Friday, February 23, 2007

"The report is sure to add fuel to a political controversy that has raged for months.

Auditors expose holes in TTC-35


Clay Robison, Austin Bureau
San Antonio Express-News
Copyright 2007

AUSTIN — The state auditor's office issued a sharply critical report on the Trans-Texas Corridor on Friday, concluding that taxpayers may never know how much they could end up paying for a toll road that would parallel Interstate 35 from San Antonio to Oklahoma.

And if the Texas Department of Transportation doesn't improve its accounting of project costs, taxpayers won't know if the public costs are appropriate, auditors said.

The route, known as TTC-35, is the first phase of an ambitious, long-term transportation network proposed by Gov. Rick Perry to help ease congestion on Texas highways.

Eventually, TTC-35, stretching from Laredo through North Texas, could cost more than $105 billion, it has been estimated.

Although costs for the Trans-Texas toll way, including financing, are to be provided through a developer, some costs could be partially paid by the state, the audit report said.

Texans could pay $13.6 billion in financing costs for the initial phase of TTC-35, plus a possible $16.5 billion for additional rail line projects, according to the audit.

A TxDOT spokesman defended the "corridor concept" and said the agency disagreed with some of the auditor's recommendations.

The corridor concept "is the most logical, most attainable way for us to relieve congestion and improve safety on Interstate 35 and provide the transportation system needed for the future economic well-being of the state," spokesman Randall Dillard said.

But the report, released less than a week before a scheduled Texas Senate committee hearing on toll roads, is sure to add fuel to a political controversy that has raged for months.

The Department of Transportation in March 2005 entered into a $3.5 million contract with Cintra Zachry LP, a private consortium, to develop a long-range plan to potentially design, build, finance, operate and maintain TTC-35.

Cintra is a Spanish company, and Zachry is based in San Antonio.

The state agency has succeeded in carrying out part of the agreement with the consortium, auditors noted.

"However, weaknesses in the department's accounting for project costs create risks that the public will not know how much the state pays for TTC-35 or whether those costs are appropriate," they concluded.

The audit noted a "lack of reliable information regarding projected toll road construction costs, operating expenses, revenue and developer income."

The Texas transportation agency plans to enter separate contracts for each segment of TTC-35 with developers and is negotiating a contract for the first segment, Texas 130 near Austin.

Although the state could receive $3 billion in concession payments from developers, such payments could be reduced if inflation, interest rates and other factors increase the developers' costs, auditors said.

"Significant changes in the cost of financing each road segment could result in the department foregoing any concession payment," they wrote. "Instead, if the department chooses to build the road segment, the state may have to pay a portion of the costs from available (state) resources."

The master development plan also anticipates that developers may apply for $3.9 billion in federal loans for some construction costs, according to the audit.

Auditors recommended more legislative oversight of the Trans-Texas Corridor, the transfer of toll revenue projections from TxDOT to the state comptroller and increased public access to information about the project.

They also proposed that TxDOT officials provide regular financial forecasts to the governor, the Legislature and the comptroller and submit development agreement contracts of more than $250 million to the attorney general for review and approval.

David Stall, co-founder of Corridor Watch, a citizens group critical of the project, applauded the audit.

"They brought up certainly a number of valid points and things Corridor Watch has been concerned about," he said, including the "gross underestimate of costs."

TxDOT's Dillard said the agency cooperated fully with the auditors and said the agency already has implemented some of the recommendations.

"We will be reviewing the report and taking any other steps we feel appropriate to improve our processes in the development of this important alternative route to Interstate 35," Dillard said.

Some of the auditor's recommendations would require legislative action, he said.

Perry spokesman Ted Royer said the governor "always appreciates new ideas for improving transparency and accountability in government."

The audit report pointed out that TxDOT kept portions of its agreement with Cintra Zachry confidential for 18 months, citing proprietary concerns, though the attorney general's office ruled it was a public record.

The contract was made public in September.

"Given the scope and public nature of the Trans-Texas Corridor project, it is important that the department makes all documents, plans and contracts related to the project public in a timely manner," the audit said.

© 2007 San Antonio Express-News:

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