the limited transportation funds than projects with little, if any, public benefit.

© 2006 San Antonio Express-News:


"Citizens would like to have some options offered to them, and not the idea that this is a done deal."

Toll lane opponents call for alternatives at public meeting


Patrick Driscoll
San Antonio Express-News
Copyright 2006

North Side residents on Tuesday pleaded with state officials, threatened a backlash at the ballot box, asked for alternatives and even offered their own solutions.

Anything to stop the Texas Department of Transportation from tolling lanes that could be added to Loop 1604, from Texas 151 on the West Side to Interstate 10 on the East Side.

"If you hear anything tonight, please know that the citizens who speak here would like to have some options offered to them, and not the idea that this is a done deal," Barry Booth said. "Please present some other alternatives rather than just private industry offering us a solution."

More than 175 people attended a meeting at the Live Oak Civic Center to provide input on a proposal to build four to six toll lanes on Loop 1604. Four out of five of the two dozen speakers railed against tolls, and a handful of business and political leaders touted the need.

By tolling new lanes, construction could be funded a decade or more sooner to deal with growing traffic, and waiting for a gas-tax increase is politically futile, proponents say. Motorists will still have a choice because existing lanes will remain free, they say.

"No one's going to make anybody go on the toll lanes," said Marty Wender, a developer and past president of the Greater San Antonio Chamber of Commerce. "If we want a quality freeway system in this community that we have today and keep it going, our only choice today is toll roads."

Drivers could pay about 14 to 16 cents a mile on Loop 1604 toll lanes, though a state survey last year tested attitudes about paying as much as double that, depending on times of day and whether people were sharing rides.

Critics say congestion relief will be available only to those who can afford to pay tolls and that everybody else will be stuck in gridlock. They suggest reversible lanes and use of shoulders during rush hours, variable speed limits and ramp metering as some ways to curb traffic.

"This is a an issue that really needs to be addressed in a different way," said Victoria Paparelli, who said she had walked into the meeting favoring tolls on Loop 1604 until she heard other people speak. "We need the opportunity to say what we want."

Another public meeting is scheduled from 6 to 10 p.m. today at the University of Texas at San Antonio's Convocation Center.

© 2006 San Antonio Express-News:


Truth or "consequences?"

Vote on more toll roads delayed

Support for pay-to-drive plan may be eroding; decision not expected before fall elections.

June 28, 2006

By Ben Wear
Austin American-Statesman
Copyright 2006

Transportation officials have postponed, probably until after the November elections, what is shaping up as a definitive vote on a second wave of toll roads for Central Texas.

And evidence is mounting that the vote could be a reversal, in part or in whole, of the 2004 and 2005 votes by the Capital Area Metropolitan Planning Organization board to make the roads pay-to-drive.

The precipitating event in the delay is a recent change by federal highway officials in requirements for environmental analyses. That meant environmental reports on the five potential toll roads in the Phase II plan won't be done for several months, erasing what appeared to be a July deadline for a CAMPO board vote.

But the underlying dynamic of the postponement is political. A growing number of the 23 board members — 21 are elected officials — want to wait for results of a study before making the politically ticklish vote. A $300,000 financial review by a Boston consulting company of the $1.4 billion project won't be done until October or so.

"Once we get the study back, we'll need to spend several months working through the results and figuring out where we go from here," said Austin City Council Member Brewster McCracken, a CAMPO board member.

McCracken, who joined the majority in a 16-7 vote in July 2004 authorizing Phase II, began to have doubts months later and pushed for the study of the plan's underlying assumptions and potential alternatives to tolls.

For months after McCracken's change of heart, it seemed that support for the toll road plan was holding firm. But at the CAMPO meeting two weeks ago, Phase II skeptics appeared to have found their voice.

"A consensus has emerged in the community in the two years since this plan was presented to the board," McCracken said Monday. "And the consensus is that it is OK to toll new roads but that we should not convert existing free highways into tollways."

The Phase II plan does not consist of pure conversions, that is, simply erecting toll facilities on an existing road without making improvements. Rather, the plan involves building one road from scratch (Texas 45 Southwest) and building tolled express lanes with free frontage roads on four other highways that are interrupted by stoplights.

Two of the four roads in that second category, U.S. 183 (Ed Bluestein Boulevard) and Texas 71 East are already under construction. The other two are U.S. 290 East and U.S. 290/Texas 71 in Oak Hill.

