Texas Department of Transportation Commission Meeting
Commission Room
Dewitt Greer Building
125 East 11th Street
Austin, Texas 78701-2483
Thursday, August 23, 2007
COMMISSION MEMBERS:
Ric Williamson, Chairman
Hope Andrade
Ted Houghton, Jr.
Ned S. Holmes
Fred A. Underwood
STAFF:
Michael W. Behrens, P.E., Executive Director
Steve Simmons, Deputy Executive Director
Bob Jackson, General Counsel
Roger Polson, Executive Assistant to the
Deputy Executive Director
Dee Hernandez, Chief Minute Clerk
PROCEEDINGS
MR. WILLIAMSON: Good morning.
AUDIENCE: Good morning.
MR. WILLIAMSON: It is 9:05 a.m., and I would like to call the August
2007 meeting of the Texas Transportation Commission to order. It's a
pleasure to have each of you here with us this morning.
Please note for the record that public notice of this meeting,
containing all items on the agenda, was filed with the Office of
Secretary of State at 4:41 p.m. on August 15, 2007.
Before we begin today's meeting, I would appreciate it if you would
take a moment to pull out of your pocket or purse your pager, your
telephone, your PDA, I-phone, or whatever else would make a noise,
and put it on the silent or vibrate mode so that our guests will not
be disrupted during their testimony. And I thank you very much for
that.
It's our custom to open with comments from each of the members. We
traditionally start with the member on your far left, Mr. Underwood,
then Mr. Holmes, Mr. Houghton, and Ms. Andrade. Fred.
MR. UNDERWOOD: Good morning, everyone. Good to see everybody. I see
all the pretty ladies on the front row, I appreciate that, that
makes our day a lot better too. Thank you.
(General laughter.)
MR. WILLIAMSON: He's a flirt, isn't he.
MR. HOLMES: Well, good morning. It's a historic meeting, Mr.
Behrens, and I know you're proud to see a big group and family.
Welcome.
MR. HOUGHTON: Welcome to everyone who has come to address and
partake in our activities here today. Mr. Behrens, going to miss
you, it's been a great three years for me. And again, good morning
and welcome.
MS. ANDRADE: Good morning. Well, certainly echo what my fellow
commissioners said, and I won't name them because then I'd have to
laugh. But anyway, it's great to be here, I also welcome you all.
And Mike, we had a great evening last night, and I hope you captured
that moment because all the people that came were there to honor you
and to pay respect and appreciation for everything that you've done
for this department. So it was a great evening that we shared with
Mike and his family.
Karen, it was great to see your beautiful family there last night.
So thank you.
MR. WILLIAMSON: Thank you, members. I associate myself with all the
remarks, and again welcome each of you to our meeting.
Let me remind everyone if you wish to address the commission today,
we ask that you complete a speaker's card. You can find the card at
the registration table in the lobby which is generally to your
right. If you're going to comment on an item on our agenda, we ask
that you fill out the yellow card, such as the one in my right hand.
If you're going to comment on whatever it is that's on your mind in
the open comment period, we ask that you fill out a blue card, such
as the one in my right hand.
Regardless of the color of the card, we ask that you limit your
remarks to three minutes, unless you're a member of the legislature,
in which case we ask that you take as long as you wish.
Before we begin today's business, we have a matter of personal
business. Last night at 7:10 p.m., I accepted the letter of
retirement from Mr. Behrens. I did so reluctantly; I waited until
what I thought was the very last moment because we wish Mr. Behrens
well in his next phase of his life. We don't wish that he leaves us.
He's been a remarkable bridge between young and old, public and
private, TxDOT as it was, TxDOT as it is, and TxDOT as it will
become. I can't think of a person who could have done a better job
at guiding the commission -- sometimes a cantankerous bunch -- and
the staff towards looking at transportation in a different way.
The film that we were all, as employees and associates of the
department, allowed to see last night touched on many things in Mr.
Behrens career, but I think the highlight for me, in my position,
was observing that when most of us were still in the private sector,
this agency had about $300- to $400 million a year to invest in the
transportation infrastructure of this state. In Mr. Behrens's last
year with the department, this agency will expend almost $4 billion
in one year in the infrastructure of this state.
Now, there's no question that that remarkable increase is the result
of the labor of thousands of people, from the governor to the
legislature to ourselves to the staff, but there's also no doubt
that the governor and the legislature would not have been moved in
that direction without the artful leadership of Mike Behrens.
So Mike I didn't want to do it, but last night I accepted, so you're
now free to take Karen and go to Giddings and you're going to build
a house. That's retirement, you're going to go build a house? But
you've got a barbecue pit and he can fix dinner.
(General laughter.)
MR. WILLIAMSON: I could make you stand at the podium but you
probably wouldn't since you don't have to comply with anybody's
request anymore. So I'm going to read this from here.
And no jokes about giddy up and get on down the road, please. I want
to read into the record this resolution from the five of us.
A Whereas, the Texas Transportation Commission takes great pride in
recognizing Michael W. Behrens and his 37 years of service to the
Texas Department of Transportation, serving most recently as the
department's executive director, while managing, directing, and
implementing changing TxDOT policies, programs and operating
strategies during a time of major challenges;
A And whereas, he has witnessed and played a large part in many
monumental changes in transportation, including a record- setting
letting in fiscal year 2006 of $5.3 billion in highway construction,
implementing new state authorized financial tools to accelerate
TxDOT's response to growing population demands, while reducing
congestion;
A And whereas, he was recognized in 2007 by the Texas A&M University
with the Engineering Alumni Honor Award, served as president of the
Western Association of State Highway and Transportation Officials,
served as a member of the Transportation Research Board executive
committee, served on the board of directors of the American
Association of State, Highway and Transportation Officials;
A Now, therefore, be it resolved that the Texas Transportation
Commission hereby honors and thanks Michael W. Behrens, Professional
Engineer for his professional career achievements and loyal service
on behalf of the State of Texas and its citizens.
A Witnessed this day, the 23rd of August, 2007.@
Michael, we're going to hand this to you down here in a second and
take a picture, but we're going to let everybody clap for you right
after we give you your going-away gift, and the going-away gift from
the commission is, I think, especially emotional for me because we
arranged to have the gift bound in beautiful and brilliant burnt
orange which I know will be forever in your heart as a moment of
inspiration as you put a period to your career.
Do you want to say anything?
MR. BEHRENS: Yes, I do.
MR. WILLIAMSON: We'll hold our applause.
MR. BEHRENS: Thank you, chairman, and appreciate those remarks, and
other commissioners, appreciate the opportunity to work with all of
you for some a shorter time than others, other commissioners who
were here until their term expired. It's been a good journey, it's
been a fun one.
Someone mentioned to me a while ago when you signed up to be an
engineer, you never know you're going to get into all this other
stuff. Well, that's really the truth, you know, you get away from
the true practice of engineering when you get into some of the
management.
But you know, as I said last night, we have a real close TxDOT
family and that's a family that goes back for Karen and I a long
time, back to 1971, and you know, you live and breathe with the
TxDOT family and you laugh with them and then sometimes you cry with
them because all kinds of things happen over a period of time. But
we've been truly blessed that we've been part of this family and we
thank you all.
I want to thank my cohorts over here, Amadeo and Steve and Ed is
probably here somewhere, but they've been as solid folks as they can
be as part of our administration. And when you talk about all these
things that happened, well, especially those two guys had a big part
of it, and a lot of others that are in this room and a lot of others
that aren't in this room, because it takes everybody to make it all
work when you cover a state as big as Texas.
The second floor bunch is sitting down here in front, and they've
done a lot of work and supported me and others over the years, but I
want to recognize my first supporter, Shirley. She took care of me
when I was over there in Amadeo's chair and Shirley is from
Schulenburg, Texas and from Fayette County where I was born, so
that's special. And then of course, Nancy, who has taken care of me
the last six years, and Nancy is from Giddings, Texas and we
graduated from the same high school, so that's was sort of special
and that doesn't happen all the time either. But both of those gals
work very hard and they make things run up there on the second floor
and they will continue to do so.
And of course, I want to thank Karen for supporting me for all these
years, particularly the last nine and a half years when I've been
coming up here every week, and when I get home, I throw that sack in
there and it gets washed, and on Sunday night or Monday morning,
well, I grab it and come back up here, and of course, get a few good
home-cooked meals when I'm there on weekends because we eat out too
much when we're here during the week.
Last night I forgot to thank all the people that put everything
together for that party last night, and they did a lot of work and I
want to get that on the record. Like we like to do at this meeting,
right, we like to get a lot of things on the record here, so
sometimes we can go back and point to them.
MR. WILLIAMSON: That's right.
MR. BEHRENS: But again, thank you all. A lot of you have come to a
lot of commission meetings, some of you are part of the industry,
some of you are just citizens and local city and county officials.
What I've seen over my career, those of you at the local level,
whether it's city or county, the grassroots organizations, you're
the ones that help us move transportation forward because you see
the things that you need in your area and you're not bashful about
letting us know what those needs are. You know, probably the hardest
thing for us to do is to tell you no sometimes because we don't have
the finances to get it done. We have a lot of new tools now that we
can use and we hope that we can continue to use those tools and get
some of them back on track here in a couple of years.
But you're the ones that make the difference and you keep talking to
your elected officials, the people that come over here across the
street and tell them the story about what we need to do in
transportation in Texas, and I'll assure you, the folks here in this
department, they'll get it done.
Thank you all very much.
(Applause and pause to take photographs.)
MR. WILLIAMSON: The first item on today's agenda is the approval of
the minutes of the July 26 meeting. Members, the draft minutes are
in your briefing materials. Is there a motion?
MR. HOLMES: So moved.
MR. UNDERWOOD: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you, members.
Mike, for the final time, I'm going to turn it over to you.
MR. BEHRENS: Thank you, Chairman. We're going to switch our order a
little bit, we're going to agenda item number 3(a) first, and then
directly after 3(a), we're going to go to agenda item number 2. So
3(a) will be a discussion item on the creation of committees to
assist the department and advise the department on the development
of the Trans-Texas Corridor, and Amadeo will lead that discussion.
MR. SAENZ: Good morning, commissioners, Mr. Behrens, Roger. For the
record, Amadeo Saenz, assistant executive director for Engineering
Operations.
And today we're following up on a discussion we started last month
in Sugar Land concerning the creation of committees to assist us and
advise us in the development of the Trans-Texas Corridor.
Currently, as you know, we have the Trans-Texas Corridor Advisory
Committee. It's a statewide committee that you created in March of
2005. There are 23 members in that committee from across the state,
they're an appointed committee, and they represent the various parts
of the state. The current committee is tasked with providing advice
and recommendations regarding facilities to be included in the
development plan of the Trans-Texas Corridor and kind of look at the
Trans-Texas Corridor and try to give us advice as to what it should
look like and what are some of the issues that as we develop
something like that come forward.
This discussion item has been intended to take that good work that's
been done by that committee and kind of carry it to the next level
as we start working on some of the corridors that are currently
underway. In particular, we're already developing the 35-TTC, we're
also developing the 69 corridor, and there's been some early looks
at some of the corridors along Interstate 20 because of the issues
dealing with the movement of wind power energy into the Metroplex.
The I-20 corridor is kind of in the very early stages, we have not
really initiated very much, we're just kind of looking at it
internally.
So what we're trying to do now is to see how we can get more
assistance in giving us advice and assistance and help as we develop
those corridors and more at the corridor level. Staff is evaluating
the possibility of creating two types of advisory committees. The
first one is to have a statewide advisory committee for the entire
corridor. For example, one statewide committee for 35-TTC, one state
advisory committee for TTC-69, and as we develop some of the other
corridors, we would have separate advisory committees. That way,
these people can focus on the development and look at the big
picture, the global picture of the development of that particular
corridor.
The second set of committees that we want to set up is what we call
corridor segment committees, and these committees would, in essence,
would be helping us and advising us for the development of
particular segments within the corridor itself. In this case, these
committees would be more down in the grassroots stage helping us in
identifying issues, concerns as we develop the environmental
documents for those segments of the corridor. As we develop
development plans and financial plans and pick routes and look at
issues and concerns, these people there would help us and advise us
as we move forward with those.
The corridor-wide advisory committee, these committees would be, as
I mentioned, specific to the alignment of the corridor and they
would be charged with evaluating the issues relating to the existing
corridor as well. For example, 35-TTC corridor can look on issues on
35, can also look at issues on 281, anything north and south between
the whole area. When we look at the segment people, then we would
say as we develop the corridor portion between Austin and Dallas, we
could have a segment committee that would help us really look down
as we develop the specifics to that project to get that project from
a corridor down to a route.
The committees that are looking at the corridor as a whole, the
statewide committees, that committee would evaluate economic,
political, societal, demographic population trends affecting
transportation. They would create short term, mid term and long term
solutions, utilizing models for the transportation and then
communicate those findings to the commission, very similar to what
the TTC Advisory Committee is doing right now but they would be
specific to the corridor that they're working on.
When we look back at the segment committees, then that group would
be specific to the particular segment and we could have three, four
or five segment committees helping us and assisting us as we develop
the planning documents and the environmental documents and the
development documents for that.
For example, as I mentioned, on 35-TTC as we move into Tier 2 and we
start looking at developing from Austin north to Dallas and then
around Dallas, and then from Austin to San Antonio and looking at
where the corridor is going to be, whether it's 130 or not 130, and
then south from San Antonio to Laredo, we could have a segment
corridor committee from Laredo to San Antonio because it has
probably a different purpose and need and it's less congested and
they would be looking at different issues, we could have a segment
corridor committee from San Antonio into Austin and then we could
have a committee from Austin north into the Dallas Metroplex, and
then we would see what happens north of there with possibly a fourth
committee.
What we're looking at forward is looking at membership, and
membership for the statewide committee could be members that could
be from anywhere along the corridor, and very similar to what we
have on 35-TTC, as long as we would them to be familiar with the
corridor, be in the area of the corridor. When we get to the
membership of the segment committees, we want these segment
committees to come from the counties that are affected by the
segment so that hopefully every county could have a member in that
segment committee. We also want to have a member from the
metropolitan planning organizations that are within the segment that
we're developing. That's so that we can ensure that we have
coordination between the urbanized planning in that area to the
rural connectivity in that area.
The role of the segment committee would be we want them to help us
evaluate the need for the corridor, we want them to assist us in
identifying issues, concerns, impediments, go out there an find out
what is it that is causing grief about the development of the
corridor, what are the things that would make the corridor better.
Then at some point they could then bring that information to us as
we develop the environmental process and also as we develop the
development portion of the corridor. They would then recommend
action to the commission prior to the execution of contracts and we
could move forward that way. That's how we're trying to roll them
out.
What we're looking at with respect to membership, we're looking for
them to be in place on a county by county level, each county would
name a person. Now, is that person named by the county judge, is
that person named by the county commissioners court? We'll put all
that in the rules as we develop that, and if you have some input or
some insight and want to discuss some of that, we'll be happy to
discuss that.
Their role, as I mentioned, is to help us and assist us in
developing the individual corridor segments, to take those corridor
segments from a corridor to a route and then to, in essence, sign
off on that route as we move forward with the construction.
Really, that's pretty much what we've got. We are in the process of
developing rules based on that structure. Once we have the corridor
committees in place at the statewide corridor level, and possibly
then the segment committees come in as we get into the environmental
process, then the possibility would be -- and it would be up to you
all -- to see if we need to continue to have the TTC Advisory
Committee, the statewide committee, but that would be something that
would be your choice.
We have met with your aides to discuss some of the items I've
covered today and we will be beginning to put together rules over
the next month to propose to you on the formation of these two
committee groups. We think that this will allow us to include and
have some local input and assistance and buy-in as we develop the
different segments of the corridor so that it could allow us to do
it more orderly, efficiently and effectively.
I'll be happy to answer any questions.
MS. ANDRADE: Amadeo, so for the segment committees, we're going to
ask the local counties to appoint people, and for the statewide?
MR. SAENZ: The statewide committee, the commission could appoint,
you could ask some of the members of the current advisory committee
to be on it, you could ask the current TTC Advisory Committee to
give you some recommendations. Those are all options that would be
available to you all.
MS. ANDRADE: So we're going to be accepting applications?
MR. SAENZ: You could, or you could simply name, very similar to what
we did before.
MS. ANDRADE: And the time line for this?
MR. SAENZ: The time line, we would like to propose rules to you
probably at our next meeting in September, and then of course, go
through the proposed rules to final rules, and then once we have
them in place, get those committees in place.
MS. ANDRADE: Thank you.
MR. HOLMES: Just to make sure I heard that right, Amadeo, did you
say that the counties would appoint members to the segment
committees, or the counties would make recommendations?
MR. SAENZ: What we are proposing for the segment committees is we're
proposing that we would like to have one member on the committee
from every county that's along the segment. Our recommendation would
be that that person be named by the county, I don't know if it's the
county commissioners court or if it would be the county judge or a
combination of both. But we would like them to name them because
this person, we want them to come from the county because that way
we do not get accused that we went and picked only people that were
pro-corridor.
MR. WILLIAMSON: I don't want to put words in your mouth but I want
to tell you a concern I have. If we go down this path, I have no
interest in segment committees and corridor advisory committees that
are limited to the Trans-Texas Corridor. I'm interested in seeking
advice from people impacted by Interstate 35 as well as Trans-Texas
Corridor 35.
MR. SAENZ: Yes, sir, and when we move forward with the environmental
on Trans-Texas Corridor 35, we also have to look at existing 35, so
this committee would be looking at both TTC-35 and 35.
MR. WILLIAMSON: In other words, what's going to happen in our state,
I think, is the 35 corridor, whatever it's called, is going to end
up being probably a multimodal transportation corridor north and
south in the state, the 69 corridor is going to end up being a
multimodal transportation corridor east-west and then north-south,
and 20 east-west, and so on. It doesn't advance the cause of
transportation infrastructure if we limit either the advisory group
or the segment group to looking at only one piece of solving that
puzzle.
MR. SAENZ: No, sir, and I apologize for not presenting it, but it's
that we look at the existing 35, the existing 69 -- 69 does not
really exist but we would look at the existing corridors also at the
same time we're looking at the proposed corridors, and the same
group would be there to help and advise, and we'd have membership
that would cover both.
MR. WILLIAMSON: Also, to make this work, I think, until the next
legislative session, the public has to see and believe that,
particularly the segment committees, their opinion of how we do our
business carries great weight until we can ask the legislature to
extend that.
Didn't we try to do that last session, Coby? Do you mind if I
interrupt you, Amadeo?
MR. SAENZ: No, sir.
MR. WILLIAMSON: Coby, can you come up and refresh the members about
our efforts on the last session? I've got something I want to ask
you about anyway.
MR. CHASE: Good morning. For the record, my name is Coby Chase and
I'm director of the Government and Public Affairs Division.
And correct me if I have the terminology wrong, but what we had
proposed was rural RPOs, or RPOs that would serve a similar function
to an MPO, because corridors that connect major metropolitan areas
fall outside of MPO boundaries, and we have talked at great length
and preached at great length local involvement, and this would have
given local rural officials a say in the planning of these corridors
and what's good for them and what isn't. So yes, we did propose
that, yes, sir.
MR. WILLIAMSON: And the thing we proposed called a corridor planning
organization and the thing we proposed called a rural planning
organization, while they received attention from both the House and
the Senate, because of all the other fun we were having, it didn't
receive as much attention as we would have hoped.
MR. CHASE: Yes, sir. And the legislature was also coming into a much
deeper understanding of what metropolitan planning organizations do
and a deeper appreciation of those, and I think extending that
anywhere else kind of got lost at that point, yes, sir.
MR. WILLIAMSON: Members, do you have anything you want Coby to
clarify for you?
(No response.)
MR. WILLIAMSON: While I've got you up here, I need to ask you about
something, and it's appropriate to this topic. Every month when we
have our meetings, we have a range of material that's put out here
for us to look at, some of it by our staff, some of it by
well-intentioned members of the audience, and I'm reading from a
widely printed publication called -- I guess it's widely printed --
The New American, and there's an article in The New American -- I
guess this is the summer edition -- called A Paving Over Our
Borders@ . And reading through the article, I see where you're
quoted extensively about the NAFTA superhighway being built for the
express purpose of bringing goods from China and India.
MR. CHASE: I am quoted as saying that, Coby Chase, Texas Department
of Transportation? Okay.
MR. WILLIAMSON: I just wondered how these people found you. This is
the One World Association.
MR. CHASE: Well, I'm available through a number of means. Sometimes
picking up the phone helps, but I don't recall ever talking to these
people or meeting with any of them.
MR. WILLIAMSON: Well, you're right here in black and white. I just
wondered did you catch the helicopter to fly over and do this
interview.
MR. CHASE: It's very hard to be part of a conspiracy when apparently
I keep running my mouth off to the media.
(General laughter.)
MR. WILLIAMSON: I just thought I'd ask, I saw your name in here.
MR. CHASE: Thank you, I appreciate that.
MR. WILLIAMSON: It's just kind of a topic we're focused on right
now.
MR. CHASE: Yes, sir.
MR. WILLIAMSON: You have nothing else to offer about this?
MR. CHASE: Apparently I need to be quiet about it at this point. No,
sir, I do not.
MR. HOUGHTON: Well, don't leave yet, Coby.
MR. WILLIAMSON: Good, I started something.
MR. HOUGHTON: Well, kind of. Coby and I are conspirators in the
selling of Trans-Texas Corridor I-69. We embarked on a journey -- or
at least I did; he gets to stay in his penthouse on the 8th floor at
the Greer Building -- and I've had a great education over the last
month running up and down the 69 corridor, visiting with county
commissioners, county judges, mayors, et al., and I'm glad to see
that we're embarking on setting up these segment committees.
I've heard -- and I haven't seen your well published or circulated
magazine -- that the Trans-Texas Corridor, from county
commissioners, county judges, that we're building this for illegal
aliens and drug traffickers, we're not going to have exit ramps for
75 miles along this corridor. I mean, there are some interesting,
interesting theories that are out there that we've tried to dispel,
and I think we've had some success. These county judges and county
commissioners are now engaging. We said you're going to have a
voice, we didn't tell them how they were going to have a voice, but
now obviously formally they will have a voice.
I will be in Wharton County again Monday before their county
commissioners which should be a lot of fun, talking about rail
running right through towns that haven't had rail run right through
their town in 33 years, and they've got some angst over that and now
they're looking to us to how we can help them.
So Chairman, I'm glad to see this occurring. I think this will be
extremely beneficial to where they have a say in where that route
goes, and when they start using their finger to say it should go
here, you know they've come into camp and they're inside the tent
and they want to find solutions. It's been a fun education.
MR. CHASE: And everybody has heard me say this many, many times, but
it hasn't been since the '50s and '60s when Texans had to think
about any sort of major change in transportation and that was the
interstate system, and you really didn't have to engage the public
then, you didn't, it simply occurred. And laws changed and the way
you talk to your fellow citizens about what they want and don't want
dramatically changed, and now we are embarking on, I would say, the
world's largest public involvement process, and we've learned a
whole lot, but it is very interesting.
I can promise you this is the first time almost any county
commissioner in this state has been consulted deeply about what he
or she thinks is the proper corridor routes, how it affects the
communities. They have legitimate questions that sometimes sound
silly, like there won't be any exit ramps. Well, it might be a toll
road, you've got to have entrance and exit ramps. But it's very real
concerns that they have never had to wrestle with before.
And I really do want to thank the commission. All of you have deeply
engaged with local officials who ask legitimate questions that we
kind of consider run of the mill. I mean, there's only five of you
and we can only stretch you so thin, but thanks for getting in and
getting engaged, it helps a whole lot.
MR. HOUGHTON: Well, I think it's beneficial from the standpoint that
we have allowed this crowd, Mr. Chairman, to control the agenda.
MR. WILLIAMSON: It would be the crowd that Mr. Chase consorts with.
MR. HOUGHTON: They have controlled the agenda and they've had the
microphone, and now we need to set the record straight. I've had the
benefit of being the benefactor of a great education. It's
interesting to see this state like no one else, or very few people
get to see it, and I do believe we're going to be successful in our
endeavors, I really do.
Again, I think it's a great idea. Let's move forward.
MR. WILLIAMSON: Ned?
MR. HOLMES: I agree, Mr. Chairman. I believe that involving the
local officials all along the proposed routes is a key to being
successful in it. My sense about major infrastructure is you always
have a fringe group that sees the black helicopters, and they will
always be there but they will become less relevant as you involve
the local officials that really have an understanding and have
input. And so I'm delighted to see this. I think it's a very
positive step forward.
MR. CHASE: When you look back at the history of the interstate, it
wasn't so much trying to merge the three nations, though that might
have been part of it, but it was the Trilateral Commission that was
behind the interstate system, so it's not new; it's just different
now.
MR. WILLIAMSON: Thank you, Coby.
Amadeo, I've got a few more questions about this. Now, you've heard
me say my concerns about I don't want it to be involved in anything
that's focused just on TTC. I think it's time to formalize the
planning process on the entire major corridors, 35, 69, ultimately
20, 45, 10, and maybe even someday 37 all the way up to Amarillo. I
also think it's important, until the legislature meets again, that
at every turn of the corner we at the commission level and you at
the staff level make certain that the county judge in Shelby County
understands that he or she is part of the ultimate outcome of this.
Because we've spent a lot of time, a lot of treasure and shed a lot
of political blood to get in front of people that there are really
three choices -- I'll take 35 since that's my part of the world --
we can either do nothing or expand the footprint of 35 or we can
parallel 35; we can either focus on cars or trucks or both of them,
or freight and passenger rail, or all four of them; or not. It's up
to each leader in each affected county to help make that
determination.
But the days of running from confronting the problem are over. If we
want to do nothing, that's a choice we can make, and we just need to
all be brave enough at every level of government, or courageous
enough to say I don't want to do anything, I'm fine with the
congestion that is on State Highway 59, I don't want to do that
anymore, that's okay. We can't do that if people don't believe and
don't see by our actions and words that's our intention.
I appreciate your clarifying the record, Coby, because we did ask
the legislature to do this formally. We will ask the legislature to
do this formally again in 2009. I live in an ex-urban part of the
state, I think my county judge is just as concerned about
congestion, air quality, safety, job opportunity, and the value of
our assets as Judge Self from Collin County, and there's no reason
why every county judge in the state of Texas shouldn't play the same
role in the planning organization process as the urban judges play
today, there's just not any reason not to do that anymore in Texas.
So as long as we keep moving down that path, I think this is a good
idea. An advisory board takes a global approach, the corridor
advisory board, the segment committees take the same approach to the
segments as the MPOs take in the urban areas. That is a plan that
makes sense for Texas.
MR. SAENZ: We can structure it like that in that they would be
making recommendations to you all for you all to consider as we go
through the different decision points on the project, including
moving the project forward.
Now, as far as the potential could be that we could set up these
segment corridor committees for other projects that we're developing
that may not be part of the Trans-Texas Corridor, and we can, I
believe, structure the rules that would allow us to have that
flexibility that should we be developing a corridor somewhere
between let's just call it the Ports to Plains Corridor, that we
could set up a segment committee as we develop those corridors and
expand those. As we develop some of the trunk system routes that we
are developing across the state, we could set up the same type of
structure to help us move forward in developing those. So that is
the flexibility, and we can write that flexibility into the rules,
if you would like.
MR. WILLIAMSON: I think that the commission would like maximum
flexibility to do such.
MR. SAENZ: We will do that.
MR. WILLIAMSON: I recollect during the last legislative session,
Senator Ogden and Senator Carona particularly were interested in
matching up any major corridor investments on the existing trunk
system, so I think they would receive that step as a favorable step.
MR. SAENZ: And this lays the groundwork to begin having the rural
planning organizations and possibly this could evolve to a corridor
planning organization
MR. HOUGHTON: Let me jump ahead of you. I think there's a group in
the state that's ahead of us a little bit. Tomorrow in the Brazos
Valley, the COG plus, I think, one other county are meeting to come
up with a recommendation on an alignment for TTC-69 which is Brazos,
Grimes, Waller, Washington, Walker counties. Bryan Wood, are you
here. Come on up here, Bryan. You didn't know this was going to
happen.
MR. WOOD: You would have to pick on me on the day I left my jacket
at the house. For the record, I'm Bryan Wood, district engineer.
MR. HOUGHTON: Can you talk about what's happening tomorrow? You're
aware of what's going on.
MR. WOOD: Yes. We have some county commissioners and some county
judges from several counties along that area that you talked about
that really involves three districts, the Houston District, the
Bryan District, and also Yoakum District, and we are going to meet
with those folks tomorrow and talk about what they would like to see
on TTC-69, is there under any circumstances which they could support
the TTC-69, what is the vision, and just to look and see what the
future is, and we're hoping to find some middle ground that they
could support it. And so we're doing that tomorrow, looking forward
to doing it.
MR. HOUGHTON: I just wanted to kind of give you a primer what is
happening to exactly what we're establishing here at the commission.
MR. WILLIAMSON: Thank you.
Amadeo, we have a pretty good idea that the 35 corridor is
premature, I think it would be pretty easy to figure out a segment
committee structure that made economic, geographic and sociologic
sense. It might be less so with 69. The Alliance for Interstate 69
has been remarkably supportive of transportation in our state for
several years. I would think you would want to reach out to the
alliance for their advice on the structure of the overall advisory
board as well as the segments.
MR. SAENZ: Yes, sir, and I've initiated communications. Judge
Thompson and I spoke a little last night and we're going to continue
and try to get some feedback from them as to look at their
structure, look at their purpose and see how we can look at the
statewide committee for 69 and see how they interact with the
coalition and the alliance, and then as we move into developing
segments of TTC-69, then we would start setting up the segment
committees. And again, there will be coordination between the
segment committees and the statewide committees, you might even have
some dual membership so that there is communication. And then, of
course, in that case with the Alliance for I-69 and even on the 35
we have the NASCO people that are working on 35, there will probably
be some communication between the advisory committee for 35 and
NASCO.
MR. WILLIAMSON: Just be sure we don't limit it to TTC. It's just
critically important for people to have to deal with the congestion
on 35 at the same time they're dealing with what to do about it.
MR. SAENZ: That's part of the plan.
MR. WILLIAMSON: We believe the parallel, not only is it logical but
we believe it's the only way we can finance congestion relief. That
doesn't mean that other people share our opinion. There are a lot of
people who live in Waco and Temple and Belton who say expand the
footprint of 35 or build large loops around their communities. If we
don't set up advisory and planning committees that have to deal with
the financing of the entire solution of the problem, then we're not
going to be making any headway.
MR. SAENZ: Yes, sir, we can do that, and that's why it's going to be
important that the members come in for the county represent the
entire county and not just segments of the county.
MR. WILLIAMSON: I found your comments about the Wharton area
interesting, Ted, not only because I have some business associates
that live in that area who have been decidedly anti-TTC and they
call me and tell me about it on a regular basis, except one called
me not long ago and said, You know, the rail traffic through this
particular city is dangerous, what are you guys going to do about
that? And I just kind of started laughing, and I said, Well, X
public official -- I don't want to say his name -- what do you think
we've been talking to you about for six years?
I mean, this is going to happen all across the triangle, the golden
triangle of our state if we don't succeed in making people aware of
it. In Weatherford, Texas, the trains now run twelve times a day,
twelve times a day those suckers come screaming through the middle
of town. People just kind of look around and say where did this come
from. Well, this is becoming the economic center of the United
States of America, that's where those trains come from. Somebody has
got to do something about it.
Any other dialogue? This is the time when we can talk with each
other and we can direct staff. We're going to proceed along the
basis of the direction you receive from each of the commission
members and we'll look forward to seeing what you come up with.
MR. SAENZ: We'll incorporate the rules and we will meet with the
commissioners individually as we develop the proposed rules to make
sure that we've covered the issues that you have brought up.
MR. WILLIAMSON: Very good. It's a good move.
MR. SAENZ: Thank you, sir.
MR. BEHRENS: Now we'll go back to agenda item number 2 and we'll get
a report from Judy Hawley who is representing the Trans-Texas
Corridor Advisory Committee.
MS. HAWLEY: Thank you. For the record, I'm Judy Hawley, representing
the Trans-Texas Corridor Advisory Board. Commissioners, Mr.
Chairman.
Mike, good ride, God bless, thank you for everything you've done for
all of us in the state of Texas for so many years. You're very much
appreciated.
Thank you for the opportunity to address the commission on behalf of
the TTC Advisory Board. Having served as chairman for this past
year, I wanted to provide you with a status report.
The TTC Advisory Board, as Amadeo shared with you, was formed by
your commission in 2005. We just completed our 27th committee
meeting. Our membership includes people from all over the state, I
think the prototype to what you're talking about for the new
committees as well. The only thing that probably holds us all
together is that we are serious transportation advocates. We've
devoted some thousand hours of volunteer time just in meetings to
become knowledgeable enough to do what you ask of us which was to
provide honest feedback to you, the commission.
Each of you participated in our meetings, as well as most of the
people along the line over here, some of you many times. You have
provided, through TxDOT, every single resource person we ask of you,
every snippet of information we requested to assist us in our
deliberations. We had representatives from the railroad industry,
from the trucking industry, private sector partners, financial
industry, the land commissioner, and hosts of others served as
expert resources at each meeting. We were assisted in our tasks by
Dr. Bill Stockton of the TTI and the excellent TxDOT staff briefed
us anew every single month.
As you know, because you were there, my fellow board members took
their task very, very seriously, they felt like they were partners
in this process. We grappled with the nuts and bolts while trying to
stay out of the political maelstrom of this last legislative
session. Last year, during the comment period for the TTC-35 DIS, we
did submit a committee white paper which reflected many of our
recommendations. My report today reflects our final observations and
recommendations to this commission.
Before I do that, I want to reiterate our great respect for this
commission and especially for TxDOT, as exemplified by the
following. By your wisdom, in clearly recognizing the challenges
created by Texas's population growth, we cannot ignore that, the
vision in conceiving something as bold as the Trans-Texas Corridor,
your effort in devising a mechanism for identifying and developing
the TTC-35 corridor, using a tiered environmental impact approach,
your innovation in identifying the opportunity for public-private
partnerships, and seeking ways to minimize costs and risks to the
state, and finally, your tirelessness in telling Texans that doing
nothing is not a viable option.
Chairman Williamson briefed our committee yesterday and then he
freed us from bondage. We had one member of our committee, Charles
Perry, who comes in from West Texas and it's a difficult trip for
him, and he said, I think the only way I'll ever get off of this
committee is to die. So we kind of laughed about that, and said,
Well, Chairman Williamson gave you a better option today.
As the chairman laid out the way ahead, we recognized that most of
our recommendations were being incorporated, rolled into the
evolution of this process. By boldly delegating to the local
stakeholders the responsibility for planning and development of
their respective segments, the commission is now empowering local
entities to use the tools provided by the legislature, to adapt the
governor's vision -- adapt the governor's vision to their region's
specific transportation needs, and then -- and this is the big
one -- select the most viable funding strategy from the very, very
short list of options. We think this is exactly what's needed. We
were overwhelmed with the simplicity and the rightness of this
proposal.
The TTC committee, after you left, kind of revised what we wanted to
talk about today, and we came up with just a series of several
recommendations that we would like to get on the record for the way
ahead.
Please continue to address, you commissioners and TxDOT, the urgency
of the needs and the long range consequences of doing nothing. The
1,200 new Texans a day, the tsunami of trade that Commissioner
Holmes and I both know is coming, has started to come, and its
interstate and intrastate implications clearly define the roles as
we go into this, Amadeo, the roles and the relationship between the
advisory boards, the planning committees, the relationships with
each other, with the commission, and especially the relationships
with TxDOT.
Make provision for diversity of representation, don't just have
elected officials on the planning committees at the grassroots, to
ensure that you've got the broadest level of grassroots
communication so we can de-politicize this process as much as
possible.
There are several models that are out there. The MPO has a wonderful
selection process where various agencies appoint certain people so
it gives you a little de-politicized. The regional planning water
development authority groups are another model that might be used
for your planning groups.
Engage your legislators in the local process as much as possible. We
feel that that was where one of our biggest communication gaps
occurred was that they weren't there close enough to what was
happening in their own respective areas.
Continue to explore innovative funding strategies for the Texas
transportation system. I was glad to hear you articulate again the
importance of the whole system concept, especially to address
filling those rural segment gaps between the urban centers.
And please invest in the new planning committees and the new
advisory boards, just as you did with the TTC Advisory Board.
Provide them access to the same tremendous intellectual capital of
TxDOT's staff and the resources that you provided us so that they
are the best informed that they can possibly be. They're going to be
motivated. There's nothing stronger than motivated, informed people
out there as partners as we move forward with developing this
transportation system.
We applaud this new direction, the refinement of this process in the
corridor development. Thank you again to this commission and to the
commissioners who preceded you for equipping us with the knowledge,
trusting our recommendations over and over and over again. We
actually feel like this evolution is part of what we shared with you
during the courses of our deliberation. And thank you to the TxDOT
staff and especially to TTI's Bill Stockton for the tremendous
support.
And commissioners, that's my final report from the TTC Advisory
Board as we fold up our tents and ride away, but thank you again for
the privilege of being able to serve in this capacity.
MR. WILLIAMSON: Well, Judy, we thank you. Members, dialogue?
MR. HOLMES: Judy, I don't think you're going to get to ride totally
away, because I've already promised to work with you on a connection
to Corpus.
MS. HAWLEY: Absolutely.
MR. HOLMES: And I look forward to that, and I thank you for all of
your efforts.
MS. HAWLEY: You're certainly welcome, and we look forward to
welcoming all of you on your visits to Corpus, and thank you very
much for that.
MR. HOUGHTON: Well, that's a mutual admiration. You've done a
tremendous job with the committee, but it's now morphing into
something a little bit more specific, and I think that is the key.
We look at the 30,000 foot approach, now we're going to get down to
start drawing lines on maps and the locals have the input where
these lines need to go.
MS. HAWLEY: Thank you, and we think that's a tremendous move
forward, absolutely. Thank you for your wisdom on that.
MS. ANDRADE: Judy, thank you so much for your leadership. It's been
just great to work with you in the Coastal Bend area, and I hope
that you won't ride away.
MS. HAWLEY: Just this committee is folding up.
MS. ANDRADE: I encourage you and I hope that you'll volunteer
throughout this. Thank you so much. I look forward to working with
you.
MS. HAWLEY: Thank you, Commissioner. I might add that a number of
the members -- and Mr. Chairman, you were there yesterday --
expressed interest in continuing to serve because you have invested
a tremendous amount of capital in just developing their brain power,
their knowledge about transportation issues, so I know that they're
going to give their names to, I think, Mr. Stockton if they want to
continue to serve in some capacity in this new structuring which we
all highly, highly applaud.
So thank you very much for that opportunity and consideration.
MR. WILLIAMSON: Three things. To you and to all the members, our
deepest appreciation for the time that you invested. I'm fond of
saying God gives you two things when you're born, grace and time,
and time is the most valuable thing that you can control past grace.
Second, I'm glad you recognize how much we did listen -- I want to
say this exactly right -- I'm glad that we were able to act in a way
that you saw that we acted on your thoughts. The advisory board was
tremendously effective in influencing the direction we took, as Ted
said, at the 30,000 foot level, starting to come down to the 5,000
foot level.
And third, you're exactly right, a whole lot of our decision last
year to recommend corridor planning organizations and rural planning
organizations to the legislature found its roots in the TTC Advisory
Board and the never-ending admonition every month you've got to find
a way to partner rural and urban Texas in solving this problem. And
so you were tremendously effective in that regard.
We thank you for your participation and we thank you for your
report.
MS. HAWLEY: Absolutely, thank you.
MR. WILLIAMSON: Amadeo, she raised an issue I want to talk to you
about. As you're developing your next recommendations for the
commission, I know we're limited -- is it 24, Mr. Jackson,
committees are limited to 24?
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: Every county government has got to have a voice in
this, but I guess if they're appointing someone and it's not
themselves, that addresses her concern about having too many elected
officials there it gets politicized. In structuring the relationship
between the segment committees and the advisory board, you may well
want to suggest to us some automatic membership participation
between the two. In other words, if you've got a segment committee
that's going to work on -- if your recommendation is Austin to
Dallas, if you've got a segment committee that you're going to set
up for that segment, it might be an automatic that two of those
members are on the advisory board so that there's a constant
discussion going on.
Because the problem isn't just Dallas and Austin -- it's the most
immediate problem right now -- but the problem is actually the Red
River to the Rio Grande, the problem we started out to solve six
years ago. And so you've got to have people talking not only about
their segment but about the statewide vision and its impact on the
rest of the state as well.
MR. SAENZ: We can set that up, as I mentioned earlier, to make sure
that there will be communication between the two groups and
coordination.
MR. HOUGHTON: Even in the rural, there's some COGs out there that
are very active. Like you've seen the one in Brazos Valley that will
meet tomorrow and start their own process which can, again, morph
into this group. Not all of those are elected officials, there are
economic development people involved. What's the partnership, Coby,
in Bryan, Research Valley Partnership? Is that right, Bryan? Yes,
Research Valley Partnership which is their big economic development
driver.
So I think a combination, Judy, of those types, not just elected
officials, but a good cross-section.
MR. SAENZ: We will include that.
MR. WILLIAMSON: Okay. Thank you, Amadeo. We'll look forward to your
report.
And Mike, I don't see any reason to change the schedule, let's
continue on our administrative stuff.
MR. BEHRENS: Okay. Then we'll continue on going back to agenda item
number 3(b), and this will be another discussion item, continuing
discussion from what we started last month in Sugar Land talking
about the financing impacts to the department because of recent
state and federal legislation. Coby.
MR. CHASE: Again for the record, my name is Coby Chase. I'm the
director of TxDOT's Government and Public Affairs Division. Today I
will continue to discuss the financial effects resulting from recent
and expected state and federal actions.
Mr. Behrens should probably consider this the best retirement gift
of all, he won't have to sit through another one of my presentations
ever again if he doesn't want to. But there is always the worldwide
web, Mike, you can listen in.
I'm going to start with discussing our appropriation for the
2008-2009 biennium, a simple comparison between the current
appropriations bill and the one that was just enacted is not as
simple as you might think, but I'm going to try to walk you through
the differences and without the benefit of visual aides. And keep in
mind that what we will be looking at are decisions that legislators
made based on the information that was available to them at the time
those decisions were being made.
If you look at the total method of financing for the 2006-2007
biennium -- and that's the one that closes out a week from this
Friday -- we received $15.1 billion. For 2008-2009 we are
appropriated $16.6 billion. To the casual observer, it looks as
though we were provided an increase of $1.5 billion.
Let me start by talking about Proposition 14 bonds. While we did not
receive an appropriation of Prop 14 bonds for the 2006-2007
biennium, we expended $1.2 billion worth of them, so when you adjust
the '06-07 appropriations for Prop 14 bonds, it leaves us with an
increase of just over $300 million for this upcoming biennium. That
is the 2 percent increase we have noted earlier.
Your next question may be where does the 2 percent increase come
from. It didn't come from the State Highway Fund. The 2008-2009 bill
actually appropriates less from the State Highway Fund than last
session. More on this in a moment.
It didn't come from the federal government. The bill appropriates
half a billion dollars less than last time. It's simply because the
estimate was too high for the previous biennium.
That leaves the Mobility Fund. Last session we were appropriated
$1.9 billion in proceeds from the Texas Mobility Fund. This session
we were appropriated $2.4 billion. That $500 million added amount
covers some of the loss.
So the bottom line is the increases in bond proceeds veiled the
decreases in state and federal funding so that we came out about 2
percent ahead at the end of the day. Of course, decisions about our
bond programs were made by prior legislatures, not the 80th.
Considering the effects of inflation on the highway construction
business, this 2 percent increase represents a step backwards in
terms of our funding.
As I mentioned, we were appropriated less money from the State
Highway Fund than last time. This is in spite of the fact that the
State Highway Fund pie stayed about the same size. Remember we are
not the only agency who is served slices of that pie. To put it
simply, the size of the pie stayed the same but our slice got
smaller. How is that possible? The legislature transferred about
$1.5 billion from the State Highway Fund to non-transportation
programs. These transfers are up 15 percent from the last biennium.
Another direct hit to our bottom line is the continued federal
rescissions. Over the last year and a half, Congress has enacted
four rescissions totaling $666 million. To be clear, this is $666
million that TxDOT, and more importantly it's local partners,
regional partners, will no longer be able to count on in meeting our
goals to reduce congestion, enhance safety, improve air quality,
provide economic opportunities, and preserve the value and strength
of our system.
But wait, there's more. Keep your hands on your wallets and your
pocketbooks for a second. The U.S. House of Representatives approved
the Transportation Appropriations Bill last month which contains
another $3 billion in nationwide rescissions. Texas's share is
estimated to be about $259 million. The full Senate Appropriations
Committee reported its bill with a rescission of slightly less than
$3 billion, so the best case scenario at this point is more than
likely $259 million, maybe $258 million.
Included in the House proposal is language restricting the
flexibility of states to work with their local leaders in deciding
the distribution of the rescission. That's an important thing to
note. In the past the Congress and the Federal Highway
Administration would say: States, you can apply it in these
categories of funding as you see fit. What the House did, at any
rate, is prescribe how those cuts are made pro rata across certain
categories. So if any category back here in Texas thinks it's
protected, it is no longer protected, everybody will take a hit of
some magnitude.
Congressman John Mica of Florida tried to change that and came very
close on the House floor to doing that, letting states and regions
decide where these cuts should be made, but alas, he failed. He was
a very close vote, 207 to 217.
A bigger federal hammer falls in 2009 when the administration and
the Congressional Budget Office project that the Highway Trust Fund
will become insolvent. The White House projects the shortfall to be
about $4 billion and that would probably be in the neighborhood of
another $320 million cut to Texas if they follow the same path. This
matter poses a substantial challenge for Congress. You can be sure
that your staff will involve itself in the discussions on how to
address this shortfall and do everything we can to combat it.
None of this is news to us, we expect rescissions. Unfortunately,
it's become part of the business. It just goes to show you that
transportation is relied upon to do everything beyond
transportation. We know the state legislature has a tendency to
transfer our highway dollars to other programs; we know of
Congress's wariness of public-private partnerships, at least a
subset of members in the House; we're aware of the precarious state
of the Federal Highway Trust Fund; and we know inflation is still
eating our lunch. Notwithstanding these challenges, we devised a
plan to continue to meet our goals for building infrastructure in
this state, and then came along Senate Bill 792.
Before the session, one of the most potent tools available to us to
combat congestion was CDAs and concessions. Senate Bill 792
prohibits most concession CDAs except for a few projects that can
move forward as planned. The authority to enter into concession CDAs
expires in 2009 and the authority to enter into design-build CDAs
and the CDAs exempted from the two-year moratorium expires in 2011.
For any given toll project, 792 requires that a market valuation be
conducted and entitles local tolling authorities to take the first
shot at building a project based on that valuation. If the authority
passes on the project, the state can build it but we won't be able
to use a CDA.
Because we simply do not have enough equity to put into traditional
toll projects without diverting resources from other critical
non-tolled and rural projects, it is conceivable that fewer projects
will be built under 792. We won't know the precise impact of 792
until the market valuations are conducted and tolling authorities
decide whether they want to build them or not. What we can say is
that unless the legislature takes positive action to renew the CDA
program in 2009, then the cumulative effects of the challenges we've
discussed would be quite difficult.
