TxDOT uses 'strategic misrepresentation' to promote TTC-35
Texas Department of Transportation downplayed costs, withheld information, audit says
February 24, 2007
By Ben Wear
The Texas Department of Transportation has downplayed the potential costs of the Trans-Texas Corridor and potentially inflated expected gains for the project, state auditors said in a report released Friday.
Auditors also said department officials have not been sufficiently open about information on the massive road project and should involve the state comptroller's office in overseeing future corridor contracts.
The department, in a response included in the 73-page audit, agreed with most of the auditors' observations and recommendations. But the department defended its decision to withhold for more than a year portions of its contract with corridor developer Cintra-Zachry. And it said the auditor was wrong to conclude that the contract commits the department to guarantee Cintra-Zachry a 12 percent rate of return on what it spends building a 300-mile toll road alternative to Interstate 35.
"The 12 percent was merely a modeling assumption," the agency's response says.
The state plans to delete language about a "12 percent guaranteed return on equity" now in the master development plan, the audit says.
The report also says the $3 billion in payments from the developer that the state expects to get could be reduced to nothing if interest rates and inflation are higher than expected. The agency in its response did not address that assertion.
Austin state Sen. Kirk Watson, a Democrat who serves on the Senate Transportation and Homeland Security Committee, in a statement said the audit should put the brakes on the corridor project pending further study.
"Texas cannot rush into a project that will help define our future when there are so many uncertainties about the present." Watson said. "We must step back, demand answers, and (ensure) the public is protected before work proceeds on the Trans-Texas Corridor."
The Trans-Texas Corridor was proposed in 2002 by Gov. Rick Perry as a 4,000-mile network of tollways, railroads and utility corridors roughly paralleling existing interstate highways in Texas. The department in late 2004 announced that it had selected Cintra-Zachry to create a master plan for developing the first and most-needed of those corridors, the twin to I-35.
The department and Cintra-Zachry in March 2005 reached a $3.5 million agreement for the partnership to create a plan, and the agency released much of the contract. But the agency said release of certain sections was not required until the actual plan was complete, an assertion that Texas Attorney General Greg Abbott's office disputed. Perry's gubernatorial opponents seized the opportunity to criticize.
The rest of the contract was released last fall when the master plan was completed.
The audit said "it is important that the Department makes all documents, plans, and contracts related to the project public in a timely manner." The audit did not define "timely." Even so, the agency remained defiant about its decision to keep the information confidential temporarily.
"Providing information prior to approval (of the plan) could jeopardize competition during the procurement process," the agency said in its audit response.
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