Sunday, February 25, 2007

"We’re hearing new language from pro-corridor forces. The talk is all about ‘transparency.’ But it’s too late for transparency.”

‘Fiscal irresponsibility’

February 24, 2007

By JOANN LIVINGSTON, Managing Editor
Waxahachie Daily Light
Copyright 2007

The Trans-Texas Corridor, Gov. Rick Perry’s massive transportation project, hit some speed bumps Friday.

A sharply-worded report from the State Auditor’s Office was released - and a member of the Republican leadership in the House filed a bill to repeal the plan, which could encompass up to 8,000 miles.

Brenham Rep. Lois Kolkhorst’s bill is almost identical to one already filed by Democrat state Rep. David Leibowitz of Helotes, near San Antonio.

With lawmakers from both sides of the aisle questioning the project, organizers of a March 2 are hoping thousands of Texans will make their way to the state Capitol for a protest.

Friday evening, Corridor Watch spokes-man David Stall didn’t mince words after reading the audit, much of which focused on the corridor’s first portion, the TTC-35.

The 560-mile TTC-35 would bisect the state and connecting with the Mexican and Oklahoman borders.

“My main point about the report is that no one has any accurate costs or revenues, indirect or direct, to the state,” Stall said. “The report provides significant evidence that enormous financial decisions are being made to move the TTC forward without any disclosure, debate, analysis or review.”

The audit states in part, “ … weaknesses in (the Texas Department of Transportation’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.”

The report estimated a $105.6 billion price tag for the TTC-35 portion alone of the massive transportation project.

TTC-35 represents 14 percent of the Trans-Texas Corridor’s proposed tollways, which would criss-cross the state. A 2002 estimate by TxDOT placed the cost for the entire Trans-Texas Corridor at between $145 and $184 billion. More than just a roadway, Perry’s plan would see separate lanes for passenger and truck traffic, high-speed rail and freight lines, and utilities bundled into the Trans-Texas Corridor’s routes.

Taken as a whole, the Trans-Texas Corridor on its completion could become “the longest network of toll roads in the world,” according to the audit.

“It’s been a bad week for the governor on a host of fronts, but the big nightmare for him has only really just begun,” said Linda Curtis of Independent Texans. “Now that the depth of the fiscal irresponsibility of the corridor is now - finally - coming to light, we’re hearing new language from the pro-corridor forces. Now the talk is all about ‘transparency.’

“But it’s too late for transparency,” Curtis said. “That is, unless they’re going to put it on the ballot and let the people vote on it.”

A Daily Light request for comment from Perry’s office went unanswered. Several lawmakers said they needed time to read the 62-page audit - which was just made public Friday - before making a response.

Stall is hopeful that critics of the project have lawmakers’ attention in the Legislature. He points to a number of bills filed that relate to the corridor and an upcoming hearing before the state Senate Transportation Committee as positive signs.

“I think they will be moved to action,” he said, noting “an extremely large number” of bills have been filed that could have an impact on the corridor.

In the several years past, Stall said the attitude from TxDOT and the governor’s office was one of “this is a matter of we’re going to do it and we’ll explain it if we have to as we go.”

“This is much like the vaccines and other things. (Perry) is unswayed by anybody, even his own party,” Stall said. “The Republican Party has had it in its platform for two conventions now to do away with the Trans-Texas Corridor. Perry isn’t taking any leadership from the party or any other officials. He’s marching to his own tune.”

Stall said he would expect Perry to strike down any bill with an adverse effect on the corridor but notes one lawmaker has filed a constitutional amendment that would automatically call the Legislature back into session for three days to consider whether or not to override a veto on any bill.

“That amendment is an example of legislation that has been filed that would have an impact,” Stall said.

Of particular concern to Stall are the audit’s findings about non-compete clauses. Auditors note that if TxDOT builds a road within a stipulated non-compete zone, with certain exceptions, the developer could be entitled to compensation. The non-compete clauses need to be clarified and thought out, the report indicates.

“There’s about three paragraphs (from TxDOT) trying to explain away the non-compete,” Stall said. “In the first paragraph they say they are not constrained. In the next paragraph is wording that they will compensate the concessionaire. If you have to compensate, it’s a non-compete. You are restrained not only from building, but you have to pay damages.”

Such language would considerably raise the cost of any improvements to Interstate 35, Stall said.

“Today we are having problems coming up with money to improve Interstate 35,” he said. “Can you imagine in the future not only having to come up with funds to make improvements but also pay the private operator of the toll road?”

Revenues and payments to the state also need to be addressed, according to the audit, which notes the state could receive a concession payment of $3 billion relating to TTC-35.

“However, these concession payments could be reduced if factors such as the cost of financing each road segment, inflation and interest rates increase the developers’ costs,” the audit reads. “Significant changes in the cost of financing each road segment could result in the department foregoing any concession payment. Instead, if the department chooses to build the road segment, the state may have to pay a portion of the costs from available resources.”

In response to the above, TxDOT said developers are not guaranteed to earn the 12 percent rate of return that had been used for planning purposes. The agency said the actual rate could be higher or lower and that it plans “to delete language about a ‘12 percent guaranteed return on equity’ in the Master Development Plan.”

Stall described the audit as “very unflattering” toward TxDOT and the corridor.

“The most entertaining portion of it was the management response from TxDOT, which just aggravates me to no end,” he said. “It’s spin. If you know the actual details, you can see they embroidered all around the edges to make it sound good.”

Although Perry has touted the Trans-Texas Corridor as a project that would use private money - leaving state money for other projects - the audit notes several costs the state could end up paying toward TTC-35.

Those costs include $3.5 million to produce the Master Development Plan, shared costs for plan updates and costs related to the environmental studies and preliminary engineering.

The state may fund 55 percent or $16.5 billion of the $25.9 billion cost of constructing all of the high-speed rail lines and freight rail lines for all of TTC-35, according to the report, which notes the developers, Cintra Zachry LP, may fund 24 percent or $7.2 billion of the rail line cost.

“The Master Development Plan for TTC-35 shows that the remaining $6.2 billion in financing (for the rail line) could come from interest earned on cash balances from project funds that have been raised but not yet spent,” the report reads, noting also, “The state may also pay $563.3 million to construct two of the seven near-term facilities of TTC-35.”

The report notes that toll road developers may apply for federal loans to fund the construction of the seven near-term facilities, which would comprise a 333-mile stretch of the TTC-35 running from the Oklahoma border to San Antonio and set for completion from 2010 to 2017.

Corridor opponents aren’t giving up, Stall said.

“There’s a lot of things on a lot of fronts that are happening,” he said. “There’s a lot of different ways to skin a cat. We’re not giving up. After five years, we’re not giving up.”

As time goes on, he expects more people to come to the same viewpoint.

“I think it’s a flawed project that is the result of a flawed process,” Stall said. “I think anybody would look at it objectively and see the same thing. I’m not surprised the report was negative. Any objective report based on the facts of this project would have to be negative.”

See the audit online at

Also online:

E-mail JoAnn at

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