Before I conclude, I'd like to mention one very important action
that the Texas Legislature took that could possibly lead to an
increase in our financial resources. SJR 64 puts on the November
ballot a constitutional amendment providing for the issuance of
general obligation bonds by the Texas Transportation Commission, in
an amount not to exceed $5 billion, to provide funding for highway
improvement projects. If approved, the legislature could come back
next session and authorize us to issue debt. We won't know until
then how much they will authorize and what strings might be attached
to that.
And with that setup, I'll turn it over to James Bass next to go
through some of the projections on our cash flow. Following James,
Amadeo Saenz will talk about some of the operational impacts of the
decisions we've been discussing.
MR. WILLIAMSON: Members, do you want to question Coby now or do you
want to wait. Let's wait? Okay.
MR. BASS: Good morning. For the record, I'm James Bass, chief
financial officer for TxDOT.
And to build upon Coby's discussion of what happened this last
legislative session to our budget and other agencies' budgets that
utilize the State Highway Fund, we took that and applied it to a
longer range forecast. Everyone is quite familiar with the $86
billion funding gap. Well, that looked out from today to the year
2030, looked at the needs and the revenues that were going to be
available to TxDOT.
As you heard Coby say, the transfers or utilization of Fund 6 by
other state agencies increased in 2008 and 2009. Obviously, that
money is no longer available to TxDOT. What we did is we took that
reduction in funding available to TxDOT in that earlier forecast we
said were going to be available, we took that and then to stretch it
out, we didn't increase it, just kept that same number between now
and 2030, and that told us we would have $2.8 billion less than what
we thought just a couple of years ago. That all happened within the
confines of the budget in 2008 and 2009.
One item I forgot to tell you about last month was in addition to
that there was a bill, Senate Bill 12, that dealt with the air
quality and the TERP Program within the state of Texas and how to
fund that going forward. In previous law there was a transfer from
the State Highway Fund to TERP of $100 million per year, roughly, in
2009 and in 2010. The 80th Legislature extended that through the
year 2015. So that is another $500- to $540 million of State Highway
Fund dollars in the previous forecast we thought would be available
to TxDOT to address the needs that is now going for another use
within state government. So just looking at the State Highway Fund,
there is roughly $3.3 billion less available to TxDOT than what had
been in that previous forecast.
Another key component in our revenues available to address the
mobility needs, of course, are the federal funds. What you heard
Coby say we already know to date between when we did the original
forecast and today, the federal government has already come in and
taken back $666 million. There's current discussion right now of
another rescission in the neighborhood of $259-, $260 million.
If you start reading the forecast from the General Accountability
Office, the Office of Management and Budget, AASHTO, ARTBA,
different groups looking at the forecast of what's going to happen
to the Federal Highway Trust Fund, they show the balance of that
federal fund going to zero in 2009 or 2010, meaning the current
programs cannot be sustained. So there's likely additional
rescissions that are going to happen in 2008 and 2009. With no
further action on Congress, that will carry forward into the future
through 2030.
In one of the management audits you heard a report on here in the
last couple of months, they looked at that, updated it, looked at
the current situation, compared it to that earlier forecast that
resulted in the $86 billion shortfall, and they said TxDOT, in our
professional opinion, you're going to have $7 billion less than what
you included in that long range forecast from the federal
government. So if we couple the $7 billion less in federal funds and
the $3.3 billion less of State Highway funds, we've now taken a $10
billion step backwards.
But we had a plan at TxDOT to address that $86 billion funding gap,
utilizing the tools that had been made available to TxDOT through
the legislature, primarily entering into partnerships with the
private sector and utilizing private financing to help fill that
gap.
Senate Bill 792 altered that landscape and we've had a number of
discussions over the past couple of months, what can we do, what
can't we do, and I thought we could do this and transfer that risk,
and unfortunately, the answer to that question depends upon where we
are in that time line. We can utilize private financing, whether
it's through a concession that's exempt from the moratorium or enter
into it and enter into an availability payment with that private
sector partner for the next 24 months.
On August 31, 2009, the ability to have any private financing on our
deals sunsets under current law, so all the toll projects, part of
that plan over the next 23 years that we're going to do to help fund
that gap would need to be squeezed out in the next 24 months. Do not
think that that's possible with all the steps that we have to go
through in that process.
So the big question is how much opportunity is lost because of that,
because of only having 24 months to continue to enter into those
type of agreements. And with any forecast, there's uncertainty,
however, with that one there's more than dealing with the state and
federal side. So we've taken a very conservative approach and
continued to look at that or will continue to look at that going
forward.
But to follow on the conservative side, we think that that, at a
minimum, is another $2-1/2 billion less in just the near term, not
going all the way out to 2030 but just in the next four or five
years, that will be less available to TxDOT and the state that we
would have likely received in up-front payments by entering into
those public-private partnerships that now we will not have the
opportunity to do, and therefore, we will end up delaying
development and delivery of those projects as we go forward.
MR. WILLIAMSON: That's $2.3- that would have been collected on
probably toll projects that we probably would have then placed onto
tax projects.
MR. BASS: Correct. We would have been able to utilize however that
region best saw fit, however they thought that additional up-front
payment could have best addressed the mobility in their region.
MR. WILLIAMSON: So for example, when 281 was put under the
moratorium, if there had been an available concession fee of say
$500 million that would have been reinvested on the open or tax
roads in San Antonio, that $500 million has now been removed from
the revenue side of our cash forecast, thus increasing the gap.
MR. BASS: Yes, sir. It wouldn't necessarily increase the gap because
the original $86 billion gap did not include the payments from
concessions but the up-front payments from concessions was how we
were going to address the gap. So the gap has grown because of less
state funds and less federal funds and our ability to address that
gap has been severely impaired because one of the major tools that
we were planning on utilizing over the next 23 years is now
available to us for the next 24 months.
MR. WILLIAMSON: I see.
MR. BASS: That is my comments. I'd be happy to answer any questions
now or at the end, and I'll turn it over to Amadeo.
MR. HOUGHTON: James, Coby said you were going to talk about cash
flow. I guess you gave that 30,000 foot view of cash flow.
MR. BASS: Thirty thousand foot view and carrying it out to 2030. And
because of what happened in the budget in 2008 and 2009 in that
TxDOT received less in State Highway funds, we continue that forward
in 2030. And the reason we did that in the estimate, if we had gone
through the original estimate that resulted in the $86 billion
shortfall, if we had gone through the revenue estimate and said
well, we're going to forecast that the legislature is going to
continue to address other priorities in the state by utilizing State
Highway Fund dollars at a higher rate than they have in the past,
well, then obviously people are going to say you're playing with the
numbers, you're estimating that in order to lower the amount of
revenue available to you in order to increase the gap.
We tried to take a very conservative approach and what we had done
in that original one was just flat-line that transfer number.
MR. WILLIAMSON: Flat-line is a good description.
MR. BASS: Well, now in 2008 and 2009 that flat-line has been bumped
up, so again, we've just changed the baseline, we have not continued
to grow it or assume that it will grow in the future, we just said
the baseline has shifted and if we now carry that out to 2030 from
results in the budget is $2.8 billion less, and then because of the
extension of the transfer to TERP for another five years, that's
another $500 million less of State Highway Fund than what we would
have thought before the 80th Session convened.
MR. HOUGHTON: Well, we all point to the Trust Fund going insolvent
in 2009, if the U.S. Chamber of Commerce were to come in here and
say where do we go the other way, where do we have not enough money
to meet our obligations, what would they say?
MR. BASS: If I'm understanding your question, most of the forecasts
show the Federal Highway Trust Fund hitting a zero balance in
2009-2010. Obviously, that will negatively impact the allocations to
the states. And over time, the Federal Highway Trust Fund had built
up a balance in it that I believe Congress used in order to appear
to balance the budget. It was over here, we weren't going to spend
it, but that allowed us to go into debt to fund other programs, but
overall, the budget was balanced but we were still borrowing money.
Now what they did through SAFETEA-LU is said we're going to not only
distribute the incoming revenue but we're going to distribute that
accumulated balance. I know it's very simple but you can only
distribute the balance one time, and so the amount of money, the
balance plus incoming revenue, once the balance is gone you have to
revert back to only incoming revenue, and that tipping point is
going to happen here in the next two to three years. And that's why
in 2009 a lot of forecasts show additional rescissions probably
equal to or greater than the ones we've seen to date, just in 2009,
and then carrying forward, without any action on Congress's part,
further reductions from what we had planned or thought was going to
happen going into the future.
MR. HOUGHTON: Well, we're issuing debt based on future tax revenue
on Prop 14, and we have the authorization to go to $6 billion, I
think is the aggregate, based upon that future revenue that you were
talking about that is going to diminish.
MR. BASS: And within that program for the State Highway Fund or Prop
14 bonds, we're required to have ten times coverage, so we need to
have ten times the amount of revenue of whatever the debt service
is.
Our latest forecast, if we were to do the full at $3 billion, we
would have 28 times coverage, and if the federal program went away
completely, we would be at 14 times. And so depending upon what
happens to the federal money and how far it is reduced, we may not
really have full ability to reach that full $6 billion capacity
because of the other constraint of the ten times coverage. And so
it's very key, not just to the day-to-day operations today but the
plans as we go forward on our bonding programs and elsewhere
throughout the department.
MR. HOLMES: James, you characterize as conservative flat-lining the
diversion. Some might characterize that as optimistic.
MR. BASS: Yes, and it's always a fine balance and there's always
going to be discussion when anyone comes up with a forecast for
anything, and we always try to be very conservative because if we
showed that growing at 3 percent and maybe history has been it's
grown at 5 percent every biennium and so we built in a 3 percent
growth, a lot of times people use that as an opportunity to just
dismiss the subject matter that oh, well, you created that number
because you grew it at 3 percent and if I grew it at 1 percent, I'd
have a different number.
Yes, obviously you would, and that tends to distract from the main
subject, and so we're trying to keep the focus on the subject matter
that at the end of the day we have less money available to address
the mobility needs of the state.
MR. HOLMES: But the simple fact is it has grown.
MR. BASS: Yes.
MR. HOLMES: To suggest that it won't grow in the future is pretty
optimistic.
MR. BASS: Is very optimistic, yes.
MR. WILLIAMSON: Thank you, James.
MR. BASS: Thank you.
MR. SAENZ: Good morning again, commissioners. For the record, Amadeo
Saenz.
Just to kind of follow up and continue on the good news that Coby
and James have been passing to you, last month we talked about
pretty much the same presentation and they were high tech and they
had slides and I didn't have any slides, so this time I decided to
get high tech and they decided to go low tech, so I guess we may not
be talking to each other.
But just as they presented that we have diversions that are
affecting our state dollars, rescissions that are affecting our
federal dollars, the end result is that there's less money that is
available to us. Couple that with the changes that the legislature
put in place with 792 and the taking away of some of the tools that
we had compounds the problem in that we have much, much less
available to us to solve the problems.
What I've got is really a continuation of what we talked about last
month and what we've talked about in the last few months is that we
also have a need for more preservation of our system, and even
though we have less money as a whole, we still need to make sure
that we address the system that we have to preserve it to make sure
that it does not cost us more in the future.
You may recall this map here. This map here kind of showed what our
pavement condition scores were across the state, and if you look at
the yellow and the orange are areas across the state where we have
the lower pavement condition scores. And of course, if you look at
that, they're, in essence, in our metro areas and along our coastal
areas where we're not meeting the goal that we had set to have 90
percent of our roads in good or better condition by 2012.
If you look at our pavement scores in West Texas and the rural
areas, we're doing much better. Kind of looking at this a little bit
different, looking at our metro areas where we spend an average of
almost $12,000 per lane mile, our scores are right at 81.62 percent.
Statewide we spend $7,000 per lane mile and we're at 87 percent,
much closer to the 90 percent goal.
We need to look at how we address these deteriorating pavement
conditions in the metro areas, and we've come up with some
recommendations that are going to affect what we will be doing in
the next few years.
One of the things that we're looking at between 2008 and 2010,
because we have some pending mobility projects that are well
underway, we do not want to go out there and remove some of the
mobility money and move it into preservation at this time -- we will
be able to take some but we have some commitments for air quality
requirements and such that we will have to move those projects to
ensure that the non-attainment areas stay in conformity, and we also
address some of the short term mobility needs that are there -- so
what we would be looking at is the possibility of reallocating our
maintenance and rehab dollars to address the pavement needs in the
targeted areas.
Some of the districts that have good pavements, we will go back and
look at how much money is available in their preservation areas and
then take some of that money and put it in targeted areas.
As we look into 2011 and 2012, we now have an opportunity to find
out what is the total impact we have, and then what we would like to
do is, in essence, move money from the mobility categories to
address the pavement needs in those areas. The only money that we
would not touch, of course, we cannot use mobility funds for
preservation. There is some district discretionary money that is set
aside and directed as district discretionary, though the district
engineers can use that for preservation and that, but it's totally
out of their discretion, and then, of course, the strategic priority
money that you all have we'll have some left to address some of the
projects that we're already committed to but we will be moving most
of that money into the preservation area.
As I mentioned, what we would like to do is, in essence, split the
funding in Category 1, our maintenance and preservation, into two
parts. Part one which is continue to distribute the funds statewide
at levels that will keep our system almost at parity, and that would
be about $1.1 billion a year for the next five years, for $5.5
billion. What we do is any money above the $1.1- that we have in the
districts in '08 and '09 and '10, any money that we have in the
districts above the $1.1- that have good pavement scores, we would
then take that and use that to target it in areas of the state where
we don't have the good pavement scores. So we would move about $1.8
billion to target those areas across the state. So in essence, we're
doing that.
The $1.8 billion for '11 and '12, it is taking and moving mobility
money into the preservation area. If you notice the slide here, we
would keep the base allocation at $1.1 billion across the state, the
districts would then get that distributed based on the current
formulas. We would have the supplemental that would move any surplus
money that we have in '08, '09 and '10 from the districts that have
high pavement scores and then distribute those to the districts that
have the low pavement scores. And then of course, in '11 and '12 we
would supplement those numbers with some additional money to
increase our funding to $600 million in 2011 and over $735 million
in 2012 to address our pavement scores. So that's what gives us the
$1.8 billion in preservation to target those bad areas.
This would result in reductions in the amount of money available for
mobility in '11 and '12. It keeps what we currently have in '08, '09
and '10 but it does reduce the amount available in '11 and '12. And
that's why I think, hopefully if we get the constitutional amendment
passed in the next session, the legislature passes legislation that
allows for the issuance of the bonds to cover that additional
transportation projects, we can come back and backfill and do some
of the projects.
That's why one of the things we will be asking the districts to do
is to continue developing those projects and have those projects
ready even though I know I don't have the available cash to let the
projects, we will have the projects ready so that they can go to
construction should we get any additional money. If we stop the
ship, you might say, it's hard to get it started again, so we need
to be able to reach a balance and then have enough projects there
sitting around on the shelf that can, in essence, be implemented in
a quick fashion.
When we do go to this supplemental allocations to the districts, as
I mentioned before, we will work closely with the district engineers
and ask them to put together a plan so that we can make sure that we
target the roads that need to be targeted and we address the
conditions that need to be addressed so that we can make sure that
we come up with a good result in improving the preservation and
improving our system.
As I mentioned, basically what this does, we're going to have to
reduce mobility funds in the out years, we're going to put them in
maintenance and rehabilitation, target those bad areas, and then, of
course, we're not going to make headway with our pavement scores,
we're, in essence, just trying to make sure that we do not lose more
ground than what we're already losing. We want to hopefully stay at
the level that we're at.
The other thing that I wanted to mention and talk about is an
extension of what we talked about last month, because of the tools
that we lost as a result of 792, and specifically not being able to
do public-private concession type models, I wanted to kind of have a
couple of examples that would show you the impact on two projects if
we don't get that particular tool back.
The first one I wanted to talk about is the State Highway 130
project. For State Highway 130 we have a segment that's under
construction here in the Austin area, Segments 1 through 4. That was
TxDOT's first design-build project, it was funded through the public
bond model. We were able to go out there and issue debt for that
project as well as a couple of other roads in the Austin area on
State Highway 45 and Loop 1, but we had to go out there from the
common pool and use $700 million in toll equity to make that project
whole. In addition, we received about $400 million from the local
entities to cover some of the additional costs of the project. So
that project had about $1.1 billion in toll equity to make that
project whole.
When we let the 130 project, we included Segments 5 and 6, and
Segments 5 and 6 start just from the south of Austin and go all the
way down to Seguin or Interstate 10. We did not have the funding for
that project. We did get estimates or bids from the contractor, but
we were not able to fund that project. If we look at 130, of course,
130, 5 and 6, we have now entered into our first public-private
partnership with Cintra-Zachry, but when we were looking at 130 and
trying to fund it using our other means, we either had to come up
with the cost of the project -- the project itself costs $1.3
billion -- operation and maintenance costs, and the next present
value is about $380 million, and then the debt was 40 years.
First of all, if we would just use our pay-as-you-go method, we'd
have to, in essence, wait till we had $1.3 billion available to us
to let that project.
MR. WILLIAMSON: When would that have been?
MR. SAENZ: Somewhere after 2060, I would imagine. We did not have
any of that money available to us all the way till our 2030 plan, so
it would be post 2030, but if you really look at it, I still would
have needs in 2030, so that's why I say it's 30, 40, 50 years down
the road before we could have gotten to that project.
MR. WILLIAMSON: So somewhat similar to another project we're going
to talk about today, State Highway 121.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: The decision to move forward on 130, Segments 5 and
6, was as much based on the fact that we weren't going to build it
anyway.
MR. SAENZ: Yes, sir. The option was to build it the traditional way,
we needed $1.3 billion, we didn't have the $1.3 billion.
MR. WILLIAMSON: And to have accumulated the $1.3 billion, we would
have had to have raided the common pool to the detriment of Lubbock,
San Antonio, Houston, Fort Worth, Dallas, Amarillo and El Paso in
order to build that.
MR. SAENZ: And we would have had to have taken that from the common
pool which every other part of the state would have been impacted.
MR. WILLIAMSON: And did I understand you to say the common pool is
already spoken for through 2030?
MR. SAENZ: Yes, sir, we have long range plans that go up to 2025,
2030, so we have projects identified. We have projects in our
ten-year unified transportation program from '07 to '17 where we
have, in essence, set the financing. Now, those projects and that
plan are going to have to be adjusted based on what we heard from
Coby and James. Based on the reduction of resources that we have,
reductions of money coming in from both the state side and at the
federal side, we're going to have to make adjustments to those
plans.
Because when we were projecting money coming in from the federal
government at a certain level, now because of the rescissions, we
will have less, and because of the rescissions as well as the
shortfall, or in essence, the trust fund going into negative in
2009, not just reaching zero, there will be less federal
reimbursements available, less federal resources, the continued
taking money from the state gasoline tax fund will result in less
state gasoline tax money to do those projects.
So in essence, our ten-year plan right now is based on projections
that we made a year and a half, two years ago. Because of these
changes, we now have an over-programmed plan because we know now
that there will be less money than what we projected. We're trying
to quantify those numbers so that we can put in place and begin to
communicate with our partners, the MPOs, and the district, with the
county elected officials to tell them that even though we had
forecast this amount of money, as we see now, that money is not
going to come in in the time that we had forecasted it, so
therefore, we cannot let the projects where we have them planned
today.
MR. HOUGHTON: So we're pushing projects outside a ten-year window.
MR. SAENZ: Yes, sir. In essence, you push projects outside of the
ten-year window, you push projects outside of the 30-year plan.
MR. HOUGHTON: And the equity that was required -- because I was
involved in 130, 5 and 6, was about $700 million; we didn't have
that kind of equity to put into that.
MR. SAENZ: We didn't have the $1.3 billion when we went to the next
method of developing the project which was to use the public finance
model and issue debt, we were still going to have to put in for this
same project almost $700 million in equity to be able to build that
project.
MR. HOUGHTON: Amadeo, have we communicated with all the MPOs across
the state of guess what?
MR. SAENZ: We have had some preliminary conversations through
video-teleconferencing about our forecasting and how much money will
be available to them. We are now internally determining what that
number is so that we can go back to them. We have sent a letter to
the district engineers for them to start working with their MPOs
with our next year's letting schedule in 2008.
MR. HOUGHTON: What kind of reduction in letting, roughly?
MR. SAENZ: Well, in 2008, based on what we had projected two years
ago, and last year we were projecting to have over $5 billion worth
of letting in 2008. Because of inflation and because of some of the
rescissions and some of the loss of money, our forecast is somewhere
between $3.6- and $4.1 billion.
MR. HOUGHTON: I guess the dollar volume is one issue, but how many
lane miles are we building as compared to three, four, five years
ago? We're building less lane miles because of inflation, it costs
more for steel and the commodities. I guess that's a better measure
than the dollars.
MR. SAENZ: Let me get that number run for you.
MR. HOUGHTON: It would be interesting to know.
MR. SAENZ: We'll get you a number.
MR. WILLIAMSON: I think even more interesting, if you can quantify
it -- I know we're having to work hard to get here -- it might be
even more interesting to know how much more congestion will result.
Lane miles is easy to explain and it's a simple thing, and I
appreciate that, but I think most important is how much more
congestion is going to result from less lane miles.
MR. HOUGHTON: I mean, we pat our selves on the back and AGC and all
the contractors say, gosh, we had a lot of lettings, but in reality,
we're building less road today than we were three, four or five
years ago.
MR. SAENZ: We can get you that.
MR. HOUGHTON: That would be interesting to know.
MR. SAENZ: If you all recall, I think two or three months ago when
we showed the impact of the highway cost index on our letting, from
2002 to 2006, there was a 73 or 77 percent increase. What we were
spending in 2006 at $5 billion was equivalent to about $3 billion in
2002.
MR. HOUGHTON: Well, I can ask you and Coby can chime in or James, we
had a 2 percent increase in the budget? If you apply the HCI or some
index, what was the effect?
MR. SAENZ: Probably if we look at HCI, say ten.
MR. HOUGHTON: So we had a negative impact to this agency.
MR. SAENZ: Negative eight.
MR. HOLMES: Well, it's really a collision of multiple factors,
right, rescissions, more diversions, higher cost of lane miles, and
greater population. And so you have all three of those converging.
MR. WILLIAMSON: And restricted access to private capital.
MR. HOLMES: And less cash available.
MR. SAENZ: Everything is against us.
Just looking at the example, so we would need to come up with almost
$700 million of toll equity to be able to develop that project. We
were not able to do that, so when we had the ability to enter into
the 35-TTC CDA, and then, of course, Cintra-Zachry brought forth the
first facility agreement, the construction of State Highway 130, we
were able to get that project developed and we now have it ongoing.
In fact, they're actively moving forward with the right-of-way
acquisition as we speak.
They were able to provide not only the $1.3 billion to build the
project, they will also be responsible for the maintenance of that
project for the next 50 years. That covers a net present value of
about $400 million in maintenance costs. They will have a 50-year
lease, and then they provided us an up-front payment of $25 million
that then we can use on other projects. And then, of course, the way
we structured the concession where we have a revenue-sharing
mechanism based on the amount of traffic that uses that facility, we
will also realize about an equivalent of net present value of about
$245- to $250 million of additional revenue through the life of that
concession.
So in essence, when you look at it, we wound up with needing to put
in $1.3 billion to fund it the traditional way, needing to put in
$700 million and then still having to possibly maintain that
facility for its entirety, to being able to get that facility built
through the public-private partnership concession model and having
the maintenance paid and getting an additional $270 million in net
present value to do more projects. More importantly is we could not
build that project before 2030 under the first two scenarios. We
were able to get this project under construction and it will be open
to traffic in 2012, using the public-private partnership model.
This is one of the tools that we lost and it would be very important
that we be able to get that back so that we have the ability to
access that private capital and allow us to build the transportation
infrastructure. By being able to build this project here, we now
have the ability that this will allow us to use some of the money
that could have gone here to put in other areas to address other
needs.
The second example that I kind of talked about because I think this
was one of the questions that came up, is the 281 project that we
were developing as a public-private partnership under the CDA model
just north of San Antonio from 1604 north to the county line. That
project, of course, if you look at our conventional financing for
that project, the project cost about $477 million in construction.
When we add the design costs, utilities, right-of-way engineering,
et cetera, it goes up to about $600 million. The net present value
for the maintenance of that project is about $140 million, and when
we look at that, we need about $739 million to build that project.
The MPO, through their planning process, has identified $54 million
available to them, and because they were not leveraging a project at
that time, they did not have access to the Mobility Fund, so they
would require $685 million more beyond what the MPO had identified
to be able to get that project built. The result is the project
could not be built and it was going to be built sometime after 2030.
The other option that the MPO had was to delay other projects within
their area, other priorities, and raid their own common pool, you
might say, to build this project, but they had chosen not to.
MR. WILLIAMSON: In other words, shift planned expenditures from
south San Antonio to north San Antonio.
MR. SAENZ: Yes, sir.
The second option, of course, is the same option I talked about for
130 which is the public debt finance model, traditional design-build
process. In that case the project still costs the same, everything
is the same on that project. We used the toll rates that we have
been working with with the RMA to get these numbers generated, and
of course, the MPO still had the $54 million identified but because
now they were looking at this project as a toll project, they now
had an additional $100 million of the Texas Mobility Fund to be able
to apply to this project as a leveraged project. That resulted in
them needing only $148 million to be able to build this project, but
they would still wind up being short, so they still had to take
money from other projects or come to the commission and ask for
statewide pool of money to be able to get that project built.
I'll jump over to the private concession model because we had
received a proposal and were moving forward with a private
concession and we don't have the numbers because the project never
proceeded that far, but we have our financial advisors that have run
some numbers on this project to see what the private concession
model could have brought the region.
The project still costs the same, the same toll rates, the same toll
escalation rate, and looking at some of the numbers because we look
at ranges, we felt that this project on 281 could bring in anywhere
from $5 million to $200 million in concessions above and beyond the
cost of the project. So the market value for that project was the
total cost plus we think somewhere between $5- and $200 million in
addition to the cost of the project.
MR. HOUGHTON: Let me stop there real quickly if you don't mind,
Amadeo. I'll go to the upside. $200 million would have come back
into the MPO. Correct?
MR. SAENZ: Yes, sir.
MR. HOUGHTON: So you look at the net revenue that not only they
access $54 million of the Mobility Fund, they got $200 million in a
concession payment. Now we impose 792 on this process and 792 says
we go to market valuation, and the RMA down there says okay, we tell
the RMA it's $200 million that you have to pay to the MPO. That's a
cost that they have to go out and finance.
MR. SAENZ: That would be a commitment that the RMA would have to
make should they choose to take that project forward in cash into
the special sub-account, or committing to build additional projects
to that amount, or committing surplus revenues from that toll
project to do that.
MR. HOUGHTON: And what happened in the session is we went 180
degrees, we took $200 million away immediately to the MPO and now
we've imposed that kind of stress on top of the RMA to go finance
that or to go commit to that and they've got those obligations
instead of an infusion of cash into the system.
MR. SAENZ: That's correct, sir.
MR. HOUGHTON: Okay.
MR. SAENZ: And I think, just like you said, what it does if we take
the high side, the project would have brought in a $200 million
concession, the MPO already had $54 million, they also had $102
million from the Mobility Fund, so in essence, they wind up with
$300 million more to put on other projects by utilizing the private
sector. If you take the low side, it's $107 million.
Under that plan that project could have been built and under
construction. We did run into some issues on the environmental side
but those have been resolved or are being resolved now, but that
project could have been on the ground by 2015.
792, in essence, does not let us use that model. Of course, 792 will
allow us, and we've talked about the availability payment model for
developing projects, and under the availability payment model, the
project is the same. As we've talked about, there's mechanisms where
we can set the project up so that we get the developer to finance
this project, and then, of course, we will pay them over time and we
can either structure this procurement as one where we keep the risk
at the local level, at the public level, or you can assign some of
the traffic risk and incorporate that so that the developer has to
bid only so much based on the traffic that uses it, very similar to
what we do on our pass-through tolling. That risk would have a price
and we would have to look at both of those to determine what the
final cost of the project is.
MR. HOUGHTON: But you never get to truly a real pure concession.
MR. SAENZ: No, sir, you don't.
I wanted to present these two scenarios and examples just, in
essence, to show that we need many more dollars and we have to wait
longer to be able to do these projects, we're keeping all of the
risk, and of course, you can do these projects but you force other
projects to wait, or these projects wait for other projects and for
money.
On the concession side, in essence, you're able to take and shift
the risk to the private sector, you get the projects completed much
sooner, there's less or no tax dollars required, you have those tax
dollars will be available for other projects, and those other
projects can be constructed with those freed-up dollars or any
concession money that comes in.
I guess the point that I want to make, it's important that we see
what we can work on and we look forward to be able to present to the
study commission that's set up to be able to try to really show the
merits of this model so that we have the ability to move forward and
develop projects in the future.
MR. HOLMES: Amadeo, before we get too far away from your comments
about availability payments, we really haven't gone through a full
process to determine how the availability payments will work.
MR. SAENZ: No. I've got our financial folks working on that, in
particular wanting to make sure that we look at the scenario that we
mentioned last month about trying to see how we can tie the traffic
to the availability payment model.
MR. HOLMES: I would encourage us to continue down that road as it
might be an available financing technique.
MR. SAENZ: Yes, sir. And Brad Watson is here, so I know that he's
going to jump on it some more.
MS. ANDRADE: Amadeo, I have a question. It's interesting that both
projects that we're using for comparison are in my area, but on the
public debt finance project 281, it says the anticipated date that
we're going to deliver this to the public is 2025, and my
understanding is that the RMA is moving forward on this and I had no
idea that it was going to take this long.
MR. SAENZ: Well, I think if you look at the project, the project is
going to be developed in phases and I think I'm talking about the
entire project, I think 2025 will probably be that final phase or
somewhere in the 2020s.
MS. ANDRADE: So from 1604 to Comal County?
MR. SAENZ: Yes.
MS. ANDRADE: Terry is here from RMA. Can she comment, Mr. Chairman?
MR. WILLIAMSON: Oh, sure.
MS. BRECHTEL: Terry Brechtel, executive director of the Alamo
Regional Mobility Authority.
We've been working with the district on a build-out model,
Commissioner, as part of our market valuation analysis. The first
phase is from 1604 to Stone Oak or perhaps even Marshall, that's a
goal that we have, and we feel like we can move forward with that in
the next twelve months. The second part is further out and it's
based on the traffic and revenue analysis that's being done, and
that's to get all the way to the Bexar County line, and so the dates
for the market valuation that we're looking at are further out. But
there's other parts of 1604 that are express lanes, the western
extension of 1604 is very viable as well, as well as the
interchange, so there's other segments. The segment that Amadeo used
was just the express lane portion all the way to the county line.
We're going to do it in two phases.
MS. ANDRADE: But it's not going to take us 20 years.
MS. BRECHTEL: No.
MS. ANDRADE: So you're projecting that we'll have it done before.
MS. BRECHTEL: All the way to the county line?
MS. ANDRADE: The 281.
MS. BRECHTEL: The 281. We'll probably look at the western extension
or the interchange before we get ultimately to the county line. I
think there's some higher priority needs in our area. The
interchange at 281 and 1604 is a higher priority than getting to the
county line.
MS. ANDRADE: Thank you. And I have another, Amadeo.
MR. SAENZ: Yes, ma'am.
MS. ANDRADE: You know, I understand that we could have had $200
million up front and that we may not get it up front, but are we not
expecting that throughout the life of the project, even though the
RMA is doing it?
MR. SAENZ: Yes, ma'am. And of course, it's just a matter of risk.
The amount of money that will come into a project will depend on the
users. With the public-private concession model, you've transferred
that risk to the developer; if we do the public model, the risk is
retained by us. Very similar with 130, 1 through 4, and 45 and Loop
1, we have retained all of that risk. We, as the department, are the
backstop for the maintenance costs should there not be enough money
to cover what we need for operation and maintenance. We're not
responsible for the debt service that's based on traffic, but we've
retained that risk. So if the traffic is higher, if you do get the
high traffic, then there will be more money and you will get more
surplus, you get to retain all of that. The private sector, it just
depends how much risk you want to transfer and the value of that
risk.
MS. ANDRADE: I understand. And you know, it's unfortunate this
project was not excluded from the moratorium, but I'm proud that the
RMA moved quickly on it and is starting to move forward on this
project, and I think that the local leadership understands what
happened, but this is what they've accepted and we have to respect
that.
MR. SAENZ: And we understand and we're working with them. I just
wanted to use it as an example because we have the numbers for this
project so I wanted to use it as an example of the different
procurement mechanisms.
MS. ANDRADE: Trust me, we've discussed this in San Antonio.
MR. SAENZ: I understand, I've been there.
MR. WILLIAMSON: The end game, members, to this now third month will
be next month, after all the legislation has been adopted and we
have a clearer picture of the impact on public-private partnerships.
Where this is all leading is Mr. Saenz will soon make concrete --
pardon the pun -- recommendations on transfers we're going to have
to approve two ways. We're going to have to approve transfers from
construction to maintenance and rehabilitation, and we're going to
have to approve transfers from districts which have pavement scores
acceptable to districts which don't.
And there are economic and political implications to those two
decisions that both Chairman Krusee and Chairman Carona have asked
us to thoroughly air out and explain in the public dialogue before
we make our decisions just so no one is caught off guard or
surprised by the impacts -- and they're going to be significant, I
think. I don't think it's going to be a fun time in the next couple
of months.
MR. SAENZ: And I guess the third impact is the impact on our program
based on the rescissions and based on the diversions, and we have
right now a program that we cannot build within the time frame that
we had identified it because of the changes that have happened in
rescissions and in diversions, and that will have also a big impact
on what we do.
MR. WILLIAMSON: Now, members, it's my intention to take up the 121
matter immediately following this, but we have a scheduling problem
with Dave Fulton that we're going to go ahead and address right
quick, if you don't mind, and then we'll go to 121 immediately.
MR. BEHRENS: We'll go to agenda item number 4, Aviation, and we have
three minute orders that need to be addressed. The first one will be
our airport funding projects for the month of August, agenda item
number 4(a). Dave.
MR. FULTON: Thank you, Mike. For the record, my name is Dave Fulton,
director of the TxDOT Aviation Division.
Item 4(a) is a minute order that contains a request for grant
funding approval for 26 airport improvement projects. The total
estimate cost of all requests, as shown in Exhibit A, is
approximately $12.6 million: approximately $8.9 million federal,
$1.4 million state, and $2.3 million in local funds.
Public hearings were held on July 19 and July 26 of this year. No
comments were received. We would recommend approval of this minute
order.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation on this minute order. Do you have questions or
comments?
MR. UNDERWOOD: So moved.
MR. HOLMES: Second.
MR. WILLIAMSON: I have a motion and a second. All in favor of the
motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. FULTON: Item 4(b) is a minute order for the purpose of
requesting continuation of the Routine Airport Maintenance Program
for fiscal year 2007. The program allows the department to match
local funds for airport maintenance and small capital improvement
work items on a 50 percent state, 50 percent local basis, up to a
maximum of $50,000 in state funds per airport per year. No changes
are recommended from the program that was in place last year.
A public hearing was held on July 19. No comments were received. We
would recommend approval of this minute order.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation. Do you have questions or comments for staff? Do I
have a motion?
MR. UNDERWOOD: So moved.
MR. HOLMES: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. FULTON: The final minute order, 4(c), is a minute order to
appoint one new member, Mr. Robert Bruce of Boerne, Texas, and
reappoint one current member, Mr. Pete Huff of McKinney, Texas, to
three-year terms on the Texas Aviation Advisory Committee. Both Mr.
Bruce and Mr. Huff meet the statutory requirements for service on
the committee. We recommend approval of this minute order. Both Mr.
Huff and Mr. Bruce are in attendance today.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation on this minute order. Do you have questions or
comments for staff?
MR. HOUGHTON: So moved.
MR. UNDERWOOD: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. And I understand Mr. Bruce and Mr.
Huff are prepared to answer questions or say what they need to say
if they need to say something or if we want to ask them questions.
MR. HUFF: I'm Peter Huff, Mr. Chairman. Good to see you again.
Fellow commissioners. I've served three years on this committee, I
do a lot of flying around the country, and I'd just like to say that
the Texas funding in the general aviation system is the best model
that I've seen anywhere. I've tried to contribute to this effort and
I appreciate this reappointment and look forward to serving our good
state three more years.
MR. WILLIAMSON: That's kind of you. Anything, members? We appreciate
it, we're trying to be multimodal.
MR. HUFF: Thank you very much.
MR. BRUCE: I thank the commission for its consideration. It's an
honor to be able to serve in this capacity. I hope that my life's
work and experience can be useful to you and my peers in keeping us,
and echoing what Mr. Huff just said, we've got a great system here
and I hope to keep it that way.
MR. WILLIAMSON: Well, Mr. Bruce and Mr. Huff, the great business of
taking Texas towards a more civilized state every day can't be done
without volunteers such as yourself, and we deeply appreciate your
willingness to serve, it's very important to us.
Anything further, members?
MR. HOUGHTON: Yes, I have a question to ask Dave. I keep reading in
periodicals, Wall Street, USA Today, about the rift between the
commercials and the privates and landing fees and FAA and financing.
Is that going to have an impact on Texas airports?
MR. FULTON: I don't think so. It's about who should pay the tax, not
really how much money will be allocated. I think our funding will
continue. The airlines feel they pay more than their fair share;
some of us in general aviation probably wouldn't agree with that
position. He's very competent to speak on this subject.
MR. HOUGHTON: So in other words, Fred Underwood is going to have to
pay more landing fees to finance the FAA?
MR. UNDERWOOD: It's not landing fees, it's use of the airspace.
MR. HOUGHTON: Airspace. I'm sorry.
MR. FULTON: It's a major change in the way the tax would be
collected and I think TxDOT would be well served to continue the old
system -- that's my opinion, anyway.
MR. HOUGHTON: I was just curious.
MR. FULTON: Any detail you would like, I could meet with you and
discuss it, seriously.
MR. HOUGHTON: So the federal government owns the airspace, they say?
I thought we did in the state of Texas.
MR. FULTON: Not really. They have total control of the airspace, the
federal government.
MR. HOUGHTON: I thought that's our sovereign right, wasn't it?
MR. FULTON: I don't know about that. It's debatable, I guess.
(General laughter.)
MR. WILLIAMSON: Thank you, gentlemen.
Mike, let's tackle the biggy.
MR. BEHRENS: We'll go to agenda item number 8 which is Toll
Projects. 8(a) deals with the cancellation of the procurement that
we had on the 121 project, and 8(b) deals with finalizing an
agreement with the NTTA on that same project. Amadeo.
MR. SAENZ: Thank you, Mr. Behrens. Commission, again, for the
record, Amadeo Saenz, assistant executive director for Engineering
Operations.
Agenda item 8(a), as Mr. Behrens said, the minute order cancels the
procurement for the comprehensive development agreement for the
State Highway 121 project from Business 121 to US 75 in Collin,
Dallas and Denton counties. We have received a letter from the
Federal Highway Administration and the letter from the Federal
Highway Administration has said that the procurement, as we were
proceeding following the requirements, is in violation of the
federal procurement procedures in two areas.
One, that it violated federal law that requires fair and open
competitive processes. This is because, in essence, Senate Bill 792
required us to allow the NTTA to submit a proposal after the bids
for the original CDA were approved, so that is a violation in that
the NTTA already knew the answer before having to submit.
And the second violation is a violation of another federal
regulation, 23 CFR 635.112(e) where a public entity is prohibited
from bidding directly against a private entity.
These two violations, Federal Highway Administration said that if we
do not correct these violations, then we would have some compliance
measures that we would be passed down upon us. In essence, the 15
waivers that were approved for TxDOT for the development of the 121
project, as well as the two other projects that were all bundled
together, were suspended, and also, all prior approvals for granting
federal loans under the 121 TIFIA program, in essence, were also
suspended and not approved. And of course, Federal Highway would not
authorize the expenditure or allocation of any future federal funds
on the 121 project.
They did say that we had an opportunity to remedy the situation, I
have written to them, and our recommendation was that if we were to
cancel the procurement, then there is no procurement, there is no
competition, so therefore, there is no violation. And so that's what
this minute order does is that it cancels and if there is no
procurement, there won't be a violation.
In addition, the reason for this recommendation, the region has also
decided that they would like their local tolling entity to develop
this project, and of course, as part of our goals and strategies to
empower the local officials to solve local problems, this falls
under that strategy. So staff would recommend that we move forward
with the cancellation of the procurement of the comprehensive
development agreement for 121 from Business 121 to 75.
MR. WILLIAMSON: Members, staff has briefed each of you individually
on the different angles of the dilemma we find ourselves in, and I
suspect staff has told you the same thing staff told me which is it
is not in our best interest to spend much time discussing whether or
not we should do this minute order. However, this is the appropriate
time to ask Mr. Saenz to clarify for those who might be observing
our actions today the concept of shifting risk to the private sector
in public-private partnerships.
If we pass this minute order, if I understand it correctly, Mr.
Saenz, we will be canceling the entire procurement in which three
private sector entities participated and from which we chose one
proposer to finance the entire project. Is that correct?
MR. SAENZ: That's correct, sir.
MR. WILLIAMSON: You spoke, in your layout on our cash flow, about
the differentiation in providing the construction costs and then
additional financial compensation for the right to lease the asset
as being the risk that is shifted from the public sector to the
private sector. Is it fair to say that you're actually shifting the
risk from either the taxpayer to the private sector, or in the case
of 121, from the toll-payer to the private sector?
MR. SAENZ: Yes, sir, that's correct.
MR. WILLIAMSON: And the reason that you can characterize it as
shifting the risk is because of the large cash payment above the
actual cost of the asset which cash payment will be used to make
other improvements in the area. In the private sector model, the
risk of recovering that difference between the construction cost and
what's actually paid is shifted from the toll-payers of the asset to
the private sector.
MR. SAENZ: The risk is kept by the private sector.
MR. WILLIAMSON: So whether or not the proposed payment ends up
meeting market principles, it will no longer be the worry of the
toll-payer because the toll-payer's toll rates would have been fixed
by the actions of this body and the metropolitan planning
organization in North Texas.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: So when we cancel this procurement, we shift the
risk to build the project, and if there is any cash payments from a
subsequent decision we might make, from the private sector back to
the toll-payers of State Highway 121.
MR. SAENZ: That's correct.
MR. WILLIAMSON: Is there anything we don't understand about that
before we make this decision?
MR. HOUGHTON: I'm understanding of it, but I have another question,
if I may.
MR. WILLIAMSON: Just be cautious.
MR. HOUGHTON: I'm always cautious.
(General laughter.)
MR. HOUGHTON: What is the downside of this action?
MR. SAENZ: The downside of this action is we have a proposal and a
commitment, and by canceling that, it will no longer be there. You
have a commitment to build this project by the private sector and
operate this project for 50 years by the private sector, and they
are retaining the risk, and by canceling it, we have, in essence,
done away with that.
MR. HOUGHTON: And we have nothing in hand to substitute this?
MR. SAENZ: We have tools available to us to develop this project
under a public sector model proposal, and we'll talk about it in the
next minute order.
MR. WILLIAMSON: I think it's safe to say that the downside is we
have the risk of the cash value someone else has associated with
this asset shifted to that person right now. If we pass this minute
order, we return that risk back to the toll-payers of State Highway
121.
MR. HOUGHTON: Well, I was looking for a different answer.
MR. WILLIAMSON: That will probably come up in the next one.
MR. HOUGHTON: It probably will.
MR. HOLMES: May I ask one question, Mr. Chairman? This minute order
is at the advice of our counsel?
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation on the minute order to cancel the private sector
procurement for State Highway 121 in the North Texas area. Do I have
a motion?
MR. HOUGHTON: Do you want a unanimous decision on this?
MR. WILLIAMSON: Bob Jackson would shoot me if I responded to that
question. I would be paint balled between the eyes.
(General laughter.)
MS. ANDRADE: So moved.
MR. UNDERWOOD: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you, members.
MR. SAENZ: Thank you, Mr. Chairman.
Agenda item 8(b). This minute order authorizes the executive
director, subject to the finalization of the environmental clearance
for this project, to continue and finalize an agreement to enter
into a project agreement with the North Texas Tollway Authority for
the development, financing, design, construction, operation and
maintenance of the State Highway 121 toll project from Business
State Highway 121 to US 75.
This minute authorizes the department to submit for the commission's
approval additional agreements that are needed to provide for the
removal of this segment of the highway from the state highway system
and the transfer of those segments over to the North Texas Tollway
Authority, and also cancels the minute order we passed June 28,
Number 110968. The cancellation of the minute order is because the
environmental clearance has not been cleared, the deadlines that
were set in that minute order cannot be met. That is of no fault of
the department, it just has taken longer to environmentally clear
this project, so the cancellation of that will resolve that issue.
Moving forward with the NTTA on this project is the same mechanism
that we've used in the past for the development of other toll
projects in the region, specifically the President George Bush
Tollway, State Highway 190, and we are moving forward with
finalizing the agreement and developing that agreement very
similarly to that agreement for 190.
Again, the region had decided that they wanted to use the local
tolling entity to develop this project, so staff would recommend
that you approve this minute order, allowing us to continue and
execute an agreement once environmental clearance is done, as well
as the other items I mentioned with the cancellation of the current
minute order.
MR. WILLIAMSON: Amadeo, do I understand that we have an agreement
that's been signed by the North Texas Tollway Authority?
MR. SAENZ: RTC and NTTA have come to terms on all the major terms,
we do have an agreement signed by the NTTA. It could require
amendments to that agreement or some additional negotiation as a
result of the environmental, so we will not be able to sign that
agreement until after all those issues are addressed.
MR. WILLIAMSON: But NTTA, not only because of their word because
their word is good, but they've signed the agreement.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: Have they submitted any monetary?
MR. SAENZ: Yes. We have two agreements: we have the agreement for
the project that's been signed by NTTA; we also have an escrow
agreement that has been signed by NTTA as well as a bank, and I
think, Mr. Behrens, by us, and they have deposited into escrow the
$75 million requirement to hold the project between now and the
close of financing.
MR. WILLIAMSON: What is the reliable cash value of the North Texas
Tollway Authority proposal?
MR. SAENZ: The North Texas Tollway Authority proposal is equal to
$3.33 billion. It was negotiated as basically $2.8- and $833-, but
in the negotiations with RTC in developing this agreement, it was
agreed that they would put up all $3.33 billion up front.
MR. WILLIAMSON: Does that include the construction cost or is that
in addition to the construction cost?
MR. SAENZ: That is in addition to the construction cost.
MR. WILLIAMSON: So the construction cost, is $700 million a reliable
estimate?
MR. SAENZ: About $600 million.
MR. WILLIAMSON: Now, we just canceled the private sector
procurement.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: What was the probable cash value of the Cintra
proposal?
MR. SAENZ: The Cintra proposal, the probable cash value above the
cost of construction -- and we can use the same cost for example --
is $2.87 billion, net present value.
MR. WILLIAMSON: And under the agreement, as you understand it,
between the North Texas Tollway Authority and the RTC, the Regional
Transportation Council, are the tolls on State Highway 121 capped
the same way they would have been capped under the Cintra proposal?
MR. SAENZ: I'm going to ask for some assistance here. I'm going to
ask Jack Ingram, who has been working on this agreement, to help me
make sure that we answer that correctly.
MR. WILLIAMSON: The question that I have, Jack, is will the
toll-payers on State Highway 121 enjoy the same capped protection of
toll rates under the NTTA proposal as they would have enjoyed under
the canceled procurement with Cintra.
MR. INGRAM: For the record, I'm Jack Ingram, associate general
counsel with TxDOT.
NTTA has essentially committed to comply with the same toll
schedule, however, they have the ability under the agreement to
raise toll rates in order to protect the financial value of the NTTA
system if required by bonds or other financing documents, or as
required by law. The agreement also provides that they will raise
rates first on other parts of the system but there is a risk that
they would have to exceed the toll rate schedule that's in the
agreement.
MR. WILLIAMSON: So if they are unable to recover from the
toll-payers on State Highway 121 the $600 million they'll spend on
construction, plus the $3.3 billion that they'll pay in cash for
other projects in the area, the toll-payers on the balance of their
system are at risk, and ultimately the toll-payers of State Highway
121 are at risk.
MR. INGRAM: That's correct.
MR. WILLIAMSON: And under the Cintra proposal, the toll-payers of
either the NTTA system or State Highway 121, neither would have been
at risk.
MR. INGRAM: That's correct.
MR. WILLIAMSON: So when we speak of shifting risk to the private
sector, that's one aspect of the risk shift that we speak of.
MR. INGRAM: Yes, sir.
MR. WILLIAMSON: Thank you, Jack.
Mr. Saenz, there are many versions of when the discussion about this
toll road began; I don't wish to revisit all those versions. I do
know there was a point in the not distant future when officials from
the North Texas Tollway Authority suggested what they thought the
concession value of 121 might be -- that was just, I think, two
years ago. Do you recall what that number was?
MR. SAENZ: Originally when the RTC working with NTTA on the
development of the 121 project, they originally were requesting some
toll equity, but about two years ago when they were only looking at
a portion of the project, just the portion in Collin County, they
submitted a proposal to the RTC where they identified the value of
that project, the Collin County portion only, and under different
toll rates -- I believe the toll rates were 12 cents per mile -- and
different escalation rates, and they valued that project, I believe,
around $500 million.
MR. WILLIAMSON: Above the construction cost?
MR. SAENZ: Above the construction cost.
MR. WILLIAMSON: And do you happen to remember what the construction
cost was of the Collin County portion only?
MR. SAENZ: I'm going to take an educated guess that it was somewhere
about $325- to $350-.
MR. WILLIAMSON: And the toll-payers through that strip of highway
would have essentially been the same as the toll-payers under what
they propose to do now because the Collin County portion is nothing
more than a continuation from the east and from the west.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: Were there other private sector proposers with
Cintra that submitted proposals that we could quantify?
MR. SAENZ: Yes, sir. We had received three proposals for the CDA
procurement that was canceled in the last agenda item.
MR. WILLIAMSON: Who was the proposer that had the second best
proposal to Cintra?
MR. SAENZ: The second best proposal was an outfit that was called
Texas Partners 121.
MR. WILLIAMSON: Now, I want to make sure I understand. The Cintra
procurement that we just canceled would have called for Cintra to
construct the road, pay the region $2.875 billion in cash
equivalent, and operate under the toll cap established by the RTC.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: This second place proposer, did they propose to also
construct the asset?
MR. SAENZ: Yes, sir. They also proposed to construct the project in
accordance to the terms of the procurement.
MR. WILLIAMSON: And what cash value did the second place proposer
associate with this asset?
MR. SAENZ: Their cash equivalent value in net present worth was
$1.33 billion.
MR. WILLIAMSON: So the difference between the second proposer and
the proposer we selected, Cintra, was roughly $1.5 billion.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: Who was the third proposer?
MR. SAENZ: The third proposer was Macquarie 121 Partnership, LLC.
MR. WILLIAMSON: They proposed to construct the asset?
MR. SAENZ: Yes, sir, they did also.
MR. WILLIAMSON: Did they propose to make a cash payment?
MR. SAENZ: Yes, sir, they did also, and their proposal was $1.23
billion.
MR. WILLIAMSON: So before I vote on this minute order, I want to be
sure I understand the numbers, something we try to do around here,
despite opinions to the contrary. The North Texas Tollway Authority
looked at roughly 52 percent of this asset two years ago and opined
that at about $325 million of construction cost, the asset was worth
roughly $500 million in cash.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: Macquarie, the largest constructor of private toll
roads in the world, looked at this asset and said, It's worth the
construction cost and $1.2 billion in cash. Texas Infrastructure,
which I understand is Skanska?
MR. SAENZ: I don't recall exactly who was on the team but I can
verify that for you.
MR. WILLIAMSON: One of the five largest toll constructors in the
world, said, We'll build this asset and pay you $1.3 billion.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: So that's three proposals from three different
points on the compass that range from $500- to $1.3 billion, Cintra
said $2.8 billion and now NTTA says $3.3 billion.
MR. SAENZ: Just the one proposal was on a portion of the project,
the $500 million.
MR. WILLIAMSON: So is it fair to say that the risk differential
between the number two proposer, $1.3 billion, and the NTTA
proposal, $3.3 billion, the $2 billion risk has been shifted from
the private sector back to the toll-payers of the North Texas
Tollway Authority?
MR. SAENZ: That's correct.
MR. WILLIAMSON: That's the decision we make today.
MR. SAENZ: That's the decision you make today.
MR. WILLIAMSON: What if we believed that was the wrong decision for
the toll-payers of North Texas, could we elect to just pass up this
minute order?
MR. SAENZ: No, sir. Senate Bill 792 does not allow us to do that; we
would be in violation of Senate Bill 792.
MR. WILLIAMSON: So we have a statute that required us to make a
finding of fact, comparing a bid that was twice as high as the next
bid, and if the public sector proposal seemed to be preferred by the
local entity in the equivalent, we're required to pass this minute
order?
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: Placing the toll-payers on the North Texas Tollway
Authority at risk for that $2 billion difference.
MR. SAENZ: That's correct.
MR. UNDERWOOD: Mr. Chairman, I'm confused on something as you're
going along. Amadeo, the risk to the taxpayers and the toll is
really $3.3-, not $2 billion. Isn't that correct? They're really at
risk for the whole $3.3-.
MR. SAENZ: $3.3- plus the $600 million.
MR. UNDERWOOD: Mr. Chairman, you're thinking the $2 billion
difference but they're really liable for all $3.3-.
MR. WILLIAMSON: If you assume that multiple bids establish a range
of probability, then the multiple bids established a range of
somewhere between $500- and $1.3 billion. In my view, probably the
toll-payers are not much at risk for having to pay higher tolls
because of the incremental payment, they're at risk for paying
higher tolls at the difference between that range and the winning
proposal.
In other words, when the Cintra proposal came through and staff
looked at the proposals, they instantly realized that Cintra was
paying a $1.5 billion premium over three other groups' assessment of
that traffic risk, but because we negotiated a toll cap and a
limitation on 121, there was no risk to the toll-payers, that
Cintra's aggressiveness would be borne by their toll payments. The
North Texas Tollway Authority then took their value of this asset,
not from the competitive position they were in two years ago but
from having to beat the best offer of Cintra, and arrived at the
$3.3 billion.
My only point is I want to know if there's some way that we can
relieve the toll-payers of 121, and in fact, the entire system from
paying any additional tolls if the traffic doesn't occur at the toll
rate projected over the next few years as three other entities who
do this for a living -- two plus NTTA -- projected in the last two
years.
MR. UNDERWOOD: And it's your feeling that the exposure is going to
be that $2 billion.
MR. WILLIAMSON: I don't want the Cintra people to take this wrong,
but I really didn't much care if they overpaid for the asset.
MR. UNDERWOOD: No, I understand.
MR. WILLIAMSON: But I have deep concerns about the taxpayers of
North Texas or the toll-payers of North Texas overpaying for the
asset.
MR. HOUGHTON: Well, there's another issue, Mr. Chairman, and it's
the ability going forward to meet the commitment of the 792 projects
that NTTA has asked for in legislation. I think the statement from
that podium, and other podiums, was they could fully finance all of
those projects, system finance it, period. Now, in fact, is that
true, can they meet those obligations under 792? That's another
issue that I think needs to be raised.
MR. WILLIAMSON: But if I understand Mr. Saenz correctly, we really
have no choice.
MR. SAENZ: That's correct.
MR. WILLIAMSON: The legislation directs us.
MR. HOUGHTON: Do you know that the financing has been lined up,
those commitment letters from their financial institutions?
MR. SAENZ: I have spoken to the NTTA people as late as day before
yesterday and they assured me that they had been visiting and
communicating with their financial folks and everything was in line
for them to be able to finance this project.
MR. WILLIAMSON: Who did you speak with?
MR. SAENZ: I spoke with Mr. Wageman.
MR. WILLIAMSON: Mr. Wageman?
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: Did you give him one more chance to walk away?
MR. SAENZ: I just wanted to express what we were going to be doing
today and the first action that, in essence, canceled the
procurement so there was no Cintra to fall back on for the region.
MR. WILLIAMSON: And he declined.
MR. SAENZ: Yes, sir.
MR. HOUGHTON: I don't think he had a choice; legislation says
they've got to do it.
MS. ANDRADE: I have a question. Amadeo, do you think that the NTTA
felt pressured that they had to exceed that amount by so much, or
were they advised? And I don't want to speak for them.
MR. SAENZ: Commissioner, they submitted the proposal. The issue with
the Federal Highway Administration in their letter is that they
submitted a proposal knowing what is it that was already out there.
MS. ANDRADE: Right.
MR. SAENZ: That's the issue that led to the violation of the fair
and open procurement process.
MR. HOLMES: Amadeo, Ted brings up a good point about the other
projects. Do we have any information about the ability or the
progress on the other projects?
MR. SAENZ: The RTC has been working with NTTA -- unfortunately,
Michael Morris is not here today, he couldn't make it, he called to
let me know -- on the development of those projects. Some of those
projects will be subject to the market valuation process, there are
some projects that are exempt from the market valuation process that
are projects that will be done by NTTA because they were already
working on them. One of them is the President George Bush Eastern
Extension project, the second one is the Southwest Parkway which is
121 but on the Tarrant County side, and the Trinity Parkway is
another project that's exempt from the market valuation because it
was going to be developed by NTTA.
They have been working and those are some of the communications that
were going on between the RTC and NTTA with respect to determining
the public benefits of their proposal.
MR. UNDERWOOD: I'm not sure I understood the answer. Do we think
that those are progressing?
MR. SAENZ: They are progressing with the projects. In fact, we have
one agenda item today on the President George Bush, and they are
progressing with the projects. I don't have the exact information
but we can write to them and ask.
MR. HOUGHTON: You know, there's a guy sitting right behind you that
is anxious just to jump up and answer those questions. Herrington,
do you want to answer?
MR. HOLMES: Amadeo, I have one other question after this.
MR. HOUGHTON: You were just on the edge of your chair.
MR. HERRINGTON: I'm Rick Herrington, deputy executive director of
NTTA, for the record.
First of all, Mr. Behrens, congratulations, and as an ex-DOT
employee, appreciate everything as an employee you did for us.
We're actually meeting now on 161. You asked about the additional
projects. We're working with the TxDOT district, we've had several
meetings, including one yesterday, starting the market valuation.
Southwest Parkway, the Eastern Extension were actually modeled in
our financial model for our financing for 121, and we've started the
environmental assessment on two of the other five projects that RTC
is out there with that TxDOT has the lead on three of the five on
environmental -- actually, we have the lead on one, TxDOT has the
lead on two. We started the process on the other two regional
projects now. We are completely committed to advancing those
projects for the region.
MR. HOUGHTON: Do you think you can fully finance? You know, you've
heard me from the dais before, it's no big secret that I don't
believe in the subsidizing of projects, and of course, we've heard
the testimony today we don't have the money to put into these
projects. You have to look at the entire project cost and can they
be financed by the tolling authorities.
MR. HERRINGTON: Our financial team continues to tell us that the
addition of 121 actually enhances our ability by $1- to $4 billion
to cover those gaps. Our financial team continues to tell us that.
MR. HOLMES: That's in spite of the change in the financial markets
over the last month or so?
MR. HERRINGTON: They continue to tell us that, Commissioner.
MR. HOUGHTON: Do you have commitment letters from financial
institutions yet?
MR. HERRINGTON: We have an early commitment letter from RBC.
MR. HOUGHTON: I'm talking about the actual financial institutions
that would finance these projects.
MR. HERRINGTON: We have commitments from the underwriters for our
bond anticipation notes, we've discussed everything with the rating
agencies, our investment grade traffic and revenue study will be
done sometime in mid September. We need the project agreement, we
need the environmental clearance, and then we can officially go
speak to the rating agencies, the market. We continue to hear good
things from the market as far as our ability to finance.
MR. HOUGHTON: One of the things, Rick, that gives me pause is that
the infusion of $3.3- in cash to the RTC -- and this is entirely up
to the RTC -- but then NTTA comes behind and says we need a backstop
or equity from that pool of funds to make this project work, so
actually the net number back to the region is to tax roads -- that
$3.3-, I anticipate, would go to the tax roads, not to the toll
assets that you're getting ready to build and you look at those
projects that you can fully finance, whether it's you or an RMA,
they're not coming back to us for equity in these projects.
MR. HERRINGTON: Yes, sir.
MR. HOUGHTON: I made a statement I meant to be a question, again,
reaffirming the NTTA's ability to fully finance these projects.
MR. HERRINGTON: The market valuation process, once that value is
established will give us the number that whether we'll go CDA or do
it ourselves, that will happen early on. But we believe, knowing
those projects, that we'll be able to do all those projects.
MR. HOLMES: The last question -- and I'm not sure whether it's for
Amadeo or for you -- there is the open question of when the
environmental permits will be completed.
MR. SAENZ: In discussing with Federal Highway and in their response
to my letter they say they continue to work and they think that they
can have environmental re-evaluation completed by sometime in the
middle to the end of September.
MR. HOUGHTON: Is there a potential for litigation under the
environmental?
MR. SAENZ: I'm going to ask Mr. Jackson to answer that.
MR. JACKSON: Bob Jackson, general counsel. The threat of litigation
on environmental, we have received a letter from the City of Frisco
threatening future litigation.
MR. HOUGHTON: Threatening litigation?
MR. JACKSON: Yes, threatening.
MR. HOUGHTON: For what reason?
MR. JACKSON: They didn't say. We presume it would be environmental
or partly environmental, they really didn't say.
MR. HOUGHTON: And that could hold up the project.
MR. JACKSON: There may be other people in this room who know better
than I, from discussions with Frisco that maybe that threat has gone
away, but we have not received anything in writing from the City of
Frisco.
MR. HOUGHTON: And if there are people in this room who could bring
that forward, it would be nice to know. Rick, can you?
MR. HERRINGTON: You know, Commissioner Houghton, I certainly can't
speak for the City of Frisco, but I can assure you we'll work hard
with your district staff to mitigate any kind of risk with any of
the member cities.
MR. HOUGHTON: Thanks, Rick.
MR. HERRINGTON: Before I step down, I would like to commend your
staff. We were all put in somewhat of a difficult situation
negotiating 121. Bill Hale and his staff, Amadeo, Bob Jackson and
his staff, if there's a definition of partnering for the good of the
region, it occurred in our negotiations. And once again, for the
record, your staff did a tremendous job.
MR. WILLIAMSON: Thank you.
MR. WILLIAMSON: Now we're going to try to find out why they were
even there; they weren't supposed to participate.
MR. HERRINGTON: Maybe I should say they were great observers.
MR. WILLIAMSON: Members, you heard the staff's explanation, witness
testimony, and recommendation.
MS. ANDRADE: So moved.
MR. HOLMES: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you. Thank you, Amadeo.
MR. BEHRENS: We'll go to agenda item number 5, Public
Transportation. The first minute order, agenda item 5(a), deals with
the New Freedom Program that's been established by the feds. Eric.
MR. GLEASON: I can still say good morning. For the record, my name
is Eric Gleason, TxDOT director of Public Transportation.
Agenda item 5(a) awards $1,276,318 in federal funds under the
Federal Transit Administration, Section 5317, New Freedom Program
for new transportation services or new transportation alternatives
to provide service that go beyond the requirements of the Americans
With Disabilities Act for individuals with disabilities. As shown in
Exhibit A, approximately $227,000 is awarded to small urban areas of
the state and approximately $1,050,000 to non-urbanized or rural
areas of the state.
On April 6, 2007, the department published a notice of request for
proposals for New Freedom projects. Proposals were received for both
operating and capital assistance. Proposals were evaluated based on
the following criteria: project planning and coordination, and
particularly in this case with members of the community with
disabilities; demonstration of need; benefits of the project; and
service sustainability.
Two small urban proposals were received and are recommended for
award: the Brownsville Urban System, and the Panhandle Center for
Independent Living. A total of nine non-urbanized area proposals
were received, of which two are recommended for award. The remaining
small urban fund balance will be rolled over for the fiscal year '07
call for projects scheduled for this coming fall. These
recommendations are shown in Exhibit A.
We recommend your approval of this minute order.
MR. WILLIAMSON: Members, you've heard staff's explanation and their
recommendation. Do you have questions or comments for staff?
MR. UNDERWOOD: So moved.
MS. ANDRADE: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you. Thank you, Eric.
MR. BEHRENS: Go ahead with 5(b), Eric.
MR. GLEASON: Agenda item 5(b) authorizes the reallocation of Federal
Transit Administration Section 5310 program funds for elderly
individuals and individuals with disabilities within the Fort Worth
District.
On March 29, 2007, Minute Order 110879 was approved by the
commission for the fiscal year 2007 Section 5310 program projects.
Recently, Jack County changed its 5310 program affiliation from
Texoma Paratransit System, or TPS, to Public Transit Services. Due
to this, a portion of the funds originally allocated to TPS needs to
be reallocated to Public Transit Services with the district's
program of projects.
We recommend your approval of this minute order.
MR. WILLIAMSON: Members, I made a mistake. I had a witness on 5(a),
and I blew right by that witness. What I'd like to do is go ahead
and move this minute order and then take a moment and permit the
witness to see if he has something that would change our mind.
So what's before you is 5(b). You've heard staff's explanation and
recommendation.
MR. HOLMES: So moved.
MR. UNDERWOOD: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. And now let's stop a moment and hear
from Ron Drachenberg. I am so sorry, I apologize.
MR. DRACHENBERG: No problem.
MR. WILLIAMSON: Looking at all the billion dollar figures in front
of me trying to figure out what I'd just done and I just overlooked
the card.
MR. DRACHENBERG: We just wanted to thank the commission for all of
your support because this adds three routes in Fort Bend County to
our rural public transportation. We've been working since the '90s
trying to get public transportation for the areas within Fort Bend
County.
And Mr. Behrens, we do have a position for an engineer, if you're
interested, in Fort Bend County.
(General laughter.)
MR. DRACHENBERG: And I want to thank Mr. Gleason too for all of your
efforts.
Paulette Shelton, our public transportation director, had a
conflict, couldn't be here, and we want to thank you from
commissioners court and the citizens of Fort Bend County for this.
Again, I believe you mentioned the things that are involved with the
program, but again, this gives us the maximum service that we can
with the dollars provided for that. It's for a travel trainer and
five-passenger attendants, so this will help further our public
transportation in Fort Bend County.
Thank you for coming to Fort Bend County last month, and you got to
see the area of Fort Bend County. So I just wanted to thank you.
MR. WILLIAMSON: Tell Paulette we said hello. She's been quite active
on issues that are important to us.
MR. DRACHENBERG: We really like having her down there.
MR. WILLIAMSON: She's contributed a lot to the state's advance in
public transportation.
And also, I think the pleasure was ours for being in Fort Bend
County. I think all of us had a great time, a positive attitude in
the community. I think, speaking for myself -- Ned probably already
knows -- I was a little bit surprised by the explosion of urban
Texas. I just didn't realize it had reached out quite that far. I
characteristically spend a day driving around when we're out of
town, and I drove some places that I was sure houses couldn't be and
there were a lot of houses there.
MR. DRACHENBERG: We're approaching a half million this year, and
born in '53, it's definitely changed in that time. And again, we
will be watching Wharton County with you too. So sure thank you.
MR. WILLIAMSON: Thank you. I apologize, members, I was a little
wrapped up in the other deal, or as Coby says, I was wrapped around
the action. I apologize also to you, Eric.
MR. GLEASON: Agenda item 5(c) authorizes the appointment of three
members to the Public Transportation Advisory Committee, and they
are as follows: Michelle Bloomer from Arlington, Texas, representing
the general public; J.R. Salazar from Coleman, Texas, representing
public transportation providers; and Vince Huerta from El Paso,
Texas, also representing public transportation providers. Their
service will be effective October 1, 2007 and run through September
30 of 2010.
PTAC, the Public Transportation Advisory Committee, is comprised of
eleven members. Four members have terms which expire on September
30, 2007. These three appointments are recommended for your approval
at this time. An appointment for the fourth vacancy, representing
public transportation users, will be recommended in a future minute
order. We recommend your approval of this minute order.
MR. WILLIAMSON: Members, you've heard staff's explanation and
recommendation.
MR. HOUGHTON: So moved.
MR. HOLMES: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you. Thank you, Eric.
MS. ANDRADE: Mr. Chairman, I just have one thing to say. Eric, make
sure that I know we've sent a letter thanking the four members that
have served. We certainly thank them for their time and they've done
a great job, and we're looking forward to working with these new
members.
MR. GLEASON: I will do that. Thank you.
MS. ANDRADE: Thank you.
MR. BEHRENS: Agenda item number 6 is our proposed rules for this
month. The first one, agenda item 6(a)(1) is rules under Management
that pertains to advisory committees. Bob.
MR. JACKSON: The commission, by rule, has created various advisory
committees. State law requires advisory committees to be sunset at
least once every four years. The commission, by rule, sunsets its
committees every two years and that date is December 31 of this
year, so the commission needs to go ahead and either abolish
committees or continue them. These rules propose that we continue
all of the commission's advisory committees. Recommend approval of
the minute order.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation on this item. Do you have questions or comments for
staff?
MR. HOUGHTON: So moved.
MR. UNDERWOOD: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. BEHRENS: Agenda item 6(a)(2) is under Contract Management and
this pertains to some statute changes concerning partial payments.
Thomas.
MR. BOHUSLAV: Good morning, commissioners. My name is Thomas
Bohuslav. I'm the director of the Construction Division.
Item 6(a)(2) are proposed rules to implement House Bill 2075 from
the 80th legislative session and they have our contract retainage
requirements agree with federal regulations. Their regulations right
now require that we have three options in regard to retainage. One
of those is that we have no retainage on our projects and it relates
to prompt payment requirements.
Previously our statute said that we had to require we had partial
payments whereby we withheld 5 percent from our contractors and
those, of course, were in conflict. This new law changes that and
gives an option to the department to no longer have to have
retainage on our projects. With the ultimate adoption of this, we
would no longer have retainage on our future contracts.
This new statute also allows us to release retainage on existing
contracts, and we'll only consider that when the contractors can
meet certain stipulations that will protect the department's
interests.
Staff recommends approval.
MS. ANDRADE: Members, you've heard staff's recommendation. Any
questions?
MR. HOUGHTON: So moved.
MR. UNDERWOOD: Second.
MS. ANDRADE: We have a motion and a second. All in favor, say aye.
(A chorus of ayes.)
MS. ANDRADE: Motion passes. Thank you.
MR. BEHRENS: Agenda item number 6(a)(3) is proposed rules concerning
Border Colonias and some new definitions and other apportionment
items that pertain to that. Wayne Dennis.
MR. DENNIS: Good morning, commissioners. For the record, my name is
Wayne Dennis. I'm the deputy director of the Transportation Planning
and Programming Division.
This minute order proposes the adoption of amendments to Sections
15.101, 15.103 and 15.105 to be codified under Title 43, Texas
Administrative Code, Part 1, concerning the Border Colonia Access
Program. Senate Bill 99, enacted by the 80th Legislature, amended
Government and Transportation Codes. The proposed amendments to
Section 15.101 and 15.103 are necessitated by this legislation.
Amendments to Section 15.105 are desired to adjust maximum funding
levels per mile for inflation.
15.101 is amended to change the definition of Border Colonia. As
proposed, the future program calls will use eleven as the minimum
dwelling number for a Colonia as a requirement for program
eligibility. Section 15.103 is amended to require applicants to
submit a Colonia classification number, if one exists, for
applications refunding. And Section 15.105 is amended to increase
the maximum amount of funding available from $200,000 per mile to
$500,000 per mile.
This minute order, presented for your consideration, authorizes the
publication of proposed amendments in the Texas Register for the
purpose of receiving comments. Staff recommends approval of this
minute order.
MS. ANDRADE: Members, you've heard staff's recommendation.
MR. HOUGHTON: So moved.
MR. HOLMES: Second.
MS. ANDRADE: We have a motion and a second. All in favor, say aye.
(A chorus of ayes.)
MS. ANDRADE: Motion passes. Thank you.
MR. BEHRENS: Agenda item number 6(a)(4) is under Right of Way, and
these proposed rules pertain to billboards. John.
MR. CAMPBELL: Good morning. For the record, my name is John
Campbell. I'm the director of the Right of Way Division of TxDOT.
I'd like to present for your consideration this minute order, item
6(a)(4) which provides for the proposed amendments to Sections
21.142, 21.150, 21.154, 21.441, and 21.551, as well as new Section
21.163 under Title 43 of the Texas Administrative Code.
The primary effect of the proposed rules is twofold: first, to
implement the requirements of House Bill 2944, passed during the
80th legislative session, regarding the permitting of outdoor
advertising signs within the ETJ of municipalities of greater than
1.9 million population; the second reason is to establish criteria
by which to regulate the limited lawful display of changeable
outdoor advertising signs.
Comments on the proposed amendments and the new section will be
accepted until 5:00 p.m. on December 6. That reflects an extended
90-day comment period. And a public hearing has been scheduled for
November 28 at 9:00 a.m.
Staff recommends approval of the proposed rules, and I'm pleased to
take your questions.
MR. WILLIAMSON: Members, we have a few who wish to comment, far
fewer than I had feared, so thank you for not calling out the troops
just yet, Margaret. Do you care to hear from witnesses first?
COMMISSION MEMBERS: Yes.
MR. WILLIAMSON: Okay. Thank you, John.
We will follow the legislative pattern of mixing and matching.
Terral, I think we'll let you start.
MR. T. SMITH: Thank you, Mr. Chairman. I'm Terral Smith. I represent
Scenic Texas, and I appreciate the willingness, Mr. Chairman and
others, to meet with many of the members of our organization over
the last week or two, and I do think that helped clarify some
issues, But there's a couple of things that you mentioned to me
yesterday, Mr. Chairman, that prompted me to write these down and
discuss with you today.
One of them is you did clarify and told us, and we knew that these
are not the rules themselves being adopted, they're just being
placed out there for public comment, and we understand. Our comment
back to you was: Why, why do we even need to discuss LED signs or
signs that light up? And your response back to us was: Because these
are taxpaying businesses and people that asked for this.
I'm glad to know about this new entitlement of taxpayers to be able
to have rules proposed and published because we actually brought a
group of rules to this commission over a year ago, fairly
uncontroversial, and they've yet to be published for notification
and nothing has happened, they're still sitting around here. And so
we're kind of wondering where our proposed rules are and when
they're going to get to come up because we're taxpaying citizens as
well.
The other thing you commented on -- and it will kind of come into
what I just said -- is that you'd like for Scenic Texas and the
billboard industry to try to come together, quit knocking heads, try
to reach some agreements, and I'm fine with that too. I'm always for
compromise, I'm always for discussion, I'm always for dialogue,
except that you have us in this position of negotiating against
ourselves, and even a country lawyer like me can figure out that's
not a good position to be put in. I mean, we're in the position yes,
we can take the position there should be none of these signs, but
essentially the pressures are to find some way to do them because
it's proposed. And if you sit out there and say no, I'm opposed to
it, well, then you're not willing to negotiate, what's wrong with
you.
Now, if our proposed rules were to come up, other things that could
help us that might be a counter to the LED signs, that would be
something to negotiate with, maybe things the industry doesn't want
at all but are willing to give in. So I propose that what you do is
pull this down for about 60 days, let our rules come in, let us look
at some rules that would help us in what we want to do, and then let
the negotiations begin and let the public hearings begin.
I'll make one last comment and be quick because I know my time is
short. One of your other comments, and it's been said that this is a
good thing for people like Scenic Texas and those whose goals is to
reduce the number of billboards in the state because when you put up
an LED you can do a deal to take down five other billboards, what a
good deal, why would you be opposed against that? That would be hard
to be against if there was some cap or limit on the number of
billboards in this state.
But if you followed the legislative session last session, you'll
know that the fight over billboards are not in the cities, they're
in the rural areas, they're in what we call the gateway areas.
Members like Robby Cook and Lois Kolkhorst, who represent those
gateways into Houston, were the ones filing bills to stop billboard
construction on their roads in their communities, and they're
conservatives and they're property rights oriented and they're good
people.
MR. WILLIAMSON: Did they get their bills passed?
MR. T. SMITH: No, they didn't.
MR. WILLIAMSON: Why not?
MR. T. SMITH: Because there's a very good strong lobby.
MR. WILLIAMSON: So you're blaming the failure of the legislature to
act on the lobby?
MR. T. SMITH: Yes, as a matter of fact.
MR. WILLIAMSON: Well, then maybe your complaints need to be in the
legislature, not here.
MR. T. SMITH: Oh, I have complaints here, and you know and I know,
because we have both served there, that you can have 80 percent of
the legislature for something and it not pass.
MR. WILLIAMSON: I can't imagine.
MR. T. SMITH: That's right, and you've experienced it and you know
how it works, and we will be back next session and we will be back
the session after that and we'll do that. I'm here because of this
rule because what is happening is local people in these areas who
have no power. What's going to happen, Mr. Chairman --
MR. WILLIAMSON: Terral, you don't mean to be on record saying people
don't have any power.
MR. T. SMITH: Well, I mean, sometimes they don't.
MR. WILLIAMSON: Surely the legislature listens to them.
MR. T. SMITH: Here's the lack of power in the rural areas and this
is what we argue: we'd given up on the idea and there was a policy
change by our organization four years ago to not even be for no
construction of billboards, we became in favor of local control, we
said give the local people the power to determine whether they want
billboards in their community or not. That's what we can't get past
because county commissioners have no power to do this, cities do,
and what happens is as the city limits billboards -- and if you pass
this, I'm convinced that yes, you'll take five billboards down on
Loop 410, put one digital billboard up, and five billboards will
then be built on Highway 290 or on Highway 71 or I-10. That's where
those billboards will go because there's no cap, they'll just move
to another area, areas that have no control.
MR. WILLIAMSON: Terral, don't think we might not be your allies on
the no-billboard deal. Don't get too rough with us, we may be your
friends.
MR. T. SMITH: Believe me, I can use all the allies I can take, and I
would appreciate your being our ally on this.
MR. WILLIAMSON: Billboards cost us a lot of money.
MR. T. SMITH: I'm bringing this to you before we do this, I'm
bringing up to you the problem. I want you to just be aware that
what sounds good when you first say it, that we'll take down five
billboards for this one, doesn't really result in that, because
there's no ability to stop new billboard construction elsewhere.
MR. WILLIAMSON: But you would also readily agree that those five
that are going to be built in replacement of the five that are taken
down could be built now?
MR. T. SMITH: True.
MR. WILLIAMSON: So there has to be a net reduction in the
possibility of billboards.
MR. T. SMITH: I don't think so, there's not necessarily. It is an
expanding, growing business.
MR. WILLIAMSON: But Terral, it's simple math. If we empower the
cities to say to the billboard industry we'll let you put up one LED
if you will permanently remove five from your inventory, or two or
three or whatever the cities decide to do, and that is two or three
or five billboards permanently removed from the billboard ozone.
MR. T. SMITH: From the city limits.
MR. WILLIAMSON: But the five that you say will go get built could be
built anyway.
MR. T. SMITH: You need advertisers.
MR. WILLIAMSON: It's a good argument, it just didn't hold up.
MR. T. SMITH: Oh, no, because they need advertisers. They just call
the advertiser who is in downtown Houston and say we're going to
rebuild this for you out here in Brenham and we'll put your ad up
there and we've got good traffic counts out there. The only reason
they just don't have 10,000 of them a year is because they still
need advertisers, and if you take those advertisers down in the
city, as the country people are discovering and the rural people are
discovering, the city stuff that the cities don't want moved to
their areas, billboards being one of them. That's what's happening
and that's what you see down at the legislature. You don't see city
legislators concerned about this issue, you see rural legislators,
especially those surrounding San Antonio, Dallas-Fort Worth, Houston
and Austin.
MR. WILLIAMSON: Be sure and enter that argument into the record so
we can consider it because I don't think we have any intention of
letting that happen, but I can only speak for myself.
MR. T. SMITH: Thank you, Mr. Chairman, members.
MR. WILLIAMSON: Wait. Members, question for the honorable former
member Terral Smith? I think you scared them, Terral.
MR. T. SMITH: I always do that. Thank you.
MR. WILLIAMSON: Now for the opposing viewpoint we will hear from
V.J. Smith of Clear Channel, unless V.J. doesn't want to speak --
V.J. has decided to speak. And this reminds me of enhancements day.
MR. V.J. SMITH: Good afternoon, commissioners. El Paso is a good
example of what Scenic is asking for and what our industry is doing.
Our new sign ordinance is a cap and replace ordinance, very
restrictive, by far more signs are coming down than are being built,
and we have retrofitted a few signs on surface streets with these
LED actual digital units, and we would invite the commissioners to
come to El Paso, our wonderful city, and view these static
changeable digital signage units.
And I'm here to answer any questions about those units on our
surface streets that were permitted under our local sign ordinance.
MR. HOUGHTON: One of those billboards he's talking about is outside
my office window.
MR. WILLIAMSON: Do you like it?
MR. HOUGHTON: Love it, it's a great LED sign. They put my name up
for financial services and it's got an arrow going that way.
(General laughter.)
MR. V.J. SMITH: If there are any questions, I can certainly answer
them.
MR. WILLIAMSON: I promise you that will be a five-page article in
The New American next month.
MR. V.J. SMITH: No further comment.
MR. WILLIAMSON: And Margaret, I'm going to let you go last. For the
rebuttal to that obviously biased position, Neal Rackleff of the
North Houston Association. How is our old friend, John Lindsay?
MR. RACKLEFF: Senator Lindsay is doing great. He's not real happy
about this proposed change, and I'm a board member of the North
Houston Association and I'm speaking on behalf of our 92
associations, agencies and entities.
Let me quote from Lewis Carroll: A Will you tell me which way I
ought to go from here? That depends on a good deal on where you want
to get to, said the cat. I don't much care where, said Alice. Then
it doesn't matter which way you go, said the cat.@
Like Alice in Lewis Carroll's classic story, this commission is at a
crossroads. Where you go from here matters a great deal. Visiting
the website of the Outdoor Advertising Association of America is
like stepping through the looking glass into an alternative and
nonsensical world. Common sense dictates that electronic signs,
vastly brighter and more visible than standard billboards, will be
more distracting and thus unsafe for drivers, but the Outdoor
Advertising folks maintain that such signs are just as safe, even
though they're touting them as being a much more effective means of
grabbing the attention of motorists.
No independent, unbiased and definitive study has been concluded to
determine the extent to which this greater distraction jeopardizes
motorists' safety. The OAAA cites two studies supporting the claimed
safety-neutral characteristic of electronic billboards, the Virginia
Tech Institute and Tantalla studies, both of which were commissioned
by the Foundation for Outdoor Advertising Research and Education.
This is an organization whose self-described purpose is to undertake
projects, quote from their website, A which help ensure that outdoor
advertising is competitive and a preferred means for marketing and
promotion.@
Now, regarding the Virginia Tech study, in Nichols Media Group v.
the Towns of Babylon and Islip, a federal district judge in New York
observed: the study is so infected by industry bias as to lack
credibility and reliability. The Tantalla study is really more of
the same. Relying on studies like this to make this kind of decision
is like asking big tobacco about the harmful effects of nicotine.
The common sense and concern for driver safety dictate that no
action should be taken to allow these signs until the ongoing
federal study of the safety ramifications of electronic billboards
is concluded. I think credible concerns have been raised regarding
jeopardizing federal funding by violating the 1972 agreement between
Texas and the federal government which need to be thoroughly
examined.
The present administrative rule prohibits any flashing, intermittent
or moving rider lights, including any type of screen using animated
or scrolling displays, such as an LED, even if the message is
stationary. It also prohibits lights that interfere with any
driver's operation of a motor vehicle. I think that this rule
demonstrates the commission's concern for the safety of motorists.
This is the right direction we should be going in.
However, the powerful interests lobbying to legitimize electronic
billboards want you to change course and drive headlong into their
alternative world. This is the same world where drinking makes you
cool, smoking makes you macho, and credit cards are the key to
prosperity and priceless memories of quality time with your
children. In this world, bright LED signs don't entail moving lights
or video animation and the images that change every few seconds are
not scrolling or intermittent, rather than conveniently change over
to the next message.
Furthermore, in this alternative universe, somebody actually thinks
this visual blight is attractive, even though public opinion surveys
have dictated to the opposite. Like obscenity, visual blight is hard
to define, but you know it when you see it, and this is it. It's
hard to quantify the positive impressions of great art which can
uplift and inspire, similarly, it's hard to quantify the damage done
by visual blight.
Merely considering amending the regulations to allow these signs is
taking a turn for the worse. Actually deviating from the path of the
current reg to allow electronic messages is the aesthetic equivalent
of driving into oncoming traffic, and looking for direction on this
topic from the outdoor advertising lobby is like asking the Cheshire
Cat for directions.
I believe this body desires to do what is best for Texans. It's my
sincere hope that the commission will make its way out of the
matrix, return from this deceptive digital detour, and like Alice,
step back into the sunlight of a new day, holding fast to the core
values at the heart of the existing regulation.
Thank you.
MR. WILLIAMSON: Questions or dialogue with this witness?
MR. HOUGHTON: Have you see one?
MR. RACKLEFF: I have seen them on the internet. I haven't had the
great opportunity.
MR. HOUGHTON: Why don't you come out to El Paso and sit in my office
so we can watch the one --
MR. RACKLEFF: I don't think any of the advertisement for your
financial services that it indicates.
MR. HOUGHTON: I'm being facetious. Have you seen one?
MR. RACKLEFF: No, I have not personally seen them, I have looked at
them extensively on the internet, and from my perspective, they
appear to be so bright that I think they would just be an enormous
blight on the visual horizon.
MR. HOUGHTON: I'm not going to argue with you, but it's to the
contrary. I was amazed, and I don't know if Clear Channel did that
on purpose that it's right there, but it is right there, it's across
the street and it may be 25 to 50 yards up the street and I can look
out my window and see it, and it's different and it doesn't have
Indians running across or kids or animation, it's interesting.
I think the open comment period and the 90 days we have -- is it 90
days, John, that we're going to talk about all this?
MR. WILLIAMSON: What's normal for a rule?
MR. CAMPBELL: The normal period is 30 days.
MR. HOUGHTON: So we've got 90.
MR. WILLIAMSON: And John, just so Neal is not too mad at us, why are
we at 90?
MR. CAMPBELL: The reason we went to 90 was in recognition of the
fact that we had a lot of interest on both sides of the issue.
MR. WILLIAMSON: So we tripled the public comment time so that Terral
can bring his proposal -- which let the record state, Terral, I've
never seen -- and he can add it as his proposed rules.
MR. RACKLEFF: And I think that's great, I appreciate and our
organization appreciates very much the fact that you're extending
the comment period, and we hope that you will listen with open
minds, hearts and ears as we voice our concerns.
MR. HOUGHTON: Well, open minds and ears goes both ways.
MR. RACKLEFF: It's just not over here or over there, there's got to
be something, and in the high age of technology. Now, talking about
technology, are you for any type of legislation that would ban the
use of cell phones or women putting on makeup in their automobiles
running down Interstate Highway 10?
MR. RACKLEFF: I don't think every foolish practice needs to be
legislated against.
MR. HOUGHTON: Or texting in your car while you're driving 70 miles
an hour?
MR. RACKLEFF: I don't think that's a wonderful idea.
MR. HOUGHTON: You're talking about distractions.
MR. RACKLEFF: Of course, I would never do that. But let me say in
response, we're talking about an issue of aesthetics and beauty
truly is in the eye of the beholder. If you've driving down I-45 in
Houston, some genius probably thinks that those 30-foot tall
inflatable gorillas that top every darn car sales facility is
beautiful, and somebody thought that a pink one would look even
better and an orange one, and now there's a bald eagle out there
too. So you know, what advertisers think is aesthetically pleasing
or is acceptable is not what the general public necessarily would
agree with.
MR. HOUGHTON: That's called zoning.
MR. RACKLEFF: That's true. And folks who are in Houston subjected to
those gorillas and other things would like to not have additional
visual blight. The issue is are you for what the public wants, and I
think public opinion polls, at least that I've seen, have indicated
overwhelmingly that people do not want additional visual blight of
this nature.
MR. HOUGHTON: Well, I think we need to keep our minds open, and I
appreciate, Neal, your input, and we have that 90-day period now to
find something here we all can work with.
MR. WILLIAMSON: Or not do anything. That might be the upside of
that. It wouldn't be the first time we proposed rules and then not
acted on them.
MR. RACKLEFF: I appreciate very much your time. Thank you.
MR. WILLIAMSON: But the gorilla argument I like because I hate those
things flying in the air, they scare me.
MR. RACKLEFF: Yes, they're frightening.
MR. WILLIAMSON: I keep thinking it's going to blow off its rope and
come across the front of my car.
MR. RACKLEFF: I've had the same concern. And these signs, I think a
lot of folks are going to be disappointed when they see just how
bright they are.
MR. HOUGHTON: You need to come out to El Paso and look at this sign.
MR. RACKLEFF: Perhaps I'll make a special trip just to see that
sign. Thank you very much.
MR. WILLIAMSON: Thank you.
Mr. Lee Vela. I know that you're going to agree with this viewpoint.
MR. VELA: Well, I didn't bring my copy of A Alice in Wonderland@ but
for the record, my name is Lee Vela and I'm president of the Outdoor
Advertising Association of Texas.
First of all, I would like to express our gratitude to the
commission for the consideration of these proposed rules changes
that would allow Texas cities to decide whether or how to allow
electronic technology on billboards and how it would be utilized in
their community, and it is up to the cities.
MR. WILLIAMSON: Wait, Lee. Don't the rules provide that we can allow
electronic lights outside of the cities?
MR. VELA: No.
MR. WILLIAMSON: Well, Terral just got through chewing on me about
that.
MR. VELA: It's amazing, isn't it, but these are only for cities and
their municipality and their jurisdictions.
Of course, as you may know, most of our advertisers, the vast
majority of our advertisers and our clients are locally owned
businesses and this new technology is just another way for them to
present their goods and services to the traveling public that
stimulates the local economy and that's good for Texas overall.
The Virginia Tech study that was referenced earlier found that these
static changeable message billboards are safety-neutral in design
and operation. And by the way, those two studies referenced are two
different studies. Additionally, the potential to use this
technology to instantly communicate with the general public offers
public agencies an incredible opportunity, whether it's the Amber
Alert System or local law enforcement or emergency messages that can
be nothing but a benefit to the local communities in getting the
messages out instantly.
Recently, with the tragedy that happened in Minneapolis with the
bridge that collapsed on August 1, within minutes there were
emergency messages on changeable message billboards that we operate
in Minneapolis.
Think about the evacuation information of our major evacuation
routes, telling people where to go, where to get fuel, where to have
other essential information that's necessary to keep people out of
harm's way. The possibilities are endless, not only for advertisers
but for public service as well.
We look forward to reviewing the proposed changes in the next 90
days, and we appreciate that again, and we think that there will be
every possibility of considering what's best for the businesses of
Texas and the citizens. And let me reiterate that this action gives
the cities the right to control their own destiny, and that is local
control and we think that's a good policy.
By the way, there are 22 states in the U.S. that allow changeable
message boards by statute, and the technology is being used around
the world, as I think Commissioner Holmes just saw in Johannesburg
just recently. So it is an emerging, 21st Century technology.
MR. WILLIAMSON: Members, do you have questions of Mr. Vela?
MR. HOLMES: Lee, this is a little bit tangential, but is the going
private deal with Clear Channel been completed, do you know?
MR. VELA: You know, I think most of that has been done, yes. It's
still in negotiations, I guess, yes.
MR. WILLIAMSON: Okay, thank you.
Bruce, I want to thank you for being so patient. You've sat there
and taken this all in and waited and I appreciate it.
MR. LaBOON: I want to thank you for allowing me to say my mind this
morning. My name is Bruce LaBoon, I'm a lawyer here in Texas, and
I've represented business interests in Houston and Austin and other
places in this state for many, many years, like 45.
I'm here this morning to represent only myself and to speak on
behalf of myself. I'm here to urge the commission to defer action on
the LED signs. I think there are several reasons why I and other
members in the business community will be very, very much opposed to
this new rule. Now, I know that we have 90 days to comment on it and
you may rest assured that you will hear from me and many other
members of the business community.
I want to say two or three things. Number one, it is my
understanding that both at the federal level and under the
supervision of Senator Carona, Chairman Carona here in Texas, the
whole issue of outdoor advertising is being looked at, and LEDs
specifically at the federal level are being looked at, and I would
think that this commission would want to wait until after the
federal and state laws are clarified before rushing into approving a
new form of outdoor advertising for all of our cities and
extraterritorial jurisdictions.
Number two, I think the business community is deeply, deeply
committed to quality of life in this state and I think that LEDs are
a step backward and not forward in quality of life. I think that the
proliferation of billboards is being addressed in our cities, and
all I can say is thank God that it is, and hopefully the cities that
are in this state, even if this rule passes, will decide that this
proposal is not something that they want to add to their problems.
I have seen the signs, Commissioner Houghton, and I've seen several
of them, they are bright, many of them do move, many of them
basically have multiple, multiple advertising on them. I think that
the business community does not need this in an off-premises basis.
I would urge you to very carefully consider the business community
comments that you receive because I think you'll find that even the
largest advertisers, the largest advertisers are not in favor of
LEDs. And anyone who has been to Times Square or Las Vegas knows
what an over-proliferation of LEDs can cause, and it's a nightmare,
it is a nightmare, as you know, if you're interested in seeing
something other than moving signs.
The last thing I have to say to you this morning -- and then I'll
sit down and be quiet or answer your questions and be happy to --
Texas is a growing state. As you well know, more than just about any
commission or body in the state of Texas, this state is growing.
You're going to be building new roads and highways, you're going to
be expanding the current roads and highways in this state. If there
is an LED sitting beside one of your roads and highways and if the
cost -- regardless of who bears the cost, whether it's the cities,
the counties or the State of Texas -- is involved in moving or
eliminating one of these signs, once one of these signs is up, it is
going to be, let's say, very highly valued by the industry because
they have a tremendous stake, as is shown by their testimony here
today, in moving these messages all the time, and the income from
one of these signs -- which is the measure that they like to use in
judging condemnation proceeds -- the income from one of these signs
is going to be enormously greater than even five signs that they
might otherwise take down. I just want to say that putting that
burden on the taxpayers of the state of Texas is not good public
policy.
And I thank you for your time this morning.
MR. WILLIAMSON: Questions for this very honorable witness.
MR. HOUGHTON: Thank you for coming.
MR. WILLIAMSON: We appreciate it and we appreciate your patience.
Blake Custer.
MR. CUSTER: For the record, my name is Blake Custer, Clear Channel
Outdoor, San Antonio Division. Mr. Chairman, members of the
commission, I'd just like to take a few minutes to kind of go back
over a few things.
First of all, we're ecstatic about the opportunity that we're going
through rule-making. We think this is a great opportunity to move
forward with the LED display opportunity, but on a sensitive and
balanced basis.
Some of the things that were pointed out today in terms of
counterpoints, in setting the record straight, Mr. Rackleff was
pointing out a wrong study. The study he was talking about was not
the May 2007 from the Virginia Institute. Now, one key point about
the Virginia Institute, just like the University of Texas or Texas
A&M, each university has their own way of analyzing things on a
non-biased basis, and so when you're looking at certain things, the
industry is not going forward to create a document that would be
opposing to the safety or distraction issue. The study that was
referenced dealt with eight-second dwell times, and under that dwell
time basis, two seconds was the distraction or anything plus that.
Under the study he was talking about a 1.6-second view time, or eye
glance is how they referenced it.
So the key is as a part of this -- we want clarity. We don't want
mixed messages; we do not want the rhetoric going back and forth. We
understand different industries and what their positions are on
billboards. This is not about that. This is about a static
electronic message sign that has an eight-second dwell time that
provides a distance between signs to avoid distraction.
So we want to be clear about that as we go forward over the 90 days,
and we are motivated and ready to discuss and talk about all the
issues that are out there.
So as we go forward, the other key point is local control. Whether
Houston wants it or San Antonio wants it or Dallas or whatever the
case may be, the local control mechanism would decide whether or not
this would be allowed in their city. So as we push down local
control, only being allowed in the municipalities and within the
ETJs, staying out of the rural areas was key. That's one of the key
points and we're hearing that, so that's why it was presented.
As we go forward in the city of San Antonio, we're presently working
on an ordinance there right now. As Mr. Smith had talked about from
Clear Channel, it's a cap-and-replace, two- for-one for new signs.
Signs are coming down, there are not new signs in that jurisdiction,
and as a part of that there is some language that's proposing some
take-down provisions as a part of that specific ordinance in that
local jurisdiction.
So thank you for your time on this. If I could answer any questions.
MR. WILLIAMSON: Questions or comments, please?
MS. ANDRADE: I just have one. And you are still considering
transitioning those billboards into messaging centers in case of
emergencies of evacuation or a kidnapping?
MR. CUSTER: Amber Alerts, as Mr. Vela talked about. In Minnesota
we're directing traffic for major catastrophes, hurricanes, those
types of things, yes, ma'am.
MS. ANDRADE: Thank you.
MR. WILLIAMSON: Thank you. And to sum up, Margaret Lloyd, or to sum
up one side of the position.
MS. LLOYD: Thank you. My name is Margaret Lloyd. I'm the policy
director for Scenic Texas. I appreciate the opportunity to come and
speak on this issue. And the previous speaker, I agree with him that
they don't want mixed messages, they want changing messages.
I just want to mention a couple of things in response to some of the
things I've heard this morning. One of the concerns that I have
about the proposed rule for limiting it to cities is the definition
of a nonconforming and a conforming sign. Many cities that have
stopped new billboard construction believe, from a city council
standpoint, that all of their billboards are nonconforming, because
from a city standpoint they are, from a city code. But the rule, I'm
afraid, doesn't address that kind of conformity versus
nonconformity.
So in a city like Houston it may not be an issue because they do
their own permitting, but in cities like San Marcos or Amarillo or
other cities where TxDOT does the permitting, the city might think
they're protected because they don't have signs that are conforming,
are going to find out that they really do because under the Highway
Beautification Act, those signs may be conforming, although under
city code they're not. So I think that's a technicality that needs
to be addressed. I'm concerned about that.
The second thing is that there are signs in San Antonio that are
being converted right now on city streets. City streets, as some of
you may or may not know, are outside of the reach of the HBA, so
right now, every city in the state can allow LED billboards on their
city streets if they want to; HBA doesn't stop it. So the cities
have the ability to do this, most of them are choosing not to.
San Antonio may be an exception. My understanding of what's
happening in San Antonio is that there's a threat of a lawsuit there
and they're under the gun to do something. Maybe that's what's
happening here too, I'm not sure. But there's a fear that there's
going to be lawsuits filed if this doesn't change, so this is
happening all over the country where there's a very litigious
industry who is making threats to local governmental entities, state
government entities. I think it's time to take a deep breath and be
very sure that this is the path we want to go down.
We had a wonderful woman die recently in our state, she tried very
hard to do something about this problem in 1965. Ever since she and
her husband defined this as a problem that needed to be addressed
through changes in statute and regulation, we have slowly and surely
dismantled the Highway Beautification Act, and there is not much
beautification left in the Highway Beautification Act anymore. She
had a very simple vision that was to limit billboards to zoned
commercial and industrial areas and to get rid of those old
nonconforming billboards that are out in the countryside that she
loved so much.
The first thing that happened was at the eleventh hour the industry
got an amendment to the Highway Beautification Act to allow those
billboards to go out into the rural areas into what's called a
commercial and industrial activity area. So now we can put
billboards out where there's one business in most states, two
businesses in this state, so there might be an antique store and a
gas station and you can put four billboards up. That was not her
intention to do that out in the rural areas.
The second thing that happened was the feds stopped funding the
removal of those nonconforming billboards out in the rural
countryside, so all those old billboards that she thought in 1965
were going to be gone in '72 are still there, 40-plus years later
because the feds stopped funding the removal of those.
The next thing that happened was we were able to remove them through
amortization, through the time value of money, but the industry went
back, got that changed so that now we can't do amortization anymore.
So, as you know so well, in order to get those billboards down now,
we have to pay cash compensation. Most cities and now states are not
able to do that anymore.
So we have slowly and surely dismantled and removed all the
beautification from this act and the intent of the act is gone, and
I would suggest that we either need to change the Highway
Beautification Act name so the name of it is what it does which is
to allow billboards to proliferate and that we protect them, or we
need to reverse our bad acts and move back towards the vision that
Lady Bird had, and back towards beautification.
I'm happy to answer any questions.
MR. WILLIAMSON: Members, questions or comments for this witness?
(No response.)
MR. WILLIAMSON: Thank you for your patience, Margaret.
MS. LLOYD: Thank you.
MR. WILLIAMSON: Okay. What's your thoughts, guys?
MR. HOLMES: Mr. Chairman, I believe I have to abstain from this.
(Pause.)
MR. HOLMES: I'm not sure so I'm going to abstain.
MR. WILLIAMSON: Okay. Fred, anything further?
MR. UNDERWOOD: No.
MR. WILLIAMSON: Hope?
MS. ANDRADE: No.
MR. HOUGHTON: Hey, Rick, do you have billboards on your rights of
way at NTTA?
MR. HERRINGTON: For the record, Rick Herrington, deputy executive
director, NTTA. They say a good vacuum cleaner sale, when you make
the sale, leave the house. I guess I should have left.
MR. HOUGHTON: You're not finished yet. You've got one more item on
the agenda.
MR. HERRINGTON: I realize that, sir. I'm trying to catch a plane
too.
We work very closely with TxDOT and currently on our facilities -- I
believe we worked with TxDOT before I got to NTTA -- we have a
billboard policy that does not allow new billboards along that
corridor.
MR. HOUGHTON: New.
MR. HERRINGTON: New billboards.
MR. HOUGHTON: So there's existing.
MR. HERRINGTON: There are existing billboards. I believe the policy
is there's no new billboards constructed.
MR. WILLIAMSON: If I could, I'll just address some of the more
hard-edged arguments.
Terral, if you have presented proposed rules for this body to
consider, I'm not aware of that, and I assure if you bring those to
me, like I do anyone who brings me a set of proposed rules, I will
find out what it takes to hear those rules publicly and comment on
them. But just because you have rules doesn't mean it's necessarily
in the department's best interests to change its policies, and
frequently people believe because they have a certain position, the
government ought to share their position, and that's not the way
things work in a democracy.
And as you well know, Terral, that's not how things work. Actually,
most of what you addressed is rightfully directed to the
legislature, and I understand the fight that you speak of, I was
involved in more than my share. But in the end, that's where that
particular fight belongs. If you want to abolish billboards, go get
76 and 21 and abolish them. I don't care, I'm not in the billboard
business. But to intimate that we shouldn't post and have public
hearings and public dialogue without listening to what we say we
want to accomplish is -- I don't know, we're friends, that's a
little bit insulting, to tell you the truth.
You had a cute argument, I liked your A Alice in Wonderland@
comparison, despite Lee's shot at you, I thought that was a pretty
good way to describe the problem. And I appreciate that John Lindsay
is mad at us about this, but you know what, he's stayed mad at us
for pretty much the last two years so that doesn't change things too
much.
Mr. LaBoon, you have the most convincing argument, except here's the
dilemma, because of recent judicial decisions, we find ourselves
having to negotiate with the billboard industry at length over the
value of their existing paper nonconforming signs and we have no way
to get out of the trap we're in except to put on the table for
discussion a possible trade.
And our view is it's not just about cities -- I'm going to take it
right down to the Houston level, Margaret -- a city council person
came to me during the legislative session and said, Your policy is
to require the city to reduce the amount of money that you spend on
their highways by the cost of removal of these signs, and we can't
afford that reduction from our transportation budget and we want you
to help us pass a law that does something about it. And I run into
the same problem, occasionally, over there that Terral runs into and
that is the legislature doesn't want to do what I think it should
do, and it didn't do what I thought it should do about the billboard
problem.
Now we have before us the opportunity to talk about city only, not
the country -- in fact, does it go into ETJ, John?
MR. CAMPBELL: Yes, sir.
MR. WILLIAMSON: Out into ETJ. Isn't there some confusion about
relocation of existing signs out of the cities and the ETJs when you
do your replacements? I think there's some confusion. We have the
opportunity to clarify that, we have the opportunity to empower
cities to trade on take-downs.
Terral, they may go build five more signs in Parker County but
there's no stretch of math that can make me believe that because
they take five down in Fort Worth, they're going to go build five in
Parker County. They can go build five in Parker County anyway and
they're only going to build five in Parker County if there's an
economic reason to do so. So that argument doesn't wash.
And here's the kicker, it may well be that the city can say to these
guys there are two conditions for us approving your LED: first, you
take down four signs or five signs or 20 signs -- whatever it is, I
don't care -- and you agree ahead of time to a calculation for the
relocation of that LED if the public transportation system ever has
to move it. And therein lies our economic interest in trying to
address this because right now, Mr. LaBoon, the amount of money that
we're fixing to have to pay to move billboards, conventional
billboards is going to be based upon future income and the amount is
staggering, and we're looking for a way to address that problem
here.
I don't know that there's anyone on this commission that is pro
billboard, there's a few of us that are pro private property rights,
but I don't think anyone could be called billboard fans, and when a
business that pays taxes and hires people says we want the
opportunity to make our case, we think that that's what ought to
happen, Terral. I think that's what we think.
What's your pleasure, members?
MR. HOUGHTON: So moved.
MS. ANDRADE: Second.
MR. WILLIAMSON: I have a motion and a second. All in favor of the
motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: One abstention. Mr. Holmes did not participate in
the motion, the second, or the vote.
MR. BEHRENS: Moving on to agenda item number 6(a)(5), another rule
for proposed adoption, and this is involving Travel Information.
Beverly.
MR. WILLIAMSON: And I thought all those people were here for the 121
discussion. Rick, they don't care about our deal, it was all about
billboards.
(General laughter.)
MS. WEST: Good afternoon. For the record, my name is Beverly West
and I'm the Ancillary Products manager for Texas Highways Magazine
in the Travel Division.
Chapter 204 of the Texas Transportation Code requires the department
to promote travel and tourism in Texas, by operating Travel
Information Centers and publishing Texas Highways Magazine, the
official travel magazine of Texas. The department is authorized to
publish and distribute literature, to sell merchandise through the
Texas Highways Magazine, and to sell advertising through Texas
Highways Magazine and other primary travel literature publications.
Amendments to Section 23.2 delete definitions for terms and words
that are no longer used. Section 23.14, Display of Travel Literature
in the Travel Information Centers, is amended to update and clarify
the types of promotional items that can be distributed at the Travel
Information Centers. Section 23.26, Magazine Discount Card Program,
is being repealed because the program is being discontinued due to
increased costs and declining participation.
Section 23.27, Magazine Ancillary Products, is amended to expand the
list of the types of products that the department may sell through
the Texas Highways Magazine. Section 23.29, Magazine Advertising, is
amended to add new advertising categories for Texas Highways
Magazine as well as banner advertising for the magazine's website.
These amendments will enhance the potential to increase revenues for
the magazine and improve the department's ability to promote travel
and tourism in the state without increasing costs to the taxpayers,
and the Travel Division requests your approval of this proposed
minute order.
MS. ANDRADE: Thank you.
MR. HOUGHTON: So moved.
MR. UNDERWOOD: Second.
MS. ANDRADE: We do have a quorum. We have a motion and a second. All
in favor.
(A chorus of ayes.)
MS. ANDRADE: Motion passes. Thank you very much.
MR. BEHRENS: Agenda item number 6(a)(6) concerning proposed rules in
Traffic Operations and statutes that created the Memorial Sign
Program.
MR. LOPEZ: Thank you, Mike. Good afternoon, commissioners. My name
is Carlos Lopez and I'm director of the Traffic Operations Division.
The minute order before you provides for preliminary adoption of
rules to create a Memorial Sign Program for those killed by drunk
and drugged drivers. The program was mandated by House Bill 2859.
The rules allow for families or friends of these victims to request
a sign memorializing their loved one for crashes that occurred on
the state highway system. TxDOT will place a sign as close as
practical to the crash site. The applicant will pay a fee of $300
and the sign will remain in place for one year. At the end of this
year, the sign will be returned to the family. Drivers who are
killed while impaired are not eligible for a sign, so it's only for
the innocent victims.
Impaired driving continues to be the most serious traffic safety
issue in Texas. We are hopeful that this program will help raise
public awareness on the dangers of impaired driving and also bring
some comfort to the victims' families.
We recommend approval of this minute order.
MS. ANDRADE: Members, any questions?
MR. HOUGHTON: So moved.
MR. UNDERWOOD: I've got a quick question. When you say you put the
sign so close to the highway, explain how you're going to do that,
please.
MR. LOPEZ: Well, wherever the crash may have occurred, we'll see if
there's space for a sign such as this along the side of the road,
and that's where we would put that sign.
MR. UNDERWOOD: But how close to the road is it going to be, just
where we normally where we put our signage?
MR. LOPEZ: Where we normally put our signs, about 12 feet off of the
road.
MR. UNDERWOOD: So it will be the same type of sign that has the
ability to be sheared off if somebody does run into it.
MR. LOPEZ: That's exactly right, Commissioner, it will have all the
breakaway characteristics that our normal signs have.
MR. UNDERWOOD: All right. I second.
MS. ANDRADE: We have a motion and a second. All in favor.
(A chorus of ayes.)
MS. ANDRADE: Motion passes. Thank you, Carlos.
MR. LOPEZ: Thank you, commissioners.
MR. BEHRENS: Agenda item 6(a)(7) concerning proposed rules for Toll
Operations. Phil.
MR. RUSSELL: Good afternoon, commissioners and Mr. Behrens and
Roger. For the record, I'm Phil Russell, director of the Turnpike
Division.
As Mike just pointed out, the proposed rules in front of you relate
back to our CDA rules. I would classify the changes really in two
different areas. The first area would be in the issue of stipends.
Over the last several years we've had a lot of discussions on the
proper use of stipends. Legislation has mandated it, it was shall
pay, and Senate Bill 792 has changed that now to a permissive, may
pay. So these rules now provide some criteria for you all to utilize
as you determine whether a stipend should or should not be paid to
unsuccessful proposers. In my view, they give you a great deal of
flexibility, and I'd be happy to talk about those.
The second major change on these rules relates to the termination
for convenience clause. Again, for maybe some of the folks that
haven't been involved, when we sign our CDA contracts, potentially a
50-year contract, we always include a clause in there so that if
future commissions, future TxDOT administration should choose to
break that contract, there is a compensation mechanism included in
that contract.
Now, clearly under Senate Bill 792, the legislature wanted us to
formulize that and make that a bit more tangible, so these rules
attempt to do that. The compensation numbers -- and again, we'll be
happy to go through them in some detail -- there's three broad areas
that this compensation formula would provide for.
First off -- and again, coming up with an example -- maybe in year
ten of a 50-year CDA and the department determines it's appropriate
to break this contract, there would be three broad classifications
that we would compensate a developer. First is we would compensate
them for any outstanding debt, any outstanding senior debt.
We would also compensate them their internal rate of return on
equity, and that goes back to what their initial financial plan was,
so we'll know that up front, it's not something that's determined
later, we'll know exactly what the internal rate of return is
projected.
And the third broad area would be for costs. There are always
demobilization costs, breakage costs and those sorts of things.
So those are the three broad areas that the formula covers. I'll be
happy to address any questions you might have. I have Brad Watson
here with KPMG who did a lot of the heavy lifting on this formula,
and Brad will be here as well. Questions?
MS. ANDRADE: Fred, please go ahead. Phil, a question for you, would
this address some of the questions that Senator Nichols had?
MR. RUSSELL: That's a great question. I think it will. Senator
Nichols has been pretty consistent in his concern, he told me more
than once he wants to be able to right up front when we sign a
contract to know exactly what the compensation amount would be in
year 17, year 21, or whatever. And so I think this formula will take
care of that and ease his concerns.
The only thing that I'll mention on that, there are some costs --
and again, I think Senator Nichols will be okay -- there are some
costs that are probably impossible to figure out. They're probably
minor in the big scheme of things but they're fairly small. For
instance, demobilization costs, I don't know how we could ever
anticipate or evaluate what somebody's future demobilization costs
would be, because during construction it will be a pretty large
demobilization cost and we do that all the time in our normal,
traditional contracts. If it was in year 40, construction is
through, demobilization costs will be pretty minor, pretty small.
So again, I would characterize those as pretty small in the whole
scheme of things. Generally, I think Senator Nichols should be happy
with this one.
MR. UNDERWOOD: Because now we have a formula is what it really boils
down to.
MR. RUSSELL: Yes, sir, absolutely.
MR. UNDERWOOD: And we may have to fine tune it at some point in
time, but we do have a formula.
MR. RUSSELL: It would be my expectation that when we sign that
contract, we'll have a chart that we can wave out there and say in
year 17 this is what the agreed-upon internal rate of return or any
of those issues would be worked out in that chart, year 17, year 28,
we would agree to that before we sign the contract, except for the
demobilization and those more minor costs.
MR. HOUGHTON: What happens if you have a big concession up front and
you unwind this contract?
MR. RUSSELL: Oh, well.
MR. HOUGHTON: No, not oh, well. Do you think that the concessionaire
is going to come in and say I'm going to pay you $3.3 billion up
front? And you have this clause and they're going to say okay, you
unwind this thing, guess what you're going to get to pay back.
Because that's based on future revenue, is that not right, or IRRs,
is that not right, Brad? Do you understand where I'm going with it?
MR. RUSSELL: Commissioner, let me give you the general answer and
then Brad can give you the real answer. My expectation will be all
of this is going to be a risk profile and will be calculated.
MR. HOUGHTON: We're going to find out exactly what the unwind cost
would be if you have an up front.
MR. RUSSELL: They will very carefully and accurately assess what the
risk profile is on any of these procurements. Whether it's the 121
discussion or anything else, any developer coming in will assess all
of the risk profiles, and in the case of something like that, I
think they will assess it, either in their internal rate of return,
their concession fee may be diminished up front, or in any of these
other areas.
MR. HOUGHTON: Or the payback.
MR. RUSSELL: Absolutely they will take that into their consideration
up front but at least we'll know what the termination for
convenience compensation is.
MR. HOUGHTON: Brad, you don't have to answer, it's hypothetical.
Move to approve.
MS. ANDRADE: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. RUSSELL: Thanks, commissioners.
MR. BEHRENS: Agenda item number 7 will be three minute orders that
will be requesting some financial assistance for some toll
facilities, the first being in Bexar County. And Phil, if you'll
come back up and take that one.
MR. RUSSELL: All right, Mr. Behrens. I got a little aggressive to
head back to my chair.
As you pointed out, the agenda item 7(a) in front of us is the final
approval for the Alamo Regional Mobility Authority. Again, if you
remember, at our commission meeting in Sugar Land, you approved the
preliminary approval. Just to kind of recap that quickly, it's a
little bit of a curious application.
This application would provide flexibility for the Alamo RMA to
begin work on three different projects, analysis work: State Highway
16, Wurzbach, and US 281. Now, there's one minor difference between
what I presented in Sugar Land and here, 1604 has now been removed.
When you all approved the preliminary approval in Sugar Land, 1604
was included. I think we've had some concern with the procurement
issues, with the FHWA on 121. For now we've removed that 1604 from
this application because we still do have an open procurement in San
Antonio on that project. So we've removed 1604 from this toll
application, could come back later on depending on how that
procurement ultimately turns out.
But it's still the same genesis, it's still for $3.965 million, it's
not new money, it's simply clawing forward the money that we've
previously approved off those two original toll application requests
done in the RMA.
Is that as clear as mud?
MR. WILLIAMSON: I think we've all been briefed on it. Members,
you've heard the staff's explanation and recommendation. What's your
pleasure?
MS. ANDRADE: So moved.
MR. HOUGHTON: Second.
MR. WILLIAMSON: I have a motion and a second. All in favor of the
motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. RUSSELL: Thank you, commissioners.
MR. WILLIAMSON: Thank you.
MR. BEHRENS: Amadeo, do you want to take 7(b) and (c)?
MR. SAENZ: I'll take 7(b) and I think Phil will come back and do
(c).
MR. BEHRENS: Okay.
MR. SAENZ: For the record, Amadeo Saenz, assistant executive
director for Engineering Operations.
Item 7(b), this minute order before you grants final approval of a
request by the North Texas Tollway Authority for financial
assistance in the amount of $160,270,000 to be used for the
acquisition of right of way, utility adjustments, and related costs
and service for the Eastern Extension of the President George Bush
Turnpike, the PGBT, or State Highway 190.
Working with the RTC and the district, part of this project extends
190 across from 78 over to Interstate 30. Part of the project will
involve the construction of frontage roads and those frontage roads
will remain on the state highway system as probably designated 190
frontage roads. That was one of the reasons for keeping the frontage
roads on the state highway system is so that the department could
control the access to those frontage roads as well as the utility
permitting that would go on those frontage roads.
The request for the final toll equity of $160,270,000, $80 million
of that is what we estimate to be the cost of the right of way
that's needed for the TxDOT portion, and the other $80 million is
coming from the allocation that the RTC gets to finance the other
items within the project. In return, the RTC and the department and
NTTA have worked out the negotiations for a revenue-sharing
agreement whereby TxDOT would get 20 percent of the gross revenue of
the project for their investment of this amount.
In addition, the RTC has allocated from their resources the
construction of the ramp, reconstruction of the I-30 interchange as
well as a bridge over Ray Hubbard. For that, then we would provide
this additional $160 million for that construction, and in return,
the NTTA would provide $10,000 per lane mile for the cost of
maintaining those frontage roads, even though they would be the
property of the state, and they would also provide the equivalent of
20 percent gross revenue share in perpetuity.
Staff has reviewed this request, and working closely with the RTC
and NTTA, would recommend that you approve this minute order. I'd be
happy to answer any questions.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation on this minute order. Do you have questions or
comments?
MR. SAENZ: Mr. Chairman, in addition, this minute order also
authorizes the construction of improvements by the NTTA on part of
the state highway system because some of the project involves
connections to connecting highways that they would be constructing,
as well as the construction of those frontage roads, as well as also
giving them authority to connect to the state highway system. Those
are requirements that need to be done on any toll project.
MR. HOUGHTON: What percentage is the $160 million of the total
project?
MR. SAENZ: When you combine the $160 million plus the construction
of the interchange and the bridge, it's about 40 percent of the
total construction.
MR. HOUGHTON: Bringing up the question, again, Rick, we're
subsidizing a toll project, and this is what I'm trying to bring us
to, that we fully load this thing into your financing model and
finance it or go to the private equity markets to look for this type
financing, we can use these funds that we would put into the tax
roads or improvement in your region instead of us investing this
equity in these projects.
MR. HERRINGTON: For the record, Rick Herrington, deputy executive
director for NTTA.
Commissioner Houghton, we heard your comments whenever you rolled
out the tolling plan several months ago, I believe in June. We
actually agree with your comments. This project has been back and
forth negotiated for two years, maybe, and it think we are at the
point of just that was the deal, Dallas County, the citizens there
want the project done immediately, we're moving forward with this
deal. We've clearly heard and actually agree that any time the
project is feasible, then we should be doing the project, we
shouldn't need to be subsidized.
MR. HOUGHTON: Well, or even have you direct your attention or sight
to the private market to help you get you over the hurdle on these
projects instead of coming back to what I call the easy touch of the
commission -- we're such easy people up here.
MR. HERRINGTON: No comment, sir.
(General laughter.)
MR. HOUGHTON: And if there's a possibility of taking us out of this
thing in the future, then that money goes back to your region in
other projects other than the toll projects.
MR. HERRINGTON: Commissioner, I think we have to be innovative in
how we fund all these projects in the region. We'll continue to work
with your staff and the region to do so.
MR. HOUGHTON: Thanks, Rick.
MR. HOLMES: Ted, and it's not relative to this project, but I've had
the same conversations with HCTRA that I expect that those projects
are fully loaded with interchanges, et cetera.
MR. HOUGHTON: It's hard to explain to an RMA we're not going to do
it for them but we do it in these areas. Rick, you understand, I
think.
MR. WILLIAMSON: There you have it, members.
MR. HOUGHTON: So moved.
MR. HOLMES: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. BEHRENS: Phil, if you'll come back and we'll do 7(c) which
concerns El Paso County looking for some financial startup fees.
MR. RUSSELL: Thank you. Again for the record, I'm Phil Russell with
the Turnpike Division.
Item 7(c) is for preliminary approval, and as Mr. Behrens indicated,
it is for the RMA in El Paso, Camino Real Regional Mobility
Authority. These folks are requesting approximately $330,000 as a
little seed money to begin some of the analysis for about a dozen
projects out there in the El Paso area.
As you all know, we're starting market valuations all across the
state and the intent is for them to utilize this money for them to
be able to bring in some financial advisors and help them as we
begin looking at the market valuations for all these projects.
So again, preliminary approval. I'll be happy to address any
questions that you might have on it.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation.
MR. HOUGHTON: Well, I would like to say this is a great opportunity
for the RMA in El Paso to start looking at projects, but one of
their board members is here and he's traveled a nice distance, came
in this morning. David.
MR. MARCUS: Mr. Chairman, commissioners. Commissioner Houghton,
thank you for recognizing that I woke up at 4:00 a.m. to be here
with you folks this morning. I'm David Marcus. I'm treasurer of the
Camino Real RMA, and certainly I'm here to answer any questions.
MR. HOUGHTON: Well, the question is congratulations on getting up
and running and for your willingness to serve. Can you talk about
the projects you're looking at?
MR. MARCUS: Well, we have twelve projects that are on the approved
list of the metropolitan planning organization in El Paso County.
All twelve projects are projects that we want to look at. As you're
aware, the RMA has the first option to accept these projects to
develop them or turn them over to TxDOT to do that, but for us to be
able to do that, we need the financial assistance to be able to hire
the advisors to be able to do the financial studies to determine
whether or not we're going to do this, and at that point we would
make those decisions.
What we're asking for is $330,000 to be allocated to be spent on
expenses related to those projects, specifically financial advisors,
legal advisors.
MR. WILLIAMSON: Ted, there's not any of us going to mess with your
deal. I mean, don't look at us, this is your deal.
MR. HOUGHTON: I wanted to give David the opportunity, and as an
aside, David is such a great guy because he's a classmate of mine,
high school classmate of mine.
MR. MARCUS: I wasn't going to mention that. Ted and I grew up
together.
MR. HOUGHTON: Small community.
MR. MARCUS: We used to call him Teddy.
MR. WILLIAMSON: Really.
MR. MARCUS: Yes, sir, we did.
MR. WILLIAMSON: And forever more it shall be.
MR. HOUGHTON: Thanks, David.
MR. MARCUS: You're welcome.
(General laughter.)
MR. WILLIAMSON: Hey, like I said, he's even more powerful than some
legislators out in El Paso accuse him of being, and he's got the
stick, we're all afraid.
But we might have some questions, I need to ask. Questions, members?
(No response.)
MR. WILLIAMSON: We do appreciate you taking the time to fly all the
way out here and get up so early in the morning. We know it's a long
trip.
MR. MARCUS: Thank you, commissioners.
MR. WILLIAMSON: Also, thank you for being willing to serve.
MR. MARCUS: I appreciate it. Thank you.
MR. HOUGHTON: So moved.
MR. HOLMES: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion, signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you, members. Thank you, Phil.
MR. BEHRENS: We've taken care of agenda item number 8; we'll go to
number 9 under Transportation Planning. 9(a) will be a
recommendation to approve the 2008-2011 Statewide Transportation
Improvement Program.
MR. DENNIS: Good afternoon. Again for the record, my name is Wayne
Dennis. I'm the deputy director for the Transportation Planning and
Programming Division.
As a condition of securing federal funding for transportation
projects under Title 23, United States Code or the Federal Transit
Act, each designated metropolitan planning organization in the state
is required to develop a transportation improvement program.
According to federal requirements, metropolitan planning
organizations develop their TIPs in cooperation with the state and
affected transit operators. These TIPs must be updated at least once
every four years.
The individual TIPs from each MPO, along with the information from
federally funded projects in those areas of the state that are not
included in an MPO area, are incorporated into the Statewide
Transportation Improvement Program. The Statewide Transportation
Improvement Program must be approved by the governor or his
designee. By letter dated June 13, 2002, Governor Perry delegated
the power and responsibility to approve the STIP to the commission
or its designees.
On June 29, 2007, a public hearing notice to receive comments on the
proposed FY 2008-2011 Statewide Transportation Improvement Program
were posted in the Texas Register. A copy of the proposed 2008-2011
STIP was also available for review at that time and the notice of
the hearing was published at each of the department's district
offices, at the Transportation Planning and Programming Division's
office, and on the department's website. Public notice of
availability was also sent to each MPO and other interested parties.
The public hearing was held in Austin on July 31, 2007 and comments
were received through August 15, 2007. No oral or written comments
were received.
The STIP is consistent with the Strategic Plan and the Unified
Transportation Program and meets all the requirements of Title 43,
Texas Administrative Code, Sections 15.7 and 15.8 and corresponding
federal rules and regulations.
With your approval of this minute order, the STIP will be adopted
and forwarded to the Federal Highway Administration for their final
approval. Also, the executive director will be authorized to sign
all necessary certifications required by federal regulations.
We recommend your approval of this document and if you have any
questions, I'd be happy to answer them.
MR. WILLIAMSON: Members, you've heard staff's explanation and
recommendation on this item. Do you have questions or comments?
MR. UNDERWOOD: So moved.
MR. HOLMES: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you, members. Thank you,
Wayne.
MR. BEHRENS: 9(b) will be a recommendation to authorize an agreement
with the National Railroad Passenger Corporation concerning the
operation of the Amtrak Heartland Flyer.
MR. DENNIS: The minute order before you authorizes the department to
provide $1,998,500 to the National Railroad Passenger Corporation,
most commonly known as Amtrak to fund the Heartland Flyer passenger
rail service. The Heartland Flyer is a state-supported Amtrak route
which provides daily passenger rail service between Fort Worth and
Oklahoma City with an additional stop in Gainesville. The Heartland
Flyer travels over the Burlington Northern Santa Fe Railway line.
Since the Heartland Flyer route was not part of the original Amtrak
system adopted in 1971, state support is required to cover Amtrak's
operating losses. The State of Oklahoma funded these operating
losses from fiscal years 1999 through 2006. Last year the commission
approved funding a portion of these operating losses for federal
fiscal year 2007 at an amount totaling $1.8 million. For fiscal year
2008 the State of Oklahoma has pledged to fund half of the operating
losses. If approved, TxDOT would enter into another contract with
Amtrak for the amount of $1,998,500 for federal fiscal year 2008.
I recommend approval of this minute order and would be happy to
answer any questions you may have.
MR. WILLIAMSON: Members, you've heard the explanation and
recommendation of staff. Do you have questions or comments?
MR. HOUGHTON: So moved.
MR. UNDERWOOD: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you, members. Thank you,
Wayne.
MR. BEHRENS: 98 will be to appoint some membership to the Border
Trade Advisory Committee.
MR. DENNIS: This minute order reappoints ten members to the Border
Trade Advisory Committee. The purpose of this committee, created in
2001 by the 77th Texas Legislature, is to define and develop a
strategy and make recommendations to the commission and the governor
in order to address the highest priority border trade transportation
challenges.
The commission appointed 29 committee members on June 29, 2006. Ten
of those members' terms expire on August 31, 2007. With your
approval, the individuals or positions named in the minute order
will be appointed to the Border Trade Advisory Committee with terms
expiring August 31, 2010.
If you have any questions, I'd be happy to answer those.
MR. WILLIAMSON: Members, you've heard staff's explanation and
recommendation. Do you have questions or comments for staff?
MS. ANDRADE: I have one question. They're all willing to be
reappointed?
MR. DENNIS: Yes, ma'am.
MS. ANDRADE: Have they been meeting on a regular basis?
MR. DENNIS: They did meet on a regular basis and they generated
their report and that was back on November 16, 2006. Their next
report is due on December 1, 2008. So since that report was
generated, they have not met.
MS. ANDRADE: They have not met since November of last year?
MR. DENNIS: No, ma'am.
MS. ANDRADE: Do we have a scheduled meeting?
MR. DENNIS: We will as soon as we reappoint these members.
MS. ANDRADE: Good. All right. So moved.
MR. HOUGHTON: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you, members. Thank you,
Wayne.
MR. DENNIS: Thank you very much.
MR. BEHRENS: Agenda item number 10, we have five minute orders under
Finance, the first one being the Operating Budget for 2008. And
James, if you'll just go through all of them.
MR. BASS: Good afternoon. Again for the record, I'm James Bass,
chief financial officer at TxDOT.
Item 10(a) is the department's fiscal year 2008 Operating Budget in
the amount of just under $8.4 billion. This Operating Budget is in
accordance with the appropriations bill passed by the legislature
earlier in 2007, and one of the main things you're doing here is
delegating the day-to-day operations of the department's budget to
the executive director, and staff recommends your approval.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation. Do you have questions or comments for staff?
MR. HOUGHTON: So moved.
MR. HOLMES: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. BASS: Item 10(b) is the adoption of the 2008 budget for the
operating --
MR. WILLIAMSON: Wait a minute, James.
MR. BASS: Yes, sir.
MR. WILLIAMSON: We've been here for four hours and 15 minutes and
Bill Hale has been sitting in that seat in the third row and he
hasn't moved.
MR. BASS: Would you like him to present this minute order?
MR. WILLIAMSON: You know, we adopted the Operating Budget which, no
doubt, includes his salary and he gets up and leaves. What's the
deal? Is there something in the Operating Budget that's special for
the Dallas District?
MR. BASS: Well, Bill did order lunch for me and had it delivered to
my office, and I told him that I would try and make sure that that
minute order passed today.
(General laughter.)
MR. WILLIAMSON: Well, I just wanted to know. Please proceed.
MR. BASS: 10(b) seeks your approval of the fiscal year 2008
operating, maintenance and capital budget for the Central Texas
Turnpike System here in the Austin area, again, which is State
Highway 130, State Highway 45 North, and the extension of Loop 1.
The indenture for this system requires that on or before August 31
the commission adopts these various budgets for the coming year, and
staff recommends your approval.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation. Do you have questions or comments for staff?
MR. HOUGHTON: So moved.
MR. UNDERWOOD: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. BASS: Item 108 is the annual review of the debt and derivative
management policies for the commission. The debt management is an
umbrella policy that contains guidelines to manage the various debt
programs of the department. Part of this management may involve the
use of derivative products and guidelines for the prudent use of
those products that are covered in the management policy.
Neither of these documents change the need that before we go forward
with any individual transaction, we would need to come back to the
commission to get your approval, it's just an annual review and
update of those policies, and staff recommends your approval.
MR. WILLIAMSON: Members, I'll have one question. Staff has explained
and made a recommendation. Do you have questions or comments?
(No response.)
MR. WILLIAMSON: James, has our financial position been impacted in
any way, positively or negatively, by the recent turmoil in the
credit markets?
MR. BASS: Most of our debt is fixed rate debt that we have
outstanding.
MR. WILLIAMSON: We're not sub-prime?
MR. BASS: No, sir. I'll talk to you about our Triple A program here
in a minute. But we do have variable rate debt outstanding in all of
our programs.
MR. HOUGHTON: How much total?
MR. BASS: There's $150 million variable rate on the Central Texas --
and I may get these next two flipped -- there is $100 million on
Prop 14 so the exposure is limited, but what we've seen in recent
weeks, those variable rate products, the interest rate is actually
reset every week on those, and we have seen those climb recently,
and when they reset this week, they're at around 3.90. But the
average, since we've had them outstanding for like the Central Texas
project, that $150 million, the average since 2002 has been about
two and a quarter percent, even though today it's around 3.90. But
we are subject to fluctuation on that variable rate piece.
MR. HOLMES: James, do you recall where it was 90 days ago or six
months ago?
MR. BASS: It's hovered here in the past six months I'd say around
3.50, 3.60 is where it's been normally, and here just this last week
it had another bump up to one of the ones I can remember off the top
of my head was 3.92, and that was on the Mobility Fund that was
reset this week.
MR. HOLMES: If I understood that, most of the move took place a year
or so ago but we've had another 40 basis points in the last week or
two, I believe.
MR. BASS: Correct, last couple of weeks.
MR. HOLMES: Last month.
MR. BASS: Yes, sir.
MR. WILLIAMSON: Any other questions, members?
MR. HOUGHTON: So moved.
MR. HOLMES: Second.
MR. WILLIAMSON: I have a motion and a second. All in favor of the
motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. BASS: Thank you. Agenda item 10(d) approves the fourth
Supplemental Resolution, the preliminary Official Statements and
other related documents and agreements related to the State Highway
Fund Revenue Financing Program, otherwise known as Ogden Bonds or
Prop 14 Bonds, and it authorizes designated department officials to
act on behalf of the commission in the issuance of the obligations.
The minute order and the documents before you seek your approval for
$1.5 billion of issuance which matches up with the new annual limit
for that program passed by the legislature. Our current plans are in
early September to only issue $1 billion of that to carry us on a
cash flow but we wanted to seek your approval for the full annual
limit in case the projects progressed fast enough that we actually
expend that $1 billion and we want to act quickly and get the
proceeds in to cover them later in the year. So we're asking for
flexibility.
And the timing of this one is where we're seeing the impacts from
the recent market movements. We actually have logistically planned
to be in New York a couple of different weeks in September, the
first one September 6, however, is that is not a good time to go
into the market, we'll wait and go in the following week and we're
in constant communication with members of our syndicate investment
banking firms and getting their read on the market and when is the
best time for us to go to the market.
Having said all that, staff recommends your approval, and I'd be
happy to answer any questions you might have.
MR. WILLIAMSON: Members, you've heard staff's explanation and
recommendation. Do you have questions or comments?
MR. HOUGHTON: So moved.
MR. HOLMES: Second.
MR. WILLIAMSON: I have a motion and a second. All in favor of the
motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. BASS: The last agenda item I have today is 10(e), and this
minute order would authorize the department to submit an application
to the Bond Review Board for the issuance of an additional $2.5
billion of bonds and other obligations backed by the dedicated
revenues of the Texas Mobility Fund.
If the BRB approves, the department would still need the approval of
the commission as well as an updated revenue forecast from the
comptroller prior to issuing any additional debt from the Texas
Mobility Fund. And staff recommends your approval so that we may go
forward to the Bond Review Board.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation on this minute order. Do you have questions or
comments?
MR. HOUGHTON: James, what would this bring us to as far as
outstanding?
MR. BASS: Today we have outstanding $4 billion, and if you'll
recall, a couple of years ago the Bond Review Board gave us approval
at one time for $4 billion worth, and we have fully utilized that
authority. We have projects ongoing that are dependent upon this
additional $2.5 billion in order to make progress payments as they
progress through their life cycle. So the current $4- and another
$2.5- would get us to about $6.5 billion.
And one of the questions we've had over the months is what is the
capacity of the Mobility Fund. Today we think it's about $6.2
billion. One of the interesting things with the Mobility Fund is
since it allows 30-year debt -- which in an overly simplistic model,
it allows us to reach out 30 years and bring all that money forward.
Well, every time we cross over that August 31 to September 1
threshold, there's a new 30th year out there that comes within our
reach that we can bring forward to us.
Now, because of the structure and different things, it may become
very expensive debt, but we will see that capacity grow as each
fiscal year passes.
MR. HOUGHTON: Do we have a chart that indicates those numbers?
MR. BASS: Yes, and one of the things we were talking with our
financial advisors is what options of debt is available to us -- and
this may be more detailed -- when we get in at some point we're
going to fully utilize the capacity in the first 30 years of the
program such that our debt service is at that full one-ten coverage.
And so when a new year 30 becomes available to us, typically you
would pay interest on an ongoing basis in each of those years. Well,
if we're already at our coverage cap, we couldn't do current
interest bonds, we wouldn't be able to fit it within our cap.
So one of the options that would be available are capital
appreciation bonds, or like a balloon note where you just pay it all
in year 30. That is more expensive than current interest bonds, and
so it will be a discussion we'll have to look at for the benefit of
the project and the cost of the debt. Does the benefit exceed the
associated cost.
MR. HOUGHTON: So moved.
MR. UNDERWOOD: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. BASS: Thank you.
MR. WILLIAMSON: Thank you, James.
MR. BEHRENS: Going to agenda item number 11, our Contracts for the
month of August that we're going to recommend for letting.
MR. BOHUSLAV: Good morning, commissioners. My name is Thomas
Bohuslav, director of the Construction Division. Or afternoon,
excuse me.
Item 11(a)(1) is for consideration of the award or rejection of
Highway Maintenance and Department Building Construction contracts
let on August 7 and 8, 2007 whose engineers' estimated cost is
$300,000 or more. We had 14 projects let, an average of 3.3 bidders
per project.
We have two projects we recommend for rejection. The first one is
Project Number 4010 in Coryell County, and the second one is in
Limestone County, Project Number 4004. I'll talk about these
together. These are both mowing contracts, both of them are about 17
or 18 percent over. We'd like to see if we can go back and rebid
these and get better competition for these projects; these are a
little higher than what we would expect.
Staff recommends award of all projects with the two exceptions
noted. Any questions?
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation. What's your pleasure?
MR. HOUGHTON: So moved.
MR. HOLMES: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. BOHUSLAV: The next item is for the award or rejection of Highway
and Transportation Enhancement Building Construction Contracts let
on the 7th and 8th of August. We had 86 projects, about 4.5 bidders
per project. We recommend award of all the projects. Any questions?
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation on this matter.
MR. HOUGHTON: So moved.
MS. ANDRADE: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. BEHRENS: Agenda item 11(b) will be to establish the statewide
goals for the Historically Underutilized Business Program.
Elizabeth.
MS. BOSWELL: Good afternoon. For the record, my name is Elizabeth
Boswell. I'm the DBE Program compliance engineer for the Business
Opportunity Programs Office.
The minute order before you establishes the Historically
Underutilized Business, or HUB, goals for fiscal year 2008. These
goals are established based on the availability of qualified
businesses. The goals are as follows: 26.1 percent for building
construction contracts, 57.2 percent for special trade contracts, 20
percent for professional services contracts, 33 percent for other
service contracts, and 12.6 percent for commodity purchases.
The department utilizes the State of Texas Disparity Study, as
described in Government Code Subsection 2161, and other data to
establish its state HUB goals for state-funded projects. Staff
recommends approval of the subject minute order.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation on this minute order. Do you have questions or
comments?
MR. HOUGHTON: So moved.
MR. ANDRADE: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MR. BEHRENS: 11(c) will be similar. It will just be the Small
Business Enterprise Program.
MS. BOSWELL: The minute order before you establishes the Small
Business Enterprise, or SBE, goals of 23 percent for fiscal year
2008. The annual SBE goal is established under Title 43, Texas
Administrative Code, and is applicable to highway construction and
maintenance projects funded with state and local funds. The goal was
established based on the availability of qualified business, and
staff recommends approval of the subject minute order.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation of this minute order. Do you have questions or
comments?
MR. HOUGHTON: So moved.
MR. UNDERWOOD: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you.
MS. BOSWELL: Thank you.
MR. BEHRENS: Agenda item number 12 is the Routine Minute Orders.
They've all been duly posted, as we're required to do so. I've
reviewed those. I don't think any of them have issues with an
individual commissioner. If you have any questions about any of
these listed on the Routine Minute Orders, we'd be glad to answer
any questions; otherwise, we'll recommend approval.
(Pause.)
MR. WILLIAMSON: From which one?
MR. BEHRENS: You're talking about the Eminent Domain?
MR. WILLIAMSON: Members, you've heard Mr. Behrens's explanation, his
last explanation. We've heard Mr. Holmes indicate that he will
abstain from this action because he has a private interest in one of
the matters which will be affected by the decision of the
commission. The clerk will show that Mr. Holmes abstained from
discussion and from voting on the minute order.
You've heard staff's recommendations, members. Do you have questions
or comments? Do I have a motion?
MR. HOUGHTON: So moved.
MR. UNDERWOOD: Second.
MR. WILLIAMSON: I have a motion and a second. All those in favor of
the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: The vote will be 4-0, with Mr. Holmes abstaining.
Now we need to do Executive Session, but I've lost my sheet, Bob. Do
you happen to have a copy?
MR. JACKSON: We do.
MR. WILLIAMSON: Thank you. At this time we'll recess in order for
the commission to meet in Executive Session to discuss the process
of interviewing and selecting a new executive director. We stand at
recess for Executive Session and that will occur in the conference
room adjacent to former Executive Director Behrens's office.
(Whereupon, at 1:31 p.m., the meeting was recessed, to reconvene
this same day, Thursday, August 23, 2007, following conclusion of
the Executive Session.)
MR. WILLIAMSON: Back on the record. The State of Texas
Transportation Commission meeting is reconvened. For the record, the
time is 2:53 p.m. The commission has concluded its Executive Session
during which no action was taken on any matter.
We're at the open comment period of the meeting. Are there any
speakers signed up for open comment?
MR. BEHRENS: No, sir.
MR. WILLIAMSON: That being the case, the most privileged motion is
in order.
MR. HOUGHTON: So moved.
MR. UNDERWOOD: Second.
MR. WILLIAMSON: I have a motion to adjourn and I have a second. All
those in favor of the motion will signify by saying aye.
(A chorus of ayes.)
MR. WILLIAMSON: All opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Please note for the record that it
is 2:54 p.m., and this meeting stands adjourned.
(Whereupon, at 2:54 p.m., the meeting was concluded.)
C E R T I F I C A T E
MEETING OF: Texas Transportation Commission
LOCATION: Austin, Texas
DATE: August 23, 2007
I do hereby certify that the foregoing pages, numbers 1 through 212
inclusive, are the true, accurate, and complete transcript prepared
from the verbal recording made by electronic recording by Leslie
Berridge before the Texas Department of Transportation.
Nancy King 8/28/2007
(Transcriber) (Date)
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731
125 East 11th Street . Austin, Texas 78701 
Copyright 2012. Texas Department of Transportation. All Rights Reserved.
