"It doesn't take a genius... companies will calculate the price in a way that enriches their shareholders and leaves taxpayers holding the bag."

DANGER AHEAD

Toll roads a good deal for shareholders, but a bad bargain fro Texas taxpayers

March 24, 2007

By STATE SEN. ROBERT NICHOLS
The Houston Chronicle
Copyright 2007

Few issues have become as emotionally or politically charged over the past few years as toll roads. As a Texas transportation commissioner for eight years and current sitting state senator, I have a well-documented history of supported toll roads to ensure our transportation infrastructure meets the demands of our growing population.

However, supporting toll roads does not equate to supporting a plan that prohibits competition or agreeing to policies that enrich a few shareholders at the expense of the taxpayer.

Gov. Rick Perry, the Texas Transportation Commission and the Legislature exhibited bold leadership and vision by embracing the toll road concept. Using toll roads enables the state to build more roads faster without raising fuel- or other taxes. Few Texans realize that current state fuel taxes do not cover the cost of maintaining current roads, much less to building new roads.

As is usually the case, the devil is in the details. As the Transportation Commission began negotiating contracts with private companies to build and operate new toll roads, the commission hit several bumps.

Most companies require at least a 50-year contract to operate and collect tolls. So the decisions we make today will affect taxpayers for the next half century. In the event the state needs to "buy back" the road during the 50-year period, it is imperative for us to have a clear buy-back provision to protect taxpayers.

The private companies prefer to put off addressing the buy-back issue until another day. This means the private companies would be free to hire experts to determine what they think the road is worth. It does not take a genius to figure out the companies will calculate the price in a way that enriches their shareholders and leaves taxpayers holding the bag. Therefore, before any contract is signed, the state should negotiate an agreed-upon formula.

Imagine if you could make a deal with the state to build a store in your hometown, use the state's power of eminent domain to take the land needed for your store and then get the state to agree to refrain from building another store in your hometown for 50 years.

Now, imagine your hometown was projected to have double-digit population growth. While it may be hard to fault any business for pursuing such a deal, the taxpayers would hold elected officials accountable.

When the Transportation Commission announced the proposed corridor along I-35 in 2004, both Cintra-Zachary, the company chosen to build the system, and the Transportation Commission publicly stated there would be no "no-compete" clause in the contract.

Fast-forward a few years later and reality is like a cold glass of water in the face. With few exceptions, the Cintra contract contains a noncompete clause stating no alternative roads can be built within miles of either side of the toll road for 50 years without paying penalties. Many similar contracts are being negotiated that would give private companies exclusive rights to many-mile wide areas of land in Texas' highest growth areas.

Put simply, the state is enacting a policy that forces Texans to drive on a toll road with very few alternatives. In high-growth areas, the private toll operator would be free to increase tolls as demand for the road increases. New road construction by the state would be penalized, thereby setting up a classic monopoly, agreed to by the state, forcing Texans to pay ever-increasing tolls. There should be incentives to relieve congestion, not penalties.

Texas' transportation policy is too important to determine without open debate. Moving fast to meet today's demand does not merit shortsighted decisions.

I filed Senate Bill 1267 to place a two-year moratorium on private equity toll projects. Toll roads can be built in the interim by the local authority or TXDOT; however, the government may not contract with a private company to operate toll roads until the Legislature ensures adequate protections are in place.

Surely we can agree that signing away our ability to expand our transportation system for 50 years in the name of expediency is not a wise decision.

Nichols, a Republican from Jacksonville, represents Texas Senate District 3 in East Texas. He is a retired engineer and former Texas Transportation Commissioner.


© 2007 Houston Chronicle: www.chron.com

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Hired brains at the 'Reason Foundation' panic over scrutiny of privatized toll roads in Texas.

Viewpoints:

RESUME NORMAL SPEED

For Texans, the choice is a stark one: It's toll roads or no roads

March 24, 2007

By GEOFFREY SEGAL
The Houston Chronicle
Copyright 2007

JOHN Kerry walked away from the 2004 presidential election saying he'd never let himself be "swift-boated" again. Kerry's failure to respond to television ads featuring false claims about his military service, where all he did was earn a Silver Star, Bronze Star and three Purple Hearts, helped seal his fate.

Right now, it looks like Texas Gov. Rick Perry should take note. Perry's toll road plans are in the midst of being swift-boated — by his own fellow Texas Republicans no less.

There is so much misinformation being spewed in the halls of Austin that years of Texas' work and billions in private capital for much-needed highway projects could be lost as state lawmakers push a two-year moratorium on public-private partnerships.

The freeze would kill many proposed projects and send billions off to the 20 other states that have passed public-private partnership laws so they too can tap into private capital.

It seems many of the state Texas legislators who want to delay toll roads until 2009, at the earliest, have forgotten why the governor, Legislature and Texas Transportation Commission agreed to allow state and local agencies to partner with the private sector in the first place: TxDOT The Texas Department of Transportation is short $86 billion it needs to meet its congestion reduction goals as the state Texas adds another 13 million residents over the next two decades.

State lawmakers could raise the gas tax, which is supposed to pay for roads. But because of inflation and more fuel efficient vehicles, the 20 cents per gallon tax isn't even enough to maintain existing roads, let alone build needed new highways. Lawmakers haven't raised the gas tax since 1991 and show no signs of wanting to push the massive tax increase that would be needed to produce $86 billion.

Yet, Perry's Republican comrades want to freeze all new road projects for two years.

Sen. Robert Nichols, R-Jacksonville, was a staunch supporter of toll roads as he served on the Texas Transportation Commission from 1997 to 2006. Now a legislator, Nichols has inexplicably flipflopped and called for a two-year ban because, "Converting existing roads to toll roads would break a promise to taxpayers. No one should have to worry that the roads they drive on today will be tolled tomorrow."

But that's a contrived, strawman argument. The senator knows, and the facts show, there isn't a single project planned that would turn existing highways into toll roads. And no one is calling for that to happen.

State Sen. Jane Nelson, R-Lewisville, joined the fracas by claiming private toll road operators "have unlimited authority to raise tolls."

In reality, the contracts signed by the state explicitly limit toll increases, with the amount allowed usually tied to a cost-of-living index.

Don't get me wrong, there will be tolls and they will likely go up. Theses private companies are paying Texas huge sums of money up front, spending billions in construction costs to build highways the state cannot afford to build on its own, and agreeing to maintain and expand the roads as necessary over the next 50 years.

In return, they are allowed to charge tolls to make their money back (in some cases, though, the state has even negotiated to receive a share of each year's profits).

Of course, Sen. Nelson also worries about "turning over highway construction to a foreign company."

Our foreign-made shoes step on the gas in our foreign-made cars (many with American brand names) that run on foreign-produced fuel so that we can go home and surf the Internet on computers filled with foreign-made parts. But we don't want a foreign-based company investing in our roads?

In a recent Wall Street Journal column, Reason Foundation Founder Robert Poole wrote: "a Spanish company sinking $7 billion into new highways in Texas, meanwhile creating thousands of U.S. jobs, is the very antithesis of protectionists' dreaded outsourcing."

Public-private partnerships can be done well or badly. State lawmakers are obligated to make sure the contracts they sign protect taxpayers from steep toll increases, allow the state to build the roads in local and regional long-range plans, and clearly state what the private companies are required to do to maintain and expand the roads.