All the Phase II roads have generated criticism, as did two others that were in the plan in 2004 but were jettisoned after massive, well-organized opposition. And toll roads have been a factor in the election defeats of CAMPO board members Karen Sonleitner, a Travis County commissioner, and former West Lake Mayor Dwight Thompson.

But state Rep. Mark Strama, D-Austin, a CAMPO member with a potentially tight re-election battle this fall, said the delay isn't about avoiding a tough vote before the November elections.

"The politics of tolling have become so opaque to me that I've given up on trying to do the right thing politically on it," Strama said. "I don't want to procrastinate on this. We have to get it right from a policy perspective so we can defuse some of the tensions and antagonisms it has created. And I'm for getting it right as soon as possible."

Strama nonetheless wants answers to some questions, such as why the plan assumes that only 15 percent of the construction money would be borrowed (with the rest coming from state and federal gas taxes) and how high a local-option gas tax (not currently allowed under state law) it would take to replace the lost toll revenue.

State Rep. Mike Krusee, R-Williamson County, the House transportation committee chairman and architect of the toll road plan, said it's too early to conclude that Phase II is in trouble. The study, he said, is unlikely to be the political magic bullet CAMPO members are looking for.

"What I presume it will say is, 'Is there any possible way to build these roads without tolling them?' and the answer will be yes," Krusee said. "And 'are there serious consequences for the future of road building if we don't toll?' And the answer to that will also be yes. So you'll still face the dilemma.

"When we do take that vote, I just want to make sure everyone understands the consequences of what we're doing."; 445-3698

© 2006 Austin American-Statesman:


Cintra pays $1.3 Billion to build and toll the final 40 miles of Highway 130

State reaches $1.3 billion deal to finish toll road

June 28, 2006,

Associated Press
Copyright 2006

AUSTIN — The developer of the proposed Trans Texas Corridor has reached a new $1.3 billion agreement with the state to build the final 40 miles of the state toll Highway 130, stretching from Austin to Seguin.

Under the agreement expected to be signed Thursday, developer Cintra-Zachry will invest the $1.3 billion to build the road and will receive a 50-year contract to collect the tolls.

According to the Texas Department of Transportation, the state's cut of toll revenue will begin with the first toll collected and will eventually reach a 50-50 split with the company.

The highway wil be a state-owned road while Cintra-Zachry will be responsible for the financing, design, construction, operation and maintenance over 50 years.

© 2006 The Associated Press:


Tuesday, June 27, 2006

Cintra is in line for TxDOT contracts that could someday be worth up to $36 billion.

Ferrovial: Building a New Future

June 27, 2006

By Joan Tarzian
Copyright 2006

Like others in the construction industry, the Spanish giant is diversifying into facilities management. That's why it spent $19 billion for BAA

Ferrovial's name was in the headlines for months as it battled investment banking giant Goldman Sachs (GS) to acquire the British Airport Authority (BAA), operator of airports in seven cities in England and Scotland, including London's huge Heathrow. In the end, the Spanish construction giant carried the day over its richer rival with a $19.12 billion bid. But why was it so eager to dish out the big bucks for a string of airports?

The answer lies in the rapidly changing nature of the construction industry. Started in 1952, Ferrovial grew from building and maintaining tracks for Spain's state-owned railroad (hence its name) into the country's leading construction firm. Its greatest claim to fame: The Madrid-based company built the gorgeous and fiendishly complex Guggenheim Museum in Bilbao designed by Frank Gehry.

But construction is a highly cyclical and often low-margin business. So starting in the 1990s, Ferrovial, like many competitors, began diversifying into facilities management. It established a subsidiary called Cintra that runs toll roads and parking garages, many in Spain, and began shopping aggressively for similar opportunities around the world.

Using Expertise

The diversification effort has been remarkably successful. Ferrovial now has 79,000 employees in 40 countries and booked revenues last year of $11.3 billion. It runs the Sydney Airport, the Chicago Skyway, parts of the London Underground, and Canada's 407 ETR toll road. All told, the company booked nearly 10% of its 2005 revenues from contracts to manage public facilities. More important, those contracts generated more than one-third of Ferrovial's $1.1 billion in operating profits.

The company won't comment to the press, but a spokesman underscored that Ferrovial believes its success comes from buying controlling interests in companies whose activities map closely into its existing expertise.

Ferrovial isn't the only construction firm eying facilities management to boost margins and smooth the uneven flow of building projects. France's giant Vinci runs numerous parking garages and last year bid more than $11 billion to acquire from the French government the cash cow Autoroutes du Sud, toll roads that fan out from Paris to the Riviera.

Still Waiting

French archrival Bouygues is also expanding from construction into facilities management. But Ferrovial has done even better than its competitors. The company figures that with the addition of BAA to its portfolio, it will earn 2006 operating profits of $3.8 billion—twice those of Vinci and 12% more than Bouygues.

Those prospects haven't yet shown up in Ferrovial's share price. It's currently trading at €58.2, or $73.33, flat for the year and 17% off its May 10 peak. Yet most analysts think Ferrovial has plenty of upside. Barcelona-based S&L La Caixa says the company's track record of generating value from acquisitions shows every sign of continuing. And construction sector analyst Rob Crines at JP Morgan (JPM) in London thinks Ferrovial shares "have underperformed compared to the potential from the [BAA] deal."

It has been a long road for Ferrovial. Founded during the Franco regime by Rafael del Pino y Moreno, it grew over the decades on a diet of state railroad contracts and construction projects. But when Spain joined the European Union in 1986 and infrastructure funding began pouring in from Brussels, Ferrovial took off with lucrative modernization and development projects. Del Pino's son Rafael del Pino Calvo-Sotelo took over as president in 1998, and the same year, Ferrovial launched its Cintra facilities management unit.

Working Model

At the end of the decade, Ferrovial took a huge step up. In 1999, it bought Spanish construction rival Agromán, leapfrogging to become the country's largest construction company. And the same year, it went public on the Madrid bourse, selling $5.3 billion in shares on the Madrid exchange. The del Pino family still controls 58% of the company, which is currently valued at $10.3 billion.

Since then, the company has accelerated its globalization. In 2000, it bought Poland's largest construction group, Budimex, and also snagged a contract to manage the airport in Bristol, England. Two years later, a consortium led by Ferrovial won a bid to manage the Sydney Airport. "Ferrovial has made its business model work in the companies it has bought over the years," says Manuel Romero, finance professor at Madrid-based business school Instituto de Empresa.

More recently, the company has turned its attention to the U.S. It scored a breakthrough in early 2005, when it signed a 99-year, $1.83 billion deal to manage the Chicago Skyway—the first privatization of an existing highway in U.S. history. The 8-mile (12.5 km) road, built in 1959, connects the city to the Indiana Toll Road, which Cintra also now manages. Even bigger prospects are in store. Since buying Houston-based construction company Webber for $220 million last year, Cintra has gotten in line for Texas transportation department contracts that could someday be worth up to $36 billion.

Deep Pockets

Now, as Spain's construction market starts to cool and a slackening of EU infrastructure subsidies looms, Ferrovial is turning to services as never before. Its most outrageous play to date is the BAA acquisition. The company holds a 64% share in the consortium of victorious bidders, which also includes the Caisse des Depot de Quebec and a venture capital arm of the Singapore government, called GIC Special Investments. Debt financing for the deal will come from Citigroup (C), Royal Bank of Scotland, Santander (SAN), HSBC (HBC), and Calyon.

BAA earned annual revenues of $4.15 billion in the year ended Mar. 31, and sales should edge up over the next decade as passenger volumes increase annually by around 3%. But what's far more interesting to Ferrovial is BAA's rich—and predictable—cash flow. Last year, it spun out nearly $1.8 billion in operating cash. That's gravy for the Spanish company, which already scores 43% of its revenues, and 46% of pre-tax profits, outside Spain.

With BAA in its pocket, Ferrovial expects to more than triple pre-tax profits this year. Not a bad outcome for an outfit of modest beginnings and global ambitions.

Tarzian is a correspondent for BusinessWeek in Madrid

© 2006 by The McGraw-Hill Companies Inc. :


"Will selling off public assets to pay debts now be regrettable down the road?"

Feds Encourage Foreign Control of U.S. Interstates


By Diane M. Grassi
Hawaii Reporter
Copyright 2006

Fifty years ago, President Dwight D. Eisenhower signed into law the 1956 National Federal-Aid Highway Act and since 1990 referred to as the Dwight D. Eisenhower System of Interstate and Defense Highways. He authorized the connectivity of 41, 000 miles of high quality highways across the United States. It would be financed by a combination of the Highway Trust Fund, federally imposed user fees on motor fuels and state user fees.

