Texas Department of Transportation Commission Meeting
Commission Room
City Council Chambers
2700 Town Center Boulevard N.
Sugarland, Texas 77479
Thursday, July 26, 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
PROCEEDINGS
MR. WILLIAMSON: Good morning. We're on the record at 9:21 a.m.,
and I would like to call the July 26, 2007 meeting of the Texas
Transportation Commission to order. It is a great pleasure to be
here in Sugar Land, Fort Bend County, Texas.
It is our practice to take the commission meetings on the road three
or four times a year. It gives us the opportunity to hear firsthand
about the problems facing the communities, particularly the high
growth communities of our state. It also gives us an opportunity to
review the activity in the area, to understand how our employees and
our management of the state's investment in the communities of this
state is being handled.
I hope that it also provides you with some insight on how we conduct
our business. You'll see this morning a commission meeting conducted
here exactly as that meeting would have been conducted in Austin,
Texas.
We've been greeted by incredible hospitality during our two-day
visit. We are so appreciative to the leadership of Sugar Land and
the western part of Houston and Harris County. We're particularly
appreciative of the city staff of Sugar Land who have done an
outstanding job in making us feel welcome, making sure we knew where
everything was, taking care of our introduction to Sugar Land,
Texas.
We note for the record that public notice of this meeting,
containing all items on our agenda, was filed with the Office of the
Secretary of State at 2:16 p.m. on July 18, 2007.
Before we continue with our meeting today, I would take it as a
personal favor if you would reach into your pocket or purse and take
out your telephone, pager, Dewberry, whatever else you carry, and
put it on a silent or vibrate mode so that we might conduct our
business in a relative uninterrupted state. I would also tell you
that if you do have a Blackberry, it will disrupt the microphone if
you're testifying, so I'd really appreciate it if you would leave
that in your seat when you come up to testify because it will blow
the documentation for our public record and that makes it tough on
all of us. Thank you very much.
Before we begin the meeting today, we have as a custom the
opportunity to let each commissioner comment as he or she sees fit,
and we always start with the commissioner on your far left and work
our way to the center, so we'll hear from Mr. Underwood first, then
Mr. Holmes, Mr. Houghton, Ms. Andrade, and myself. Members.
MR. UNDERWOOD: Thank you, Chairman. I want to thank again, reiterate
what the chairman said, really appreciate the hospitality we've
received. Your facilities here, your whole community, your whole
town, your whole city, it's amazing what you've done. I can see how
progressive and aggressive you are and you've got a great future and
whatnot.
I also want to compliment your staff at the Sugar Land Airport. As a
private pilot, I've flown from the East Coast to the West Coast and
I've been to a lot of FBOs, but you have one of the best in the
country and you need to take pride in that. Not only does it look
good but it's very functional from a pilot's standpoint, from a
corporate viewpoint, as a corporate pilot or corporate people flying
in and out. It's first class, please take pride in that. Thank you.
MR. HOLMES: I'd like to add my welcome. Mayor Wallace, you've got a
great facility here and I'm really impressed with all the progress
that you've made out here in the last few years.
Judge Hebert, we appreciate being in Fort Bend County, and I want to
add my thanks to your being here but also thanks to the TxDOT staff
that hosted us to dinner last night at the Rosenberg headquarters of
TxDOT. We appreciate the Fort Bend staff for taking care of us. Jim,
thank you.
MR. HOUGHTON: I echo Commissioner Holmes's remarks. Mayor, this is a
fine, fine facility, and a tremendous development plan here in Sugar
Land and ought to be proud of it.
And Judge, great to visit with you yesterday. I think we got a lot
of things done, and I appreciate you listening and you taking your
time.
And to the TxDOT family, Jim and Gary and crew, thank you very, very
much, and for the fine hospitality from this part of the great state
of Texas. Thank you.
MS. ANDRADE: Good morning. First of all, I want to apologize to our
TxDOT for missing the event last night. I know that you put a lot of
effort into it and I want you to know I may not have been here
physically but I was here in spirit and I'm always very proud of our
staff.
Mayor, congratulations. This looks like a very progressive
community. I landed at 8:15, my fear was that I was going to be
late, but I want to thank HCTRA and Fort Bend Tollway for getting me
here on time and safely. I had one of our TxDOT staff members who
brought me here and gave me a little bit of history, and I have to
tell you that I was very impressed with what I heard, I'm very
looking forward to hearing your presentation.
Judge, you've got a great region out here, and I love the aesthetic
treatment and the landscape. It just makes it beautiful. So looking
forward to hearing your presentation, and it's great to be here this
morning with you all.
MR. WILLIAMSON: Thank you, members. And I associate myself with the
remarks of the members completely. I also, again, personally
appreciate the hospitality you've shown to us.
There are plenty of important people in this room, but there's no
one more important than a former chairman of this commission, Bob
Lanier, who has taken the time to be with us this morning as part of
Harris County. Chair, we appreciate you taking the time to be with
us.
Many of you are young -- like me -- and would not know that there
was a time in the state's history, and in particular in the state's
transportation world, when there was even less being done to prepare
for the future of the state than perhaps has been done in the last
ten years, and a governor had the good common sense to hand the keys
over to Mr. Lanier, and I think, if memory serves me correctly, it
was the last time this state has received a revenue injection into
the state's transportation system that wasn't associated with debt
or wasn't associated with a concession, and the state should be
forever grateful for the hard work you brought to the commission at
that time, Chairman.
We have certain legalities we have to follow, and one of the
legalities is if you wish to address the commission on the record,
we need for you to fill out a witness card. If you're going to be
addressing the commission on a matter that's on the posted agenda, I
need for you to complete the yellow card, similar to the one in my
left hand, that you can find out in the lobby of the building.
If you want to wait until the end of the meeting and just comment
generally or on something that doesn't appear on our agenda, I need
for you to fill out a blue card, like the one in my left hand.
Again, you can find one out in the lobby to fill out.
Having said that, because we almost always have a long meeting it
seems, we ask everyone, other than sitting members of the
legislature, to limit their remarks to three minutes, make their
point and move on. We're good listeners, we tape and we take notes,
everything you say will be considered, and reviewed at a later date,
but if you could keep it kind of short and to the point, we would
appreciate it.