They can do all of those things without endangering Texas' quality of life and the state's economy by derailing the toll road process for two years. Toll roads certainly beat the alternative: no roads.

Segal, based in Los Angeles, is director of government reform at Reason Foundation. He can be e-mailed at Geoffrey.Segal@Reason.org.


© 2007 Houston Chronicle: www.chron.com

To search TTC News Archives click HERE

Sen. Nichols: "The effort to halt private toll road deals is not over.”

Nichols proposes two-year freeze on contracts

March 23, 2007

by Christine DeLoma
Lone Star Report
Vol 11, Issue 30
Copyright 2007

Responding to the political backlash over the controversial Trans-Texas Corridor toll road plan, lawmakers are seeking to restrict multi-billion dollar highway construction and operation contracts to private companies.

At issue is whether the state should be in the business of leasing roadways to private operators for 50 years in exchange for large upfront concession fees.

Among senators leading the charge is former Texas Transportation Commissioner Robert Nichols (R-Jacksonville). Nichols has 25 co-sponsors for SB 1267, which would put a two-year moratorium on TxDOT’s ability to enter into comprehensive development agreements (CDA) with private contractors.

“I don’t think it was originally conceived certainly by me or the department that we would be selling roads at some point in the future,” Nichols said at the March 21 Senate Transportation and Homeland Security committee meeting.

Nichols, who was on the commission when the Legislature voted to let TxDOT negotiate the Design-Build method in procuring highway contracts, said the move occurred with understanding that the agency would proceed with its newfound authority slowly and cautiously. Four years later, he said, there are more than a dozen planned projects underway that would allow private companies to build and operate toll roads.

Nichols’ bill would squash TxDOT’s recently announced deal with Cintra-Zachry to build State Highway 121 in Collin and Denton counties. Under the 50-year lease agreement, Cintra will build a toll road and get the revenue from the tolls in return for paying $2.1 billion in up-front concession fees to the state.

While more than two-thirds of the Senators have signed onto the bill, including committee chairman John Carona (R-Dallas), Carona has expressed reservations about moving the legislation forward. He has indicated he wants to instead try to fix CDAs, rather than temporarily prohibit the contracts.

Collin County Judge Keith Self said that delaying the project is unacceptable. Collin County is one of the fastest growing counties in the nation, according to the U.S. Census Bureau, he noted. “I really don’t care who builds the road, but we need the road,” Self said. If the CDA doesn’t go through, government agencies would need $1.3 billion to build the road themselves, he said.

Replied Sen. Florence Shapiro (R-Plano): “I think what should be unacceptable to you as the county judge is to accept a bid on a proposal for [state highway] 121 that is going to gouge our citizens over the next 50 years. That’s my concern. And I am not here to kill the road. I have been on city council and [served as] mayor of Plano, and I’m now the state senator in this community. I have never been opposed to roads, ever.

“What I do intend to do is make absolutely sure that every dollar that my citizens spend on these roads is going to be [for] the benefit to my community and the surrounding communities. I am not going to sit back and watch as we give a bunch of money away to allow another entity, a private entity to come in and gouge the citizens of Collin, Denton, Dallas, and Tarrant Counties.”

Shapiro and Nichols are particularly concerned with the non-compete clauses within the CDA that may be designed to protect the interests of private developers at the expense of the state. In some cases, TxDOT may have to compensate the developer for lost revenues if the state builds ancillary roadways near the toll road.

“They [Cintra] will have a monopoly in the fastest-growing county in Texas, and they can prohibit competition except by the state paying them huge penalties.

Many other local officials testified that the moratorium on CDAs would indefinitely delay or kill their planned transportation projects. “The consequences of eliminating this revenue stream would be absolutely devastating to our communities,” said Burleson Mayor Ken Shetter. “In addition to its immediate impact, I believe Senate Bill 1267 will hamper our efforts to satisfy our transportation needs far into the future.” He urged lawmakers to set reasonable limits to CDAs rather than eliminating the contracts altogether.

Nichols assured local officials that the moratorium does not prohibit toll roads. “The moratorium is against private equity, concession-type toll roads,” he said.

Non-profit, quasi-public local tollway authorities, like the North Texas Tollway Authority (NTTA) and the Harris County Tollway Authority would still be able to build the roads.

Nichols told the committee that his bill contains one exception for Sen. Kim Brimer’s (R-Fort Worth) district that applies to managed-lane projects that are far advanced in the CDA stages. However, TxDOT must receive the permission of the commissioner’s court before proceeding with the project.

Whether the non-profit tollway authorities can currently compete on a level playing field with private companies is another story. Local metropolitan planning organizations (MPO), charged with setting the transportation policy of a particular region, are enticed by billions of dollars in upfront money that they can get from private companies willing to build and lease a toll road.

The moratorium “stops a lot of upfront money,” said Tarrant County Judge Glen Whitley, who is a member of the region’s MPO. The concession fees would be used to pay for other road projects within the region, he said, adding that he believed NTTA would not have the bonding ability to match Cintra’s $2.8 billion concession fee offer. Seventy-five percent would be awarded upfront, with the rest paid over the 50-year length of the lease.

“I think it’s very important that we recognize that we’re not just talking about upfront money only. We have to look at the life of the project,” Shapiro said. Private companies that build toll roads are there to make money, she said. “Their goal and their objective is just to make money, not to build more roads in the community.” The NTTA, for example, does not make a profit, it reinvests the toll road money into the community to build more roads, she said.

Carona, however, is not ready to throw the baby out with the bathwater. He issued a statement March 22 indicating that Nichols’ bill does not address the state’s transportation problems. The bill “does not address the things that we need to change about the Comprehensive Development Agreement laws, such as noncompete agreements, up-front payments, and duration or contracts,” Carona said. “There is no reason to wait years to fix those problems.” For Tarrant County and others, the CDA moratorium “creates a hardship, and we have an obligation to listen to them as well,” he said.

Nichols, however, vowed to press on. “The effort to halt private toll road deals is not over,” Nichols said in response to Carona’s statement. “We will continue working to prevent Texas from entering into bad agreements that will hold our transportation system hostage for the next half century. Pursuing a short-term solution with dangerous long-term consequences is not the answer to alleviating traffic congestion. A two year “cooling-down” period gives us a chance to get these contracts right before we sign away control of our transportation system.”

Sen. Steve Ogden (R-Bryan), one of the primary authors of HB 3588 said that the Legislature did not intend to allow TxDOT to lease the state’s roads to private companies.

Unlike Nichols’ bill, Ogden’s SB 719 would altogether prohibit the state from granting a private interest a lease on a state road.

To address local officials’ concerns the legislation would cut off their revenue stream to build new roads, Ogden has also proposed doubling TxDOT’s bonding authority from $3 billion to $6 billion. A portion of the bonds would be guaranteed by the State Highway Fund.


© 2007 The Associated Press: www.ap.org

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To view the Trans-Texas Corridor Blog click HERE

Texas Farm Bureau: "Our members are overwhelmingly opposed to the Trans-Texas Corridor.”

Farm Bureau Describes TTC Project As A Disaster For Farms And Ranches

March 23, 2007

KTWX CBS (Waco-Temple-Kileen)
Copyright 2007

The massive Trans-Texas Corridor project is a disaster for farms and ranches that lie in its proposed path, the Waco-based Texas Farm Bureau says.

The Farm Bureau has been steadfast in its opposition to the project and says its encouraged by efforts in Austin to derail or at least delay the $184 billion plan, which ultimately calls for a 4,000-mile network of transportation corridors that would crisscross the state with separate highway lanes for passenger vehicles and trucks, passenger rail, freight rain, commuter rail and dedicated utility zones.

“Our members are overwhelmingly opposed to the Trans Texas Corridor,” says TFB President Kenneth Dierschke, a grain and cotton farmer from San Angelo.

“There’s never been any doubt that the impact on agriculture would be negative, but now we see a growing number of people who believe the TTC would be bad for all of Texas.”

Several bills are pending in Austin aimed at putting the brakes on the project, at least temporarily.

State Representative Lois W. Kolkhorst of Brenham has filed a bill that would kill the project altogether and a second measure that calls for a two-year moratorium on allowing private entities from buying the rights to build and operate toll roads.

State Senator John Carona of Dallas says he thinks most of the ambitious project will never be built, except for major projects along the Interstate 35 corridor.

“Pieces of the Corridor will be built over the years ahead,” Carona said.

“They are the pieces that would have been built anyway, such as State Highway 130 in Austin, but not four football fields across.”

Work on the Central Texas portion of the project could begin within four years, the Texas Department of Transportation said last fall as it released a plan identifying near- mid- and long-term phases of the privately developed toll road.

The plan identifies portions of the corridor from north of Temple to near Hillsboro and from Georgetown to Temple as among the likely near-term phases of the project, on which work could begin by 2010 and could be completed by 2013.

The Temple-to-Hillsboro leg of the corridor would cost an estimated $1.1 billion to design and build. The Georgetown-to-Temple leg would cost about $1 billion to design and build.

Designers ultimately envision a corridor with six separate passenger vehicle lanes and four commercial truck lanes; two high speed passenger rail lines, two freight rain lines and two commuter rail lines and a utility zone that will accommodate water, electric, natural gas, petroleum, fiber optic and telecommunications lines.

© 2007 Gray Television Group, Inc. : www.kwtx.com

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To view the Trans-Texas Corridor Blog click HERE

"A brutal course on the often disingenuous ways of the Texas Legislature. "

Stopping toll roads not so simple when the Legislature is involved

3/23/2007

Carlos Guerra
San Antonio Express-News
Copyright 2007

As a spate of state toll-road proposals came to light — especially plans for the Trans-Texas Corridor — Texas got thousands of new political activists.

Suddenly, people who hadn't done much more than vote were building e-mail lists, sending out alerts and even knocking on doors, attending meetings organizing rallies and confronting elected officials.

Hold on, folks, because you are about to get a brutal course on the often- disingenuous ways of the Texas Legislature. And hopefully, you won't become so embittered and discouraged that you will stop trying to influence state government.

After all, it is widespread political "inactivism" that has allowed toll road plans to develop.

Because the Legislature meets only once every two years for 140 days, during which thousands of bills are considered, few noticed laws approved in 2003 and 2005 that authorized the Texas Department of Transportation to cut deals with private-sector interests to build toll roads on state-owned land.

But as details of the Trans-Texas Corridor became known, people from very disparate constituencies started to act.

The TTC is an ambitious 50-year plan that will forever change Texas. The state will take thousands of square miles of land in quarter-mile-wide swaths for the construction of multi-use "transportation corridors." This land will be leased to private interests that will build toll roads, railroads and utility easements at their expense in exchange for many decades of toll and lease revenue.

Different groups are alarmed by different parts of the TTC.

Farmers and ranchers fear losing their land or having it bisected, and others worry about ecological damage.

Others reject being doubly taxed by fuel taxes and tolls, and many oppose giving leaseholders noncompete agreements that will limit expansion of free roads. There is also concern that only foreign interests are bidding for TTC tollways.

Perhaps for varying reasons, thousands of TTC opponents packed TxDOT hearings throughout Texas.

Shortly after the Legislature convened, the anti-tollers were encouraged when several anti-TTC bills were filed, especially Senate Bill 1267, which was filed by Sen. Robert Nichols, a former member of the Transportation Commission.

It would slap a two-year moratorium on highway privatization deals. As more senators signed on as co-sponsors, and more representatives joined to co-sponsor an identical House bill, the anti-tollers followed closely until 25 of Texas' 30 senators and 105 of the 150 House members were on board.

"It's veto proof!" the new activists cheered.

Well, that may have been true were the bills in Congress, but for legislators to override a Texas governor's veto is so unusual that it hasn't happened since 1979, when they overrode Gov. Bill Clements' rejection of — get this — a bill approving changes made to hunting regulations by the Comal County Commissioners Court.

It is all in the rules. Since our Legislature only meets 140 days, and doesn't pass any laws during the first 60 days unless the governor declares something an emergency, all real lawmaking is limited to a session's last 80 days. And for a bill to become law, it must get committee approval in each chamber — stumbling block No. 1 — be read three times and voted on twice.

If two versions of a bill are approved, a House-Senate conference committee usually eats up another five days or more resolving differences before both chambers must vote on it again.

Only then can bills be sent to the governor, who gets 10 days during the session to sign them, let them become law without his signature or veto them. But the governor gets 20 days to decide on bills sent in a session's final 10 days.

So, he can simply wait until for the session to end before exercising a veto, and the bill's sponsors — regardless of their number — will simply have to try again in two years.

© 2007 San Antonio Express-News: www.mysanantonio.com

To search TTC News Archives click HERE

"The NTTA can return $3.5 billion more to the region than Cintra."

OPINION

We would forfeit billions with private partnership on 121

March 23, 2007

Jere Thompson Jr. (Former chairman of the North Texas Turnpike Authority)
The Dallas Morning News
Copyright 2007


Over the past few weeks a drama has played out in Austin over the future of State Highway 121, a huge roadway that will soon be the equivalent of a 26-mile-long "LBJ Freeway" between Central Expressway and Interstate 35.

The story began over a year ago when the decision was made to obtain badly needed transportation funds by converting Highway 121 to a toll road and then selling a 50-year concession on it.

At the insistence of the Texas Department of Transportation, the North Texas Turnpike Authority – the region's only experienced toll road agency – was ultimately excluded as a bidder.

Last month, Gov. Rick Perry announced with some fanfare that a Spanish company, Cintra, had the winning bid of $2.8 billion for the rights to the toll road. That's when things got interesting.

At the request of state Sen. John Carona, the NTTA responded that it could likely "offer" $6.3 billion using the same general assumptions employed by Cintra.

How can the NTTA produce so much more than Cintra? Because of its lower cost of funds.

The NTTA requires no equity returns and has access to low-interest municipal bonds. This capital structure is significantly less expensive than Cintra's combination of taxable bonds and equity.

Therefore, with the same revenue assumptions, the NTTA can return $3.5 billion more to the region than Cintra. This amount is more than TxDOT spent on new road construction in Dallas, Collin and Denton counties during the past five years.

The contract with Cintra has not yet been signed. By selecting the NTTA, an additional $3.5 billion would become available to the region. By selecting Cintra, that same $3.5 billion would become profits for Cintra and interest income for Cintra's banks.