Eisenhower was prompted to persuade the nation’s people to build the interstate system, as a matter of national security. Although not at war at the time, he believed it was imperative the interstate be designed for mass evacuation of cities in the event of a nuclear attack, in the era of the Cold War.

The Act dictated that one out of every five miles must be straight, in order to use as airstrips in times of war or other catastrophic emergencies. And to that end, the success of national defense was dependent upon the navigability of large numbers of military personnel and their equipment during such a crisis. And even today, 75% of the interstate highway system represents the Strategic Highway Corridor Network (STAHNET) utilized by the U.S. military.

And while in 1956 there was the fear of nuclear threat from the then Soviet Union, today’s national security, often referred to as homeland security, remains similarly threatened in an era where the threat of terrorism looms.

Yet, at such time that it would appear imperative that U.S. strategic infrastructure such as the interstate highway system remain under American control, it is but one more public asset available for sale under the guise of Public-Private Partnerships.

Unlike domestic privatization, however, states throughout the country are negotiating contracts solely with foreign corporations and conglomerates, primarily in Europe, Australia and Asia, in order to finance the maintenance, modernizing and extension of U.S. interstates.

As funding from federal gas taxes and state user fees have fallen behind the inflated costs associated with road construction and maintenance, more and more state governors and lawmakers no longer see the operation of roads solely as a public responsibility. However, the reason states initially took over handling roads at the beginning of the 19th century was because many roads, bridges and canals had previously fallen to bankruptcy in the hands of private owners.

According to the Secretary of the Department of Transportation, Norman Mineta, “We are like a poker game. We are inviting people to the table and saying, ‘Bring money when you come.’” And Mineta believes, “A big part of the answer is to involve the private sector more fully – not just as a contractor or vendor, not merely as a financier, but as a partner in the funding, management and expansion of our transportation infrastructure.” Yet when those partners are exclusively foreign entities, a whole new dimension is added to the management of the U.S. interstate highway system. It is unprecedented.

The deal which started a flurry of more than 18 proposed foreign financed interstate highway projects across the nation over the past year in amounts of over $25 billion was in Chicago, IL in December 2004. Chicago Mayor Richard Daley proposed an agreement to lease the Chicago Skyway for $1.83 billion dollars to Cintra-Macquarie Consortium, a Spanish-Australian conglomerate, doing business as State Mobility Partners in the U.S.

The deal, finalized in January 2005, gave Cintra-Maquarie a 99-year lease for which it is responsible for the maintenance and structural quality of the 8-mile elevated structure. -1- -2- In exchange for its upfront payment, Cintra-Macquarie will collect and keep all money from tolls from the Skyway and will be able to raise tolls as incorporated under the terms of the agreement. The company is modernizing toll collection with an electronic transponder system.

Until the technology is fully operable, toll collectors have been newly but temporarily recruited. But instead of earning an average hourly wage of $20.00 as their predecessors did, they are paid a $10.00 to $12.00 hourly wage. And as contracted, the Skyway offers the buyer an asset without having to deal with improvements or debt.

Following the situation in Chicago, Indiana Governor and former Office of Management and Budget Director for President Bush in his first term, Mitch Daniels, explored a similar arrangement for Indiana’s $2.8 billion shortfall in its transportation budget over the next ten years. Daniels was able to get his highly contested proposal through the state legislature as well as the courts where it was challenged by a citizen advocacy organization.

A bid was accepted by the state of Indiana in the amount of $3.8 billion and an agreement was arrived at with Cintra-Macquarie, the same operator of the Chicago Skyway. The lease agreement will provide for the operation and maintenance of the 157-mile Indiana Toll Road, a part of the interstate highway system, for a period of 75 years. The deal is expected to close on June 30, 2006. The Indiana Toll Road will also have an upgraded electronic toll system installed, eventually ending the need for toll workers.

Here are just a few of the many other projects either approved or proposed across the country. In Virginia, the rights to manage, operate and maintain the Pocahontas Parkway, an 8.8-mile toll road outside of Richmond, were bought for $611 million by the Transburban Group, also an Australian entity in its first foray into U.S. road management. A lawmaker in New Jersey has proposed selling a 49% interest in the New Jersey Turnpike and Garden State Parkway to a private investor.

In August 2005, the same Macquarie Infrastructure Group took over operations of the Dulles Greenway Toll Road which operates between suburban Virginia and Washington, D.C., for the amount of $533 million. And the anticipated widening and extension of the Trans-Texas Corridor which runs 316 miles and parallel to I-35 in Texas, is slated to be built by Cintra, the Spanish company, and Zachry Construction, out of San Antonio, TX, who plan to invest $7.2 billion.

But windfall upfront payments while attractive to states to reinvest in other transportation projects, have their limitations and pitfalls too. States will need to learn how to enforce and write explicit contracts. And the proceeds from the sale or lease of roads should be earmarked for specific projects. Non-compete clauses are often inserted in such contracts such as inducing lower speed limits on parallel free roads to drive traffic to the toll road. Others fear that operators will only maintain those parts of the route which remain profitable.

Other issues which are arising more often after the fact is the increasing worry that the public will have less and less input over the use of its public assets. Such is the case in Colorado and California where the enforcement of maintenance matters have already become problematic. Immediate increases in tolls and applied on a perennial basis, with higher tolls applied at rush hours have not sat well with commuters.

However, questions will continue to arise in a process still in its in infancy. Yet states must have the ability to learn from mistakes made in doing business in this brand new way. Will a private firm maintain the roadways as well as the U.S. government? Will a foreign corporation care about the needs of the American people? And will selling off public assets to pay debts now be regrettable down the road? One would think that Eisenhower would have thought so.

© 2006 Hawaii Reporter, Inc.:


What might people do as gas prices go up?"

Driver attitudes to be examined


Patrick Driscoll
San Antonio Express-News
Copyright 2006

High gas prices don't seem to be scaring most members of a transportation planning board that has staked the city's future on highways and tollways.

But, members said Monday, they'll at least probe commuter attitudes to see if a big shift in driving habits could be lurking.

The Metropolitan Planning Organization voted to change its next Regional Transportation Attitude Survey to include questions about what people might do as gas prices go up.

"When peoples' habits start changing, that's when we need to refocus," Chairman Richard Perez said. "Attitudes have changed, but I don't know if people's habits have changed."

The next survey is set for fiscal year 2007. But board member Tommy Adkisson, who wants to know how rising gas prices could affect local plans for more than 70 miles of toll roads, said he'll try to get the survey pushed up to 2006.

"It's a step in the right direction," said Terri Hall of San Antonio Toll Party, who's been pushing for a study on the matter.

Regular unleaded gas in Texas has hovered within 50 cents of $3 a gallon for several months, according to AAA, which when adjusted for inflation is close to the record average set in 1980. Today's average is $2.78.

Bond statements for the Texas 130 and 183A toll roads in Austin assume gas prices won't top the 1980 peak. And with typical bond paybacks of 40 years, toll critics in San Antonio say there's a lot of room for problems to develop.

On top of that, federal officials expect global production of conventional oil to peak in two to four decades, if not sooner, and one report says easing increasingly short supplies will take more than a decade.

© 2006 San Antonio Express-News:


"Past studies suggest a 50-cent charge to get on a toll ramp."

Meetings set on tolls for 1604


Patrick Driscoll
San Antonio Express-News
Copyright 2006

State officials this week will cart out their maps, charts and microphones for the latest round of public meetings on toll roads — these for lanes to be added to Loop 1604.

The meetings, from 6 to 10 p.m., will be held tonight at Live Oak Civic Center and Wednesday at the University of Texas at San Antonio's Convocation Center.

Plans call for a 36-mile tollway on North Loop 1604, with six toll lanes from Texas 151 to Bandera Road and four from Bandera to Interstate 10 near Randolph AFB.

Drivers could pay about 14 to 16 cents a mile, Texas Department of Transportation officials say, though a TxDOT survey last year tested attitudes about paying as much as double that, depending on times of day and whether people were sharing rides.

Ramps would also be added to upgrade Loop 1604 interchanges with the freeways it crosses.

Past studies suggest a 50-cent charge to get on a toll ramp.

By tolling new lanes and ramps, construction could be funded a decade or more sooner. Existing lanes and ramps will remain free.

"The purpose is to improve mobility and safety in this corridor in a timely manner," said David Casteel, who heads TxDOT's San Antonio office.

Critics say congestion relief will be available only to those who can afford to pay tolls and that everybody else will be stuck in gridlock.

"Toll lanes aren't what we want," said Terri Hall of San Antonio Toll Party.

The public meetings are part of an environmental assessment TxDOT expects to finish next spring. If federal officials find no significant impacts, construction could start next year — otherwise a full impact study would be launched.