In a few minutes, we're going to be hearing from our partners and
the leadership in transportation in Fort Bend County, Sugar Land,
and in our Houston District office, but we have a bit of a deviation
from our norm this morning because we want to recognize one of the
many people who volunteer their time to creating a better
transportation system in our great state. And for this recognition,
Michael, I would ask that you take over and lead the way.
MR. BEHRENS: Thank you, Chairman.
We would like to recognize someone that has played a big role in the
transportation arena in our state, and to begin with, I'd like to
call Dave Fulton up, who is the division director of our Aviation
Division, to begin that presentation and introduce others that will
take part in that. Dave.
MR. FULTON: Thank you, Mike. Again for the record, my name is Dave
Fulton, director of the TxDOT Aviation Division.
I want to thank you, Mike, for giving me the honor to introduce to
the commission and the audience an individual that the commission
intends to recognize today for his service. Bill Knowles, would you
come forward?
Bill is the chairman of the Texas Aviation Advisory Committee. His
service to the State of Texas in aviation goes back before TxDOT was
formed. He's been an ardent supporter for aviation in this state for
many years.
I'd also like to ask some members of our committee, Jim Schwertner
and former member, Blair Bisbey to come forward -- they did fill out
a card. And I'd also like to recognize Greg Jones, another member.
At this time I'll turn the podium over to one of these gentlemen.
MR. BISBEY: May it please the commission. I'm Blair Bisbey. I'm a
lawyer. I live in Jasper, Texas; I've been a private pilot for 24
years, and it was my privilege to serve three terms on the Texas
Aviation Advisory Committee with Bill Knowles.
When I was appointed to the committee by David Bernsen, he told me,
in his fiercely parochial style, that he wanted me to get money for
East Texas airports. When I joined the committee, I found that David
had packed it with people from East Texas, or behind the Pine
Curtain, as we're referred to on the committee.
(General laughter.)
MR. BISBEY: Including my good friend, Bill Knowles, George Mitchell
from Beaumont, and at that time, Loretta Scott, who was from Tyler.
I very quickly learned, however, that Bill and George and Loretta
and the rest of the members of the committee had a much broader
vision for aviation in the state of Texas. And it was my privilege
to serve on this committee under, first, George Mitchell's
leadership, and then Bill Knowles' leadership, as we went from a
time when there were no funds dedicated to the aviation
infrastructure in the state of Texas on the general aviation level,
to the point now to where we have over $50 million annually allotted
to the improvement and maintenance of the general aviation
infrastructure.
It has been a watershed change that pilots have seen in the airports
of the state of Texas. Under the leadership of Dave Fulton and his
very capable assistants, Bill Fuller, Karen Weideman and Linda
Howard, we have seen incredible improvements in not only the
facilities but the safety of aviation.
We're poised now at a point where we're seeing a new revolution with
the WA System that's being implemented that's going to allow
precision instrument approaches into all of the general aviation
airports in the state of Texas that have these GPS approaches.
I commend Bill Knowles to this commission's attention for the work
that he's done to bring us to the point we are now, and to those who
will follow after Bill on the committee, I say here's an example of
not just good government but great government as we move into the
future.
Bill, it's been an honor and a privilege.
MR. KNOWLES: Thank you very much, Blair.
(Applause.)
MR. SCHWERTNER: Mr. Chairman, members. My name is Jim Schwertner.
I'm vice chairman of the Texas Aviation Advisory Board, and I'm also
owner of Capitol Land and Livestock. We're a livestock dealer, we
fly all over Texas and the United States buying and selling cattle.
I can tell you this guy has been my friend for 40 years, we've been
on a lot of trips together, and 30 years ago I'd been to almost
every airport in Texas, especially the rural areas and they were in
shambles and rundown, and because of the leadership of this guy who
understands how important aviation is to Texas, and under the
guidance of Dave Fulton and his staff, we now have one of the best
aviation systems in the United States of America. And you all should
be very proud of that, and it really has helped us in agri-business
and in commerce all over Texas, and it's all because this guy right
here had a vision.
He's a good friend, and we hate to see you retire.
(Applause.)
MR. KNOWLES: Thank you, Jim.
I'd like to ask the staff of TxDOT Aviation Division to stand up,
those who came, please. We appreciate your being here. These are the
guys who really do the work with Dave.
Thank you so much for making an opportunity for this today, Ric and
commissioners. I much appreciate it.
I was on the old Aviation Commission when we had nothing, and I
remember well the days when people said, Oh, we're going to have to
go to the Highway Department -- like we were being sent down to some
other area. It's far and away the best thing that ever happened to
aviation in Texas. You guys have made money available to us to do
the sort of improvements, like the terminal at this fine airport
here, and many, many other small airports all over the state of
Texas.
I sincerely appreciate what you've done for Texas and the money
you've injected in aviation. We're a big state, we must have it, and
with staff like Dave and his group, we'll take good care of it.
Thank you very much.
MR. WILLIAMSON: Hang on just a second.
MR. BEHRENS: Don't sit down yet. Bill, it's my honor, on behalf of
the commission, to read this resolution in your honor.
A Whereas, upon the establishment of the Texas Department of
Transportation in 1991, the Texas Legislature created the Texas
Aviation Advisory Committee to ensure continued statewide support
for aviation;
A And whereas, the Texas Aviation Advisory Committee is comprised of
six members committed to aviation in Texas;
A And whereas, Bill Knowles has faithfully served as a member of the
Texas Aviation Advisory Committee for twelve years, as chairman the
past seven years, while contributing significantly to the Texas
Department of Transportation's aviation programs;
A And whereas, he served as a member of the Texas Department of
Aviation Board from 1989 to 1991 and rendered such service in a
manner that has contributed greatly to the betterment of aviation in
Texas;
A And whereas, he has contributed his time and resources and service
solely due to his love for and commitment to aviation;
A And whereas, he has announced his retirement from the Texas
Aviation Advisory Committee effective August 31, 2007;
A Now, therefore, be it resolved that the Texas Transportation
Commission hereby honors and thanks Bill Knowles for his service to
TxDOT and to the people of Texas.