Which would you pick?

Welcome to the new world of comprehensive development agreements, commonly referred to as CDAs. They involve the sale of a toll road's revenue stream to a private entity in return for huge upfront signing fees and future revenue sharing.

CDAs can sometimes be good. Examples are ventures that the public sector is unwilling or unable to construct, very expensive urban projects with uncertain traffic estimates, and projects in rural areas with no history of toll roads.

The private sector's willingness to accept the construction, financing, traffic and revenue risks in these examples justifies their economic rewards.

On the other hand, a perfect example of a bad CDA is Highway 121. The NTTA is willing and able to finance and construct the project, right-of-way costs are known, construction cost increases are not being assumed by Cintra, noncompete penalties are provided, traffic can be reasonably forecasted, and area commuters have already demonstrated their receptiveness to toll roads. Cintra would capture very high rewards for very little risk.

Because of the controversy over Highway 121 and other projects around the state, a two-year moratorium on CDAs has been proposed in Austin.

Local opponents to the moratorium claim that critical projects will not get built and congestion will strangle our region.

But the proposed moratorium applies only to selling to the private sector the rights to public assets. The NTTA is a public agency and would be exempted from this moratorium. It could build and, with legislative permission, allocate funds to nontoll projects.

If the moratorium halts a flawed selection process, results in more transportation dollars for this region, and permits construction of critical projects without delay, how can it be viewed as anything but good?

How should the Legislature address the use of CDAs and solve the funding crisis?

• First, regional toll road authorities should obtain the first right to build new toll projects and should not have to pay TxDOT for this right to build.

• Second, toll road authorities should obtain the ability to allocate funds to nontoll transportation projects.

• Third, funding raised from tolls should not reduce funding from gas taxes, and all gas tax dollars due this region should be promptly returned here and not spent elsewhere.

• Finally, the only serious long-term solution to this crisis is to index gas taxes. When the pain of the status quo exceeds the pain of change, change happens.

The Legislature needs to increase and index the gas tax to fund new transportation construction.

Jere Thompson Jr. is a former chairman of the North Texas Turnpike Authority and its predecessor, the Texas Turnpike Authority. He now serves as the Transportation Chairman for the Dallas Citizens Council and the Trinity Commons Foundation. His e-mail address is jwt@ambitenergy.com.

© 2007 The Dallas Morning News Co www.dallasnews.com

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"Even if the bill fails to win the committee’s recommendation, the measure is not necessarily dead."

Texas' moratorium on P3 Tollways sits idle

3/23/07

Richard Williamson
The Bond Buyer
Copyright 2007

DALLAS — A two-year moratorium on public-private financing of toll highways in Texas was parked in a Senate legislative committee after Tarrant County government officials pleaded for exclusion of billions of dollars worth of projects.

Jerry Hodge, transportation director for Grapevine and chairman of the Metroport Cities Partnership, said the moratorium could stop toll projects on several major highways in the rapidly growing Dallas-Fort Worth area. Of particular concern, he said, is the DFW Connector Project, also known as the Funnel, which ranks as the largest in the history of the Texas Department of Transportation.

Joining Hodge in seeking a Tarrant County exemption from the proposed moratorium was county Commissioner Gary Fickes.

“To put a moratorium on these projects is like a stake to the heart,” Fickes said. “We feel like we’re going to be severely, severely damaged. It’s not going to be a two-year wait. It’s going to be four years or longer.”

After hearing the testimony, Sen. John Carona, R-Dallas, chairman of the Transportation and Homeland Security Committee, said that he did not plan to move the bill out of his committee.

SB 1267, which would create the two-year moratorium, is sponsored by Sen. Robert Nichols, R-Jacksonville, a former Texas transportation commissioner and member of the Transportation and Homeland Security Committee. Nichols called for the moratorium to allow more time to study the implications of multibillion-dollar public-private partnerships. Rep. Lois Kolkhorst, R-Brenham, sponsors an identical House version of the bill.

Even if the bill fails to win the committee’s recommendation, the measure is not necessarily dead, according to committee director Steven Polunsky. The bill could be amended or could bypass the committee. Among the ideas being discussed is raising the state’s fuel tax according to an inflation gauge that would allow the state to fund more projects without relying on private financing.

Exempting certain counties because of urgent transportation needs would lead to intense political wrangling, committee members said.

“There are projects all over the state that have started some sort of work,” said Sen. Florence Shapiro, R-Plano. “At a certain point, we’re going to hear requests for all of those projects to be taken out. The what-about-me issue comes into play.”

Nichols introduced his bill in the wake of Spanish developer Cintra Concesiones de Infraestructuras de Transporte’s selection as private developer for State Highway 121 toll road in the populous suburbs of Dallas.

Under terms of that deal last month, Cintra would pay $2.1 billion upfront and $700 million over its 50-year contract for the right to operate Highway 121 toll road in Collin and Denton counties.

The deal developed after the U.S. Department of Transportation in October authorized Texas to issue nearly $2 billion of tax-exempt private-activity bonds for the SH 121 project. Republican Gov. Rick Perry last year signed legislation allowing the P3 deals, the first of which would be SH 121.

Another big P3 is the proposed Central Texas Corridor, designed to ease congestion on heavily traveled Interstate 35. The Trans-Texas Corridor would be a $184 billion 4,000-mile network of toll roads, rail lines, and utilities.

In a potentially related development, the House passed a proposed constitutional amendment that would allow the Legislature a chance to override vetoes that come after the regular session ends. Currently, only the governor can call a special session, but if the constitutional amendment won voter approval, a brief session could be held after gubernatorial vetoes, in which lawmakers could override by a two-thirds majority.

Perry could veto the override provision itself, but the House bill won by more than two-thirds majority, 109-to-29, and a Senate version is co-sponsored by 26 out of 31 senators.

The amendment could clearly not take effect until the next legislative session in 2009. When the current session ends in May, Perry could veto any bill creating a moratorium on public-private toll-road financing. The Republican governor is a major backer of the financing model.

Meanwhile, the House Appropriations Committee voted 24-to-2 in favor of a $150.1 billion biennial budget that increases spending for public education and health and human services. The budget bill HB1 is expected to be debated in the full House next week.

© 2007 The Bond Buyer www.bondbuyer.com

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SH 121 Privatization: "Critics argue that the NTTA could have offered more than double that amount if not restricted by the agreement."

Bills target reliance on private toll roads

Legislature: Senate panel moves to bolster North Texas Tollway Authority

March 23, 2007

By JAKE BATSELL
The Dallas Morning News
Copyright 2007

A Senate committee approved a handful of bills Thursday designed to reduce the state's reliance on private toll roads, including a measure that would give the North Texas Tollway Authority first dibs on building pay roads in its region.

Another measure passed by the transportation committee would dissolve a "protocol" agreement between the tollway authority and the Texas Department of Transportation.

That agreement prevented the tollway authority from offering a construction bid on the controversial State Highway 121 toll road project in Collin and Denton counties. In exchange, the agency was given a five-year contract to collect tolls on the road.

The Transportation Department later announced a tentative $2.8 billion deal with Cintra, a Spanish company, to build and oversee Highway 121. Critics argue that the tollway authority could have offered more than double that amount if not restricted by the agreement.

"What these bills do is untie their hands and level the playing field for more competition," said Sen. Florence Shapiro, R-Plano, who sponsored the legislation.

After the Cintra deal became public, state leaders asked the tollway authority to consider submitting a proposal for the Highway 121 project. Paul Wageman, chairman of the tollway authority's board of directors, said Thursday that the agency has not decided on whether to render a bid.

Another bill passed to the full Senate would double the Texas Department of Transportation's bonding authority from $3 billion to $6 billion, which supporters say could reduce the need for more toll roads.

Committee members did not take action on a proposed two-year moratorium on private toll road contracts. The committee's chairman, Sen. John Carona, R-Dallas, said this week that a freeze on such contracts should be used only as "a last resort."

jbatsell@dallasnews.com

© 2007 The Dallas Morning News Co www.dallasnews.com

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"Suddenly quite a few members of the Texas Senate and Texas House have gotten a spine transplant."

Perry suddenly comes under political fire

03/23/2007

Dave McNeely
Midland Reporter-Telegram
Copyright 2007

What's this? Texas legislators showing some muscle? Looks like it.

Although a few independent legislators always said what they thought, suddenly quite a few members of the Texas Senate and Texas House have gotten a spine transplant.

Many have been tired of being run over by the governor and legislative leaders. But for the last four years, with iron-fisted House Speaker Tom Craddick in tandem with Gov. Rick Perry, Perry basically has had his way. Lt. Gov. David Dewhurst, who presides over the Texas Senate, has been at odds with Craddick off and on. But he and the solid Republican majority in the Senate, in the post-9/11 years, with a Texan in the White House, have kept a closed season on the governor.

But now, it seems the Perry-hunting season is perpetually open. The 39 percent governor, as the Democrats love to call him -- his re-election plurality last year -- finds things backing up on him.

Even many Republican legislators think Perry overreached on some things, and been wrong or asleep at the switch on others. Those include Perry's toll roads; his proposal to sell the Texas lottery to set up funds for cancer research, education, and insurance for the working poor; fast-tracking old-technology coal plants; and sexual abuse of teenage prisoners by Texas Youth Commission staff.

During last year's elections, legislators heard plenty from voters angry about Perry's Trans-Texas Corridor toll roads. Some lawmakers who voted in 2003 to allow it are having second thoughts now, afraid they've given away the ranch to foreigners.

At least two-thirds in both the Senate and House -- enough to override a veto -- favor a two-year moratorium to re-evaluate public-private toll road deals. That would be enough to override a Perry veto.

Add tuition deregulation and spiraling college costs for middle-class families, and it's a potent stew.

What helped it boil over, however, was Perry's surprise executive order Feb. 2 that 11-year-old and 12-year-old girls be inoculated against the human pappilomavirus (HPV). Perry said parents could opt out for their daughters.

Some Democrats endorsed Perry's initiative, because the vaccine prevents a condition that can cause cervical cancer. But Perry's own Republicans were in lockstep in their disagreement. First, ordering shots for pre-teen girls for a disease spread solely by sexual contact would put a political bulls-eye on Republican legislators who let it happen.

Second, they and many Democrats were livid that Perry presumes he can unilaterally order a state agency to spend tens of millions on the injections. That tells legislators they're out of the loop. "We might as well go home," groused one disgusted Republican.

Sen. Jane Nelson, R-Lewisville, and Rep. Jim Keffer, R-Eastland, asked Atty. Gen. Greg Abbott for an informal opinion about the executive order. It amounts to an unenforceable suggestion, they said Abbott told them.

Austin District Court Judge Stephen Yelenofsky, a Democrat, sided with environmental groups challenging Perry's executive order fast-tracking the power plants. The order has no legal force, the judge ruled.

Then the TYC scandal broke. Perry demoted the board's chairman initially said the rest of the board would stay, and appointed a "special master." The Texas Senate, however, overwhelmingly called for the board to be fired and an independent conservator appointed.

Perry named former aide Jay Kimbrough as a special master. Then the board resigned en masse.

Midway through the 140 days the Legislature meets in regular session every two years, Perry is in Dubai for eight days, helping dedicate a new Texas A&M University campus. Back in Austin, the Texas House voted by well over two-thirds -- more than enough to override a veto -- to rescind Perry's HPV order. Twenty-five of 31 senators signed a letter calling for Perry to rescind his action.

© 2007 MyWestTexas.com www.mywesttexas.com

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"TxDOT has certainly burned its bridges with a lot of members."

TxDOT directive drives Congress' Texans into tizzy

March 22, 2007

By MICHELLE MITTELSTADT
Houston Chronicle Washington Bureau
Copyright 2007

WASHINGTON — Texas Republicans and Democrats on Capitol Hill are hopping mad at the Texas Department of Transportation, accusing its leaders in Austin of trespassing on Congress' most prized power: doling out federal dollars.

A letter this month from TxDOT's executive director tells members of Congress that the department will no longer support their individual road projects unless they obtain state and regional approval before pursuing federal funding.

"Arrogant," fumed Rep. Chet Edwards, D-Waco. "A letter like this is not a way to build relationships," complained Rep. Gene Green, D-Houston.

Said Rep. Ted Poe, R-Humble: "TxDOT needs to understand the elected representatives make the decisions on what projects we do — not the bureaucrats."

Financial constraints

In his March 9 letter, TxDOT Executive Director Michael Behrens said that because of state funding limits, lawmakers need cited financial constraints in telling lawmakers to run individual projects past TxDOT district offices and local Metropolitan Planning Offices.

"Most, if not all, projects require matching funds," he wrote. " Earmarks subsidizing only a portion of a project simply do not justify that project's advancement if funding is not available to provide the remaining balance."

That message did not resonate with lawmakers who are proud of delivering millions of dollars in roads and bridges for their districts — with federal funds defraying a big chunk. Forty percent of TxDOT's funding last year came from Washington.

"To send a letter like this, it's almost saying, 'Well, members of Congress, we'll take your money, but we're going to decide what to do with it,' " said Green, estimating he's delivered $30 million to $40 million in federal highway money to his district.

Preparing a response

Delegation members are readying a response to be sent to TxDOT Chairman Ric Williamson to complain about the agency's stance.

"We are concerned that your letter reflects an unwillingness to work with us to secure future federal funding," says a draft of the letter obtained by the Houston Chronicle. "Considering the Texas congressional delegation provides almost half of your funds, we are surprised by the tone of your letter and sincerely question whether Texas commuters sitting in congestion share your perspective."

TxDOT spokesman Randall Dillard denied any attempt to intrude on lawmakers' turf.

"Certainly, we did not mean to offend any member of Congress," Dillard said. "We are simply trying to ensure that we are all working together to advance transportation improvements that provide the most benefit to Texans."

He noted the budget climate is a tight one — with TxDOT being ordered to return $288 million in federal funds by mid-April because of congressional cuts. That's on top of the $305 million lost through other cuts in the past 15 months, he said.

The lawmakers are irritated by the suggestion they don't already work closely with TxDOT district engineers and others.

Said Edwards: "TxDOT has certainly burned its bridges with a lot of members."

michelle.mittelstadt@chron.com


© 2007 Houston Chronicle: www.chron.com

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"Senator Carona, remember us, the citizens?"

Has Senator Carona Been Crushed By TxDOT Special Interest Toll Pressure?

3/22/06

David & Linda Stall, Co-founders
CorridorWatch.org
Copyright 2007

TxDOT and just about every agency and organization that wants to build a toll road has pulled out all the stops to pressure our legislators to stop the private toll road moratorium.

CorridorWatch.org is shocked to read in this morning's Austin American Statesman a report that Senate Transportation Chairman Carona doesn't plan to allow SB1267 a vote before his committee.

"I don't intend to move it," Senator John Carona.

It would be nice if this were a misquote, but we're afraid it isn't. At best we might find the intent and effect of SB1267 incorporated into SB1929, a much larger transportation bill. At worst we might find that our protection from private toll monopolies were traded away in a backroom political poker game.

Who's in charge?

It's not TxDOT, it's not Ric Williamson, and it's not Senator Carona either. It's the citizens, taxpayers, and voters of Texas. It hasn't been more than a couple weeks since Senator Carona admonished Chairman Williamson that he didn't have just one person to keep happy [Governor Perry]. Carona told Williamson that he worked for 181 legislators and the citizens of Texas. Senator Carona, remember us, the citizens?

What the heck is going on?

You might have a plan Senator but right now we feel pretty ripped off and sold out. We're all ears.

And we're not alone - how about the other 129 legislators who stood up to represented their districts by signed on in support of SB1267 and HB2772?

Yes, we need roads. But . . .

We also need to know at what cost our state is entering into 50 year contracts with for-profit toll road operators. We need to know if we are making bad public-private deals because toll road proponents have been blinded by big money. We need to know that average Texans 30, 40 and 50 years from now will be able to afford to travel on highways they should own. These are just a few of the many serious questions that deserve serious consideration, and answers.

We believe the citizens of Texas would be best served by legislative review and a cautious approach to long-term contracts that could rob our communities of future transportation funds, limit future transportation alternatives, and unnecessarily increase the cost of public mobility.

Put the public back in public decisions.

Somehow we have left the public out of toll road decision making. Historically we have voted for highways with our taxes. When you hit the limit of how much we are willing to be taxed the expansion stops. We are effectively making a purchase decision.

Unfortunately virtually all of these new toll road decisions are being made without public approval.

Let's revisit the moratorium.

Once we start down this public-private road and begin signing away the control over our highways the cost of turning back may only be exceed by the cost of driving on those highways.

Chairman Carona, we sent our Senators to Austin to represent us and vote as we would if we were there. As Chairman of the Transportation and Homeland Security Committee you represent all Texans. Let our individual representatives do what we sent them to Austin to do. Let our Senators vote. Please move SB1267 out of committee.

© 2007 CorridorWatch.org: corridorwatch.org

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"Privately controlled toll roads in California to date have been a disaster. "

The hefty price of toll roads

March 22, 2007

By Matt Hanson
Capitol Weekly (California)
Copyright 2007

Tolls should benefit transportation users. All tolls paid for transportation should be reinvested in the system for the public's benefit, not siphoned off for private profit.

For anyone who agrees with that simple and sensible principle--and most Californians do--there is considerable cause for concern in recent news reports about toll roads in California. For anyone caring about their ability to move around the state efficiently and economically, or concerned about their dollars being invested for the greatest possible public benefit rather than corporate wealth, the news should set off a chorus of alarm bells.

News articles have raised the chilling prospect of a state transportation system controlled by the "world's largest investment firms," who obviously wouldn't have obtained that status if they weren't primarily concerned with their own profit rather than the public's best interest.

When the chairman of the Senate Transportation Committee declares that Californians will pay tolls to drive on their roads in the future, and that "who will control them is an open question," it's time for Californians to demand that they, through their representative government, keep that control.

The voters just approved a $20 billion bond to improve their roads, and another $2 billion annually by dedicating the sales tax on gasoline to transportation. That's not a mandate for corporate profit: It's a mandate for public benefit.

Privately controlled toll roads in California to date have been a disaster. They don't reduce congestion. In fact, they depend on it. And when the bottom line doesn't satisfy the corporate executives, taxpayers get stuck bailing them out.

Taxpayers were forced to bail out the corporate operators of the State Route 91 express lanes in Orange County at a cost of $207 million, and saw their toll for using the road soar to as high as $9.25, as congestion on nearby public roads only worsened. In San Diego, the Route 125 toll road project brought huge cost overruns, years of delays and ultimately a deal to allow the private company to collect tolls for an extra 10 years, at a cost of hundreds of millions of dollars to the road's users.

Californians get this. When polled, a majority says the state should have fewer or no toll roads. Large majorities say existing toll roads operated by public entities should not be sold to private entities, and that toll roads should not be operated by private companies using tolls to make a profit.

Toll roads may be a convenience for the wealthy who can afford to pay to use them, and a source of wealth for the international firms that run them. But they don't help the small business owners who have to eat the higher costs of delivering their goods and services, or the working families who see more of the household budget diverted for the tolls required to get everyone to work and school.

One recent story acknowledged that "international investment firms are accountable to their shareholders, not the driving public." Yet it quotes public officials supporting schemes to allow those firms to control our roads, while the driving public pays.

That's scary.

Matt Hanson is president of the Professional Engineers in California Government.


© 2007 Capitol Weekly: www.capitolweekly.net

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Carona: A moratorium "ought to remain a last resort,"

Toll road policy debate revs up

Legislature: Moratorium of 2 years on private projects one of proposals

March 22, 2007

By JAKE BATSELL and TONY HARTZEL
The Dallas Morning News
Copyright 2007

AUSTIN – Lawmakers continued their assault on Texas' toll road policy in a Senate hearing Wednesday, while two House and Senate leaders pledged to work together on a comprehensive bill that would lessen the state's reliance on pay-as-you-drive roads.

The Senate Transportation and Homeland Security Committee heard testimony on six toll road bills Wednesday, including a bill filed by a former Texas Transportation Commission member that would place a two-year moratorium on future private toll roads.

That bill, which has been filed in the House and Senate, has gathered enough supporters in both chambers that the Legislature could override any veto by Gov. Rick Perry.

While Wednesday's debate was fiery at times, lawmakers did not take action on the moratorium or other toll road bills.

A moratorium "ought to remain a last resort," said Sen. John Carona, R-Dallas, who chairs the Senate Transportation Committee.

"With North Texas in need of so many major road projects, a moratorium at this time in my opinion would be disastrous," he said. "That said, it remains a tool at our disposal should we be unable to reach consensus on the issues that are most troubling."

The push against privately operated toll roads has increased in the weeks since the Texas Department of Transportation announced a 50-year deal with Madrid-based Cintra to build and operate a State Highway 121 toll road in Denton and Collin counties. Cintra has guaranteed $2.8 billion in cash, including $2.1 billion upfront that will help pay for other road projects.

The Cintra deal was the flashpoint of Wednesday's Senate hearing and prompted a pointed exchange between two of Collin County's highest-ranking public officials.

New Collin County Judge Keith Self told senators that his fast-growing, traffic-choked county can't afford a delay in the State Highway 121 project.

"I really don't care who builds the road, but we need the road," Mr. Self said.

That drew a rebuke from Sen. Florence Shapiro, R-Plano, a longtime toll-road advocate who told Mr. Self she was "absolutely not here to kill the road."

"I think what should be unacceptable to you as the county judge is to accept a bid on a proposal for 121 that is going to gouge our citizens over the next 50 years," Ms. Shapiro said.

Mr. Carona said Wednesday that he and his House counterpart, Rep. Mike Krusee, R-Round Rock, are working on a comprehensive bill that could mean more money for transportation, possibly without as much reliance on toll roads.

Alternatives include raising gasoline taxes based on inflation measures, and limiting lawmakers' ability to tap transportation revenue for other purposes.

"This allows us to deal with transportation in a more global sense," Mr. Krusee said. "If we don't want to do as many private partnerships, that means we would somehow have to put more money into the system."

But any tax bill must originate in the House, where opposition to a tax increase continues.

"They have tax fatigue in the House," said Sen. Kim Brimer, R-Fort Worth, at the committee hearing. "This type of funding [tolls] is tax fatigue in a camouflage. They're going to get it one way or another."

A comprehensive bill also could address several major concerns related to private toll-road partnerships, Mr. Krusee said. Those concerns include the length of private toll-road deals and non-compete clauses that restrict a state's ability to build non-toll highways near a privately operated toll road.

With all the bills being filed, is Texas' push toward private toll roads losing steam?

"It's too soon to say," said Mr. Krusee.

At Wednesday's hearing, Mr. Brimer offered an amendment that would exempt certain Tarrant County toll projects from the proposed moratorium, including those featuring toll lanes in the middle of rebuilt highways such as State Highway 183.

But the moratorium bill's author, Sen. Robert Nichols, R-Jacksonville, said he expects the Highway 121 project to be included in the freeze.

jbatsell@dallasnews.com;

thartzel@dallasnews.com

© 2007 The Dallas Morning News Co www.dallasnews.com

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Federal Government Seeks Immunity for Bullying Bureaucrats.

Our View

Bullying bureaucrats

High court should rein in rogue agencies

March 22, 2007

Colorado Springs Gazzette
Copyright 2007

Let’s say government officials want you to turn over a portion of your property to them for free. Let’s say you refuse, arguing that you have no legal requirement to do so. And let’s say the government then embarks on a harassment campaign to intimidate you into giving it what it wants.

Should that be legal? We know that the Fifth Amendment protects the public’s right to keep government off their property. But is it implicit in that right that government agents cannot abuse their power to harass you?

This is the subject of a case now being mulled by the U.S. Supreme Court, Wilkie v. Robbins. As R.S. Radford and Timothy Sandefur of the Pacific Legal Foundation explain in a Legal Times article, Harvey Frank Robbins is a Wyoming man who bought a ranch in 1993, “not knowing that the previous owner had agreed to give the Bureau of Land Management an easement over the land. BLM agents, however, had neglected to record the easement, so when the purchase went through, Robbins got the land free and clear.”

This clearly was the mistake of the government agents, yet they weren’t about to let Robbins off the hook when he did not accede to their request to reinstate the easement. The agents made threats against him. Justice Ruth Bader Ginsburg spoke during oral arguments “of a pattern of harassing conduct that included trespasses on this man’s lodge and leaving the place in disarray, videotaping the guests, selective enforcement of the grazing laws, a whole pattern of things, even asking the Bureau of Indian Affairs to impound his cattle.”

Rather than punish government agents who have clearly abused their power, the federal government is asserting in the nation’s highest court the right of government representatives to act in this very manner.

In this case, the federal government claims that there is no constitutional right to physically exclude the government from your property, and even if there were such a right that it would offer no protection against harassment. This government argument, Radford and Sandefur explain in an amicus brief on behalf of Robbins, is “based on a disturbing and mistaken understanding of the relationship between the American people, their government and constitutional protections of private property rights. The framers of the Constitution accorded great weight to the importance of private property as a bulwark of personal sovereignty and autonomy, which not even the power of government could breach except in limited circumstances. . . . If the government were allowed to retaliate against citizens who exercise their right to exclude government agents from their land, the right itself would be extinguished.”

In a society that respected individual freedom, the agents who harassed Robbins would face prosecution. Instead, they are exonerated and the government itself arrogantly demands a right to harass individual citizens because — get this — the Constitution does not specifically forbid harassment by such officials. If the Supreme Court sides with the Bureau of Land Management, then the rule of law will be eroded and we will all be subject to the whims of the petty despots who sometimes work in federal agencies. A decision is not expected until early summer. We hope it will come down on the side of property owners — and against immunity for bullying bureaucrats.

© 2007, The Gazette, a division of Freedom Colorado Information.: www.gazette.com

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"What a shame we don't have recall elections for the governor in Texas."

LETTERS TO THE EDITOR

March 22, 2007

COMMENTS FROM OUR READERS
Austin American-Statesman
Copyright 2007

Hike up the gas tax

Texas reportedly will receive close to $3 billion over the 50-year life of the give-away to Cintra to build Texas 121 north of Dallas. It also seems that the toll for the 23-mile trip along 121 will be about $3.33 now and will increase to over $13. Forget calling it a "possible" increase. If it can be increased, it will. It is very unlikely that Cintra will leave profits on the table.

Consider this: The 20 cents per gallon gasoline tax generated about $3 billion for Texas in fiscal year 2006. So a simple increase of 20 cents per gallon in the gasoline tax would generate $150 billion over the next 50 years for Texas. That is more money every year than the Cintra deal will provide for the entire 50 years of the "deal."

Some deal. What a shame we don't have recall elections for the governor in Texas.

GARRY SISCO

garrysisco@verizon.net

Carrollton

Selling our souls

What is all of the fuss about toll roads? Our leaders don't have the guts to tax us and our gasoline to pay for the roads that we demand to have, and we are selfish dreamers who take all our luxuries for granted and expect others to pay for our roads.

Our poorest folks are richer than 80 percent of the world and yet we refuse to give up our $5 cups of coffee, our big-screen TV sets, our luxury SUVs and oversized houses to pay for roads to drive on.

It is a terrible shame when our selfish and narrow-minded attitudes force our leaders to seek foreigners to finance our roads (and take the profits) because we refuse to pool our resources to build our own roads.

We are selling our souls because it will keep us happy for a short time — just as we get cars and TVs on credit because it makes us feel good for a little while.

ED ROBERTS

eroberts6@juno.com

Round Rock

© 2007 Austin American-Statesman: www.statesman.com

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Carona won't give the measure a vote in his committee.

Tollway freeze bill frozen

Committee chairman, a co-sponsor of moratorium on private road contracts, says no vote likely on bill

March 22, 2007

By Ben Wear
Austin American-Statesman
Copyright 2007

The chairman of the Senate's transportation panel, despite being one of more than 125 legislators co-sponsoring legislation to shelve private toll road contracts for two years, said Wednesday he won't give the measure a vote in his committee.

"I don't intend to move it," said Sen. John Carona, R-Dallas, chairman of the Senate Transportation and Homeland Security Committee. Carona has repeatedly criticized Texas Department of Transportation policy and officials in recent months and is among 25 Senate co-sponsors of SB 1267, the moratorium bill by state Sen. Robert Nichols, R-Jacksonville.

