“There are a lot of eyes watching us. And there is a lot of chatter in Austin, chatter that is being backed up by legislative activity.”

NTTA pushing back against bills that would sharply reduce fees on unpaid tolls

3/3/11

By MICHAEL A. LINDENBERGER
Dallas Morning News
Copyright 2011

North Texas Tollway Authority officials are pushing back against legislation filed in the Texas Senate and the Texas House that would dramatically reduce fees it can impose on drivers who fail to pay their tolls.

NTTA collects millions of dollars in fees each year from drivers who ignore bills for at least 75 days, and has insisted that its practice of attaching a $25 fee for every unpaid toll transaction is both necessary and required by state law.

Last year, a review by the NTTA board failed to end the practice, despite opposition by board member Victor Vandergriff, who has since become chairman. And the authority has defended the practice in federal court against ongoing claims by four customers who say the fees are unconstitutional.

All that could change if legislation filed by Sen. Jane Nelson, R-Flower Mound , and Rep. Diane Patrick, R-Arlington, succeeds in Austin.

The bills, which are identical, would require NTTA to send one notice each month containing all the unpaid tolls a customer has incurred that month. NTTA would be permitted to add just a single $25 fee to the invoice, and give customers 30 days to pay the past-due amount.

Customers who don’t pay within that time could be guilty of a traffic violation, and subject to a court-imposed fine of up to $250. They would be liable for only one violation for failure to pay all the tolls incurred in a single month.

A spokeswoman for Nelson said the senator was unavailable to comment on the bill Thursday.
NTTA government relations director Carrie Rogers told board members Thursday that she had made clear to Nelson that the bill as written would threaten the “integrity of our system.”

Her boss, executive director Allen Clemson, said in a subsequent interview that the legislation as written would cost NTTA about $20 million annually.

Most NTTA customers use a TollTag, and therefore pay their tolls in advance. But for those who do not, the only way to pay their tolls is to have their license plate photographed as they pass through checkpoints. Once a driver has incurred 30 toll transactions, or 30 days pass, NTTA sends the owner of the car a bill for just those transactions.

If they aren’t paid within 45 days, the authority attaches an $8.25 fee to each of what might be dozens of unpaid transactions on a single unpaid invoice. If the owner fails to pay within another 30 days, the account is sent to collections and each one of those fees roughly triples, to $25.
Some customers have reported fines of hundreds, and in some cases, thousands of dollars as a result of the way NTTA levees the fines per transaction.

That would change if the legislation becomes law, but Clemson said NTTA has more to worry about with the legislation than just the lost revenue it now collects. Only 8 percent of the authority’s 500 million annual transactions are unpaid, he said. That’s due in part, he said, to the strong deterrent provided by the stiff penalties.

Knowing that failure to pay a month’s worth of tolls only brings a $25 fine might encourage customers who pay their bills not to do so, he said.

“If we were to make changes and see that slipping from 92 percent to 90, or 85, then we would have problems,” Clemson said.

Vandergriff voted last year against keeping the basic fee structure in place. He lost 8-1, but he too said he’s concerned that Nelson’s legislation could have unintended consequences. Any lost revenues would have to be made up, he said, and if collections were to fall over time, it would be drivers who do pay who would suffer.

“We’d eventually be in the position of having to raise our rates,” he said. “And to me, asking people who already pay their tolls to absorb higher rates to cover those who don’t would be just as tragic as assessing the fees in the way that we already do.”

As result, he said the authority will continue to work with Nelson and Patrick aiming for a compromise bill, one that might include, for instance, lower fees but also a provision that unpaid toll balances would have to be paid before a driver could renew his or her vehicle registration.

Meanwhile, Vandergriff urged colleagues to take note that bills targeting NTTA practices are accumulating in Austin. Whether or not they ultimately pass, the lesson should be clear, he said. “There are a lot of eyes watching us. And there is a lot of chatter in Austin, chatter that is being backed up by legislative activity,” he said.

Both bills have been referred to committee and await a second reading.

SB 366: Would require toll roads to revert to free state roads once debt associated with their construction is paid off.

HB 593: Would empower the state auditor to audit NTTA as if it were a state department.

HB 1577: Would subject NTTA to review by the Texas Sunset Advisory Commission before the 2013 session.

© 2011 The Dallas Morning News: www.dallasnews.com

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Transportation Secretary LaHood says federal government sees no problem with tolling existing highways.

Transportation Secretary Ray LaHood: 'We believe in tolling,' says U.S. open to tolling existing interstates

3/2/11

By Michael Lindenberger
The Dallas Morning News
Copyright 2011

Officials want to add toll lanes to the highway between Dallas and Denton. But with Washington open to tolling existing interstate main lanes, too, and traffic bad on I-35E from Denton to San Antonio, it's only a matter of time before someone asks why Texas hasn't sought permission to make I-35E a toll road.

Would the federal government allow Texas to toll all the lanes on Interstate 35E between Dallas and San Antonio to speed up the hugely expensive (and badly needed) reconstruction of that interstate? It might. That's the only possible conclusion after remarks by Transportation Secretary Ray LaHood on Wednesday, in which he declared once again that Washington is big on toll roads.

To toll an existing interstate -- or to build a new one with tolls -- a state has to get permission from Uncle Sam, and Texas has never asked to toll Interstate 35E headed to Austin. And it's only fair to add that even the toll-road loving Texas Department of Transportation has set down in its own rules a prohibition of tolling existing highways.

This post shouldn't be read as an argument for tolling Interstate 35E. The very idea will send plenty of drivers into fits of rage -- and given that I drive that road often, I might be one of them. But policy makers continually say that every option ought to be on the table, and it's clear to me that with LaHood's comments today, this is at least an idea that will draw some discussion.

Money is tight across Texas, and North Texas officials are lining up to twist lawmakers' arms for permission to add toll lanes alongside I-35E from Dallas to Denton. Is it such a stretch to go one step further and ask Uncle Sam for permission to just toll all existing lanes between here and Austin or San Antonio.

Doing so would leave more state and federal tax money to spend to fight congestion in cities like Dallas.

Let's look at it another way: The Pegasus Project in Dallas is badly needed, and entirely unfunded. It's likely to cost billions, and it's layout makes it a terrible prospect for tolling itself. But what would leaders here say if the state offered to shift the tax dollars away from Interstate 35E's widening to the Pegasus Project in Dallas?

You couldn't take tolls off I-35E and use them in Dallas, since federal law requires that even if the FHWA grants permission to toll a road, all the money has to be used on that road itself.

What flushed these thoughts were comments made by LaHood, captured by my friend and former colleague Marcus Green of The Courier-Journal in Louisville. Green reports that LaHood said the federal government sees no problem with tolling existing highways. "We believe in tolling," LaHood was quoted in Green's story. "I think if states come to us with good plans, we will look at them very carefully."

LaHood was speaking to state highway officials at an AASHTO event, and was explaining that the government had turned down Pennsylvania's proposal to toll more than 300 miles of Interstate 80 only because the plan would have used the money for other needs, and not just to pay for improvements to the turnpike. (Rendell argued for tolls on existing highways when he was in Texas in January. You might remember, too, that Rendell was behind a $16 billion deal to privatize the Pennsylvania Turnpike, but it was state lawmakers who killed that deal.)

AASHTO gave Green a transcript of LaHood's comments. LaHood said: "Tolling has to be a part of the mix. You can raise a lot of money with tolls and if states decide that's the way they want to go ... as long as you're building more capacity, that's really what we're going to look at."

That's not exactly a shift in position. LaHood, a Republican, has been in favor of tolling since before President Obama named him transportation secretary. He's in favor of greater use of private equity to finance toll deals, too. Perhaps more to the point, federal law has for decades allowed tolling even on interstates, but with big restrictions.

There are two programs that allow tolling on interstates (and a third that deals with non-interstates), one for new interstates and one for reconstruction of existing interstates. Two of the three available slots under the program that allows the use of tolls to fund reconstruction or rehabilitation of an existing interstate are already taken. (Pennsylvania would have been the third.)

Only one state -- South Carolina -- has been approved to build a new interstate using tolls.

Kentucky and Indiana are jointly developing a $4 billion-plus project to put two new spans over the Ohio River at Louisville. I've followed it closely, and that project is as broke as most of the nation's not-yet-underway big-ticket transportation projects. It's at least even money those states will ask for permission to toll existing interstate bridges to fund the new bridge.

So, you know, there is still room for Texas to get on the list, but probably not for long.

© 2011 Dallas Morning News: www.dallasnews.com

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"All of these contract terms put the public safety and well being last and the investors’ profits first. "

If it sounds too good to be true...

What you need to know, but don’t, about privatizing infrastructure

3/2/11

Ellen Dannin
Pennsylvania State University
Copyright 2011

Remember the old joke about some sharpie who takes innocents by “selling” them the Brooklyn Bridge? By the time the poor guy finds out he was taken, the crook is long gone.

Flash forward to the present. States and cities are being told that they can fix their budgets and have money left over by leasing their infrastructure for 50, 75, or even 99 years. It sounds great, even miraculous. But we all need to slow down and do our homework, because the rule “If it sounds too good to be true, it is” still applies, and there are good reasons why state and local governments should not want any part of these deals.

The truth is that, rather than making money on just tolls and fees, private contractors make their money through big tax breaks and by squeezing state and local governments for payments for the life of the contracts.

In fact, tax breaks explain why the deals last generations. One tax break for leases that last longer than the useful life of the infrastructure allows investors to write off their investment in just over a decade. A second tax break lets private companies issue tax-free bonds to finance their deals. While tax-free bonds and tax breaks make it less expensive to finance these deals, the downside is that governments lose tax revenue. Losing tax revenue puts government budgets deeper in the red and worsens problems privatization was supposed to fix.

But that’s not all. Infrastructure privatization contracts are full of “gotcha” terms that require state or local governments to pay the private contractors. For example, now when Chicago does street repairs or closes streets for a festival, it must pay the private parking meter contractor for lost meter fares. Those payments put the contractors in a much better than the government was. It gets payments, even though Chicago did not get fares when it had to close streets.

Highway contractors can be entitled to payments if there is an accident on the highway and if the police, fire, and emergency crews do not give “appropriate” notice and do not perform their emergency work in a way that is “reasonable under the circumstances”. And, given the vagueness of those standards, states and cities may end up paying just to avoid the costs of litigation.

Highway privatization contracts also often include terms that forbid building “competing” roads or mass transit. Some even require making an existing “competing” road worse. For example, the contract for SR-91 in southern California prohibited the state from repairing an adjacent public road, creating conditions that put drivers’ safety at risk. A proposed private highway around the northwest part of Denver required that local governments reduce speeds and install speed humps and barriers and narrow lanes on “competing” roads to force drivers to use the privatized road.

And worst of all, these deals put a stranglehold on democratic decision making and the public interest. For example, Virginia decided to promote carpooling to cut down on pollution, slow highway deterioration, and lessen highway and urban congestion. As a result, Virginia must reimburse the private contractor for lost revenues from carpoolers, even though not all of the people in a car would otherwise have driven individually. Chicago is not allowed to reduce the number of parking meters for the life of the contract. So when there have been changes that mean parking meters in one location are no longer appropriate, the city has had to install meters where none have ever been.

All of these contract terms put the public safety and well being last and the investors’ profits first. And, although infrastructure privatization proponents claim that the deals transfer risk from the public to the contractors, a fair reading of the contract terms shows that this is not the case. State and local governments lose control of their destinies and communities, while giving private investors power over our new dollar democracies.

These problems will persist even when the private contractor does a good job in maintaining the infrastructure and providing good public access to it. But contractors have not always done a good job in keeping their agreements.

Shortly after it took over the Indiana Toll Road, the private contractor put sand-filled barrels in turn-arounds with no notice to the state. State officials begged and pleaded for the barrels to be removed, so police and emergency crews could get to accidents and deal with other public safety problems as quickly as possible. Those pleas fell on deaf ears, while the turn-arounds remained blocked for months.

Or consider the poor people of Auckland, New Zealand. Their government had become enamored of privatization, because they had been told that the private sector always provided better service at lower cost. The private company that bought the electrical service for Auckland decided to save costs by eliminating backup power, by not replacing parts of the system that were years past their normal life, by doing no maintenance, by having no electrical cables in reserve, and by terminating its repair crews. When they were terminated, the crews left NZ to find work elsewhere. All these decisions were made to increase company profits.

Those decisions may have lowered the company’s costs, but at a huge price, most of which it did not bear when the power cables to Auckland’s central business district failed. Banks, stock exchanges, restaurants, and all functions that depended on electricity were hard hit. Water, sewage, and all systems went down, and the power outage lasted nearly two months, because it had no repair crews or replacement components on hand.
Auckland's businesses lost millions of dollars. Companies tried to stay open by using generators, office workers climbed stairs in skyscrapers in mid-summer, and generator noise and diesel smoke filled downtown. At one point Auckland was provided power to essential facilities through an electric cable plugged into a large ship in the harbor.

You would think that New Zealand privatization advocates would have rethought their positions after they saw the carnage created by Mercury. But that was not the case. They actually claimed that the problem was caused by not having privatized enough infrastructure. While ludicrous, given what they had experienced, that view is not unique.

Consider, then, that at this very moment, state and local governments are contemplating signing contracts that restrict their rights to inspect infrastructure paid for with public money. Consider that they are agreeing to sign away their ability to protect the public interest and are setting in motion the same sort of disaster that Auckland faced, while the federal government is offering tax breaks to promote privatization.

The lesson and warning for states and local governments who are being wooed by private contractors is to do their due diligence. Read the contracts. Demand explanations and information. Ask for evidence that the public sector cannot do what private contractors do — and at lower cost – since the public sector does not need to pay dividends to investors. Get advisors who are not beholden to the privatization industry. And use common sense.

If you had thought the miracle of infrastructure privatization sounded too good to be true, now you know it is. But if you still have a hankering to give privatization a try, well, I just might have a bridge to show you . . .

You can find more details in Crumbling Infrastructure, Crumbling Democracy: Infrastructure Privatization Contracts and Their Effects on State and Local Governance. It was first published in the Northwestern Jounral of Law and Social Policy at 6 Nw. J. L. & Soc. Pol’y 47 (2011), http://www.law.northwestern.edu/journals/njlsp/v6/n1/2/.

© 2011 Employment Policy Resource Network: www.employmentpolicy.org

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TxDOT's pig in a poke goes to market: "Not enough drivers, pointedly truckers, are using the SH 130 toll road to bypass Austin."

State to pursue marketing of 130 toll road

2/28/2011

KLBJ Radio
Copyright 2011

The state group overseeing the Texas Department of Transportation generally seems to agree with most people in the Austin area that not enough drivers, pointedly truckers, are using the SH 130 toll road to bypass Austin.

Toll rates for trucks will be cut 25%, or by about $7, starting tomorrow morning. "It would become effective on March 1. This does not end our efforts to bring more trucks to the toll system," Central Texas Turnpike System Director Mark Tomlinson says.

But that is not quite enough for Transportation Commissioner William Meadows. "We do have a goal of making sure that this facility parallel to Interstate 35 does function the way it was intended to, which is to act as a traffic reliever," Meadows says. He believes there needs to be more done to entice drivers on the long haul into using the toll road and bypassing the thick traffic of downtown Austin. "A marketing strategy that would again result in us being able to meet the demand which is us being able to shift traffic to that facility," he said.

Tomlinson says he and his staff are working on a solution.

"Meeting with the trucking industry and individual trucking companies to ask for their input about other incentives, other changes in the way we manage toll roads that might bring future truck traffic," Tomlinson says.

Considered as part of those marketing efforts are suspended tolls on the 130 and 45 toll roads east of I-35, in addition to the reduction in truckers' tolls and additional signs to be posted on I-35 to remind drivers the toll roads are there.

© 2011 Emmis Austin Radio Broadcasting Company, Lp. : www.590klbj.com

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"Texas has borrowed $11.9 billion for roads, which will cost $21.1 billion, including interest and other fees, to pay back over 30 years."

Your Commute

Texas Transportation Department going into debt to pay for road work

2/27/11

By Gordon Dickson
Fort Worth Star-Telegram
Copyright 2011

Texans are increasingly borrowing from their children to pay for the roads they are using today.

Unable to persuade lawmakers to raise gas taxes or vehicle registration fees, the Texas Department of Transportation is going deep into debt to build roads and keep up with the state's explosive growth.

Since 2001, legislators and voters statewide have allowed the department to use a variety of new tools to speed up road work. That eased traffic congestion in the short term -- but now nearly $1 billion of the agency's roughly $8 billion annual budget goes to debt service.

It wasn't always that way. Traditionally, roads weren't built until the state had cash in hand. But many long-awaited projects were delayed because of chronic funding shortages.

"We've advanced as much as we can with the ability to borrow funds," Transportation Department spokeswoman Jodi Hodges said. "Now we're having to pay it back with interest."

Texas has borrowed $11.9 billion, which will cost $21.1 billion including interest and other fees, to pay back over 30 years, said state Rep. Joe Pickett, D-El Paso.

Some of the money repays debt from bond sales. Some goes to reimburse cities and counties, which use property tax-backed bonds to build roads.

"At the end of the day, there's not going to be any new money," Pickett said. "So we're leaving it up to the communities to handle this crisis."

Some of the money is paired with private equity from private developers: the North Tarrant Express project on Loop 820 and Texas 121/183 in Northeast Tarrant County, for example. The developers bring in their own funds to a project in exchange for control of the roads and toll collection for 52 years.

Though some Texas leaders criticize the federal government for engaging in expensive programs that mortgage the nation's future, the state is arguably doing something similar by increasingly relying upon alternative financing options such as debt and public-private partnerships that commit public resources for decades.

Even so, supporters of the approach say building the roads now -- even if Texas can't put cash on the barrelhead -- is a worthwhile investment.

Relieving the traffic now, they say, creates a setting for continued job growth in Texas and reduces air pollution in Dallas-Fort Worth.

Examples of alternative financing tools used in Texas:

Proposition 12

In 2005, voters authorized the Legislature to issue up to $5 billion in Proposition 12 bonds for road work and repay the money through the state's general fund.

So far, $1 billion in bonds has been obligated to nontoll highway projects, and repayment over 30 years will cost taxpayers $1.5 billion including interest and fees, Pickett said.

Another $1 billion was authorized for the state infrastructural bank.

The Transportation Department is seeking authorization from lawmakers to spend another $1 billion.

Projects must fit into a handful of categories, including rehabilitation work or improvements to nontoll corridors of statewide significance.

Most of the funds have been spent outside Dallas-Fort Worth, although $144,000 was used to resurface Cooper Street in Arlington from Arkansas Lane to Pioneer Parkway.

Nearly $1.9 billion overall is being spent improving 94 miles of Interstate 35 in the Waco, Belton and Hillsboro areas -- much of it from Proposition 12 funds.

Many projects are coming in under budget because contractors are bidding less than expected, so more projects may be financed with Proposition 12 funds.

"We definitely have the benefits of an economy working in our favor," Randy Hofmann, the Transportation Department's Tyler district engineer, told transportation commissioners Thursday. Hofmann is overseeing the Proposition 12 program.

Proposition 14

The Transportation Department has issued $4.6 billion in funds from Proposition 14, which allows the agency to repay the debt with future gas tax revenue. Repayment over 20 years will cost $7 billion, Pickett said.

And more projects are on the way. The state has authorized all but about $45 million of the $6 billion in Proposition 14 funds, said Hodges, the Transportation Department spokeswoman.

The long-awaited I-35W expansion in north Fort Worth could be under construction by 2017 after the Texas Transportation Commission agreed last year to set aside $135 million in Proposition 14 funds for the project.

Texas Mobility Fund

Voters created the Texas Mobility Fund in 2001 by constitutional amendment as a revolving fund to pay for roads.

About $6.3 billion has been committed, which will cost $12.1 billion to repay over 30 years. The money comes from a variety of state sources, as directed by lawmakers, including driver's license and title fees.

At times during the past four years, mobility fund dollars have been shipped to Tarrant County to help with projects including improvements to I-35W south of downtown, U.S. 377 north of Keller and East Loop 820 right-of-way purchase.

But transportation commissioners have sometimes been criticized for steering the fund toward toll projects. Last week, the commission learned that $340 million in unspent mobility funds could be used on Grand Parkway in Houston, a multibillion-dollar toll loop project that will likely bring in private equity as well.

Pass-through financing

Cities and counties pay for road work, and the Transportation Department reimburses the costs over several years based on a formula. The state is asking local entities to submit projects for $282 million in pass-through financing this year.

In the Metroplex, Hudson Oaks and Weatherford are using $7.9 million and $52.4 million, respectively, to improve the Interstate 20 corridor west of Fort Worth.

In the Dallas area, the North Central Texas Council of Governments applied for $63 million in pass-through funding for Interstate 30 managed lanes, and Denton County applied for $41 million to expand Farm Road 1171 from Shiloh Road to I-35W.

Colleyville applied last year for $25 million in pass-through funding for Texas 26 improvements and is negotiating with the Transportation Department and Tarrant County to get the work done through a variety of funds.

Reinvestment zones

El Paso and Forney have approved projects that use investment zones to capture property taxes and use that money to pay for road work. Pickett has filed a bill that would give cities more flexibility to create reinvestment zones.

In Fort Worth, supporters of a proposed commuter rail line from southwest Fort Worth to Grapevine, Dallas/Fort Worth Airport and possibly as far east as Carrollton, Addison, Dallas and Richardson would like reinvestment zones expanded to include development around future rail stations.

Gordon Dickson, 817-390-7796

© 2011 Fort Worth Star-Telegram: www.star-telegram.com

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