Clock to wind down on private toll road contracts
by Mark Lavergne
Copyright 2009The Texas Department of Transportation’s authority to enter into comprehensive development agreements — contracts with private companies like Spanish-based Cintra to build and operate toll roads in Texas — will expire on Aug. 31. All county toll-road authorities will still be able to enter into such contracts indefinitely.TxDOT itself will be able for another two years to enter into "design-build" contracts, which are toll-road construction and operation agreements that do not involve any private equity. The same goes for regional mobility authorities (RMAs). Other specific exceptions to the rule remain here and there in the state as well, including the RMA for Dallas and Tarrant County, which can still do private toll-road contracts.
The Texas Transportation Commission met on Aug. 26 to review those remaining CDA’s that will survive beyond Aug. 31.TxDOT is continuing to work with the Harris County Toll Road Authority on the Highway 99 "Grand Avenue Parkway" in Houston. HCTRA has until Sept. 25 to tell TxDOT whether or not it will develop the project. If not, TxDOT has to decide whether it will do so itself, TxDOT assistant executive director Phil Russell told the Commission.
In the Dallas-Fort Worth Metroplex, three major projects are in various stages — the DFW Connector, the LBJ managed lane project (I-635), and the North Tarrant Express. The LBJ project will add managed lanes, whose toll rates will vary inversely with occupancy of the vehicle — meaning the more people in the car, the lower the toll.
Also the feeder roads will be improved, TxDOT spokesman Chris Lippincott told LSR.NTE will also be a managed lane project designed to improve mobility along 35W, Interstate 820, and state highways 121 and 183 near the DFW airport. NTE Partners will design, develop, and construct, operate, and maintain about 13 miles of highway. NTE Partners includes Cintra, Meridian Infrastructure, and the Dallas Police and Fire Pension System.
DFW Connector is a design-build contract that has no private equity. It will affect SH 114 and SH 121 on the north side of DFW Airport.All projects require approval from the Legislative Budget Board and Atty. Gen. Greg Abbott, who has approved the North Tarrant Express.Also in Dallas, the North Texas Tollway Authority will handle the Trinity Parkway project, and likely Highway 161 as well.The I-69 project has been approved by LBB, and Russell said he was "optimistic" the project would receive approval from the AG. It’s a master-development contract that basically will be to come up with a plan for how to develop I-69 — one of the most controversial TxDOT projects that was part of the Trans-Texas Corridor before the plan was scrapped (in name only according to some critics). The Texas portion would be more than 600 miles long.
TxDOT general counsel Bob Jackson told the committee that Abbott has asked for a full transcript of each contract, and one contract at a time. The paperwork for the DFW Connector was sent to him on Aug. 26.
The commission also looked at several other issues affecting transportation and transportation funding this week.Rescission
TxDOT government and public affairs director Coby Chase told the commission that the federal government could rescind as much as $740 million in transportation funds from Texas, a sum never to be seen again here.
Of that, some $130 million could come from what is called the "equity bonus," which is the funds that are used to improve the Texas’ rate of return as a donor state, Lippincott told LSR. The challenge for Texas, he said, is that the rescission could cut deeper than the state’s obligation authority. "This could stop or slow down projects," he said.
The requirements for this particular rescission are governed by different sets of requirements — one from the original federal law "SAFETEA-LU," passed in 2005, which expires Sept. 30, 2009.
Those rules were modified by the Energy bill that was passed last year. The requirements are confusing, could potentially be read as contradictory, and TxDOT has a limited amount of time with which to respond, Lippincott said.The $740 million rescission means Texas will have had to send nearly $2 billion back to Washington in the last three years.Chase told the committee that TxDOT received notice Aug. 25 of the possible rescission, and that the Federal Highway Administration has to come to a decision by the end of September.
Although there is a chance that Texas may not have to return the money, Lippincott said TxDOT is prepared to do so.
"At the end of the day it knocks projects off our books," Chase told the committee, "whether it’s now or a couple years down the road."
TxDOT Chief Financial Officer James Bass said that with "reasonable certainty" the department could complete all of its existing projects, but it could affect letting in projects for FY 2010. He said the state would end up with about $550 million after the rescission.
The agency received $2.25 billion from the federal government under the Recovery Act, which could offset the rescissions, provided the agency meets the federal requirement to spend all of the money or risk losing it back to the federal government. Some of the transportation projects that TxDOT had selected to fund with the stimulus dollars are turning out to cost less than originally expected, so the agency has identified a list of "Plan B" projects to funnel the stimulus money into, to avoid losing it.Sunset changes
The department is looking to implement some of the changes contemplated (though not required, as the measure didn’t pass) in the TxDOT Sunset legislation from the 81st session, particularly in the area of the statewide transportation plan. Per the bill’s recommendations, the plan will need to address all modes of transportation, set multiple transportation goals, deal with the growing congestion problems in the state, and address specific projects, TxDOT’s chief engineer John Barton told the commission.
Sunsetters also recommended updating the plan every five years — more often if need be.
The bill also directs TxDOT to set targets for reduction in fuel consumption and greenhouse gas emissions. And it directs the commission to create a new performance reporting system, which will need to be displayed on a public website, and which will provide information on the state of ongoing projects, their location, timelines, progress, etc. The department has already developed a website enhancement called "project tracker," Barton said, in an effort to be more open and transparent about where the agency is in transportation projects.
The department is also working on a system to report problems in each district of TxDOT, which will include information on roads and bridges.Proposition 12 bondsVoters approved $5 billion in bonds under Proposition 12 in Nov. 2007, and the 81st Legislature finally passed enabling legislation for up to $2 billion of it in the special session.
The Legislature allowed for $1 billion to go towards the state infrastructure bank (SIB) and the other $1 billion to be used on non-tolled projects. Now the commissioners must decide on what, specifically, to spend that money.
In general, projects that could use cash include those to address system preservation, safety, congestion, previous commitments and leveraging opportunities, Barton told the commission.
Among the projects the commission could spend it on now include the building of major bridges in the state and expanding the I-35 corridor. The commissioners can fund individual projects entirely or partially. They also can choose to divide the funds up among the state’s eight major metropolitan areas. Or they could spend it all on safety and congestion, Lippincott told LSR.
The commission should have marching orders for the coming months. Lippincott pointed out that the agency did not get Prop 12 funds until July. "The commission is going to have to make tough choices about how to spend this money," he said.
Bass told the commission he plans to set up a separate SIB account especially to house the Proposition 12 bond money, so that the public could clearly see which projects are being funded by those bonds.
In other transparency efforts, the Comptroller’s Office has been working with the agency officials to create a new page called "Where the TxDOT money goes" on the Comptroller’s web site. Bass said he expects the page to be up in the next few weeks.
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