Carona is trying to work out a large compromise transportation bill with toll policy supporters and has struck a more conciliatory tone in recent days. Carona aide Steven Polunsky said that although Carona thinks that some sort of controls on private toll road contracts are in order, a two-year freeze might remove the only option available to get some badly needed road projects done.

Carona and his committee, which includes Nichols, spent most of Wednesday afternoon listening to — and sometimes debating with — local elected officials from the Dallas-Fort Worth area concerned that a moratorium on such toll road arrangements might delay by several years road work nearly ready to begin.

"To put a moratorium on these projects is like a stake in the heart for many of us," said Tarrant County Commissioner Gary Fickes. "We feel we're going to be very, very damaged."

Nichols, a former Texas Transportation Commission member, says such contracts with private companies have the potential for long-term financial damage, at least based on language in the first two such arrangements between the state and private companies. Pending contracts for Texas 130 southeast of Austin and Texas 121 in Collin County set out broad areas in which the state, over a period of more than half a century, might have to pay the companies if it builds competing roads.

Many senators are concerned that private road contracts, because companies must make profits, would have higher tolls than roads run by government agencies.

Carona's committee Wednesday considered seven bills that in various ways would rollback some of the powers the Legislature granted to the Texas Department of Transportation in 2003 and 2005. Carona said the committee probably will vote on some of them today.

Sen. Steve Ogden, R-Bryan, chairman of the Senate Finance Committee, carried four of those bills, including one that would outlaw private road contracts with the state and another that would require that toll revenue be used only on the road where the tolls are charged.

Ogden likens what has happened to Texas transportation policy to a golf bag. The rules of that game allow a golfer to carry 14 clubs. Over the past four years, as the Legislature tried to find new ways to inject money into an increasingly cash-starved transportation system, "We gave TxDOT 21 tools in the golf bag when they really only need 14," Ogden said. Allowing the state to grant long-term tollway leases to private companies, Ogden said, is "the 21st club."

Carona, who is carrying a bill that would use an inflation index to annually increase the state's long-frozen 20 cents a gallon gas tax, used his Wednesday hearing to step up the pressure for such legislation. The tax, last increased in 1991, has lost about half its value to inflation and traffic increases. He asked everyone who testified whether they would support a gas tax inflation index. Overwhelmingly, the answer was yes.

However, the answer in the House, where by law tax increase bills must originate, remains no.

Rep. Jim Keffer, an Eastland Republican who is chairman of the House Ways and Means Committee, a few weeks ago heard Rep. Mike Krusee's gas tax indexing bill in his committee, but he has left the Williamson County Republican's bill pending. He said Tuesday that his inclination is to let it die.

"If the whole committee came to me and said, 'Let's do it,' I'll have to give it a lot of credence," Keffer said. "But they haven't done that."

Carona told his Senate committee about the House position on the gas tax.

"They have 'tax fatigue,' whatever that is," Carona said. "That's all fine and well. But there's not an ounce of statesmanship in tax fatigue."

bwear@statesman.com; 445-3698

© 2007 Austin American-Statesman: www.statesman.com

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"It’s not toll roads that Nichols is targeting. It’s the concession deals."

Nichols heads to Transportation to ask for concession moratorium

Concerns are more about contract terms than toll roads.

3/21/07

Harvey Kronberg
Quorum Report
Copyright 2007

Sen. Robert Nichols (R-Jacksonville) – transportation commissioner turned toll road skeptic – will finally get a hearing this afternoon on his proposed two-year moratorium on concession agreements for toll roads.

Of all the cases that have been made against toll roads in the last two years, Nichols’ is probably the most compelling. He was, of course, instrumental in the proposed creation of the “new age of toll roads” in Texas and at the table for much of the negotiations for State Highway 130. Nichols, an engineer by training, is smart and detail oriented and has a talent for running the numbers in his head. And he knows his way around a contract.

All of that should be clear this afternoon. One thing Nichols does want you to know – and what has often been lost in the heat of debate – is that he’s not opposed to toll roads. Nor was he particularly opposed to the Trans-Texas Corridor. Instead, he’s concerned about the specifics contract protections for the state on buy-backs and non-competes, among other things.

“I’m concerned, very concerned, that what everybody has seen in the contract is that we get to build something with some front-end money, and that front-end money is going to go to build something else,” Nichols said. “And so there are some very good things in that. You really get to get some things done quickly. But very few people are focused on the contract itself and what’s in that contract.”

The message Nichols will take to the committee this afternoon is that private equity firms are in it for a profit, and they can carry a whole lot more debt than the state of Texas. They’re often termed “patient capital” because, unlike the state, they can wait 20 years to turn a profit. That profit, however, comes on the back of toll payers, something that the state needs to carefully consider in its contracts, Nichols said.

“You jack up the price of a toll road when you let the private vendor come in and raise the equity, because that private vendor has to go pay back their investors,” Nichols said. “They have the ability to bond things, but it’s the toll that’s going to pay off that debt.”

Arguing over contract terms is a lot more complicated than just getting rid of toll roads. As Chair Rep. Mike Krusee (R-Taylor) freely admits, most lawmakers have received so many calls and gotten so much flak over the issue that they would do “just about anything to make the toll road issue go away.”

But it’s not toll roads that Nichols is targeting. It’s the concession deals. Many toll roads being proposed by regional mobility authorities will be built with comprehensive development agreements – the private developer agrees to design, engineer and construct the road – but only the Texas Department of Transportation has aggressively pursued concessions deals where the developer shares in the profits of the road’s operation.

For instance, none of the roads being proposed by the Central Texas Regional Mobility Authority are based on concession agreements, nor were the first five segments of State Highway 130. On the other hand, the final two segments of State Highway 130, State Highway 121 in North Texas and Loop 1604/SH 281in San Antonio. TxDOT has at least another dozen possible concession deals in the pipeline for consideration.

This is what concerns Rep. Lois Kolkhorst (R-Brenham), who says a private equity partner willing to front so much money -- $2.1 billion to the state on State Highway 121 alone with no talk about Cintra’s eventual profit – raises red flags with her. It’s simply too good to be true. No equity partner would be willing to put that much up front unless they intended to reap serious rewards, Kolkhorst said.

Nichols said the whole path to toll roads started out simply. TxDOT wanted to move road construction along more quickly, so it proposed legislation adding comprehensive development agreements to design-build options. Instead if piecemeal contracting, one contractor could handle a project from beginning to end. Then the Texas Mobility Fund was added. Then it morphed into concession deals, and that brought real money to town.

Suddenly, TxDOT was seeing the potential for a whole lot of upfront money, quick money it could use to build long-delayed projects in Texas’ road system.

But at what price? Some regular transportation observers say the agency has taken a good idea too far. Once restricted in numbers, the concession deals are now a free-for-all. Nichols says TxDOT promised, back in 2001, that it would never step in front of a regional transportation authority to complete a project. Then along came the lucrative State Highway 121. They promised contracts would never have a “non-compete” clauses – reimbursing a toll road vendor if the state built new competing roads– but then added such terms to the SH 130 contract. They talked about protecting the state under buy-back terms and then offered to buy back a toll road at “fair market value.”

These are issues that need to be discussed now, say Nichols and Kolkhorst. This contract will be the template for all future deals in the state, Kolkhorst said. Nichols says a two-year cooling off period will give lawmakers the time to review contract terms and come up with a standard for future concession agreements.

quorumreport.com

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