Saturday, February 21, 2009

"It needs a dramatic lift in revenue for it not to go into financial oblivion."

MIG shrugs off default concerns


Scott Rochfort
The Age (Australia)
Copyright 2009

MACQUARIE Infrastructure Group has played down concerns its part-owned Indiana Toll Road is at risk of defaulting on a $US4.1 billion ($A6.4 billion) debt facility, after revealing cash flows from the road barely covered interest payments in the final months of 2008.

The toll-road operator yesterday said the ITR, which it co-owns with Spain's Cintra, had dipped into $US77.5 million of "stabilisation reserves" to cover debt payments on the road, which suffered a 14.8 per cent slump in traffic volumes in the six months to December 31. "We effectively don't have a default trigger (since) we have that balance of reserves to meet that coverage," said MIG's chief executive John Hughes.

Mr Hughes said MIG had found that even in its "worst case scenario" the reserves would not be exhausted.

The update on the financial state of the road concession purchased from the Indiana State Government in 2006 came as MIG announced a $1.68 billion half-year loss was underlined by heavy write-downs on the value of its toll road portfolio. Perversely, the $1.7 billion asset write-down was seen as the only good news yesterday.

It was less than the $2.1 billion write-down MIG warned of in a December trading update.

MIG shares rose 0.5¢ to $1.35, with revenues for the period falling $20.8 million to $112.4 million, thanks largely to the impact of the economic slowdown on traffic volumes.

Austock infrastructure analyst Andrew Chambers did not share MIG's confidence. "It needs a dramatic lift in revenue for it not to go into financial oblivion," he said.

Investors read the lack of any dividend guidance for next year as a bad sign, given MIG's boasts about extra cash from the recent sale of assets.

In the strongest sign the company's debt-fuelled acquisition binge is over, Mr Hughes said MIG was open to selling more assets.

This follows the sale of its Sydney Westlink M7 stake back to an investment vehicle set up by itself and co-owned by the Queensland Investment Corporation. MIG is looking for a buyer for its remaining half stake.

Mr Hughes stressed MIG would only sell assets if the price was right.

© 2009 The Age:

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Friday, February 20, 2009

"Along with the late commission Chairman Ric Williamson, Houghton has been a strong advocate of long-term toll road leases with private companies."

Houghton, Underwood reappointed to transportation commission


By Ben Wear
Austin American-Statesman
Copyright 2009

Gov. Rick Perry has reappointed Texas Transportation Commissions Ted Houghton and Fred Underwood to six-year terms that would expire in February 2015. Both appointments are subject to confirmation by the Texas Senate.

Houghton, 57, from El Paso, is self-employed in financial services, executive benefits and estate planning. He has served on the commission since December 2003, joining the board when the Legislature expanded it from three to five members. Along with the late commission Chairman Ric Williamson, Houghton was a strong advocate of long-term toll road leases with private companies, but in recent months has toned down his rhetoric on the issue.

Underwood, who lives in Lubbock, has been on the commission for just two years, filling an unexpired term. He is president and CEO of Trinity Company, a cotton bale storage company.

© 2009 Austin American-Statesman:

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"I'm personally not convinced about the decisions that are being made without any oversight and transparency."

Pace of Texas stimulus spending called 'staggering'


The Dallas Morning News
Copyright 2009

AUSTIN – Thanks to the federal stimulus package, the state budget deficit is all but erased and the Texas economy will see a quick injection of up to $70 billion. But oversight needs to be slammed into place quickly as the money begins flying, state lawmakers said Thursday.

Rep. Jim Dunnam, D-Waco, said he was 'stunned' by next Thursday's goal.

A special committee looking at the stimulus money began peeling away the numbers and recognizing the usually glacial pace of government has been shot into a speed boat, so lawmakers need to react quickly to guarantee that the funding is well-spent.

"That's staggering," said Rep. Jim Dunnam, chairman of the special stimulus committee as he ticked off the flood of funds. "And I'm personally not convinced about the decisions that are being made without any oversight and transparency."

The money is a windfall for state budget writers, who had anticipated making cuts throughout government to balance the budget. Now, they can expand health care for the poor, build roads and expand programs ranging from child care to education technology.

But Dunnam, D-Waco, and other lawmakers immediately jumped on $2.3 billion for roadway projects that are slated to be approved by the Texas Transportation Commission next week. But lawmakers don't know which ones they are.

"I'm not picking on TxDOT, but I was stunned to learn that their goal is to obligate 100 percent of the money next Thursday," he said.

The Texas Department of Transportation is still compiling its final list of the selected "shovel ready" projects. The states have 120 days to submit those projects to federal transportation officials for approval and funding.

More than $1.5 billion of the money is for state highway projects designated by TxDOT and an additional $700 million will be allocated to regional transportation groups to use on local projects they have selected.

The planning has been going on for four months, and most of the priorities were set by local authorities, said Deirdre Delisi, chairwoman of the transportation commission.

"The list was based on whatever the criteria was set in the [federal] bill," she said. It is moving quickly, but that is needed to reassure construction companies poised to lay off workers that projects are in the works and will start soon.

"The whole point was to get people working again," Delisi said.

Dunnam said that TxDOT will brief lawmakers next week on the selected projects in their districts but that he feels the money is being allocated too quickly, pointing out that the state has at least three more months before it has to submit the list to federal authorities.

"These are the kinds of decisions that are being made while some of us are still trying to get a copy of the bill," he said.

In the stimulus, about $17 billion will be coming directly to Texas for existing state programs in education, transportation, health and assistance areas. An additional $27 billion will go to local government projects and private entities for things such as energy efficiency. And about $27 billion will be forthcoming in tax breaks to Texans earning less than $75,000, according to Legislative Budget Board estimates.

State lawmakers still must determine if they want to draw down even more funding by changing laws and policies, if only for a year or so.

For instance, the state could receive an additional $560 million for laid-off workers if it covered part-time employees with unemployment insurance. Private businesses are assessed fees that cover the insurance costs, and to keep those fees low, Texas has chosen to limit the coverage.

The Legislative Budget Board, which provides spending numbers and analysis, told lawmakers Thursday that an additional $5 billion will be coming from Washington to bolster payments to those on Medicaid. It means that Texas can now use those federal funds to fill a large state budget hole because of growing caseloads under the program that, along with a state match, provides health coverage to low-income Americans.

After the 2001 recession, states got $20 billion, half of that to defray costs for Medicaid. The current plan will send states $87 billion for Medicaid alone.

"This is clearly a new world," said John Thomasian, the National Governors Association's director of best practices, at a panel discussion Thursday in Washington. "This is an unprecedented flow of funds to states, through an almost unprecedented number of spigots."

It is exactly the problem state lawmakers need to grapple with in the coming weeks, Dunnam said at the inaugural committee meeting on the stimulus oversight.

It's imperative that taxpayers don't re-experience that "sick feeling I got in my stomach," after learning that bankers used their federal bailout for executive bonuses and posh retreats, he said.

"We've got to wisely use this one-time resource," he said.

Staff writer Todd J. Gillman in Washington contributed to this report.

© 2009 The Dallas Morning News: /

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Appointees on Texas Transportation Commission and unaccountable NCTCOG plan to spend 'stimulus' on toll roads and public-private partnerships

Capital Injection - 2009 Economic Stimulus Package

$2.25B up for grabs as state eyes local transportation partnership

Michael Morris of the North Central Texas Council of Governments believes a proposed partnership with the Texas Department of Transportation would help generate funding for three large highway projects in the Metroplex.


Jeff Bounds Staff writer
Dallas Business Journal
Copyright 2009

Local and state officials are discussing a partnership that would decide how to spend the hundreds of millions of dollars North Texas hopes to get from the federal stimulus package, and three specific roadway projects already have been identified as top priorities.

The Texas Transportation Commission, which oversees the Texas Department of Transportation, will decide on Feb. 26 whether to join forces with the North Central Texas Council of Governments. The Texas Transportation Commission also is scheduled to decide at that meeting how the state will allocate its portion of federal economic-recovery money.

Should that partnership not come to pass, TxDOT and NCTCOG essentially would go their own ways in spending the federal stimulus funds being allocated to them. In that scenario, North Central Texas Council of Governments’ officials say, TxDOT basically would pick the statewide projects it’s most interested in, and NCTCOG would then apply the money it has to its choice of smaller works the state has opted not to do.

The state is scheduled to receive about $2.25 billion for highway projects from the stimulus package, with roughly $700 million of that money allocated to different “metropolitan planning organizations.” These entities are transportation policy making organizations such as NCTCOG that include representatives of local governments. (The 16 counties covered by the North Central Texas Council of Governments will get a total of $130 million of those regional funds, including Dallas, Collin, Tarrant and Denton.)

If the Texas Transportation Commission decides to go forward with the NCTCOG partnership, the Regional Transportation Council, which oversees the transportation aspects of the North Central Texas Council of Governments, would have to give final approval when it meets on March 5.

Michael Morris, NCTCOG’s director of transportation, says “we’re right in the middle” of talks between the two agencies, and the North Central Texas Council of Governments’ preference is to work together.

Whether or not the partnership ultimately happens, North Texas is likely to get more than $130 million of the state’s total stimulus funds, though a partnership would, from a purely political standpoint, make extra funding easier to come by.

“The theme to the story is we’re not just going to select $130 million of projects and go our own way,” Morris says. “We’re having partnership conversations with the state” to find the best projects to do.

Chris Lippincott, a TxDOT spokesman, says discussions with the North Central Texas Council of Governments are “ongoing.”

“There’s no single infusion of funds that will solve our state’s transportation problems,” he says. “But we want to make sure we get the best use of the stimulus funds that we can.”

Eyes on the Prize

Here are the three biggest projects that a TxDOT-NCTCOG partnership might help bring to fruition. NCTCOG officials stress that the amounts they are seeking are subject to change.
  • The money will provide funding for the so-called “New LBJ” Freeway, which calls for having eight no-cost lanes on the Dallas freeway (four in each direction) along with six new “managed” toll lanes (three in each direction) whose costs will vary depending on congestion. North Central Texas Council of Governments officials are seeking about $100 million for the public-private project, whose total price tag is estimated at $1.5 billion.
  • The partnership also would provide a proposed $271 million for an interchange at Southwest Parkway and Interstate 20 in Fort Worth. The project cost for that piece of work isn’t available yet, but the interchange is part of a multibillion-dollar toll road between Fort Worth and Cleburne that will kick off construction this year.
  • The so-called “D-FW Connector” would get unspecified funding under the North Central Texas Council of Governments’ proposal. That project will reconstruct and expand State Highways 114 and 121 north of the Dallas/Fort Worth International Airport in Tarrant and Dallas Counties. At this point, NCTCOG officials don’t have a target on how much they’re seeking on the D-FW Connector, because they are trying to move money from one project to another to get the best funding for a given piece of work. | 214-706-7122

© 2009 Dallas Business Journal:

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Thursday, February 19, 2009

"While 'last rites' for the TTC have been announced, the Environmental Impact Statement (EIS) for the corridor has continued."

Revised corridor plans still under review


Country World News
Copyright 2009

In the wake of a recent announcement that the controversial Trans-Texas Corridor (TTC) proposal is dead, Texas Department of Transportation (TxDOT) officials have met with several sub-regional planning commissions to clarify what projects associated with the TTC will still go forward.

Members of the sub-regional commissions, which were formed in response to the corridor, have expressed concern that while last rites for the TTC have been announced, the Environmental Impact Statement (EIS) for the corridor has continued.

Doug Booher, an environmental specialist with the Texas Turnpike Authority, told the commission that the state EIS is continuing because individual corridor projects are still being planned.

“The documents for the EIS, as it relates to the Trans-Texas Corridor as a whole concept, have to be revised,” he said.

Mark Tomlinson, director of the Texas Turnpike Authority Division, said the TTC-35 and I-69 programs will go forward as individual projects rather than as part of a larger system. The turnpike division is responsible for toll roads and other financing options for TxDOT.

The TTC-35 project calls for a highway running roughly parallel to Interstate 35 from the Red River to the Mexican border. The I-69 project would create a highway running from Texarkana to Laredo or the Rio Grande Valley.

“The overall goal of the (EIS) document is the same,” he said. “How we plan to implement the projects has changed. For example, the overall width of the corridor projects still under consideration was conceptualized at 1,200 feet but are now closer to 600 feet.” He added that the proposed paths haven’t changed, and that the widths weren’t considered when the first proposed routes were drawn.

Gov. Rick Perry first proposed the TTC in 2002 as a $175 billion, 4,000-mile network of highways, rail and communication lines through the state. The elaborate system was designed to ease overcrowding on current highways and accommodate future growth.

The plan was controversial from the first. The massive amount of land needed for the project drew critical attention from farmers, ranchers and rural landowners.

Agriculture groups, such as the Texas Farm Bureau and others, spoke out loudly against the proposal at a series of public hearings to gather public input on the TTC.

Fred Kelly Grant, a lawyer and legal adviser for the sub-regional planning commissions, asked the officials if they have worked within the provisions of the Farmland Protection Policy Act in drafting the EIS.

“That (Farmland Protection Policy Act) is not the only factor we have to consider,” Tomlinson said. “We looked at unique farmland on both sides (of Interstate 35) but we also have to look at the Endangered Species Act, which comes into play a lot more on the western side of the highway. Until it’s an actual project, we can’t say for sure how the Farmland Protection Act will come into play.”

Richard Skopic, district engineer for TxDOT, said the federal stimulus plan could have an impact on TxDOT’s ability to fund projects like TTC-35 and I-69, but added that it is too early to tell what impact, if any, it will have.

“Part of the plan, as it stands now, calls for $27 to $30 billion for highways, bridges and transportation,” Skopic said. “I think we could expect Texas to get just under $2.5 billion. When you look at that amount of money, it’s less than what we spent on similar projects over the last five years.”

TxDOT Executive Director Amando Saenz announced at a transportation conference in Austin last month that the name Trans-Texas Corridor, as a single-project concept, is not the choice of Texans and that the name will be put to rest. He also announced the Innovative Connectivity in Texas/Vision 2009 program, which includes a policy of meeting with local groups for input on transportation projects.

Dan Byfield with the American Land Foundation, a private property rights group that advises the sub-regional commissions, said that TxDOT has held several meetings with the local commissions.

“The Pineywoods group got a letter from Amando Saenz saying that the department looks forward to working with them on the I-69 project,” he said. “That’s a step in the right direction.”

© 2009 Country World News:

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"I'll continue to boycott toll routes."

'Texas tollways are a scam.'


Letters to the Editor
Austin American Statesman
Copyright 2009

Paying a toll ... and more

I made the huge mistake of using a Texas toll road without a TxTag. I received a bill in the mail and paid it via personal check, but the Central Texas Regional Mobility Authority did not credit my account even though the check cleared my bank.

When I called, officials told me that I have to prove that I paid. That requires paying my bank for a copy of my check. It would cost me more to fight this than pay again. They also charged me an extra $1 for the second bill they sent.

Texas tollways are a scam.

Shelley McCarthy

Re: Feb. 11 letter "Make the toll road scofflaws pay."

My blood is boiling, too, but not over the tolls (even though I'm opposed to them). It boils over the arrogance of the designers who failed to place cash lanes at the toll booths.

I'd be glad to pay for the few toll rides I take, but why should I be forced to have an account? Until I can pay cash, I'll continue to boycott toll routes.

Ritchie Mintz

© 2009 Austin American-Statesman:

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"Macquarie & partner Cintra Concesiones were guaranteed toll increases at or above the rate of inflation for decades as part of longterm leases."

Toll increases mean profit for private investors


By David Tanner, staff writer
Land Line Magazine
Copyright 2009

Private-sector companies that operate a handful of toll roads in North America have stayed profitable despite significant declines in traffic. It would not have been possible without toll increases, company officials say.

Officials with Australian toll operator Macquarie Infrastructure Group issued a report to say their portfolio took a $1.3 billion hit to its profits during the second half of 2008. In their portfolio are stakes in five North American toll roads, including the Indiana Toll Road and Chicago Skyway.

Still, Macquarie managed to post a slight revenue increase during that time – about 1.4 percent – thanks in part to toll increases and to the sale of shares in some of its worldwide assets.

Macquarie operates the Dulles Greenway in Virginia and South Bay Expressway in California.
Macquarie and partner Cintra Concesiones of Spain formed a consortium to operate the 407 Express Toll Route in Toronto, Canada, along with the Indiana Toll Road and the Chicago Skyway.

The consortium is guaranteed toll increases at or above the rate of inflation for decades to come as part of its long-term leases for those roadways.

The 407 ETR did not see significant traffic growth in 2008, but the consortium has countered with a toll increase that took effect Feb. 1 of this year.

Traffic counts in December 2008 on the Indiana Toll Road and Chicago Skyway were down 8 to 10 percent when compared with December 2007.

A 20 percent toll increase on the Indiana Toll Road and a 27 percent toll increase on the Chicago Skyway have kept those roads profitable for the Cintra-Macquarie group.
Transurban, an Australian company that operates the Pocahontas Parkway in Virginia saw traffic decline by 10 percent in 2008. A toll increase implemented in January 2008 offset the brunt of the decline, company officials stated, leading to a 4.4 percent profit.

Toll-road investors do not appear to be slowing down, although Macquarie stated in a report released Tuesday, Feb. 17, that it is not obligated to buy into new toll ventures at this time.

Transurban won a contract in 2008 to construct and operate a tolled-lane project to expand the Capital Beltway in Washington, DC, and add tolled lanes along Interstates 95 and 395 in Virginia. The Beltway project is in its first year of a five-year construction project, and the I-95/I395 project has not yet broken ground.

Cintra has landed several new toll road projects in the state of Texas and continues to bid on more.

Another Spanish company, Grupo ACS, has burst onto the North American scene in the past year by bidding on at least four new toll roads in Texas, Florida, North Carolina and Quebec, Canada.

© 2009 Land Line Magazine:

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Wednesday, February 18, 2009

"The use of a defacto puppet agency like the CTRMA allows TxDOT to use the CTRMA as a financial firewall, to avoid bond default blowback"

Texas Toll Road 183-A: The Economics and the Special Interests

Texas Tollroad U.S 183A northbound in outskirts of Austin, approaching toll plaza.

Shrinking traffic increases could mean bond default problems for US 183-A
The road lobby operates as a sort of well-funded shadow government, organized to overcome citizen opposition to unpopular toll roads intended to serve hypothetical sprawl development.

By Roger Baker
The Rag Blog
Copyright 2009

In August 2007, the Central Texas Regional Mobility Authority’s (CTRMA's) first toll road, US 183-A, was newly opened and was acclaimed as a star performer. And yet it could still be in trouble due to outside factors beyond the control of the CTRMA. Let us drill down and examine the background and details.

The success of 183-A is important because the CTRMA, which manages 183A, intends to use the current extra revenue being generated by 183-A as a financial "backstop.” The 183-A toll revenue will essentially serve as collateral for leveraging funding for another toll road, US 290 E, that the CTRMA is actively promoting. Such speculative use of deficit spending to leverage rapid growth in road infrastructure was part of a leveraged debt trend encouraged under Bush, called public-private partnerships (PPPs).

The plan that the Capital Area Metropolitan Planning Organization (CAMPO) recently approved, urged by CTRMA bond consultant JP Morgan Chase Securities, is to combine these two toll roads using the 183-A surplus toll revenues as a substitute for bond default insurance on 290E. 183A does have bond default insurance, but it has now become unaffordable for 290 E due to the credit crisis. (TxDOT partly wants to get 290 E built to help bail out SH 130, a relatively underused toll road which suffers from slow access into Austin).

Not long after the Texas Department of Transportation (TxDOT) famously mismanaged their finances about a year ago, by double counting $1 billion in revenue, TxDOT cut back its construction spending drastically. TxDOT then decided to turn over its plans for six planned Austin area planned toll roads to the Central Texas Regional Mobility Authority. Under strong organized pressure from the road lobby, CAMPO, which approves federal funds for roads, accepted this shift in funding and construction responsibility.

The Texas road lobby, similar to the situation in many parts of the USA, is basically a coalition of special interests, both local and statewide. Statewide, these revolve around Texas road consulting and road construction in coalition with local regional banking, development and land speculation interests. The Texas road lobby and its allies (like the Texas Good Roads Assn., and Associated General Contractors or AGC) has been around as a significant force in Texas politics since about 1950. Now they are recognized as one of the most powerful lobby groups in Texas. Molly Ivins used to call TxDOT "the Pentagon of Texas.”

Locally, the road lobby is closely linked to the Greater Austin Chamber of Commerce, Opportunity Austin, and the Capital Area Transportation Coalition .

In the last year or so, the same interests that were previously focused solely on roads have developed a much stronger interest in regional and commuter rail to San Antonio, Cedar Park, Elgin, etc. At the same time federal funds for rail starts have become scarce. There is no easy money for rail or roads anymore.

Bankers, developers, and land speculators all share a strong interest in the outcome of most decisions on public infrastructure funding. Special interests fund "astroturf" media campaigns meant to mimic grass roots input. For example, this link is a good example of such an effort to promote 45 SW, a planned but mostly unfunded toll road over the sensitive recharge zone of the Edwards Aquifer.

The road lobby operates as a sort of well-funded shadow government, organized to overcome citizen opposition to unpopular toll roads intended to serve hypothetical sprawl development. It aims to persuade politicians to issue public debt to subsidize what up until recently was highly profitable sprawl growth in the suburban fringes that were predicted to grow rapidly forever. The money incentive is strong in Texas, with its many property rights laws imbedded in the state constitution. However, Texas has a heavily urbanized population distribution. As with other sunbelt cities that grew rapidly in an affluent era of cheap oil, Texas has large rings of car-addictive sprawl development surrounding its major cities.

Although the two are legally distinct, TxDOT maintains tight control over the CTRMA toll road projects through close collaboration on planning, long-standing ties involving ex-TxDOT engineers, common contractors, etc.

The use of a defacto puppet agency like the CTRMA allows TxDOT to use the CTRMA as a financial firewall, to avoid bond default blowback. It also allows TxDOT to preserve control in a new and less regulated part of state law, recently crafted to give expanded toll road deal-making power to the RMAs; the regional mobility authorities, RMAs, like the CTRMA. TxDOT and the late Transportation Commissioner Ric Williamson had strongly encouraged establishing RMAs around Texas, although they have had limited success.

In other words, 183-A is being promoted as an example of the CTRMA's bonding prowess, demonstrating that 183-A can be used as a financial engine to pull along 290 E. Let us take a closer look at the engine.

Here is a glowing August, 2007, account in Toll Road News , a national pro-toll newsletter. The article shows that despite heavy public opposition to the toll road package passed by CAMPO in October of 2007, the early 183-A numbers toll numbers looked excellent. It seems that this road jumped ahead to match its future numbers:
...Central Texas may be a hotbed of anti-toll activism but motorists there love the tollroads. Traffic and revenue on the four pikes that have opened this year is way above expectations. In six months on the 183-A toll road they are meeting third year traffic and revenue forecasts.

Tollers in Austin seem to have found a way to bypass the dread "ramp up" that has afflicted many new tollroads in their first several years - from the Dulles Greenway VA to the Suncoast Parkway FL and the 91 Express Lanes CA. At five to ten years old these tollroads tend to be closer to forecast but they had horrible startup numbers for three or four years.

Take the Central Texas RMA and its 183-A tollroad. Since full toll rates have been in effect 183A has been pulling in $1.2m to $1.3m/month. On that basis it should gross $15m in its first year. The Vollmer Stantec forecast for the first full calender year (2008) was $10.3m. 2009 was forecast at $13.9m...

CTRMA don't think the traffic forecasts they got from Vollmer Stantec are flawed on the low side. They think that the marketing model they and TxDOT adopted in Austin has allowed them to bypass "ramp-up" and jump straight to a trend traffic level...
This was the situation a year and a half ago, but now we have about a year and a half of data that allow us to see how well things are actually doing on US 183-A. Since the bond brokers expect that toll roads will not do very well at first, until they are marketed to the public as a convenience, there is a bond debt reserve fund set aside. This is to cover the bond shortfalls through the ramp-up phase until a predicted ridership saturation point is reached. Financial training wheels of a sort.

In some ways things still look very good, including the fact that there is still more than enough revenue to pay the bond creditors. Whereas the 183-A toll road was only projected to collect $10.3 million in 2008, it actually brought in a bit more than $17 million. So 183-A is more than financially solvent for now. And 183-A would be likely to prosper if the transportation trends of the past were to continue.

In essence, 183-A jumped way up to a sort of plateau near its post-ramp-up projections, attributed to good marketing, but now the rate of revenue growth has slowed down considerably. The year over year toll transaction increase from the last quarter of 2007 to the last quarter of 2008 rose about 12.8%, whereas the revenue increase over the same period is about 10.8%.

Here were the bond projections for 183-A revenue:
  • 2008 -- $10,336,000 (2008 was the first full year of revenue, which counts weekends)
  • 2009 -- $13,937,000 (a 35% yearly increase projected)
  • 2010 -- $19,595,000 (a 40% increase)
  • 2011 -- $23,446,000 (a 20% increase)
  • 2012 -- $26,306,000 (a 12% increase)
(These 183-A revenue forecasts are from the official bond statement on the CTRMA website, showing projected increases during the initial ramp-up period; Table ES-1, page ES 3.)

But what if the 183-A revenues, off to a fast start, were only to grow at the current year over year rate of 10.8%, continuing over the next few years? Comparing with the numbers above, such increases would then fall behind the bond revenue projections after 2010, as follows:
  • 2008 -- $17 million
  • 2009 -- $18.9 million
  • 2010 -- $19.8 million
  • 2011 -- $21.4 million
  • 2012 -- $23.1 million
The truth is that when you inspect monthly 183A revenues, which jump around a lot from month to month, most of the last year looks fairly stagnant, about flat since May, 2008, when 183-A took in about $1,446,000. In December, 2008, the 183A toll revenue was down to $1,364,000.

These stagnant 183-A numbers probably tend to reflect the background situation that national road travel has been decreasing sharply for the last few years due to fuel prices and the recession. This chart makes this unprecedented travel decrease quite obvious:

Clearly there are unpredicted economic and growth risk factors at work, which are certain to affect 183-A traffic as well as the CTRMA's other planned toll roads. What are these risk factors?

These factors were outlined in the official bond statement to be found on the CTRMA website. Here are some of the risk factors spotlighted in the 183-A bond statement by the bond consultant, Vollmer and Assoc. prior to the 2005 bond sale, This is taken from page 66 of the US 183-A Official Bond Statement posted on the CTRMA's website:
10. "2005 Project traffic during the early years of operation will ramp up as formulated in the Traffic and Revenue Report." (Reality: Much faster early increases than projected, but looks like there may be a plateau and relative stagnation now.)

12. "Motor fuel will remain in adequate supply during the forecast period, and motor fuel prices (i.e., the average price for regular gasoline) in the foreseeable future will not increase above the 1980 peak, which, if adjusted for inflation, in current dollars would not be more than $3 per gallon." (Reality: These figures were greatly exceeded, peaking in July 2008, but now fuel prices have collapsed with the general economy.)

14. "No radical change in travel modes, which would drastically curtail motor vehicle use, is expected during the forecast period." (Reality: The FHWA travel chart above shows that this risk factor is in place and rapidly growing.)

"15. In the long term, generally normal economic conditions will prevail in the State and the United States, and there will not occur a major depression, national emergency or prolonged fuel shortage." (Reality: The IMF says that all the world's major economies are in a world-wide depression now, and long range fuel supply problems are apparent.)
Are there any further problems likely to crop up? Frankly yes. Not only are there about $66 million in federal TIFIA loans at stake in 183A, which have to be paid back starting in 2012, in addition to about another $166 million in private bond debt, but it is entirely unclear that the private bond insurance would still pay out in case of default. In case of 183A bond default, the insurance policy might amount to toxic waste requiring a federal bailout.

The feds are already distinctly pissed off at the way that TxDOT manages its federal toll road loans, and have threatened to cut off TIFIA funds, without which projects like 290 E seem impossible: Go here and here.

In the next year, the world economy could make a miraculous recovery and the 183A revenue trends could turn around, but it is very hard to find municipal bond investors willing to risk money on that possibility.

Such bonds tend to be favored by high income individuals who find tax-free municipal revenue bonds attractive as a tax shelter, partly because most such bonds were insured at a low cost. The current inability to get affordable bond default insurance today on toll road bonds is a problem. We don't know if the feds will bail out insured toll bonds, while uninsured toll bonds are like naked bets putting capital at risk for 40 years. US 183A is largely a commuter road designed to serve future residential development of a kind that is now reported to be in sharp decline in the Austin area (reporting in the Statesman on growth in Manor). Detroit, which makes the cars needed for expanding the future toll traffic, is broke and other car companies are in big trouble. CAMPO is now considering sharp cutbacks in its other road projects incorporated in its new long range 2035 plan.

This link explains how and why most toll road authorities tend to overestimate long range future demand.

Next is a link that explains how rapidly and unexpectedly once-assumed travel behavior can turn around in Texas, given our changing economic environment.

A willingness to invest private bond money on the theory that the weak 183A toll user trends might turn around fairly dramatically, even enough to help finance other projects like 290 E on its coat tails, is thus beginning to look like a heroic investment gamble.

In fact, the official travel numbers on the road 183A is designed to help -- 290E -- show approximately level traffic demand. [I hope to post the documentation later on The Rag Blog.] The TxDOT vehicle count numbers for 290 E have been stagnant for the last several years, and the accident statistics are trending downwards. Plus new home starts in fringe cities on 290 E, like Manor and Elgin, are in sharp decline. These trends undermine the major justifications commonly used for promoting new roads.

Sen. Kirk Watson, who chairs CAMPO, (and owns an interest in a bank in Elgin, on 290 E) is a skilled, energetic and powerful politician. He is also the vice chair of the Senate Committee on Transportation and Homeland Security and usually gets what he wants from CAMPO, the body that controls Austin's shrinking federal funds.

In more normal times, and if politics could still leverage money the way it used to do a few years ago, 290 E would probably be a done deal by now. But now we are living in times when the available public infrastructure funds are shrinking a whole lot faster than the old style of special interest politics can accommodate.

© 2009 The Rag Blog:

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"Everyone should keep a wary eye, not only on TxDOT, but the Lege as well..."

Now could be too soon to celebrate Corridor's demise


Willis Webb
El Campo Leader-News
Copyright 2009

There was much rejoicing when the much-criticized Trans-Texas Corridor, a pet project of Gov. Rick Perry, was declared a dead deal by the Texas Department of Transportation.

The proposed 12,000-foot wide amalgamation of car, truck and rail traffic as well as energy transmission lines was to be partly a toll road (for cars and trucks) and would've been built and owned by a foreign company but paid for by taxpayers and drivers.

In its place TxDOT gave us a new name and plan - Innovative Connectivity in Texas. Many of us were so busy rejoicing over TTC's demise, we didn't bother to search for details of the "new plan."

TxDOT officials pointed to the huge public outcry against TTC and said that they'd taken a "practical lesson" from the experience and they needed to do a better job of communicating and of listening. They did say they'd still look to public-private partnerships to build roads.

Rep. Lois Kolkhorst (R-Brenham) said TxDOT needs to do more than just change the name. "Is this an admission of error or a strategic maneuver to repackage? Unfortunately, there is a distrust of the department." Kolkhorst wants the state to retain ownership of new toll ways, so revenue can be invested in more roads instead of "allowing the profits to go off potentially to other countries to investors."

At about the same time these news reports of TTC's demise and "Innovative Connectivity's" rise, there was another story that, while unrelated, touched a cynical nerve in my brain.

That story dealt with a warehouse fire in a Houston suburb. The fire was in an external power supply box and after putting it out, insisted to the "caretaker" of the building they must enter to make sure the fire hadn't spread nor done damage inside. The caretaker reluctantly surrendered the keys and disappeared while firemen checked inside where they found about 200 marijuana plants in an elaborate greenhouse, complete with special heating and insulation, grow lights and an internal irrigation system. The "weed" was in the early stages of growth and had an estimated street value of $10,000. The property ownership was listed as "MJJ Innovative Investments LLC." Hmmm. Two innovative equals too innovative?

Now, why would rejoicing over the supposed TTC demise be premature? First of all, TTC is worth too much to just walk away. Some big companies have already invested a lot in lobbying for it as well as toll roads. Secondly, the governor has spent some political capital in not just TTC but this private-public partnership of toll roads as well.

In the name of full disclosure, let it be known that my home is, depending on whose map you believe, within one to 15 miles of the proposed TTC route. And, in an April 2008 column, I took Perry et al to task on the potential for abuse of eminent domain in getting the right of way necessary to build TTC. I wasn't alone in that concern. Thousands of Texans, through various organizations, raised Old Billy Ned about grabbing land, particularly productive farms and ranches that have been in families for generations.

A lot of ideas are being floated about how to go about upgrading Texas highways without giant tollways and private public partnerships.

In lieu of the economic stimulus possibilities out of Washington, some have suggested establishing true public works projects to build toll-free highways, at the same time creating jobs in Texas.

Another idea is to raise the gas tax that is supposed to be for roads and maintenance in Texas, an idea it is said that would also discourage gas consumption and, at least indirectly, advance the ideas of alternative energy.

The Texas Legislature (Lege) has been diverting highway funds for other purposes (also mentioned in a previous column) and there is sentiment to outlaw that diversion. There are those who want to revamp TxDOT, particularly after last year's fiasco of "misplacing" a billion dollars. Still others say more funds could be available for highways if the state did more to ensure the collection of traffic fines.

Then there are the wishful-thinking ideas: abolishing access to politicians by lobbyists, and voting toll road and TTC supporters out of office.

Everyone should keep a wary eye, not only on TxDOT, but the Lege as well. They are in session.

Willis Webb is a retired community newspaper editor-publisher. He can be reached at

© 2009 El Campo Leader-News:

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Tuesday, February 17, 2009

"The Corps of Engineers: Just What in the Hell Is That Thing, Anyway?"

Better Now Than Never, the City Council's Gonna Get a Civics Lesson Tomorrow


Here we are, one full decade -- 10 years, count 'em, one-10th of a century -- into the U.S. Army Corps of Engineers and City Of Dallas's Trinity River Corridor Project, and tomorrow the city council's Trinity River Corridor Project Committee has a briefing scheduled that I would summarize as, "The Corps of Engineers: Just What in the Hell Is That Thing, Anyway?"

Ah, well. Better late than never.

The briefing, scheduled for 11 a.m. in Room 6ES of City Hall, is actually titled "Overview of United States Army Corps of Engineers (USACE) Roles and Responsibilities for the Trinity River Corridor Project." And the PowerPoint presentation, as you can see above, includes those vaguely retro-cartoonish graphics you may remember from middle school civics class -- you know, "How a bill gets through Congress," that sort of thing.

So, what in the hell is this all about?

It's about the fact that Dallas has devoted has devoted a decade, untold millions of dollars and huge political capital to a project that is never, ever going to happen because the Corps of Engineers, which is responsible for protecting the city from flood devastation, ain't gonna let it happen.

The city council -- which, with the exception of Angela Hunt, has never understood anything about any of this -- is just now getting the picture that the project is bogged down, probably fatally, in the Corps of Engineers review process, because it's crazy and totally unsafe. So the council now is sitting around scratching its head and asking over and over again, "The Corps of Engineers? What in the hell is that, anyway?" Tomorrow they find out.

Next week's briefing? I think they should do "The Bicameral Legislative Process," with a big cartoon of a two-humped camel. I still remember that one.

Later, "Checks and Balances," with a balance scale that has little people on both sides. Way down in the corner I would draw tiny little Oliphant characters called "Dallas City Council" staring up at the scale and saying to themselves, "How come we're not on it?"

© 2009 The Dallas Observer:

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Monday, February 16, 2009

"A powerful reminder of the fundamental difference between supporters and opponents of the toll road."

Corps' Attention to Detail Could Jeopardize More Than Just the Toll Road. The Whole Effin' Trinity Project Could Die!

The entire Trinity River Corridor Project, including the Texas Horse Park, is tied to the approval of the toll road by the U.S. Army Corps of Engineers. At least, that's what proponents of the Trinity Turnpike want you to believe.


By Sam Merten
The Dallas Observer
Copyright 2009

"Attention to detail delays Army Corps of Engineers, frustrates Trinity Parkway supporters."

The headline of Michael Lindenberger's latest story on the Trinity Turnpike in The News serves as a powerful reminder of the fundamental difference between supporters and opponents of the toll road.

The opposition views the U.S. Army Corps of Engineers as the vital partner in the project, one likely to cause problems with the process because its focus is to make sure the floodway and levee system are as safe as possible. These folks find great comfort in comments like this one from Gene Rice of the corps' local office: "Our overriding concern is the safety and integrity of the levee."

The other side sees the corps as part of the bureaucracy that needs to be massaged and bullied when necessary in order to move this project forward. When the corps focuses on mindless things like details, these people get frustrated and say things like "They are taking too long."

One of these people is Craig Holcomb, executive director of the Trinity Commons Foundation, who is concerned that delays by the corps might cause the Trinity project to die. Before Mayor Tom Leppert led the Vote No! effort against the referendum on the toll road, Holcomb was the face behind "Save the Trinity," which attempted to stop people from having the opportunity to vote on the issue.

Holcomb told The News that he has focused his attention on urging the corps to speed its review of the road, and we already know Mayor Tom has been tattling on the corps to his friends in Washington, D.C.

"Because the forest, the horse park, the white-water, the lakes, the bridges, all those are important," he said. "But if we can't get this roadblock fixed [on the toll road], then everything comes to a halt. So for now our job is to figure out how to encourage the corps without making them enemies."

These are the same scare tactics we heard from Holcomb, Leppert and others during the campaign, but they never provided any facts to back up the claim that delays with the road would result in problems with any of the amenities. In fact, the Texas Horse Park has been struggling for quite some time, and it has nothing to do with the corps' evaluation of the toll road.

To catch those up who haven't been following, Texas Horse Park, Inc. partnered with the city to split the cost of a $30 million horse park, with THPI's $15 million due in September 2008. But that deadline came and went, and the Trinity River Corridor Project Committee hasn't been briefed on it since they voted to stop funding the design in December 2007 because THPI had raised only approximately $300,000.

Willis Winters, assistant director of the Dallas Park and Recreation Department, says not much has changed with the project since he gave us an update in August. "The horse park has been put on hold, so to speak."

While funds for the horse park have been utilized to accelerate other projects, Winters maintains that $15 million is still allocated for the project. He referred us to THPI for specific fund-raising figures and says once it reaches a comfortable number, it will meet with council member Dave Neumann, who will then set up a briefing to the Trinity committee.

THPI would not release its fund-raising numbers and issued a statement through the president of its board of directors, Kevin Payne, who replaced Ben Casey at the beginning of the year.

In response to your request, the board is currently in the "quiet period" of our capital campaign. As such, we are in negotiations with several prospective donors for the Texas Horse Park. We have commitments that total in the millions; however, no agreement for public disclosure of the individual gifts has been reached. The capital commitments we currently have identified are also contingent upon setting a date for beginning construction of the park's first phase.

We expect to end the initial quiet period in the fourth quarter of 2009 and set the initial date for construction. At that time, we would be happy to discuss the individual donor commitments. If it would be helpful, we can update you should the calendar change.

Thank you for your interest in the Texas Horse Park and the Trinity Corridor Project.

So when it comes to the toll road, which is not fully funded and has numerous safety questions surrounding it, Holcomb whines that the corps is taking too long. Yet the horse park, which has nothing to do with the road whatsoever, is failing to get its private fund-raising off the ground, and instead of lighting a fire under their asses, he wants to blame that on the corps and the toll road too?

As Jim noted earlier, tomorrow afternoon Kevin Craig of the corps will brief the Trinity River Corridor Project Committee regarding the corps' "roles and responsibilities" regarding the Trinity project. Not sure where the horse park factors in that discussion, but we'll be there to find out.

© 2009 The Dallas Observer:

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"Dallas residents do no want the corps to expedite its review process at the expense of safety."

Angela Hunt says Tom Leppert's lobbying on Trinity toll road project is troubling


The Dallas Morning News
Copyright 2009

A successful effort by Dallas Mayor Tom Leppert to prod the U.S. Army Corps of Engineers into paying closer attention to the Trinity River toll road project drew a sharp response this weekend from the road's chief opponent.

In a letter to top corps officials in Texas, Dallas City Council member Angela Hunt urged them not to be pressured to hurry their evaluation of the road project.

"I am writing to assure you that Dallas residents do no want the corps to expedite its review process at the expense of safety," Hunt wrote.

Leppert has been concerned about the project's schedule.

He wants to see construction completed on the toll road by 2014, an aggressive schedule that has increasingly come into doubt.

The corps is not involved in the construction or engineering of the road, but it is responsible for reviewing all elements of the project to ensure the integrity of the Trinity River levees, which are designed to prevent flooding.

Increasingly, city officials and Trinity project backers have been frustrated at the corps' pace in approving preliminary engineering work on the project.

In Washington last week, Leppert met with top corps officials, and with U.S. Sens. Kay Bailey Hutchison and John Cornyn, to discuss concerns about the project.

After that meeting, the corps appointed a high-level employee to act as "director of the Dallas floodway."

That director will use an office near City Hall and be completely dedicated to the Trinity project, corps officials said.

Leppert said he has never asked the corps to compromise its review of the toll road project, but he has been concerned with the agency's communication with the city and the North Texas Tollway Authority, which will construct and manage the road.

Hunt called Leppert's lobbying of the corps and Texas' congressional delegation troubling.

"[T]he corps is not a 'partner' with the City on this project, but rather a critical regulatory agency tasked with ensuring the levee testing plan, as well as all aspects of the toll road construction proposal, to be certain that the levees are in no way compromised," she wrote.

In November 2007, Hunt led an unsuccessful effort to stop the toll road's construction through a citywide referendum.

© 2009 The Dallas Morning News:

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"Opponents of the toll road have argued for years that the parks project could, and should, proceed without the toll road."

Attention to detail delays Army Corps of Engineers, frustrates Trinity Parkway supporters


The Dallas Morning News
Copyright 2009

Trinity Parkway supporters frustrated at the slow pace of the review by the U.S. Army Corps of Engineers can take solace in this: They have plenty of company across America.

From Sacramento to St. Louis, and in scores of other communities, the corps has been taking a much harder – and often much slower – look at the integrity of its levees since Hurricane Katrina struck in 2005.

One result: Some large urban-area developments have been left twisting in the wind as the engineers study the plans in excruciating detail.

"I think what you are seeing happen in Dallas is the natural tension between economic development and flood safety that is happening all around the country," said Eric Halpin, the top expert on levee safety at the corps' headquarters in Washington. "This is the dialogue that goes on between making public safety the top priority while also allowing development in front of and behind the levees."

That tension may be natural, but in Dallas some of the strongest supporters of the Trinity River park plan – and the controversial toll road that has become so closely entwined with it – are beginning to worry.

"I am very concerned that this project will die," said Craig Holcomb, the former Dallas City Council member who leads the Trinity Commons Foundation. "The election was in 1998, and after all this, more than 10 years of working on it, if we can't get it really moving soon, people will start losing interest. And we will have lost a tremendous opportunity."

As a reflection of that concern, Mayor Tom Leppert made a quick trip to Washington, D.C., last week to meet with corps officials and congressional leaders to press for faster action.

The corps responded by naming a high-level liaison to work directly with local officials, although it is unclear what, if any, impact that will have on the speed of deliberations.

When Katrina nearly drowned New Orleans in 2005, it didn't take long for people to question why the levees hadn't been built taller or stronger. The corps began re-evaluating levee safety and has since then been reviewing thousands of flood-control projects across the country.

Halpin, vice chairman of a government-wide task force charged with reviewing federal levee safety, said the corps wants to work with local governments and others to speed the reviews when possible. But he said safety remains the agency's primary focus.

A year ago, a showdown in Sacramento showed just how serious the corps can be about insisting on levee safety, even if it hurts.

Acting on a corps evaluation of levee safety along the Sacramento River, the Federal Emergency Management Agency ordered a halt to development in the city's fastest-growing district, home to roughly half of Sacramento's planned development.

The move outraged local leaders, who threatened to seek an act of Congress to lift the moratorium. But a year later, the moratorium stands, and $618 million in flood-control improvements have been delayed as the corps and other agencies continue to review the details.

Similar stories abound in cities across the country. In St. Louis, a review of levee safety prompted FEMA to judge existing levees seriously inadequate, jacking up insurance rates for homeowners and stalling development.

Back in Dallas, the Trinity River park plan – a massive project first approved by voters in 1998 – has been supported by the corps as a way to help improve the Trinity levees near downtown, a step corps officials say is necessary to safeguard the city from severe flooding.

Gene Rice, Trinity River project manager for the corps' Fort Worth district office, said much has changed about the area's topography since the levees were designed decades ago. Upstream, he said, nearly all of the ground is paved, meaning more water runs into the river during a heavy rain.

"The same rain will leave the water at a higher level than 50 years ago," Rice said. "And downstream, with more trees and vegetation, the water takes longer to flow through, creating a back up."

But one part of the parks project would stretch the Trinity Parkway toll road 10 miles straight through the flood-control efforts. Rice said the corps does not oppose that idea in principle, but it's also something corps engineers won't approve without fully understanding its impact on the city's safety.

"We are not operating in a blind box," Rice said. "But our overriding concern is the safety and integrity of the levee. While we are aware of the pressure to get their work done on time, we are really keyed into the technical review."

What folks like Holcomb want, though, is for the corps to give more evidence that it's taking deadlines created by Leppert as seriously as City Hall and the North Texas Tollway Authority is taking them. Leppert wants construction complete by the end of 2013.

"They are taking too long," said Holcomb, whose foundation raises private money to see, as he put it, that the original vision of the Trinity Parks project is realized. That includes three new lakes, white-water rapids and other amenities – as well as the toll road.

"I understand how complex the issue is. And I understand the pressure they are under. But I also understand that we need partners who can work together to make all these pieces fit, not partners who say, 'Gee, we can't show up at your meeting.' Or, 'We are not suggesting how these pieces fit together, but we can tell you that you need to spend this much time and this much money on more studies.' "

The city, Holcomb said, has already helped lure $80 million in federal funds for flood-control aspects of the Trinity River project. But so far, the corps has done little to help advance the toll road, he said.

"Our fear is that they will take so long in approving it that everyone will lose interest," Holcomb said. "That in the end, we will have the flood-control project, but we will get nothing else."

Opponents of the toll road have argued for years that the parks project could, and should, proceed without the toll road.

Holcomb conceded that for much of the public, the toll road is less important than the lakes that have been promised as part of the Trinity Parks project. But he said for now his agency has switched its focus almost entirely to urging the corps to speed its review of the toll road project.

"Because the forest, the horse park, the white-water, the lakes, the bridges, all those are important," he said. "But if we can't get this roadblock fixed [on the toll road], then everything comes to a halt. So for now our job is to figure out how to encourage the corps without making them enemies."

© 2009 The Dallas Morning News:

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Sunday, February 15, 2009

Dallas City Hall votes to give their developer patrons taxation powers

Dallas Votes to Give Developers Taxation Powers


By Holly LaFon
Copyright 2009

Dallas City Hall took a little-publicized step Wednesday toward creating districts that would give private developers the power to tax and issue public debt. They want to turn three areas into Municipal Management Districts, similar to those already seen in Houston.

According to the Dallas Business Journal, the three sites include:
  • North Oak Cliff ­-- A 313-acre urban infill project being developed by Dallas-based Incap Fund in what’s being called the River District Area. It includes pockets roughly bounded by Davis Street on the south, Cockrell Hill Road on the west, Interstate 30 on the north and Zang Boulevard on the east.
  • Trinity River West -- A 342-acre site owned by investment company West Dallas Investments surrounding the westside connection point of the planned Calatrava Bridge. It’s roughly bounded by Commerce Street on the south, Sylvan Avenue on the west, Pueblo Street on the north and Beckley Avenue on the east.
  • North Lake ­-- A 942-acre site being developed by Lucy Billingsley, roughly bounded by Belt Line Road on the north and west, Hackberry Drive on the south, and Vista Circle and Lakebreeze Road to the east.
In the resolution passed Wednesday by City Hall, taxation can only be levied with the approval of a majority of voters within the district.

Because the passing of the resolution came as a surprise to many, there has been some controversy over whether it was intended to be covert. However, a committee briefing outlining the whole plan has been available on the Dallas City Hall Web site since at least Jan. 20.

Those in the West Dallas/Oak Cliff area can also attend a General Membership Meeting on Friday at 11:30 a.m. Karl Zavikovksy, director of economic development for the city, will discuss the alleged benefits of the district in that area.

All Municipal Management Districts must be approved by state Legislature before taking effect by state law.

© 2009 MSNBC:

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