Two private consortiums — one led by Cintra of Spain and the other by Macquarie of Australia — are competing to build and operate the Loop 1604 toll system as well as take over a proposed tollway on U.S. 281 north of the loop.

The groups might submit their plans by the end of the year, and TxDOT could choose a winner by next summer.

More than 70 miles of toll roads are planned on the North Side, including new lanes on Interstate 35 and Bandera Road as well as a Wurzbach Parkway interchange with U.S. 281.

© 2006 San Antonio Express-News:


"I have a problem with that."


A heavy toll; Almost all of the planned pay-as-you-go roads are in East Austin

June 27, 2006

Eddie Rodriguez, State Representative, District 51
Austin American-Statesman
Copyright 2006

I was reminded recently why I voted against the Phase II toll road plan for Austin. At the June meeting of the Capital Area Metropolitan Planning Organization, the board (on which I serve) viewed a slide that mapped the toll roads planned for Austin. Most of those in Travis County were east of Interstate 35, and every single mile of toll lane in the City of Austin was on the East side.

Texas requires us to develop a plan in order to receive state transportation money. Our critical need for new highways can't be met by existing levels of state and federal funding. So, the state extended special borrowing authority to local areas — in our case, the three-county area of the Central Texas Regional Mobility Authority, which covers Travis, Williamson and Hays counties. Such loans — transportation revenue bonds — must be used to develop a system of toll roads, and they must be repaid by quarters and dollar bills collected at toll booths.

As each metropolitan planning organization complies, by designating transportation corridors under a toll road plan, that area qualifies for the balance of state transportation money.

But designating those corridors creates immense opposition from affected neighborhoods — and those with political clout have been most effective in resisting toll roads in their area.

Residents in the eastern part of the city have tended to have lower incomes and be less involved in the political process. That helps to explain why CAMPO's Phase II has scheduled almost all of the mandatory toll roads in East Austin's back yard.

For generations, those residents have disproportionately endured power plants, landfills, tank farms, wastewater treatment plants and excessive industrial zoning. Now, we see plans for East Austin to bear most of the burden of funding toll roads — so the rest of the city can qualify for other state transportation money.

In the plan, only 37 toll lane miles lie west of I-35; a whopping 136 miles of toll lanes are planned east of I-35. With just a little math, you can see that the east side will fund about four times as many toll miles as the west side. The statistics within the city are even worse. Phase II directs the state to establish all toll lanes in East Austin.

In July 2004, the CAMPO board adopted eight resolutions detailing its intent for the implementation of toll roads. One resolution addressed fair and equitable treatment of all citizens in bearing the burden of the toll roads.

That intent was apparently abandoned. In fact, 46 miles of Texas Loop 360 had been planned as a future toll road in the first phase of this project. After a huge protest from residents in that area, CAMPO decided not to fund it — leaving

I have a problem with that.

When CAMPO votes on Phase II in the next month or two, we could be in serious jeopardy concerning our own resolution to see that this toll plan is fair. The lack of social equity in the plan is a concern that will weigh heavily on my voting decision.

We Austinites care deeply about our city and the people who live on both sides of the I-35 divide. I'm tired of the East versus West debate. I want to see both sides treated fairly and equally. But I have an obligation to my district, and to all like-minded Austinites, to raise this issue of disparity in this toll road plan.

Rodriguez represents East Austin in the state Legislature.

© 2006 Austin American-Statesman:


Monday, June 26, 2006

Pickett: "I do not support and won’t support an RMA.”

Transportation Turmoil When RMA Resolution Fails

June 26, 2006

by Sito Negron
Newspaper Tree
Copyright 2006

When U.S. Rep. Silvestre Reyes’ chief of staff finished reading a letter the congressman wrote opposing a resolution supporting the proposed Camino Real Regional Mobility Authority, a look at the faces in the room at the Metropolitan Planning Organization Friday (June 23) told the story.

The resolution was not going to pass, and a new dynamic was introduced into the public discussion of the issue. Although the vote does not affect formation of the authority, which is in the hands of the state Transportation Commission, it was an embarrassing public setback for supporters.

The Regional Mobility Authority (RMA) is a concept promoted by the Texas Department of Transportation and many El Paso business and political leaders. The RMA would have the authority to build new roads and toll them, which supporters say would allow projects to get done quicker and help El Paso compete with other border ports of entry.

Voting against the resolution were most of the members of the MPO -- a regional transportation planning group -- who represent outlying towns, as well as two state representatives, Chente Quintanilla and Joe Pickett, who has waged a long battle against the RMA. Pickett has argued that the RMA would be a powerful and unaccountable entity that once created could not be undone, and he contends there are other ways to speed up key projects.

He also argues that TxDOT is using heavy-handed techniques to punish those who fail to conform; for example, within hours of the vote, he claims, Ted Houghton, an El Pasoan on the Texas Transportation Commission, threatened to derail the Inner Loop project. [npt background]

Houghton said Saturday the Inner Loop project has not been authorized -- the commission simply has opened the proposal up for additional bids -- and denied any retaliation. The Inner Loop project would use “pass-through” financing, in which the contractor sells bonds to pay for the project, and the state repays the bonds on a per-vehicle basis based on vehicle counts.

“We’re going to support communities that fully embrace all the tools that are made available to those communities by statute over the last several years,” he said. “We have tons of pass-through applications at the commission level from all over the state, very worthy projects, and El Paso is one of them.”

“All the tools” includes RMAs, and when asked whether that meant El Paso’s proposal would not pass muster, Houghton said, “I don’t know that. I have not seen the proposals, I don’t know what they say, I don’t know if they are too expensive. Those proposals will be evaluated and reviewed.”

He also said, in reference to the MPO vote, “unfortunately, people have to use political agendas instead of what’s best for the community.”

If that is so, the play before the MPO -- ironically, an unnecessary vote, since the state could act on El Paso’s petition without the MPO resolution -- only strengthened the agenda. The item to approve the city’s RMA application is on the Transportation Commission agenda for Thursday (June 29). [city rma petition]

Pickett said Houghton’s comment clearly was a veiled threat, and said that he and Cobos might by Monday issue a statement meant to contrast the lack of support from the MPO -- made up of members from the city of El Paso, local planning officials, and mayors from Sunland Park, Socorro, Vinton, Clint and Horizon City -- with the state’s impending action to approve the RMA. And, he said, to address the possibility that the Inner Loop project may not be funded.

“I’m going to go on the offensive and say ‘If you guys (TTC) don’t approve this it’s because you’re threatening us,’” Pickett said.

* * *

During the meeting, in introducing the item for discussion, El Paso Mayor John Cook compared the impending resolution on the RMA to the day the city created the Public Service Board, an entity created to manager water in El Paso. “Today I think is also going to be a historic day,” Cook said.

He said the RMA would allow money to be spent on projects in New Mexico and Mexico; painting a picture of the future, he said it could even help pay for a highway through Mexico to Guaymas, a deep water port on the Pacific coast hundreds of miles to the south that has been talked about as a Western state alternative to the California ports of Long Beach and Los Angeles.

But Pickett homed in on local issues, grilling District Engineer Chuck Berry about whether tolls would be added to new lanes on Interstate 10, and whether TxDOT would defer maintenance on non-toll roads. The answers are complex, because, for example, although only new lanes would be tolled on I-10, Pickett argued that since those are part of long-held plans, they ought to be paid for by TxDOT, instead of turned into toll projects.

State Sen. Eliot Shapleigh attempted to refocus the discussion. Saying El Paso is the only large Texas city without a completed loop, he said the question was simple: “Do you want to get (major transportation projects) done in a lifetime, or in 10 years? ... Are we willing to vote to take destiny in our own hands?”

Quintanilla focused on tolls. He also said that he, like Pickett, voted in favor of a toll project to complete the Northeast bypass, but did not believe the project proposed for the first RMA-funded project, the Southern Relief Route to parallel I-10 along the Border Highway’s path, was the right project.

It was after that, and a comment from Berry, that Philip LoPicollo of Reyes’ read the Reyes letter into the record. The gist of it dealt concern about the creation of a powerful agency that would be appointed by the city and then be relatively autonomous to issue bonds, set toll rates, and have the power of eminent domain. [reyes letter]

Sunland Park Mayor Ruben Segura then spoke, echoing those concerns, saying that the issue was not considering a project, but rather the creation of an unelected political subdivision.

Others spoke, the issue framed as the creation of a powerful and largely unaccountable agency, the vote was taken, and the resolution failed.

* * *

Pickett said after the meeting that if and when the Transportation Commission approves the RMA, “that's going to show how this whole thing from day one has not been up front. I guarantee this isn’t going to stop the RMA. All we did today in my mind is prove it's a bigger issue than people realize. What we did today sent a message to the public.”

Shapleigh said after the meeting: “If we want to finish the outer and inner loops that are so key to regional infrastructure during our lifetimes, the RMA is the way to go. We need to make the case to small town mayors that RMA money will free up other allocations for their regions.”

Houghton said Pickett doesn’t understand a fundamental fact: “Mr. Pickett believes you can build your transportation system on pass-through finance, and it’s important to understand we’re not going to do that. There is no new money in that program.”

He said the MPO can build the Inner Loop using other methods -- for example, essentially borrowing on future allocations. He said that TxDOT also could contract with a builder to create new toll roads: “So in essence you don’t need an RMA, but why would anyone want Austin to make the decision for you?”

The bottom line, Houghton said, is that communities have to show a willingness to contribute more. An RMA is a way to do that, and it provides more flexibility than TxDOT has, he said.

“(An RMA) can finance airports, ship channels, international bridges, projects in Mexico, in New Mexico. The opportunity in El Paso is a unique opportunity on the border, with our communities that ajoin us. An RMA can fund mass transit,” Houghton said.

Pickett said that funding is a red herring. He said the issue is that TxDOT is trying to force communities to adopt RMAs, an issue that increasingly is becoming of concern statewide. As for tolls, he said, “I think a plan for El Paso in our future includes tolls. I do not support and won’t support an RMA.”

Sito Negron can be reached at

© 2006 Newspaper Tree:


"Let's break out the confetti!"

Interstates play heroic, villainous roles in U.S.

June 26, 2006

Ben Wear
Austin American-Statesman
Copyright 2006

In "Cars," the No. 1 movie in the U.S. this month, the villain of the computer-animated piece is an unnamed interstate highway.

The interstate, if you haven't seen the movie, with ruthless efficiency has bypassed an old Route 66 town and left the cute vehicular residents of Radiator Springs lonely and bereft. James Taylor even sings about how the interstate done them wrong.

This has to be considered lousy timing (and typical Hollywood claptrap) from the standpoint of the highway industry, which is engaged in celebrating the 50th anniversary of the 47,000-mile interstate system. Well, kind of. The anniversary is not of the beginning of interstate construction, or even of the end (which technically hasn't occurred yet), but rather of the signing by President Eisenhower on June 29, 1956, of a 29-page bill with a chill-bumps-inducing name: the Federal-Aid Highway Act of 1956.

Woo-hoo! Come Thursday, let's break out the confetti!

Maybe not. The interstates, undeniably, have been a major factor in the country's economic growth these past few decades and gotten us places a heck of a lot faster. Picture going from Austin to Fort Worth on old U.S. 81 and all the stoplights in Round Rock, Georgetown, Temple, Waco and Hillsboro.

The interstates also required displacing a lot of urban dwellers in the largely poor neighborhoods they cut through; memorialized in concrete the existing racial and class divisions within communities (like Austin); bisected farms and ranches; and are, by and large, unattractive. And, oh yes, they bypassed and ruined the economy and spirit of many small towns.

So it's a mixed bag, perhaps worthy of neither celebration nor condemnation. We needed bigger, faster roads, and there was a cost.

Anyway, from a purely Texas standpoint, the timing of the anniversary is pretty interesting as well. Because if Ike's signing of the bill signified a change from the past — federalizing highway construction in a big way by guaranteeing that Uncle Sam would pick up of 90 percent of the tab for the new freeways — what's happening around here represents just as dramatic a departure from the past.

Gov. Rick Perry and company want to build a 4,000-mile intrastate system in Texas, and they're pretty far along the planning road on the first leg paralleling Interstate 35. The departure, as I'm sure most of you are aware, is that you'll have to pay to drive it (Eisenhower rejected a push to have tolls on the interstate system) and that it will be built and run by a private company. It will help the economy, speed travel, bypass towns, be unattractive — and cost you $20 or more to get to Dallas.

Kind of puts the nasty ol' interstates in a whole new light, doesn't it? Maybe when they make "Cars V: Open Range" the bad guy will be the Trans-Texas Corridor system, the heroes will live along that blessedly toll-less strip of asphalt running through Salado, and 90-year-old Randy Newman will croak out the schmaltzy theme song, "Free to drive, on I-35."

Feel free to use the idea, Pixar. No charge.

Getting There appears Mondays. For questions, tips or story ideas, contact Getting There at 445-3698 or
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© 2006 Austin American-Statesman: