"The 20-cent-a-gallon state gasoline tax hasn't been raised since 1991."

Raise gas tax 10 cents a gallon? It's on table

But Dallas senator’s idea for road projects isn't on Perry's agenda

11/13/09

By PEGGY FIKAC
Houston Chronicle Austin Bureau
Copyright 2008

AUSTIN — The Senate Transportation and Homeland Security chairman Friday suggested a 10-cent-a-gallon increase in Texas' gasoline tax for a system that's soon to run short of money for new roads.

The proposal touted by Sen. John Carona, R-Dallas, got a cold reception from GOP Gov. Rick Perry at a conference by the Texas Taxpayers and Research Association.

“I'm not real fond of raising taxes when there's a recession going on. We ought to be looking at ways to cut taxes, not raise them,” Perry told reporters when asked about Carona's proposal.

Carona said there's no way around the need for new funding to relieve congestion and meet the transportation requirements of the state's growing population.

No cash by 2012

As he did during this year's legislative session, Carona noted that the highway fund at the Texas Department of Transportation will be out of money for new construction contracts in 2012.

During the session, Carona pushed unsuccessfully for local-option funding options after, he said, “current leadership made clear that there would not be support for a statewide increase at this time.”

The problem must be faced head-on in the 2011 legislative session, he said.

“By 2012, there will be no money left at TxDOT to build new roads. We'll only have enough money to maintain what we presently have. That is mismanagement on the part of the Legislature, and a situation that has to be corrected before we adjourn the next legislative session,” Carona said.

“The problem could be addressed in a responsible fashion if we raised the tax by 10 cents a gallon and then provided some sort of modest future indexing for inflation,” he said.

Any other options?

Carona said he's willing to listen to any other ideas, but added, “At this point, there's just no other solution to it.”

In order for such an idea to pass, however, Carona said it would need the support of the governor, lieutenant governor and House speaker — noting tax increases must originate in the House.

Perry — who has talked often of the need for more transportation funding and pushed what proved to be an unpopular plan that included a strong component of private investment in toll roads — sounded anything but supportive.

“Going to Lubbock, Texas, and telling ‘em ‘Hey we're gonna raise your gas tax out here a dime so they can build some more roads in East Texas' is generally not a real good political sell,” Perry said.

“So it's there, and it's talked about, and it'll probably have about the same result as it has had in the last four or five years, and that's not a very ... warm welcome in the Legislature.”

The 20-cent-a-gallon state gasoline tax hasn't been raised since 1991.

Democratic candidate for governor Hank Gilbert has called for an 8-cent-a-gallon increase with automatic annual increases.

Budget pressures

The need to raise money for transportation is just one of the budget pressures facing lawmakers when they next write a two-year state budget.

The current $182 billion budget includes $12 billion in federal stimulus money that's not expected to be available next time.

In addition, a school funding measure has left the state picking up a bigger share of public education spending than it did years ago.

State revenues also are being dampened by the recession.

Sales and natural gas tax collections together fell more than $1 billion short of projections in the 2009 fiscal year, which ended Aug. 31.

State Comptroller Susan Combs said Friday that despite the slide, she doesn't expect that she'll need to change the revenue estimate for the current budget — at least not at this point.

Combs said spending also was down in fiscal year 2009, offsetting the lower tax collections. Combs said she wants to see what happens with holiday shopping and revisit the figures in February or March.

pfikac@express-news.net

© 2009 Houston Chronicle: www.chron.com

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"Why would the feds want to promote the sale of our public roads to private corporations?"

End the grip of BIG MONEY on Transportation Policy

11/12/09

Terri Hall
San Antonio Transportation Policy Examiner
Examiner.com

We applaud the Greasing the Wheels report released today by TX PIRG because it affirms what we already knew...that the road lobby is driving transportation decisions and policy not the taxpayers.

In California, Governor Arnold Schwarzenegger tried to oust his own transportation board appointee for objecting to the Governor's proposal to sell a CA freeway to private investors. His appointee called the deal "too risky for taxpayers." In Idaho, the Governor had the Director of their DOT fired in a "political powerplay to help Governor Butch Otter and his big campaign donors." Her crime? Saving the taxpayers money by steering money away from high-paid outside consultants back to the highway department who can do the work far cheaper.

Even worse, federal transportation agencies are using OUR taxpayer money to both lobby to and waive provisions in the law to handover our public highways to the private sector. Most of these changes were authorized by the Bush Administration, but the Obama Administration has allowed this controversial policy to stay in place, which is public private partnerships (PPPs, also called CDAs in Texas). PPPs are the most expensive way to fund roads.

A recent article in the Bond Buyer exposed that: "...there are a number of tolling and P3-related programs administered by the Federal Highway Administration. One is the Special Experimental Project Number 15, or SEP-15, which gives the transportation secretary the ability to waive certain rules of the current transportation law on a case-by-case basis. The program allows the FHWA 'to experiment in four major areas of project delivery' including project finance, and one of its goals is to promote P3s, according to the FHWA."

Why would the feds want to promote the sale of our public roads to private corporations? To enrich the highway lobby who's been greasing the wheel.

Perry's behavior in Texas has been equally deplorable: stacking his commission with goons who rabidly promote the sale of TX infrastructure to his cronies, payments of up to $3.6 million to losing bidders on CDAs, withholding highway funding from local communities until they capitulate to tolling existing freeways, illegally hiring registered lobbyists with taxpayer money to lobby to relax and even remove prohibitions on tolling, the revolving door between his office and Cintra lobbyist Dan Shelley, the list goes on and on.

When our elected representatives are bought and paid for by road building interests, how can the citizens stand a chance? It's no wonder why our politicians are so tone-deaf to the public outcry against enormously expensive, unwanted toll roads and privatization schemes that will break the backs of the middle class. It's time to clean-up Texas politics, By exposing the link between the BIG MONEY and the types of road projects that get priority, the taxpayers can then hold their politicians accountable in the ONE way they can...at the ballot box.

We also think it's time to consider TX PIRG's recommendation of publicly-funded elections. It may be the only way to shatter the vice grip special interests' wield over our politicians and public policy.

Transparency is the first step toward accountability. May this report and our efforts to shine the light on the today be the first step toward citizen-driven transportation policy in the great State of Texas!

© 2009 Examiner.com: www.examiner.com

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"The public is chafing at rising tolls and the spread of toll roads across the region."

Oversight for NTTA

11/11/09

Editorial
The Dallas Morning News
Copyright 2009

State lawmakers have an obligation to make sure the business practices of the North Texas Tollway Authority do right by the public.

The NTTA began in 1997 with a narrow focus: Take over operation of one toll road and plan a second. Its business practices paralleled that limited scope. The agency started with a small in-house professional staff and contracted out nearly all of the costly engineering and legal work to outside firms.

Today's NTTA has a breadth of activity that includes projects in operation, under expansion, under construction or on the drawing boards across all four counties of its service area.

Yet NTTA's business model has changed little from when it took over from a successor agency in 1997. Outside contractors and consultants now cost tens of millions of dollars more a year than if the agency had the professional work done in house, as reported by Dallas Morning News transportation writer Michael Lindenberger.

With the public chafing at rising tolls and the spread of toll roads across the region, state and local transportation leaders must demonstrate a stewardship of transportation dollars that is beyond reproach. To their credit, the NTTA's top leaders acknowledge that change has been overdue, and they have begun bringing on more staff and curtailing payments of marked-up services to outside contractors.

But like all public agencies, the NTTA would benefit from greater outside analysis of its operation.

This year, state lawmakers filed measures that would have put the agency under review in Austin. The provisions passed the House but died later. Lawmakers ought to take up the matter again in the 2011 legislative session.

The NTTA is a state agency, but since its budget relies on toll revenue – and not state appropriations – the agency is not subject to review by the state auditor.

Still, the NTTA typically uses significant amounts of state fuel-tax dollars and public right of way to build its toll projects. That gives the taxpayer a legitimate stake in the matter.

Legislation requiring the State Auditor's Office to review the NTTA's business practices is one option for added scrutiny. Another is a review by the Texas Sunset Commission, a process that subjects most state agencies to a thorough going-over every few years – even to the point of addressing whether the agency needs to exist.

The sunset process could be dicey, since the NTTA performs a vital function and has ongoing obligations to bondholders for billions of dollars. But the sunset process still could yield solid recommendations on how to improve efficiency.

Members of NTTA's nine-member board are appointed by county commissioners courts in the agency's service area. But they are not legally answerable to commissioners or voters.

Elected state lawmakers should step into the picture and ensure the taxpayer's interests are properly represented.

© 2009 The Dallas Morning News: www.dallasnews.com

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"New Texas law is one of a long series of eminent domain reforms that fall short of actually forbidding the kinds of abuses they supposedly target."

Texas’ Amendment 11: Another Post-Kelo Eminent Domain Reform that Falls Short

11/10/09

Ilya Somin
The Volokh Conspiracy
Copyright 2009

It hasn’t gotten much media attention, but last week, Texas voters overwhelmingly approved Amendment 11, an eminent domain reform measure that purports to ban “economic development” takings of the kind the Supreme Court upheld in Kelo v. City of New London.

Texas badly needs stronger protection for property rights, since it has a long history of eminent domain abuse, including recent examples documented by the Institute for Justice (the libertarian public interest firm that represented the property owners in Kelo) in this report.

Unfortunately, the new Texas law is one of a long series of eminent domain reforms that fall short of actually forbidding the kinds of abuses they supposedly target.

The amendment does forbid the taking of property for “the primary purpose of economic development or enhancement of tax revenues.” , But it continues to permit condemnations in areas with “urban blight.”

And, as I document in this article (pg. 2124), Texas is one of many states where the definition of “blight” is so broad as to include virtually any property that the government might want to condemn. Indeed, Texas’ definition counts as “blighted” any area that, due to a wide range of possible causes, creates an “economic or social liability to the municipality” where it is located.

This includes any area that creates an “economic . . . liability” because of insufficient development. Furthermore, the new Amendment still allows the power of eminent domain to be wielded by private organizations if they are “granted the power of eminent domain under [state] law.”

Amendment 11 is a small improvement over Texas’ previous almost completely toothless post-Kelo reform law (which I discussed in this article, pp. 2124, 2135–37).

The major is that “blight” now has to be shown on a property by property basis. Previously, local governments could simply declare an entire area blighted and then condemn any property within it, even if there was nothing wrong with that particular tract.

However, the impact of this improvement is likely to be minor, at best, given the ease of proving the existence of proving “blight” under Texas’ definition of the term. Amendment 11 also closes the previous law’s loophole allowing takings for “community development.” However, the broad blight exemption undercuts this improvement as well. “Community development” takings can easily be couched as “blight” takings.

Why did Amendment 11 turn out to be so ineffective? One possible explanation is that, under the Texas Constitution, a proposed amendment has to get the approval of two thirds of the state legislature before being submitted to a popular referendum. In my recent article on post–Kelo reform, I found that eminent domain laws that go through the state legislature are far less likely to impose meaningful constraints on condemnation than those that are enacted by an initiative process in which citizen groups can place propositions on the ballot directly.

State legislators have strong incentives to water down eminent domain reforms so that takings that benefit influential interest groups can continue. And widespread political ignorance makes it difficult for voters to tell the difference between laws that actually ban economic development takings and those that merely pretend to do so, while allowing them to continue under a different name.

© 2009 The Volokh Conspiracy: www.volokh.com

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"I seriously feel like all of our cooperative efforts ... are now resulting in a stab in the back."

DFW Leaders Fuming Over Lack Of I-35 TxDOT Funding

11/11/09

Jack Fink
CBS 11 News (Dallas /Fort Worth)
Copyright 2009

LEWISVILLE-- There are some things that are just out of your control. We all pay a tax every time we fill up our gas tanks. Part of that tax is supposed to help improve existing North Texas roads and build new ones.

Perhaps no road in North Texas could use more help than Interstate-35 -- particularly in Tarrant and Denton counties.

While the Texas Department of Transportation (TxDOT) has earmarked an impressive chunk of change for an I-35 widening project, there's one small problem – the section of I-35 is in Waco. The North Texas sections of the interstate aren't getting a dime for expansion.

Every morning, April Perez can plan on sitting in traffic on I-35E in Lewisville for at least 20 minutes. "It's horrible," she said. "It's the only way to get to work. It'd be nice if we had some relief."

Under a new plan by TxDOT, there's no relief in sight for Perez or the hundreds of thousands of other commuters along I-35E in Denton County or I-35W in Tarrant County.

TxDOT is proposing to spend $1 billion to build new lanes on I-35 in the Waco area. The new construction would run from Hillsboro to the Killeen area. "We could use that here in the DFW area," said Perez.

The Dallas/Fort Worth area is only getting one-tenth of the amount the Waco area is from the state's general fund. The fund consists mostly of sales taxes. The money earmarked for North Texas isn't for new expansion, but mostly for repairs.

The Waco widening project has some DFW leaders fuming. "As a region, we're being punished. We're being punished because we went along with TxDOT's recommendations and plans and what they told us to do," explained Senator Wendy Davis, D-Fort Worth.

The TxDOT plan called for more toll roads. Just about every new or newly expanded highway in our area is either a toll road or will have some toll lanes built next to free ones.

In return for agreeing with the plan, the state promised to give priority to future North Texas roads.

Now area leaders accuse TxDOT of going back on its word. "I seriously feel like all of our cooperative efforts and innovative thinking is now resulting in a stab in the back," Denton County Judge Mary Horn said with frustration. "And I'm not very happy about it."

TxDOT is spending most of its general fund money in Waco even though the area has much less traffic than North Texas. The average daily traffic on I-35E from Denton down to Lewisville is 126,000 vehicles. On I-35W from Fort Worth down to Burleson, the average daily traffic is 120,000 vehicles.

Comparatively, on I-35 in Hillsboro to Waco the average daily traffic is about 60,000 – less than half of either section in North Texas.

TxDOT officials say they have to look at the interests of the entire state. "We have to move goods and people from here to there in lots of cases and we can't neglect that area," TxDOT spokesman Mark Pettit said, speaking of the Waco area.

That logic doesn't sit well with April Perez. "They need to get out with the other working people at 8 a.m. and sit in traffic with the rest of us and see what needs to be done."

TxDOT says the legislature developed the criteria to decide which projects would be eligible for the general fund revenues. And TXDOT says I-35E in Denton County wouldn't be eligible because the expansion plans for that part of the highway include some toll lanes. TxDOT says projects with toll lanes aren't eligible.

There is no money at all to expand I-35W in Fort Worth.

The Texas Transportation Commission, appointed by Governor Rick Perry, will be voting on TxDOT's controversial plan next week.


© 2009 CBS TV: www.cbs11tv.com

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"This shows the folly of redevelopment projects that use massive taxpayer subsidies and other forms of corporate welfare and abuse eminent domain."

Pfizer abandons site of infamous Kelo eminent domain taking

11/9/09

Timothy P. Carney
Washington Examiner
Copyright 2009

The private homes that New London, Conn., took away from Suzette Kelo and her neighbors have been torn down. Their former site is a wasteland of fields of weeds, a monument to the power of eminent domain.

But now Pfizer, the drug company whose neighboring research facility had been the original cause of the homes' seizure, has just announced that it is closing up shop in New London.

To lure those jobs to New London a decade ago, the local government promised to demolish the older residential neighborhood adjacent to the land Pfizer was buying for next-to-nothing. Suzette Kelo fought the taking to the Supreme Court, and lost. Five justices found this redevelopment met the constitutional hurdle of "public use."

The Hartford Courant reports:

Pfizer Inc. will shut down its massive New London research and development headquarters and transfer most of the 1,400 people working there to Groton, the pharmaceutical giant said Monday....

Pfizer is now deciding what to do with its giant New London offices, and will consider selling it, leasing it and other options, a company spokeswoman said.

Scott Bullock, Kelo's co-counsel in the case, told me: "This shows the folly of these redevelopment projects that use massive taxpayer subsidies and other forms of corporate welfare and abuse eminent domain."

© 2009 Washington Examiner: www.washingtonexaminer.com

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Cintra en Canada: Death, toll taxes, ghost riders and "mafia shakedowns."

Anger over Hwy. 407 bills

Star readers tell of huge bills sent years after supposed trips

More than 200 readers responded with angry emails after The Fixer asked about billing problems with the 407 Express Toll Road. Some simply gave up fighting and paid the bills.

Read more about 407 ETR Toronto's privatized Spanish toll road [HERE]

11/9/09

By Jack Lakey The Fixer
Toronto Star
Copyright 2009

Invoices for thousands of dollars – mostly interest fees – have been received by hundreds of drivers years after charges were incurred for using the 407 Express Toll Road.

Some got invoices intended for long-dead spouses or parents, in one case billed to a plate that's been mounted on a garage wall since it was cancelled nearly five years ago.

Others said they were far away from Ontario when they were supposedly driving on the toll road.

More than 200 readers responded with angry emails after we asked about 407 billing problems.

Many drivers who tried to fight unfair bills gave up and paid, rather than risk being denied a licence plate renewal – an unparalleled power included in the 99-year lease granted to the private consortium that runs the 407. (In other words: Pay what we say or you don't drive your vehicle.)

One email compared 407 billing to a "mafia shakedown."

Lisa Thompson got a 407 invoice in September billed to a licence plate that belonged to her father, who's been dead for two years and last held an active plate in 2004. The trip allegedly occurred Aug. 9.

The bill said they couldn't record "either the entry or the exit point" for the mystery trip, but still demanded payment of $6.58, Thompson said. She was also asked to fax a copy of a death certificate as proof of his demise.

"If the 407 could not record the entry or exit point," she wonders, "how could they send a bill to a deceased man with expired plates?"

Robert Kelly said he got a bill last February for $4,297.25, including $194.97 in fees and $2,813.99 in interest, on $1,288.87 in toll charges.

"I have not even owned a car since 2002 or 2003, and even then I was only on (the road) once when it was free," Kelly said.

"I am in a nursing home now on a fixed income and my inquiries have been ignored. I don't know what to do."

The 407 says there is nothing wrong with its billing methods, insisting customer service is a priority topped only by safety.

"It is not an indication of a billing problem," 407 spokesman Steve Spencer said of the complaints we received, adding he could not discuss individual cases.

"Your article did ask for people to tell you their bad stories," he noted.

Customers have made more than 500 million trips on the 407 in the past five years, said Spencer, and "the great, great majority of those drivers are happy with our service.

"We're not saying we are perfect. ... But then if the customer does have an issue, we want them to give us a call and we'll try to sort it out."

Of the complaints we received, which were forwarded to the 407, only a few readers said the company's dispute resolution process cut them a break. Others got nowhere, even after appealing to the 407 ombudsman.

Gary Stracina says his overdue 407 bill was sent to collection more than 10 years ago. He had paid it, "but the money was never applied to my account," he writes, "and now, with interest on a dead account, I owe $1,200.

"Numerous trips to their offices on Steeles with a copy of the cashed cheque and promises to resolve the situation have led nowhere. They did, however, mail me a file one-inch thick with invoices they claimed I received."

The most common complaint, like Stracina's, is that a bill arrived out of the blue, demanding an eye-popping amount from drivers certain they owed no money, with no supporting documentation on the invoice.

The 407 charges annual interest of 26.82 per cent on unpaid balances, as well as collection fees and other charges that can swell the total enormously.

Some readers suggested the 407 is in no hurry to collect on outstanding balances, since the clock is ticking on huge interest rates and the company can simply bill later with the potent threat of licence plate denial.

"The 407 billing system sucks," said Shirley Poon. "It sounds like it will suppress the billing and randomly send out the bill after X number of years so they can claim a ridiculous amount of interest."

"My blood comes to a slow boil every time I try to deal with the arrogance at 407 ETR," said Darko Mesich, who recently received bills from early 2005 that grew from $79 to $246, "with no activities besides interest charges and one enforcement fee of $18."

Like many others, including people who have lived at the same address since before the 407 existed, Mesich said he didn't get any bills until the recent invoice, while the 407 maintained he was repeatedly billed but didn't pay.

Erin Lumley said she got a $216.34 invoice last January for an unpaid charge of $5.97 from 2000, adding that she had reported her changes of address in between to the provincial transportation ministry, "but never had an invoice sent to my correct address."

She was told to pay $55 and that an investigation would be done on her account. "In September I received a notice saying the ministry has been instructed not to issue me new plates and my account was being sent to collection."

Spencer says the 407 sends out an unpaid bill for at least a few months and eventually stops mailing them if it isn't paid, but didn't explain why it often stops billing for several years, then manages to find the customer and send a new bill.

"We really do try to get a hold of them as best we can," he said. "When we're getting no response from an invoice, so it's gone out and there's an amount owing still, we actually go to the MTO and we check every month to see if there's been a change in the address."

It may come as a surprise to users that the 407 considers anyone who has used the road even once to have entered into an "implied contract" requiring drivers to promptly notify it of all future changes of address, licence plate or vehicle.

"A new account is opened each time a new licence plate travels on 407 ETR," said Spencer, who then referred to a standard notice on all invoices: "New plate? New address? New car? Remember, we don't receive automatic updates from the Ministry of Transportation, so keeping us up to date will ensure you receive your 407 ETR bill promptly and avoid interest or collection activity."

© 2009 The Toronto Star: www.thestar.com

Death, taxes and now, 407 bills

Woman incredulous after highway bills her late husband for trips taken after his death

Diane Tobin says the 407 took money from her bank account to pay for bills supposedly accumulated recently by her late husband, who died in 2004.

11/9/09

By Jack Lakey The Fixer
The Toronto Star
Copyright 2009

Diane Tobin's husband died in 2004, but he's taken up driving on the 407 this year, according to bills sent to her by the toll road.

His licence plate was cancelled in early 2006 and has since been tacked to the wall of their son's garage in Oshawa, but bills from the 407 say he got on several times at Brock Rd. in June and July and cruised over to Airport Rd.

"I'm pretty sure he's dead," said the 64-year-old Tobin, laughing. "He was cremated and we buried his ashes, but he had a real sense of humour. Maybe he's having some fun with me."

When she didn't pay, the 407 twice went into her bank account and withdrew $40 to cover the ghostly trips, even though she thought his automatic-billing arrangement with the 407 was cancelled when she returned his transponder by registered mail soon after he died.

Frank Tobin was battling cancer in 2004 and had to drive from their Port Perry home to Sunnybrook hospital. The 407 was the quickest route, so he got a transponder and arranged automatic withdrawals from their joint bank account.

She thought Frank's business with the 407 had ended with his death, until an invoice billed to his cancelled plate arrived last summer for $13.61.

Incredulous, she got on the phone to the 407. "The guy said, `Don't worry, we'll take care of it,' but later on I got my bank book updated and saw that they'd taken it out of my account."

A second bill for $26.77 showed up in September, she said, which claimed Frank had twice driven from Brock to Airport Rd.

"My son went out to his garage to check, but the plate had been there all along." After the 407 went into her bank account a second time, Tobin hired a lawyer and complained to the Bank of Montreal, which managed to retrieve the cash. Even after the money was recovered, she says, 407 tried to go back into her account and take it again, which was blocked by the bank. Only after the lawyer intervened did the 407 concede it had erred and had no right to take money from her account, she said.

"They offered me the $40 back and another $150 for my trouble, as long as I signed a waiver saying I wouldn't come after them legally and wouldn't talk to anyone about it." She didn't take them up on the offer.

ROAD RANTS

When I first moved into my apartment, July/03, I received mail from for 407 ETR for (a deceased former tenant) and I returned it to them stating the person had died. I am still getting mail for this person from them.
– Alma Anderson

They said I had a bill for $20 from years ago, which they say I didn't pay. Now, with interest, it was $68. In fact, I don't take the 407. Ever. Never did. I tried to argue with them, so they assessed me more late-payment charges, bring the total to over $80.
– Zev Berkovich

One day they sent me a mystery bill for $5 and change. ... I sent them a cheque for the $6. A few weeks later they sent me a cheque back for the same amount (with no explanation).
– Julius P.

We returned our transponder some years ago and, at the time, there was a credit balance of $3 or so on our account. For five years following return of the transponder, we received an invoice EVERY month saying we had a credit balance of $3.
– Gaynor Reader

I finally after years of being a 407 customer sent back my transponder last year and paid my bill. Suddenly last month, I got a bill for, get this, 34 cents!
– Doug Benavidez

I received a mystery 407 bill this summer dating back 5 years for $200! I called and according to their records the unpaid bills stem from months when I wasn't even in the country: I was in Germany on exchange for a full year.
– Karen Brusso

We bought a new house and inherited the 407 bills of the previous owner. That person used the 407 daily, accumulating bills of many thousands of dollars. In the meantime, those bills all kept coming to us – every month. This went on for over three years ... The only way I was finally able to resolve the issue was to contact the ombudsman.
– Anita Thomas

I received numerous bills for a plate number that was sitting on a shelf in my garage. After numerous calls they sent me photos of the vehicle in question. It was a BMW. Never had one. I took the plates to the MTO. The person had modified his plate with blue paint.
– Paul Mackie

© 2009 The Toronto Star: www.thestar.com

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Contract engineering firms and lawyers benefit from NTTA's creeping toll tax bureacracy and ballooning debt

Outside contract work taking bigger toll on North Texas Tollway Authority

11/8/09

By MICHAEL A. LINDENBERGER
The Dallas Morning News
Copyright 2009

The North Texas Tollway Authority spends hundreds of millions of dollars each year to design, build and repair its roads, to market itself, and to solve its legal problems.

But only a fraction of the hundreds of professionals who perform those tasks actually work for the toll authority, whose impact on North Texas drivers has soared in the past few years as it has increased its debt to about $7 billion to vastly expand its network of toll roads.

Instead, NTTA relies on a handful of gold-plated firms that for decades have given that work to their own employees, routinely charging NTTA three to four times what a staff member might earn to do it.

Hundreds of firms are paid to do work for NTTA each year, including some small outfits and some that are national engineering powerhouses.

But five legacy firms, each of them among the nation's best at what they do, have held key roles for NTTA since long before it was created in 1997 out of the old Texas Turnpike Authority.

Three of those firms have worked for the toll authority and its predecessor since the 1950s, and one since 1962. NTTA's financial adviser, RBC Capital Markets, a subsidiary of Royal Bank of Canada, is the newcomer, working for the authority since 1983.

National toll road behemoth HNTB has been the agency's general engineering consultant since the authority's creation in 1953 and occupies an office building owned by NTTA across the parking lot from the authority's sprawling Plano headquarters. It billed NTTA $30 million last year.

And for more than 50 years, when NTTA has needed a lawyer, it has called one of the most prestigious, and most expensive, law firms in Texas, Locke Lord Bissel & Liddell. One of the founders wrote the statute to create the turnpike authority in 1953 to build the Dallas-Fort Worth Turnpike, which is now part of Interstate 30. The business has stayed with the firm ever since.

The long tenure is more than just institutional. Senior partner Frank Stevenson has worked on NTTA legal matters for 29 years and been its outside general counsel since 1995.

"There is an incredible amount of personal loyalty to NTTA here," Stevenson said. Beyond that, his firm has developed exceptional expertise, he said. "We're the best there is at this. We just are. We're really, really good at this."

Excellence at a price

Those long-standing relationships provide NTTA with unquestioned expertise, flexibility to ramp up during an emergency and to cut staff loose during a slow time, as well as guaranteeing deep familiarity with its work.

But they come at a steep price.

That's become especially so during the last couple of years, as elected officials in North Texas have increasingly turned to tolling as a way to pay for new highways, instead of relying on gas taxes and the state Department of Transportation. As NTTA's portfolio of projects has grown, it has hired relatively few employees and instead has increased its spending on outside firms.

Last year, for instance, Locke Lord billed NTTA nearly $7.7 million in legal fees, three times more than it billed in 2006. About $3 million paid for NTTA's aggressive pursuit of right of way, a program that has seen it go after 200 parcels of property for its planned expansions. As NTTA's borrowing soared, payments to McCall Parkhurst, its bond counsel since 1955, jumped to $3.4 million, up from $233,148 just two years before.

But NTTA also paid millions for other legal chores, many of which could have been done far more cheaply by smaller firms or by a lawyer on the NTTA payroll.

Until last month, NTTA had no attorney on staff. It hired a new general counsel last month at a salary of $215,000, and both NTTA officials and Stevenson said legal bills should be much smaller next year as a result.

On the engineering side, NTTA, like all heavily leveraged toll entities, is required by agreements with its creditors to employ a general engineering consultant, usually a top-notch design and construction management firm that oversees much of its road work. But after nearly 60 years of working for NTTA, HNTB's job duties have grown far beyond than what is required by the agreements.

Currently, HNTB provides senior engineers, including managers, who direct nearly all aspects of some of NTTA's top projects.

It also keeps scores of other employees on call, many of whom fulfill routine roles. For instance, it has the equivalent of five full-time employees to augment NTTA's communications staff.

That's a form of mission creep that NTTA executive director Allen Clemson said the authority is reviewing. Some of its largest contracts have grown to include work that smaller, less expensive firms could probably do easily – a fact that Clemson and his bosses on the board of directors have acknowledged.

"Here's how it works," said Clemson, who five months ago became the agency's fifth top boss in as many years. "Somebody here needs something done, and they get on the phone [to HNTB]. Maybe they need a map or a glossy presentation, and need something produced quickly. Well, pretty soon some of the brightest, most creative people in the business come across the street and start working on it. That happens too much."

It's not the companies' fault that NTTA had grown too lazy in its use of them, NTTA Chairman Paul Wageman said.

"It's our fault," he said. "We needed to find a competent, experienced public administrator to the run the agency the way it ought to be run. I think we've done that. We're maturing as an agency. Candidly, it may not have been happening as quickly as it should have. But it now commands the full attention of our board and our staff."

Adding it up

How expensive are consultants? In NTTA's case, very.

By Clemson's estimate, much of the work NTTA pays to have done by someone else costs about three times more than if NTTA did it.

It adds up in ways both big and small.

In August, for instance, two HNTB communications staffers assembled routine packets that board members receive before each meeting – booklets that sometimes are hundreds of pages long and explain each item on a board meeting's agenda.

One HNTB employee, whose salary is about $38 an hour, spent 21/2 hours putting the packets together, and another, paid about $20 an hour, spent nine hours, including some time being "on call for packet assembly."

Together, they were paid $273 to assemble the packets, but when the bill got to NTTA, adjustments for profit and overhead – standard multipliers common in most consulting contracts – meant that the bill totaled $757.

At the other end of the scale, NTTA pays engineering firms such as HNTB and others to provide top-paid professionals to build, manage and maintain its roads. The most senior engineers earn up to $150,000 a year or more, but when NTTA pays their employers for their time, the bill for each can reach nearly a half-million dollars per year.

In all, NTTA relies on the full-time equivalent of about 150 professional engineers to manage its workload, though that number can jump or drop, sometimes with little notice.

It has eight engineers on staff.

Longtime NTTA executive Rick Herrington, who recently left to rejoin his old firm, HNTB, to help lead its toll road operations nationwide, defended NTTA's approach to contractors.

He said that when the new agency was formed out of the old turnpike authority in 1997, its mission was smaller, and the officials who created it wanted to avoid creating a big, costly agency. "They didn't want to create a miniature TxDOT," he said.

Instead, the NTTA followed a model used in dozens of other toll authorities across the country. It kept the professional staff small and brought in outside firms capable of quickly adding – or shedding – workers and expertise as required.

"We could ramp up our staff, and then bring it down," Herrington said. And until the State Highway 121 deal, NTTA had little need for a large, permanent engineering staff. After all, its responsibilities included maintaining the aging Dallas North Tollway, still its largest cash generator, and building the Bush Turnpike.

It's mostly been ramping up since 2007, when NTTA agreed to borrow about $5 billion to build the Highway 121 toll road, a deal that also required it to pay Texas some $3.2 billion in cash for the right to collect tolls on the road forever.

It also promised local elected officials that it will aggressively build a growing roster of other costly toll roads.

When Clemson arrived earlier this year, he was surprised to see how few engineers NTTA employed, and how big its payments to contractors were each month.

With encouragement from the newly expanded nine-member board of directors, he began to wonder whether NTTA could get by with hiring more employees who could perform the routine tasks it pays some of the most expensive firms in the industry to do.

"The numbers are big, very big," he said. "Sometimes you need an all-pro professional, and sometimes we just need a good solid professional."

Changes ahead

Some changes already are being made. By 2010, NTTA plans to hire about 25 positions, including 10 information technology staffers, a few engineers and a landscape architect.

After paying those new salaries, it expects to save nearly $4 million in fees to contractors.

"There is a palpable effort being made to see that the NTTA has the staffing in place to perform what are seen as areas of core competence," said Stevenson, the Locke Lord lawyer who said the new general counsel will reduce payments to his firm significantly.

"In the cases where NTTA can look at what its contractors are doing and say, 'We're always going to need this guy doing this job,' then it makes sense [to bring it in house]. I applaud that, and it's something I've told them they ought to be doing."

But the savings aren't likely to be seen by drivers who are just getting used to higher toll rates. Next year, NTTA expects its revenue to be $410 million, including $377 million from tolls.

Its biggest expense – some $158 million – will be to service its fast-growing debt load. It will spend about $102 million on operations and maintenance, and an additional $128 million for capital improvement projects, maintenance reserve and other items.

By 2013, NTTA expects to spend about $400 million a year to service its debt.

Contracts up for grabs

Clemson said he has not yet completed a review of how NTTA spends its money. He said some additional staff members may be brought in house in the future.

But the biggest opportunity for change arrives next year, when each of the five firms must compete for new five-year contracts.

When they bid, they will bring enormous advantages to the table. Making a change to that roster would be difficult, and at least one attempt by NTTA board members to do so has failed in the past.

But Clemson said he wants NTTA to approach the new contracts with a new focus on efficiency. That will include unbundling some of the biggest contracts to make sure that the top-priced firms are only used for the sophisticated, highly specialized work that requires top dollar.

Even some of the professional work, such as more routine legal and engineering help, could be broken off into smaller contracts. That could have the bonus, board members said, of helping NTTA improve the diversity among the firms that it pays to do its work, including adding firms owned by minorities or women and companies in Tarrant County.

"I am new at this organization," Clemson said. "I don't have a single relationship with anybody in the law firms or the engineering firms. So we are going to make sure that our request for proposals are properly structured, and cover the body of work that we need to have, and don't have a bunch of tricks in them. I want to encourage, and hope to get, good firms to compete. We will evaluate them in very open and transparent way and see what happens.

"I would think that of all the times these contracts have been in place, that this is a very likely time for changes to happen."

© 2009 The Dallas Morning News: www.dallasnews.com

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"NTTA has always relied on a small number of legal and consulting firms."

NTTA'S LEGACY FIRMS

11/8/09

The Dallas Morning News
Copyright 2009

NTTA has always relied on a small number of legal and consulting firms to provide manpower for its projects.

HNTB

Founded in 1914, and the developer of the first modern turnpike, HNTB is a giant engineering and architecture firm that serves as general engineering consultant for dozens of toll authorities across the U.S. It has $800 million a year in sales, employs 3,700 workers and has more than 60 offices. It has worked for NTTA since 1953.

RBC Capital Markets

RBC Capital Markets has been NTTA's financial adviser since 1983. It is a subsidiary of Canada's largest company by market share, Royal Bank of Canada.

Wilbur Smith Associates

Since 1962, Wilbur Smith Associates has been NTTA's traffic and revenue engineer, studying population, traffic and economic trends to forecast likely traffic and toll revenue for each NTTA project. NTTA relies on those projections to borrow billions of dollars to build its roads.

Locke Lord Bissell & Liddell

Locke Lord Bissell & Liddell and its predecessor firms have been NTTA's outside general counsel since the agency's founding in 1953. Charles Purnell, a partner in one of the predecessor firms in Dallas, is credited with writing the statute in 1953 that formed the Texas Turnpike Authority, which became the NTTA in 1997.

McCall Parkhurst & Horton

McCall Parkhurst & Horton has been NTTA's bond counsel since 1955. Founded in 1919, the firm has three Texas offices and focuses exclusively on public finance law. It was the first Texas firm to issue an approving opinion for a bond issue in Texas that was accepted by the national financial markets.

© 2009 The Dallas Morning News: www.dallasnews.com

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE