Tuesday, June 30, 2009

'Free market' myths of privatized toll roads exposed again: Perry and Legislature squabble over limiting 'non compete' agreements

Toll road item may threaten session

Contract protections sought if private leases to remain legal.

CDA- Pigs in a toll road
CDAs (Comprehensive Development Agreements)


By Ben Wear
Austin American-Statesman
Copyright 2009

The spoiler of Gov. Rick Perry's midsummer's dream of a three-day special session could be the "Nichols language."

The consensus seems to be that few problems exist with the first two items on Perry's session "call" — essentially the allowable agenda for the session — that would extend the life of five state agencies, including the Texas Department of Transportation, and allow TxDOT to issue $2 billion in debt.

But there could be trouble with the third and last item, legislation granting a reprieve to a statutory death sentence for private toll road leases.

During the regular session, state Sen. John Carona, R-Dallas, carried a bill that would have extended by six years the legal authority for TxDOT and regional mobility authorities to sign what have usually been 50-year contracts with private companies to build and operate (and profit from) tollways on public land. Authority for such leases expires Sept. 1.

The general understanding was that the legislation's final passage was dependent on approval of a separate bill by state Sen. Robert Nichols, R-Jacksonville, that would put limits on such contracts. Both bills passed the House and Senate, either with their original bill numbers or as part of the main TxDOT bill that died late in the session.

The question is, will that linkage still be the case in the special session? Nichols said Monday that it had better be, or the toll road item could end up in the ditch.

"I feel very strongly about it, and so do many" other senators, Nichols said.

Carona said Monday that he could see eliminating at least some of what Nichols had in mind if a toll road lease extension were passed that applied to only a handful of projects for which officials have already decided who — TxDOT or local toll authorities — will be in charge of the projects. That list reportedly includes extending the Texas 130 tollway north from Georgetown to Hillsboro, building the new Interstate 69 from south of Refugio to the Rio Grande Valley and adding toll lanes in the Dallas-Fort Worth area.

However, even in those cases, Carona said, "you'd have to have at least put some protections in there."

That would potentially include limiting so-called noncompete clauses in private tollway leases and requiring that the contracts specify what government would pay if it wanted to prematurely end a lease and take over a road. Nichols' Senate Bill 17, among other things, said that noncompete clauses would apply only in a four-mile strip along either side of a toll road built under such a lease.

Noncompete clauses, a common feature in toll road agreements, typically say the government cannot build a free road nearby that would lower usage of the tollway and thus its revenue. Or, if such an adjacent free road were built, then the toll road operator would be entitled to compensation.

So, what would Perry do if something close to SB 17 were attached to the extension legislation in the special session? Some officials said that such an amendment could be determined to be outside the scope of Perry's call. Nichols disagrees with that.

Perry spokeswoman Katherine Cesinger said Perry's staff is talking with Nichols' office to discuss his concerns.

Carona said, "One source in the governor's office indicated that any bill that contained the Nichols language would be vetoed. Another said that's not necessarily so."

© 2009 Austin American-Statesman: www.statesman.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE