Friday, November 28, 2008

Texas Toll Road Schemes: On the Verge of Implosion

Texas Toll Road Soup: The Environment, Federal Funding and Peak Oil

U.S. 281 N Toll Road near San Antonio.
'"It's been obvious to us from day one that TxDOT was willing to do and say anything to get a toll road on U.S. 281," said Terri Hall of Texans Uniting for Reform and Freedom.'
November 28, 2008

By Roger Baker
The Rag Blog
Copyright 2008

Four points about TxDOT and the Texas toll road mess.

1.) First of all, everyone who follows Texas road politics knows that the environmental studies done by The Texas Department of Transportation (TxDOT) are shoddy. They always conclude that whatever roads TxDOT wants are needed and will have a minimal environmental impact.

Federal officials now seem to agree that TxDOT's studies have been substandard, after a citizen lawsuit forced the issue and after incriminating internal emails were revealed. The feds are now making the San Antonio's TxDOT district do their federally required studies over again. The project, the US 281 toll road, would of course stimulate proposed development over the Aquifer where SA gets its drinking water. This "mistake" cost TxDOT $8 million and a delay of three years, so they fired somebody at the bottom. Here is the full story on that.

"It's been obvious to us from day one that TxDOT was willing to do and say anything to get a toll road on U.S. 281," said Terri Hall of Texans Uniting for Reform and Freedom. "I don't think one biologist should take the fall. It should be management that pays the price."

Another hugely important fact, which is off-limits for TxDOT's environmental studies, is that the greenhouse gas emissions closely associated with sprawl development stimulated by new roads are causing irreversible climate change.

According to top climate scientists , this is a critical problem demanding immediate action.

2.) In the case of US 290 E, it has now been revealed that the consulting group that did the Traffic and Revenue studies for this road has quit the traffic forecasting business. Here are the details.
"...URS has established an international reputation as one of the leading consultants in toll financing. URS reports are fully acceptable to the financial community and rating agencies. In illustration of this, URS staff periodically gives seminars on toll road traffic and revenue forecasting to staffs of the three rating agencies... URS's greatest strength in traffic and revenue work was in the US south. The collapse of political support for toll financing in Texas may have been a factor in the closure of their T&R work..."
These forecasts are work that the bond rating agencies rely on to justify the road's ability to repay toll road bond debt. By not insuring its toll road bonds, the public would have to take the financial hit because the bond houses often respond to default by lowering the bond ratings for those local governments that participated in the bond sales. This is done in order to force the public to bail out the bond lenders.

The CTRMA (Central Texas Regional Mobility Authority) is refusing to reveal the US 290 E T&R studies on the grounds that the studies are still incomplete, in some sense, and therefore can be withheld by the CTRMA until just before the bond sales. The CTRMA's refusal to reveal this data indicates that the numbers probably don't look very good. More evidence is the fact that the US 290 E bonds are considered too expensive (meaning too risky) to be insured.

Meanwhile the CTRMA's bond counsel, J.P. Morgan Chase Securities is advising CAMPO to change its toll road financing policies through the CTRMA, but they are doing this consulting without any written contract, according to CTRMA director Heiligenstein.

This fundamental change in CAMPO's road funding policy to allow the transfer of funds within an undisclosed $1.5 billion toll road "system,” would violate the rules that were promised to the public and were unanimously adopted by CAMPO in Oct. 2007.

This change is being posted for a CAMPO vote next week. See agenda item 8 on CAMPO's Dec. 1 2008 agenda.

3.) The FHWA issued a stinging rebuke to TxDOT last year, and withdrew potential federal approval for its TIFIA loan on SH 121. This is the category for federal loans that the CTRMA is depending on for roughly a third of its toll road financing. (Without the TIFIA loans, the financing for the CTRMA's toll roads pretty much falls apart.)
"The letter announces:

-- withdrawal of the special exceptions program (SEP-15) waiver granted to expedite SH121 and two other unnamed highway projects for accelerated environmental clearance

-- withdrawal of approvals for TIFIA federal loan and Private Activity Bonds support

-- a request for reimbursement of the US Government for its expenses in incurred in considering and evaluating the TIFIA loan associated with SH121

-- no future federal funds for SH121

-- additional oversight and approval requirements for future Texas applications so long as Texas breach of federal law is not remedied

-- more "far reaching compliance measures" if Texas violates federal law again..."
4.) The private bond money on which the CTRMA was depending for about another third of its of its toll road funding has virtually disappeared. Things have changed a whole lot in the last few months. We're not operating under the Bush/Greenspan bubble with easy credit for long-range debt anymore. Yet this is the type of private funding that TxDOT, and now the CTRMA, were counting on to cover their huge funding shortfalls. Here and here are links that underline the fact that borrowing long-range funds for toll roads has now gotten extremely difficult:

Likely, Obama and the Democratic Congress will favor new transportation money to repair neglected US infrastructure, but it will likely come with new strings attached; being targeted for repair of existing facilities rather than building uninsured new toll roads. TxDOT is acting fast to try to capture what it can of these funds:
"Texas Department of Transportation officials have notified the state's Metropolitan Planning Organizations to begin identifying ‘ready to go’ projects that could qualify for a new $700 billion federal stimulus proposed this week by President-elect Barack Obama. The package is intended to boost employment by rebuilding infrastructure, modernizing schools, and strengthening the alternative energy industry..."
Meanwhile the 40 year toll road bonds are nearly certain to default. This is because world oil production is peaking with no affordable near-term energy or technology to replace oil. If electric cars should become widely available, they are unlikely to be cheap, would require a lot of new electrical power capacity, and both US consumers and the government are heavily in debt. If you are short of transportation money, urban rail in combination with smart growth policies are a much wiser option than new and widened roads.

World crude oil production practically stopped growing in 2005. Since then, steadily increasing world demand bid the oil price up to $147 a few months ago. Such high oil prices are like a tax on everything involving transportation. This burden has now triggered a severe world recession. Whenever the world economy recovers, oil prices will soar again as the world bids for a limited oil supply:

The peak oil crisis: the Crash of 2008
"...Despite the dramatic drop in oil prices during the last three months, recent developments have only made the supply and demand situation worse. Oil consumption in the U.S. has fallen by 1.8 million barrels a day (b/d) or nearly 9 percent as compared to last year due to a combination of high prices, a slowing economy, and the shortages resulting from the hurricanes that tore up Gulf coast production and refining last month. During September, however, Chinese imports increased by 2 million b/d as Beijing took advantage of the low prices to start building its strategic reserves -so much for falling American demand. The major oil forecasting agencies are now saying that the increase in worldwide demand for oil will slow from rates seen in recent years, but that worldwide oil consumption is still forecast to increase this year and next...

© 2008 The Rag Blog

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Big RPC's chafe at Sub-Regional Planning Commissions working to protect rural communities from TTC-35 & TTC-69 boondoggles

The nature of sub-regional group debated


by Paul A. Romer
Temple Daily Telegram
Copyright 2008

HOLLAND - A group of rural politicians from East Bell County that have banded together to fight the Trans-Texas Corridor look and act like a governmental body, but the state has yet to recognize it as such.

In July 2007, the mayors of Holland, Little-River Academy, Bartlett and Rogers, with help from a special-interest group named Stewards of the Range, created an organization called the Eastern Central Texas Sub-regional Planning Commission. The sole purpose of the group is to quash the corridor, to make sure it doesn’t split up local farmland and school districts.

The sub-regional commission held public meetings with state agencies such as TxDOT, Texas Commission on Environmental Quality and the Texas branch of the National Resources Conservation Service.

By all appearances, the commission looks to be an acting governmental body.

Fred Kelly Grant, president of Stewards of the Range, said the group has followed the “letter of the law” in the way it was organized.

Others point to the law, specifically chapter 391 of the Texas Local Government Code, as a reason the group should be considered “extra-governmental.”

“Chapter 391 allows regions and subregions to organize, but the governor must so designate,” said Jim Reed, executive director of the Central Texas Council of Governments, which was created under chapter 391. “My understanding is the governor has not so designated. Whether they have legal standing under the state of Texas is under debate, although I don’t think anybody would debate that getting together to solve problems is a good thing.”

A spokeswoman for Gov. Rick Perry’s office would not comment about whether the subregional commission is recognized by the state. Eight more have been created in Texas over the past 18 months.

Some government officials see the creation of these commissions as an attempt by a special-interest group to twist the law in their favor and introduce more bureaucracy into the planning process.

Since 1965, when Chapter 391 was created, 24 planning commissions have been created in Texas. These commissions, generally referred to as councils of government, encompass all counties in the state.

Bell County and six neighboring counties are tied to the Central Texas Council of Governments, with offices in Belton.

The idea that more commissions could be created using boundaries other than what has already been established is new.

“Why spend money and create another bureaucracy that does the same thing as the council of governments?” Reed asked. “For over 40 years CTCOG has been the vehicle chosen to speak regionally and we’re honored to play that role for all communities in the region, including those who have joined the subgroup.

“We happen to think our vehicle, being recognized by the government at both the state and federal level, is the advocacy vehicle that can receive good results for Texas … Our mission statement is accomplishing together that which we cannot accomplish alone.”

Reed admits the local council of governments has not spent much time on corridor issues that concern the rural subregional commission.

The issue is not vital or as important to all seven counties, he said.

The subregional commission argues that by banding together it has been able to find out more information and play a more significant role in the planning process than would have been possible through the council of governments.

A planning organization from within the council called the Killeen-Temple Urban Transportation Study recently passed a measure that would give rural leaders in East Bell County a place at the table for planning area roadways.

An attempt to expand the jurisdiction of the transportation study is under way with one scenario calling for one member of a proposed 12-member board to represent the interests of East Bell County.

Mae Smith, mayor of Holland, said the transportation study does a poor job of representing the interests of rural east Bell County, and she and her partners are not about to dissolve their board to join an organization where they might have less impact.

Earlier this year, commissioners in Brewster County were invited to be members of a subregional commission being formed in its area. Before making a decision whether to join, the commissioners court consulted with Austin attorney Greg Hudson.

Hudson said he advised commissioners in Brewster County that they were well represented by the Rio Grande Council of Governments.

“Where did they find the authority to create a district smaller than what the governor created?” Hudson asked about subregional planning commissions.

Then there is the question of how the subregionals pay for expenses. Hudson said he sees a real problem if a subregional commission uses taxpayer money.

So far any spending of tax money by the local subregional commission appears marginal. A week ago, Holland taxpayers paid for lunch for the rural commission and Texas Commission on Environmental Quality officials after a two-hour meeting in Holland, Ms. Smith said.

If a subregional commission were determined not to be what it purports to be, its members may not be afforded the legal protections extended to those who serve on a legitimate board or council. In other words, members may be opening themselves up to personal lawsuits.

“They may have a noble cause and have absolutely honorable intentions, but they may want to contact their local city attorney to make sure they have governmental protections,” Hudson said.

Ms. Smith said Holland’s city attorney drew up the resolution form used to create the rural commission.

“I can assure you we are legal,” she said. “If the state of Texas wants to go to court over this, we have documented everything and we are ready.”

Penny Redington, executive director of the Texas Association of Regional Councils, said the rural commission here is “duplicative,” which was one of the issues the law to form the commissions was created to guard against.

“If they have succeeded in creating a commission, there are huge responsibilities such as annual audit requirements and open meetings requirements, to name just two. It’s a serious undertaking, not something you do on a lark, on a whim.”

© 2008 Temple Daily Telegram

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Thursday, November 27, 2008

The Gift That Keeps on Giving......

Trans-Texas Turkey

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Wednesday, November 26, 2008

"Beyond toll roads & privatization schemes, Texas has provided few options for cities, counties & other local jurisdictions to pay for transportation"


Time is now to fix transportation

November 26, 2008

John Carona & Kirk Watson, Texas Senate
Austin American-Statesman
Copyright 2008

Texas highways were once the pride of the state — and justifiably so. Our extensive infrastructure allowed generations of farmers and ranchers to feed the state and the world, and it turned our cities into economic powerhouses. Our transportation networks allowed generations of Texans to charge into a prosperous future without having to catch up with the present.

But for a generation, the state has approached old and new transportation challenges in a very different way. We have struggled simply to keep up with our needs. This has left Texas at a critical intersection, and the choices the Legislature makes over the next several months will determine both how we live in the short term and what opportunities our children will inherit.

Texas now faces a transportation crisis. We spend more and more of our lives in traffic instead of with our families. We seldom, if ever, see major roads built without toll booths. And the rail lines and highway lane miles we know we need are being scaled back or scrapped in the face of a hopeless inability to pay for them.

It is only becoming harder to address these needs. The costs of concrete, steel and other basic road building materials have risen by 60 percent over the past five years. However, the state motor fuels tax — our primary source of transportation funding — has been frozen at 20 cents per gallon since 1991. The disparity has left the state facing 21st century challenges with a 20th century tool.

The Texas Lyceum, a group of the state's top thinkers and policy makers, will focus on this issue at its annual public conference in Houston on Dec. 3 (for more information, see And in January, the 81st Texas Legislature will begin weighing opportunities to make a meaningful investment in transportation. Here are alternatives that we believe the state must explore:
  • End transportation funding diversions. The State Highway Fund has long provided money for the Department of Public Safety and other priorities. We must focus this money on roads and other transportation projects.
  • Use bond funding transparently. A year ago, Texans voted to dedicate $5 billion in tax-supported bonds to transportation projects. The Legislature should appropriate this money for its intended purpose and commit to using it with complete transparency and accountability.
  • Support regional financing tools. Other than toll roads and privatization schemes, the state has provided few options for cities, counties and other local jurisdictions to pay for transportation. The Legislature should offer voter-approved funding mechanisms for regions to plan and pay for roads, rail lines and other projects.
  • Rewrite the gas tax. Texas' primary source of transportation funding cannot provide for the state's transportation needs. The Legislature must have a serious debate about restructuring the motor fuels tax to reflect the enormity of our tasks by indexing it to inflation.
  • Explore new alternatives. Texas must move past a 20th century model that relies so heavily on single-occupancy vehicles and work to create a truly comprehensive statewide system for moving people and freight. This should begin by funding the Rail Relocation Fund that voters overwhelmingly approved in 2005.
  • Reform the Texas Department of Transportation. With its overt advocacy of privatization and occasional disregard for the Legislature, the department has rightly incurred the wrath of Texans and their representatives. Though we applaud the department's recent efforts to be more transparent and accountable, the Legislature must fundamentally reform the agency so that Texans are fully aware of its activities and never question its objectives.
These changes will not be easy, and they will confound the frequent promises of something - for - nothing. But they are necessary if we are to address the needs we see every day at rush hour — challenges that will only become greater. Our children must not be the first generation of Texans to inherit an inadequate transportation infrastructure with nowhere to grow.

Carona, R-Dallas, and Watson, D-Austin, are members of Texas Senate.

© 2008 Austin American-Statesman

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“I don't think one biologist should take the fall. It should be management that pays the price.”

Firing, reprimands follow tainted study for 281 tollway


By Patrick Driscoll
San Antonio Express-News
Copyright 2008

Two months after a lawsuit revealed a conflict of interest that spoiled yet another environmental study for the U.S. 281 tollway, the Texas Department of Transportation has responded by firing a biologist and disciplining other staffers.
A recent internal audit said TxDOT biologist Valerie Collins, based in San Antonio, was involved with several contract jobs being done for the U.S. 281 study by a consulting company her husband works for.
Her supervisor, Transportation Planning Director Judith Friesenhahn, and other TxDOT employees knew about the relationship, the audit says.

“District staff attempted to implement controls to mitigate a conflict,” TxDOT's San Antonio manager, Mario Medina, said in a memo Friday to agency Director Amadeo Saenz. “But the controls were insufficient and in some instances were circumvented by” Collins.
TxDOT fired Collins on Nov. 13, more than seven weeks after the in-house probe started, Medina said. Other employees were put on probation or reassigned and will undergo extra training on the agency's conflict of interest policy.
Also, TxDOT is reviewing other projects involving the firm Collins' husband works for, SWCA Environmental Consultants, to see if there might be other conflicts. That report is due next month.

Collins, her husband and SWCA officials didn't return phone calls.

Flubbing the environmental study put the 8-mile U.S. 281 tollway behind at least three more years, and doing another will cost an estimated $8 million. A bruised TxDOT, under pressure from lawsuits, has now let two federal clearances on the project slip away since 2006.

“Incidents like this one ... are an affront to the thousands of TxDOT employees who strive conscientiously every day to be good stewards of the state's resources,” Saenz said in a statement.
Toll critics, who suspect the agency's problems are more widespread, have called for a housecleaning.
“It's been obvious to us from day one that TxDOT was willing to do and say anything to get a toll road on U.S. 281,” said Terri Hall of Texans Uniting for Reform and Freedom. “I don't think one biologist should take the fall. It should be management that pays the price.”
Hall lately has pointed to a copy of an alleged e-mail, received by mail from an anonymous source, as an example that shows TxDOT predetermined the outcome of the U.S. 281 study. Such a fix would violate federal regulations.

But a separate TxDOT audit cast doubt on the authenticity of the e-mail, which on its face implies Friesenhahn told Collins that a “finding of no significant impact,” known as a FONSI, is wanted to avoid a more detailed “environmental impact statement,” or EIS.

The alleged e-mail says:
“pls do whatever you need and make sure this handled .. based on the emails i have seen so far we have a problem. We have been directed to get a FONSI and get this project on its way .. nothing else will work per David . something like this could send us into an eis per (scratched out)”
TxDOT investigators couldn't find proof that the e-mail ever existed, says the audit, which was released late last week along with the audit covering Collins' conflict of interest. The e-mail also included a tag line that records show Friesenhahn hadn't started using until several months later.
“The department is seeking to hire an independent forensic specialist in an attempt to validate the existence of the e-mail,” the audit concluded.
TxDOT discovered the conflict involving Collins and her husband while gathering documents in response to a lawsuit filed in February by TURF and Aquifer Guardians in Urban Areas. The groups challenged the FONSI from the U.S. 281 environmental study.
After coming across e-mails that raised suspicions, TxDOT ordered the audit Sept. 22.

On Oct. 1, citing possible contract irregularities, the agency asked the Federal Highway Administration to pull the U.S. 281 environmental approval. Two days later, Collins and Friesenhahn were placed on administrative leave.

While with TxDOT, Collins wasn't allowed to choose consultants, negotiate fees or approve payments, but that wasn't enough to avoid conflicts, according to the audit. E-mails show she worked with SWCA and reviewed three jobs that her husband also worked on.

Collins corresponded often with SWCA, sometimes copying her husband or communicating directly with him, the report says.

She once asked that time and money be added to a work authorization, and another time offered to work with her husband to meet a deadline.

Friesenhahn said she knew about the wife and husband connection but had assumed Collins' husband didn't work on the U.S. 281 project, the audit says. However, it adds, an e-mail the husband sent to Friesenhahn indicates otherwise.

© 2008 San Antonio Express-News

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Tuesday, November 25, 2008

Obama's Secretary of Transportation Candidates in the Bullpen

In Transition: Transportation Secretary

November 25, 2008

The Washington Post
Copyright 2008

Mortimer Downey

Current job: Self-employed transportation consultant and chairman of PB Consult.

Credentials: Deputy secretary of transportation under President Bill Clinton from 1993 to 2001, making him the longest-serving person in that job. Assistant secretary of transportation under President Jimmy Carter. Former executive director and chief financial officer of New York's Metropolitan Transportation Authority. Former transportation budget analyst for the House Budget Committee. Held various planning jobs at the Port Authority of New York and New Jersey. A key adviser to Barack Obama and currently leading the president-elect's transportation transition team.

What he offers: Extensive experience running the Transportation Department; highly regarded in transportation circles and on Capitol Hill; strong background in private and public sectors; national stature; seen widely as a "wise man" choice.

Vetting: Downey has been repeatedly vetted for Senate-confirmed jobs.

Quote: "Our infrastructure needs more investment. It is important, it is crumbling, and other countries are doing more. We've got national issues we need to deal with, and transportation is a critical tool for doing that."

Jane F. Garvey

Current job: Head of U.S. public-private partnerships at J.P. Morgan Chase.

Credentials: Appointed by President Bill Clinton to become the first female administrator of the Federal Aviation Administration and served from 1997 to 2002, including the period of the Sept. 11 attacks. Former acting administrator and deputy administrator of the Federal Highway Administration, also under Clinton. Former director of Logan International Airport in Boston and a former commissioner of the Massachusetts Department of Public Works.

What she offers: Garvey has an extensive background in air and highway transportation, understands the structure of DOT, and ran two of the department's biggest agencies. She is well known and liked in Democratic circles and is on the Obama transition team for transportation issues. She would bring diversity to the Cabinet as a woman and as a supporter of Hillary Rodham Clinton's presidential bid.

Vetting: Garvey's recent work at J.P. Morgan Chase may cause concern among skeptics of public-private partnerships who worry about a proliferation of such projects at the federal level

Quote: "Probably for anyone in Washington, you have to be somewhat thick-skinned. It's easy in these jobs to think about where you want to be. I have to remind myself to stop and look at how far we've come. You really do take these jobs on to make a difference, to move the ball forward."

Steve Heminger

Current job: Executive director, San Francisco Bay area's Metropolitan Transportation Commission.

Credentials: Member of a congressional commission that analyzed U.S. transportation policy and recommended ways to strengthen it over the next decade, including reorganizing the Transportation Department and raising the federal gasoline tax to 40 cents in the next five years.

What he offers: Through his work in the San Francisco region, Heminger befriended House Speaker Nancy Pelosi (D-Calif.), who appointed him to the National Surface Transportation Policy and Revenue Study Commission. The work helped Heminger cultivate congressional ties and gave him an understanding of the strengths and weaknesses of the Transportation Department. Heminger would be an outside-the-Beltway choice for a president-elect who says he wants to bring fresh ideas to Washington.

Vetting: Not well known outside transportation circles.

Quote: "The inefficiencies and under-investment that plague the nation's transportation network aren't just about concrete, asphalt and steel. They jeopardize our national security, damage our ability to compete in a global economy and harm our enviable quality of life. We simply cannot afford to pass this problem on to the next generation. The time to act is now."

James L. Oberstar

Current job: Congressman for Minnesota's 8th District since 1975; chairman of the House Transportation and Infrastructure Committee.

Credentials: The powerful Democrat and aviation expert has served on a presidential panel that reviewed aviation safety after the sabotage of Pan Am Flight 103 in 1988. As chairman of the transportation panel, he will write a reauthorized highway bill that will shape billions of dollars in road, bridge and transit expenditures.

What he offers: Oberstar has what admirers say is a nearly encyclopedic knowledge of the federal transportation program. He has built extensive congressional ties over his House career, is well respected by road and transit industries, and was an early Obama supporter.

Vetting: Oberstar is unpopular with enthusiasts of the budding space tourism industry because he thinks the FAA should formulate minimum safety and health standards for passengers and crews aboard commercial spaceflights.

Quote: "While the U.S. transportation network remains the envy of the world, we are losing ground. Without a renewed commitment to providing the vision and leadership needed to rebuild and expand this network, congestion will worsen, goods will move more slowly, air quality will continue to deteriorate, the number of roadway fatalities and injuries will continue to stagnate, and our quality of life will be diminished."

© 2008 The Washington Post:

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Guadalupe County Commissioners Court votes unanimously to join 391 Commission

Guadalupe County Joins South Central Texas Sub-Regional Planning Commission

November 25, 2008

Kathy Palmer, President
South Central Texas Sub-Regional Planning Commission
Copyright 2008

Well it is official! The South Central Texas Sub-Regional Planning Commission officially welcomes Guadalupe County to the table.

In a unanimous vote the Guadalupe County Commissioners Court voted to pass the resolution to join our 391 Commission.

We are now made up of the following entities: The City of St. Hedwig, Wilson County, the City of Marion, and Guadalupe County. Between the 4 of us we now cover the following TxDOT roadways: SH1604, US 87, IH10 and SH130 (not to mention numerous Farm to Market Roads) and we look forward to the continuing coordination meetings with TxDOT as well as other state and federal agencies.

Have a wonderful and Happy Thanksgiving!!

© 2008 South Central Texas Sub-Regional Planning Commission:

Monday, November 24, 2008

Eminent domain in Texas: "The current law is not much more than legalized theft."

Fairness or legalized theft?

November 24, 2008

Kenneth Dierschke, President, Texas Farm Bureau
Waco Tribune Herald
Copyright 2008

Demographers project that Texas will gain four new congressional seats in the next census, trailing only California.

That’s just one measure of what can only be described as phenomenal growth in the Lone Star State. Some estimates peg the 2010 population of Texas near 24 million.

With this growth will come a greatly increased demand for services by local governments, service companies and state entities.

A partial list:
  • $5 billion worth of electrical lines proposed by the Public Utility Commission to move electricity from the wind farms in West Texas to the electrical grid.
  • Gas pipelines to move natural gas from the Barnett Shale gas fields from an area extending from Hill County to Tarrant County.
  • Proposed water pipelines by Boone Pickens from the Panhandle to the Dallas/Fort Worth area.
  • And, finally, Gov. Rick Perry’s pet project, the Trans-Texas Corridor (TTC).
These and hundreds of other government growth projects will require the taking of property from Texans.

With all that on the horizon, Texans are faced with a choice. We can turn our back on a proud tradition of property rights and continue with the current unfair eminent domain process, or the state can require a level playing field that fairly compensates owners for their losses.

So much for ‘good faith’

The current law is not much more than legalized theft. It doesn’t even require entities to make a “good faith offer” before beginning condemnation proceedings, much less providing compensation for a loss of access to property.

Last session, Perry vetoed legislation that would have given Texas one of the strongest “takings” laws in terms of private property rights and proper compensation in eminent domain cases.

When all was said and done, the governor claimed it was simply too expensive to be fair with a property owner. That claim is tinted with shades of his massive highway corridor project, an idea that even a citizens committee advising the Texas Transportation Commission on future transportation needs has rejected.

The citizens committee said it didn’t support the TTC concept. More important, the committee acknowledged that all efforts should be made to minimize the impact of future transportation projects on private-property owners.

That’s what we at the Texas Farm Bureau have been saying all along. Texas needs to level the playing field for property owners.

We strongly believe that if property owners’ rights are restored in the law, then condemning entities and property owners will reach an agreement on compensation without going to court.

With such protections, condemning entities will know they no longer can acquire land without fair compensation.

House Bill 2006 passed the Legislature with more than the two-thirds vote necessary to override the governor’s veto. The Texas House approved the bill with 125 of 150 possible votes and it passed unanimously in the Senate.

Unfortunately, the bill passed too late in the session. This year, the Legislature must pass identical legislation early in the session to mandate that owners be properly compensated when their property is taken.

Laws with built-in fairness on eminent domain reform are not the unknown that some would lead you to believe. It’s the law in California and Florida, states with comparable growth issues.

Texans deserve no less. If we fail to act, all of us will share in the shame of taking property with less than fair compensation.

Kenneth Dierschke, a San Angelo farmer, is president of the Waco-based Texas Farm Bureau.

© 2008 Waco Tribune-Herald

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Sunday, November 23, 2008

"$1 billion of Indiana Toll Road lease proceeds invested in corporate junk bonds and mortgage-backed securities."

Troubled by Toll Road investments

November 23, 2008

Teresa Ghilarducci
The Indianapolis Star
Copyright 2008

Recently, we learned that $1 billion of Indiana Toll Road lease proceeds was invested in corporate junk bonds and mortgage-backed securities. Since then, the Daniels administration has scrambled to convince Hoosiers that this is perfectly normal. As a former trustee of Indiana's public employee pension fund, an economics professor, and a trustee of national multibillion-dollar long-term funds, I take exception to the administration's attempt to paint its investment decisions in the best possible light.

At least four of the things I have heard from the administration are troubling.
  • First, I do not agree that investing 22 percent of a major fund in a single type of security -- specifically, residential mortgage-backed securities issued by Fannie Mae and Freddie Mac -- represents a prudent balance of risk and return. To place this many of the state's funds in one basket is inconsistent with good practice in public finance.
  • Secondly, I am surprised that State Treasurer Richard Mourdock defended the state's holdings in corporate junk bonds -- worth about $300 million -- as a low-risk investment. Junk bonds are investments on par with stocks. In a press conference, he characterized the default rate on these bonds as less than 3 percent. This is no longer true in today's market. Many experts expect corporate junk bonds to default at rates several times those cited by the treasurer. Worse, the state holds more than $42 million in bonds rated CCC or below -- the riskiest kind of speculative bond -- which one analysis recently predicted to default at a rate of more than 50 percent. If the labor and corporate trust funds I work with were seen investing in this way, it would raise red flags for possible policy violations.
  • Third, as a trustee of major pension and retiree health funds, I was surprised to learn that the Investment Policy Statement for the funds was not made accessible to the public until questions were raised. For a public fund this big, standard practice is to publish an extensive policy. The state's Public Employees' Retirement Fund, in contrast, is guided by a lengthy document, readily available on the Internet.
  • Last, Gov. Mitch Daniels has claimed that this is a technical matter housed completely within the treasurer's office. In my experience, any entity -- be it a government, a union or a corporation -- entrusted with a long-term fund this size, will regard that trust as one of its most important responsibilities. Accountability for its prudent management goes right to the top of the organization. That is the intent of the Sarbannes-Oakley legislation passed after the Enron debacle. CEOs take responsibility for management decisions.
The governor advanced Major Moves asking for a great deal of trust by the legislature and voters. He appealed to his experience as a corporate executive. The investment practices here were messy and should be fixed.

Ghilarducci, who taught economics at the University of Notre Dame for 25 years, is the Bernard and Irene Schwartz Chair of Economic Policy Analysis at the New School in New York.

© 2008 Indianapolis Star

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