A With gratitude and best wishes, presented by the Texas
Transportation Commission this 26th day of July 2007.@
And it's signed by all the members of the commission.
MR. KNOWLES: Thank you.
(Applause.)
MR. WILLIAMSON: We're going to continue on our agenda, but we don't
presume everybody has all day to spend with us; we understand life
goes on, and what's going to happen is Gary Trietsch, our very
capable Houston area engineer, is going to give a presentation about
this part of the state, and then we're going to take about a
five-minute break to give everybody an opportunity to resettle, and
if you need to leave, to leave without disrupting the meeting. So
just so you know, we'll take a break in a few minutes.
MR. BEHRENS: At this time, I'd like to call up Gary Trietsch, our
district engineer in Houston, and he will give us a report on things
going on in the Houston area. We have picked on Gary for the last
several years we've been around the Houston area, so this will be
his third report, and probably some of your fellow district
engineers are either jealous or happy, Gary. The floor is yours.
MR. TRIETSCH: Well, I hope they're jealous. For the record, I'm Gary
Trietsch, Houston District engineer for Texas Department of
Transportation. And I'm a little worried about touching anything up
here, so I'll try to be careful.
(General laughter.)
MR. TRIETSCH: I would first like to officially welcome the
commission and Mike Behrens, Executive Director, for coming to Sugar
Land, to Fort Bend County, to the Houston District, that it means a
lot to us.
It's not too much work for us to be able to show you what's going on
around here, talking to several of you, you've driven around the
area, looked at the terrain and seen what the country is like around
here, and I will tell you it changes vastly in a very short period
of time from the metropolitan center of Houston to the suburbs of
Sugar Land and Missouri City and Stafford, and you go across the
Brazos and you see the farm fields and the farmers. And you know,
you think of me as a metropolitan district engineer, but you haven't
lived till you met with six farmers about frontage roads on US 59.
They get your attention quicker than anybody else.
But I would also like to introduce one of our many, many partners,
the Grand Parkway Association, and their board of directors, chaired
by Billy Bird, they're here today. Would you all stand up? It looks
like the entire board made it.
(Applause.)
MR. TRIETSCH: Grand Parkway started back under Chairman Lanier
20-plus years ago, and it's had its ups and downs, and the only part
that's open to traffic right now is predominantly in Fort Bend
County. We have a part under construction in Chambers County which
is in the Beaumont District. That's how big Grand Parkway is, 170
miles. It's almost like building I-10 from Houston to San Antonio.
And we are going to get it done and things are going to start
happening pretty rapidly here in the coming months.
I am not much of a speaker -- actually, I'm a real good speaker but
I'm a long-winded speaker, I don't know when to quit, so my folks
have prepared a video on Fort Bend County. If we could play that
right now.
(Audio problems starting video.)
MR. WILLIAMSON: Mike convinced a few uninformed employees of the
department in Austin, Texas that Sugar Land got its name from the
sugar that flows through Sugar Creek, and they bought that story.
MR. HOUGHTON: Mayor, how do you keep the people's attention, your
council members, with internet access up here and games?
And did you notice, Chairman, there's another gavel up here besides
yours?
MR. WILLIAMSON: Listen, I've already decided when we get through,
I'm going to have Roger take a picture of this deal and we're going
to try to duplicate this in Austin. It's pretty slick.
MR. HOLMES: Well, Fred and I are taking our chairs back.
MR. WILLIAMSON: You've got Bose surround sound, this is great.
(General talking and laughter.)
MR. TRIETSCH: Well, I will fill in while we get this up and ready.
It's really a very good video, but it's a whole lot better with
sound, I will not try to narrate it. I will tell you that we, as a
state agency, could not begin to do the things we do here locally
without the cooperation and the support of the cities and counties,
the economic development boards, chambers of commerce, the state
representatives and state senators and congressmen that all
represent this area, and I will tell you that the City of Sugar
Land, Fort Bend County have passed bond election after bond election
to build the infrastructure that's needed to support this growth
that is going on in this area, that as you can tell by driving
around and looking.
This is 1989 where you're at now and this is what it was last year.
It has changed dramatically, and Chairman, as you often mention
about the growth of Texas, this is kind of at the heart of the
growth, along with other cities and towns in Texas that's growing. I
will say unfortunately I was wanting bad traffic last night, not
just quite as bad as it was. I think it took us an hour and 15
minutes to get from here to the area office. I did tell somebody it
was their truck was broke down on the Brazos River but I did not see
whose it was.
But we have a dedicated area office, area engineer in Jim Hunt and
his staff and maintenance folks and construction folks that work
hand in hand, day-in and day-out with the folks that live here. Jim
is a part of the community, everybody likes Jim because he tells it
like it is, but the other part is he tries to find a solution, and
as an area engineer, one of the things I like about him is he
generally brings a solution in when he brings a problem. Makes my
job a whole lot easier because I don't have all the answers.
With that, I'd like to just play emcee, and Mayor Wallace of Sugar
Land has a few comments, and then I'll introduce the Judge after
that.
MAYOR WALLACE: Good morning, Mr. Chairman and commissioners. I'd
like to welcome all of you to the greatest city in the United States
of America, the city of Sugar Land, Texas. And many of the folks
that I've spoken with this morning, a lot of them said that this was
the first time that they've been to Sugar Land, so I'd like to
welcome all of them here as well.
But don't just take my word for it. I'm sure all of you know CNN and
Money Magazine every year ranks the top 100 best communities in the
Unites States. This year they ranked the city of Sugar Land as the
third best city in the United States, and most of the time I give
pretty good credibility to CNN and Money Magazine, but we know that
they're wrong because we actually are number one.
I, too, have a video, I'm not quite sure whether it's going to work.
We've got a video that we would like to show. And you were talking
about the sugar running through Sugar Creek. Obviously I shared with
you last night about our motto, A Sugar Land, where there is no
Equal@ -- for those of you that didn't get it, the little blue
packet and you'll understand.
But if we could show this video and then I'll come back and I'll go
through the presentation.
MR. WILLIAMSON: Although, last night at the reception that you had,
I don't think it was you but it might have been, somebody made the
comment that the desserts were great.
MAYOR WALLACE: That was me, that we have taken all the calories out
of anything sweet here in Sugar Land, so as you were eating that
dessert, there were no calories in that.
MR. WILLIAMSON: They were great desserts.
MR. HOUGHTON: With all this sophistication, they're still doing hand
signals from the back of the room.
(General laughter.)
MAYOR WALLACE: Let's see if this works here. There's no sound. If
there's no sound, then let's don't even bother with that.
MR. WILLIAMSON: No, no, it's good.
MAYOR WALLACE: No, you should see it with the music, it's
phenomenal, it's not the same.
As I mentioned, we have close to 200 years worth of history here, so
let's just kind of move on to the presentation. As I mentioned,
Imperial Sugar started here over 160 years ago, before the State of
Texas was the State of Texas, obviously, and we have grown from a
relatively small company town into a thriving metropolis that we
have right now. In fact, when I moved here in '93, the population of
our city and our ETJ was around 25,000; today that same geographic
footprint is over 125,000.
And Mr. Chairman, as I mentioned this morning, making sure that we
stay ahead of that power curve from an infrastructure standpoint is
one of the primary goals that we have.
Educational attainment, not just in Sugar Land but in all of Fort
Bend County, is something that's extremely important from an
economic development standpoint as we go out and recruit businesses
to come here. With Wharton County Junior College, University of
Houston Sugar Land, the primary, the secondary education is
extremely important.
When University of Houston Sugar Land opened its doors about five
years ago, its enrollment on day one was about 2,000 students, and
that's a large footprint, about 260 acres that we have right here in
Sugar Land.
Dave Fulton already commented about the Sugar Land Regional Airport.
Obviously, you've flown into this airport -- which we appreciate.
And again, from an economic standpoint, that is a big weapon in our
arsenal when we go out and talk to businesses to get them to come
here. The economic development program with the City of Sugar Land,
the team that we have here, as well as with Fort Bend Economic
Development Council, as well.
One of the things that we are very progressive about is we
understand public-private partnerships. We reached to the private
sector and we have a yellow page theory that if there is a private
company that can do the job quicker, faster, cheaper, better than we
can as a public organization, we're going to reach out to the
private sector. And so we are one of the top 1 or 2 percent in the
United States as it relates to reaching out to the private sector.
And it stands to reason that when we can do that, we can continue to
lower our tax rate and we do have the second lowest tax rate in the
state of Texas in our peer group at this point in time, and then as
you can see, consistently rank as one of America's best places to
live, work, shop and play.
And we can run the video now and it's going to work. We're going to
try the video one more time, if you don't mind. While we're trying
to do that, then I'm just going to keep talking.
I mentioned the partnerships that we have are tremendous. One of
those partners that we have is TxDOT and we're very proud of the
relationship. When we come to the table, as we mentioned this
morning, it's not just us coming to the table with spirit and a
vision, it's us coming to the table with a checkbook, as well, to
partner with TxDOT to help accelerate the development of some of the
roads that we have here.
You can see whether it's University of Houston, the Greater Houston
Partnership, the Fort Bend Economic Development Council, other
private developers, there's a number of things that we work very
closely with the private sector for us to continue to grow. Economic
development, our relationship with the State of Texas and Texas One,
Team Texas, Greater Houston Partnership and then the Fort Bend EDC,
again these are strong relationships.
The partnership specifically with TxDOT. You commented about the
beauty as you drive through the city of Sugar Land. When people
drive down 59, we want them to know that they are in the city of
Sugar Land. Whether it's the street scape that we have, the
landscape on either side, again, we come with a checkbook because we
want to make sure that people understand the beautification that we
have, and again, working with TxDOT for all of us collectively to
win those types of awards.
The access management, the city of Sugar Land has worked very
closely with TxDOT for this community basically to be a poster
child, as I mentioned yesterday, for all of the state of Texas on
access management so that we can replicate what has been done here
to improve the access.
And then the airport construction, we would not have been able to be
where we are today, we would not have been able to do that type of
construction, that type of development if it weren't for TxDOT and
TxDOT Aviation. Dave Fulton, each and every one of you have been
great partners with the City of Sugar Land, and we are most
appreciative of that.
From the legislative perspective, every single year we come up with
our legislative agenda. Many times our legislative agenda is
basically playing defense so that we don't kind of screw up things
that we presently have, but this year we had a couple of offensive
programs. One of them resulted in Senate Bill 909 that basically
deals with Texas Department of Criminal Justice and the central
prison unit that we have right here in the city of Sugar Land, and
what that Senate bill provided for was a feasibility study to
basically relocate the prison that is presently in the city of Sugar
Land.
In a moment I'll show you an aerial and you'll see that there is a
great deal of development that has developed around it, not the
least of which being our airport, and what we are asking is as a
city, we would love to step up and acquire that prison and assist in
the funding of its relocation. So the Senate bill basically has
provided for this type of feasibility study and will be the first
time in over a hundred years that a state prison has been relocated
in the state of Texas.
As I mentioned, our goal is to acquire the property. It's adjacent
to our airport, it works fantastically from an economic development
perspective as we are running out of land in the city of Sugar Land.
At the same time, we're working to receive federal funding. We know
that there's $1.7 million appropriated, Congressman Lampson called
us last week in connection with that, and so again, it's a great
partnership with all of us working together.
This is the aerial and you can see where our airport is. Sugar Land
Regional Airport as a business unit is profitable. The revenue that
we receive from whether it's landing fees, whether it's fuel sales,
hangar lease, things of that nature, basically it covers the cost,
has a positive cash flow that we can continue to pour back into the
growth of the airport. There are no tax dollars from any citizen of
the city of Sugar Land that are going into this airport.
However, you can see on the southern portion the central prison unit
and then Smithville. Smithville is where the warden and many of the
folks that work at the central prison unit actually live. As you can
see, it surrounds our airport, and just beneath that you can see
some vacant land on the bottom right side. That is a 2,000-acre
development that during the very first month when they came in for
building permits, there were about 300 building permits that were
requested. There will be 4,400 rooftops in that 2,000-acre area. And
so what we are looking to do, obviously, is to move the central
prison unit.
Tract 2, as part of our land use plan, is basically for a business
park. The business park that we have in Sugar Land, the only
principal business park, is about out of land, and again, as we are
recruiting a number of major corporations to come in here to help
grow the economy to enable us to continue to reduce our tax rate
year-in and year-out, we would like to move forward. And so all of
this, between our airport, the central prison unit and Tract 2,
obviously is something that we would like to be owned by the City of
Sugar Land for us to come to the table with a check to acquire it to
develop that land.
MR. HOUGHTON: Can I ask a question? On that slide, do I recollect
that those pieces of land were at one time owned by TxDOT?
MAYOR WALLACE: They were.
MR. HOUGHTON: And purchased then by the General Land Office?
MAYOR WALLACE: That's correct.
MR. HOUGHTON: I remember that transaction.
MAYOR WALLACE: The airport itself, we have 24-hour Customs. We were
designated by TxDOT as the number one reliever field this year in
the state of Texas. Regularly we serve over 100 Fortune 500
companies that fly in regularly into this area. Many of those are
international companies that fly their Gulfstream from here to
international destinations and back, and obviously the cost of them
going to another airport to go through Customs and then ferry here
is pretty cost-prohibitive, so we have Customs now on a
24-hour-a-day basis.
Many of you have seen our new terminal, 20,000 square foot terminal.
It's a very efficient operation, it's a beautiful operation. That's
the impact we want people to see when they come to the city of Sugar
Land. The fourth largest airport in this area. A lot of people don't
know that we are the number one reliever field for Intercontinental
and Hobby. Our runway length is longer than Houston Hobby -- a lot
of people don't know that -- and again, it is centrally located in
Sugar Land's business district. So we do see this continuing to be a
significant asset when we are recruiting businesses to come here.
So we stand before you to talk about the fact that things that we
hope you will see in the future coming back to you is in connection
with our request to sell the prison unit and for the City of Sugar
Land to basically acquire that. One thing they're really not
creating anymore is airport property, and so we would like to own
that property ourselves so that we can use that to build additional
hangars, to build additional infrastructure for us to grow as a
local economy and for us to talk about those improvements.
That's basically what we wanted to brief you on. I could go on for
hours and hours -- many of these people have heard me talk before, I
could go on for hours and hours. I'm very proud of the city of Sugar
Land, everyone here is. Many of you met our council members. I also
wanted to acknowledge our city manager, who is here, Allen Beaugard.
I say this all the time, I'm involved in investment banking, if you
don't have a good CEO, it doesn't matter what your business plan,
what your strategy is, it can be flawed, but if you have a good CEO,
they can make wonderful things happen, move mountains. And we do
have a phenomenal CEO which is our city manager, Allen Beaugard.
With that, I'll be more than happy to answer any questions any of
you have.
MR. WILLIAMSON: Mayor, I think that you're a pretty good economic
development guy. You've sold me.
MAYOR WALLACE: Well, we've got some homes for sale. What are you
doing this afternoon? I'd be happy to show you. And our city manager
will actually move you, he will unpack the boxes.
(General laughter.)
MAYOR WALLACE: We're going to try this one time.
(Whereupon, the video was shown.)
MAYOR WALLACE: In any event, as I mentioned, we're very proud of the
things that have taken place in Sugar Land. Four or five years ago,
this was nothing more than an empty field. And obviously the
partnerships we've created with the private sector, as well as the
folks at TxDOT, we just would like to thank you. We want to thank
you for recognizing the city of Sugar Land and for being here and
holding your meeting here today. It is truly an honor.
So on behalf of all the citizens of Sugar Land, I'd like to welcome
you to the greatest city of the United States.
MR. WILLIAMSON: Well, we appreciate your hospitality, and I think it
would be appropriate -- I just was looking a while ago and I noticed
one of my former colleagues in the Texas Legislature, Dr. Jack
Harris, is with us, and he was a lot of what got us interested in
coming to this part of the state in our next round of commission
meetings in the first place.
Jack, it's good to see you and we're glad you're here. Are you going
to be up here or are you just here watching?
DR. HARRIS: I'm just here watching.
MR. WILLIAMSON: Thank you very much. Members, anything for the
mayor?
MR. UNDERWOOD: Great job.
MR. HOUGHTON: Outstanding. Speaking of public-private partnerships,
what are you doing January 1, or roughly thereabouts, 2009 for the
next legislative session?
MAYOR WALLACE: What would you like me to do?
MR. WILLIAMSON: That's a can-do spirit. We need to recruit this guy
to come down and help us.
MR. HOUGHTON: Yes, absolutely. Mayor, thank you.
MS. ANDRADE: Great job.
MR. WILLIAMSON: Thank you. Very good job, Mayor.
(Applause.)
MR. TRIETSCH: One of the things we're very proud of in this district
is our landscaping and beautification program. I tell everybody I
don't plant rose gardens. I found out this morning that yes, we do.
The City of Sugar Land plants roses in our medians and they take
care of them, and I think this is indicative of this area and what
they are trying to accomplish.
Now I'm going to try to follow the mayor and see if I can get my
video to play, and we'll see what happens. If not, I'll sing.
(Whereupon, the video was shown.)
MR. TRIETSCH: And that concludes my remarks.
I'd like now to introduce Fort Bend County Judge Hebert, and of all
the introductions he's had the past 24 hours, I'm not sure it was
mentioned, but he is an engineer.
(Applause.)
JUDGE HEBERT: Mr. Chairman, commissioners, welcome to Fort Bend
County. I'm going to try this technology. There is no audio with my
presentation, I'm the audio, so we'll see what happens. There it is.
Good.
I have to correct Gary. I confuse a lot of people who think I'm an
engineer. My degrees are in business and organizational development
but I moonlighted as an attorney and an engineer when it was to my
benefit over the years.
Fort Bend County is currently home to over 500,000 residents. We're
growing at a rate of roughly 30,000 a year and maintaining mobility
and improving mobility is a constant challenge. We're fortunate to
have an excellent resource in the TxDOT Houston office. I've said
this before and I'll say it again, they're great to work for. Wish
they'd give us more but we get a lot out of them.
We're also blessed to have broad support from local voters for
mobility initiatives, local support. In 2000, voters of Fort Bend
County approved $85 million in road bonds and $140 million in toll
road bonds. This year, voters again approved $156 million in
mobility bonds, and that came with an associated 2-cent property tax
increase that passed by a 73 percent vote.
Mobility projects that we do in Fort Bend County are always a
combination of county projects and partnerships with our cities and
with TxDOT. We try and leverage that money as much as we can to
address mobility issues.
The one thing I'm going to highlight in this brief presentation to
you is give you a brief overview of the Fort Bend County Toll Road
Authority. Why do we have a toll road authority in Fort Bend County?
Well, there's a little saga there.
What is currently the Fort Bend Parkway was originally designated by
TxDOT as State Highway 122 in 1961. In 1980, as nothing was being
done, the county created a road district to acquire right of way and
pay for design, but couldn't come up with the funding. We returned
to the table in 1996 and created Fort Bend County Toll Road
Authority. It's a five-member board appointed by commissioners
court. It's tasked with helping the county solve mobility issues and
the authority does the heavy lifting, they do all the work and then
they make recommendations to the court, but Fort Bend County
Commissioners Court makes the final decisions on all projects.
The concept that we employed was to avoid building a new
bureaucracy. We use consultants whenever possible, we have an
extremely small staff, and we try to minimize administrative and
development costs with the goal to get the most road for the dollars
we spend.
The toll road bond election which I spoke of that passed in 2000 was
$140 million for two projects: Fort Bend Parkway which was the
former State Highway 122, and the West Park Toll Road along Farm to
Market 1093.
The Fort Bend Parkway Toll Road was a partnership between HCTRA,
TxDOT and our toll road authority. We constructed what is a seamless
toll road in two counties. You don't know when you leave one county
and enter another on the toll road system. TxDOT assisted us on the
parkway by doing the interchange at State Highway 6 which was a
relatively expensive project that made our numbers work.
This toll road is a combination of unmanned coin operation and EZ
Tag lanes; it's approximately six miles long. It has a common EZ Tag
system with HCTRA; all operations, billing and collections and
incident management are handled by HCTRA, and we pay approximately a
5 percent per transaction fee for their services.
Construction cost of the project was $65 million. You can see it
down there in the lower left-hand corner. There's a little white
circle that I think everybody can see. It's hard for me to see but
it looks like it picks up. That's a photo of it on the opening day
which proves that we did pour some concrete. But you'll notice that
shows the combination cash machine and there are EZ Tag lanes out to
the right of that.
The West Park Tollway extension is a partnership with Harris County
Toll Road Authority -- we tie into their Westpark Toll Road -- and
TxDOT, who worked with us as they improved FM 1093 to four lanes,
concrete curb and gutter. We built our toll road in between those
four lanes. It worked out very, very well. Again, this runs all the
way from the Harris County line to State Highway 99 to Grand
Parkway. It is also approximately six miles in length.
We built it with 150 feet of additional right of way acquired by the
county, the rest of it was in the 1093 right of way. This toll
system is an all-electric collection system, there's no coins, no
gates, no toll booths. Total construction cost on the Westpark Toll
Road was $100 million. It's complete and running all the way to 99,
as we speak. Westpark Toll Road was built 180 days ahead of plan,
opened in August of 2005.
You'll notice, as Mike Stone refers to them, the croquet wickets.
That's the toll booth for the Westpark Toll Road. It's all
electronic, has several advantages. We're not subject to mechanical
failure. If we have mechanical failure in that toll booth, traffic
doesn't know it, we know it and we react fairly quickly, but there's
no stoppage of flow on that toll road.
We find even with the non-personnel operated coin-handling operation
on Fort Bend, whenever one of those cash operations fails, we start
stacking traffic up on the toll road. So this is constructed to
maximize efficiency in moving cars. So we have those little wickets,
people don't even know when they go through the toll system unless
they read the signage.
Future projects underway in Fort Bend County using our toll
authority, one is the Fort Bend Parkway, Project B-1, which runs
from Highway 6 where the parkway currently ends down to Sienna
Plantation Boulevard. We're in right of way acquisition, as we
speak. Eighty-five percent of the right of way has been acquired or
we have commitments for donation and we're moving ahead with the
environmental work that needs to be completed. We expect to let
contract for construction design in September of 2007. The estimated
cost of this project is $25 million.
That's a photograph of the Fort Bend Parkway, as you can see, coming
down to Highway 6 which runs diagonally across the center of that
photograph, then B-1 will take it on down to Sienna Parkway.
The second project that's currently underway is the Westpark Tollway
extension from State Highway 99 on out to Farm to Market 1463.
Schematic design is complete and we're currently acquiring right of
way and we're negotiating with Metro to acquire additional land to
accommodate the positioning of the extension in the improved 1093
corridor, as TxDOT completes that work. The estimated construction
cost of this project is $50 million.
And here's a photograph that shows the Westpark Toll Road extension,
actually runs a little bit west of 1463, almost into the city of
Fulshear, to accommodate several thousand homes that are beginning
construction in that area just north of 1093.
Future projects. The policy that we follow in defining future
projects through the toll road authority, they must be financially
feasible to construct, operate and maintain them with toll revenues
alone, and they must provide vital transportation infrastructure in
the county not attainable by other means. We use our toll road
authority just to acquire those mobility improvements we have to
have that we can't get by other means, and we'll work in partnership
with anybody that will help us accomplish those goals as we move
forward.
That's just a brief overview of what we've done in toll roads. I
want to thank you for visiting Fort Bend County. I think you will
agree that Sugar Land is excellent, it's selling, the City of Sugar
Land, they do a great job. I had the privilege of living in Sugar
Land for eight years before I moved further out in the county. I
would invite you, if you get a chance, to tour the rest of the
county. We have a number of fine cities in Fort Bend County.
We have one unusual circumstance in a county of 500,000 residents
and that is over half our county lives in the unincorporated area,
fewer than 250,000 are in incorporated cities, almost 260,000 live
in the unincorporated county. So we deal at the county level with
numerous urban problems we find that counties are very poorly
constructed to deal with, but it seems to work by seeking
cooperation with all the stakeholders involved. And I think you'll
find that this dynamic county will continue to grow and grow
successfully.
Again, Commissioner Holmes, Commissioner Houghton, thank you for the
time you spent with me yesterday and visiting on the issues that are
important in Fort Bend County. Chairman Williamson, thank you for
the comments you made this morning about me, they may have been
misguided about my capabilities, but I do appreciate them. I want
you to understand that as the Fort Bend County judge, we will
disagree on issues that we think we need to debate, but we have the
highest regard for the job that each and every one of you do and the
folks in TxDOT do to serve the citizens of all of Texas. We do
appreciate that. Thank you very much.
(Applause.)
MR. TRIETSCH: Now I'd like to introduce Fort Bend County
Commissioner James Patterson, who I've worked with a number of years
and he just recently, three or four months ago, became chair of the
Transportation Policy Council, and as a retired principal, he is
well equipped to handle the rather unruly crowd that sometimes
gathers around the board table there.
MR. PATTERSON: Thank you, Gary. The truth of the matter is when
Judge Eckels decided to go make a fabulous living, I couldn't run
fast enough not to be nominated and elected as chairman of the
Transportation Policy Council.
Again, thank you all for being here, ladies and gentlemen. We
appreciate you coming to Fort Bend County. After 45 days, if you
could, if you'd make sure that Mr. Behrens knows exactly how to get
to his son's house just a few blocks from here, we'd appreciate
that. If you didn't know that, I see Commissioner Houghton looking
back, maybe he didn't know that he could have gone over to your
son's house last night and ate home cooking instead of having to
stay in some hotel.
I am here today as chairman of the Transportation Policy Council,
not that I'm not proud of being commissioner of Fort Bend County,
but as Transportation Policy Council chairman, hopefully we have the
reputation of not worrying about our county but being that. And you
don't have to worry about any power point and I will read my remarks
so they will stay very short.
As chairman of the Transportation Policy Council, I would like to
thank you guys for coming today. I want to take a few moments to
brag about our TPC and its undertaking for the 2008-2011 TIP. My
notes had $10 billion and Alan Clark went and found some more work
yesterday afternoon, our 2008-2011 TIP will contain in excess of
$13.5 billion as a result of lots of partnerships. This is the
largest TIP in terms of projects and dollars that our TPC has ever
developed.
Many of the largest mobility projects in the TIP are joint ventures
between the counties, TxDOT, Metro, toll road authorities, port
authorities, and in some cases, private partners like the railroads.
You will see this cooperation in action as we move forward on tolled
and managed lanes on I-10, US 290 in Hempstead, 249, Grand Parkway
and others.
The TIP also contains a $2.5 billion transit program, an important
component of the region's mobility improvement. In addition to
expanding light rail, signature bus, fixed route bus service, the
TPC is making progress in coordination of transit services.
One of the things that we believe is really missing in most areas is
coordination. Everybody is excited about doing their own thing and
as an old principal, if I walk into the room and start talking to
folks and they're sitting there enjoying my conversation with their
arms folded, we're not going to cooperate a whole lot. So the first
thing we've worked on is how to get people to unfold their arms so
we can all talk about cooperation.
Developing and managing such a large program of projects is only
because of a spirit of cooperation. You will see that, in fact,
officers of our TPC represent four counties. I happen to be county
commissioner of Fort Bend County; our first vice chair is the city
council lady from the city of Houston, and I glanced in the audience
to see if Pam might be here; our secretary is the mayor of the City
of Pearland in Brazoria County; and the second vice chair is the
commissioner from Liberty County, Mr. Brown. So we have been very
careful in trying to elect board officers for our TPC that will
represent the whole region and have done a great job in doing so.
We're also excited about the possibilities that exist as a result of
Senate Bill 792. If we can any of us figure out exactly what 792
said, we're going to move forward with great haste. We do appreciate
that.
We look forward to working with you folks in lots of ways. We want
to thank specifically Commissioner Williamson. The last legislative
session removed a 30 percent reduction in the transit formula
funding for 5311, and we appreciate the fact that you're working on
a process to try to get that put back in.
On a separate note that was not in my notes, Commissioner Houghton,
yes, as you made mention to the mayor, that was TxDOT land. When I'm
out dealing with homeowners associations, I call all that land Enron
property because in 1984 it was prison property and the prison
didn't have any money, so the state legislature said, TxDOT, you've
got money, guess what, now you've got land. And about five years
ago, Gary Trietsch was having to call engineers saying we don't have
enough money, stop work. The State Legislature said, Guess what,
Permanent School Fund, you've got money, now you've got land. So
that all belongs to the Permanent School Fund now, that land does,
and it's operated by the General Land Office.
I'll be glad to answer any questions that you might have as far as
the Transportation Policy Council is concerned. I cannot imagine
having a commissioners court meeting that lasted more than 15
minutes, and you have already been here an hour and a half and
haven't even started yet. So be glad to answer any questions in
regard to the Transportation Policy Council and the way we operate.
I'll probably spin around and let Alan Clark answer them, but that's
okay.
MR. WILLIAMSON: Members, do you have questions, any dialogue that
needs to be had with this person?
MR. HOLMES: Just one brief comment. James, I want to commend you for
the cooperative spirit that your group and the TPC shows. Clearly,
everybody is working their way through 792, but we expect great
progress on it, and we appreciate the help and leadership that you
provide.
MR. PATTERSON: And just as a side note, several months ago the
commission received a letter from TPC in regard to what we call the
$21 billion plan where it was HCTRA and TxDOT forming a partnership.
When we started talking about this, the idea that we could get nine
commissioners courts to agree to resolutions, everybody sort of
laughed and snickered because in most commissioners courts you can't
get three of those guys to vote together, much less having nine
diverse commissioners courts supporting a resolution. As you saw,
ladies and gentlemen, you got those resolutions. So we're extremely
proud of the cooperative spirit from Jack Harris, and I'm looking
around and if there's any commissioners court members from other
counties, speak up, but it was a good experience.
Thank you all.
MR. WILLIAMSON: Anything else, members?
MS. ANDRADE: Thank you
MR. WILLIAMSON: Thank you very much. Thank you for your service,
also.
(Applause.)
MR. TRIETSCH: I will conclude by saying we are truly a multimodal
agency. Monday morning we had a meeting in Houston to basically roll
out our final Houston Region freight rail study that we've been
working on a couple of years. That impacts this county greatly, it
impacts the port, the city of Houston, the whole region. And it's
about a $5 billion list of projects, it's not a plan yet, but as of
Tuesday, Harris County Commissioners Court took action and Harris
County and the City of Houston jointly appointed Mark Ellis as chair
of the Houston Region Freight Rail District. So I think all of the
board members have been named and it will get up and running in the
next few weeks and months, and it's my hope they will take this as a
resource document to begin their work. It's going to be a long and
arduous task to relocate railroads or change operation, but I think
the railroads are onboard at least as far as working with us.
With that, I'll conclude, and Chairman, if you have any questions,
and other commission members, I'll be happy to answer, or I'll sit
down.
MR. WILLIAMSON: Members, questions for Gary?
MR. HOUGHTON: Thank you for your hospitality, Gary.
MR. WILLIAMSON: We appreciate the presentation, we appreciate the
hospitality, Gary. Thank you.
MR. TRIETSCH: Thank you.
MR. WILLIAMSON: Mike, let's take a couple of minutes to let people
resettle and take a break, and then we'll come back on regular
business. We'll be at ease.
(Whereupon, a brief recess was taken.)
MR. WILLIAMSON: Mike, if you'll take over, let's resume.
MR. BEHRENS: I think, Chairman, the first would be agenda item
number 1, we need to approve the minutes from last month.
MR. WILLIAMSON: Members, you got a copy in today's agenda of the
minutes from the previous meetings. The first item on our agenda is
the approval of those minutes from the June 28 meeting and the
special called meeting of July 18. 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: Motion carries. Thank you.
MR. BEHRENS: We'll move to agenda item number 2, and we're going to
have three discussion items. The first one will be led by Coby
Chase, and Coby will be talking about some of the financial impacts
that we see coming from recent state and federal legislation. Coby.
MR. CHASE: Thank you. For the record, my name is Coby Chase. I'm the
director of TxDOT's Government and Public Affairs Division. Today I
will discuss the financial effects resulting from recent and
expected state and federal action, as part of my continuing series
on upbeat news.
(General laughter.)
MR. CHASE: I would like to, if I could, take just one semi-personal
privilege, and somebody else in this room is retiring, Janelle
Gabor, who is the public information officer at our Houston
District, and I've worked with her and for my 13 years she's done
everything from handle governor's visits to doing almost anything we
asked her to do, to being the face of TxDOT in the Houston area and
nationally when hurricanes hit. And she is a spectacular resources
agent and irreplaceable. Whoever replaces her is going to have big
shoes to fill. But I would like to thank Janelle quite a bit for all
of her service to TxDOT, and we'll miss you.
(Applause.)
MR. CHASE: As we discussed last month, and as it's been reported in
a few newspapers, our total appropriation for the next biennium in
the state legislature increased by 2 percent, as compared with the
last biennium. That would be $16.3 billion in '06-07 as compared to
$16.6 billion in '08-09. Considering the effects of inflation in the
highway construction business -- which over the last five years
averages out to about 6 percent per year -- this 2 percent increase
represents a step backwards.
MR. WILLIAMSON: Hang on a second, Cob.
MR. CHASE: Yes, sir.
MR. WILLIAMSON: I assume you will not object if we interrupt you and
ask you to clarify as you go through your remark.
MR. CHASE: Yes, sir, absolutely.
MR. WILLIAMSON: Now, when you say our appropriations increased by 2
percent, is that because the legislature gave us additional general
revenue.
MR. CHASE: No, sir. It was an appropriation of state gas tax
receipts and what is federal reimbursements.
MR. WILLIAMSON: So in our particular case, when appropriations
increase, generally it means that the projected collections from
gasoline tax are going to increase over the next two years and the
legislature has given us the authority to spend that additional 2
percent.
MR. CHASE: Exactly, yes, sir. That's a very good point. This is not
the result of new revenue. Actually, I would argue, and maybe James
can clarify -- and bond proceeds, as well, that had already been
anticipated.
MR. HOUGHTON: Well, if you carve all those out, you take all that
revenue out, what would the increase from appropriations be?
MR. CHASE: Well, the overall increase is $242 million over the
biennium.
MR. HOUGHTON: From what source.
MR. CHASE: I don't have that broken out by source.
MR. HOUGHTON: That's what I'm saying, if you take that out, those
sources of revenue.
MR. CHASE: Fund 6 stayed flat, from what I hear.
MR. HOUGHTON: From what you hear.
MR. CHASE: Yes, sir.
MR. WILLIAMSON: So the increase in appropriations is not even
related to a projected increase in gas tax receipts, it's related to
debt, giving us the authority to spend debt against the system.
MR. CHASE: Yes. That's a very, very good point.
And this is the chart that I have in front of you right now.
Additionally, 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 which means an
additional $242 million was sent to other purposes over the
biennium.
MR. WILLIAMSON: Okay, stop.
MR. CHASE: Yes, sir.
MR. WILLIAMSON: So we're looking at a chart that compares the
previous biennium transfers to other purposes -- the biennium that's
ending next month with the one that will begin in September.
MR. CHASE: Yes, sir.
MR. WILLIAMSON: So what was it in the biennium we're in now?
MR. CHASE: $1.3 billion.
MR. WILLIAMSON: And it will be?
MR. CHASE: $1.573 billion, so up $242 million.
MR. WILLIAMSON: So the appropriation was increased in order to give
us authority to spend indebtedness that will have to be paid back in
future years, and the transfers of gas tax revenue actually went up
almost $250 million.
MR. CHASE: Yes, sir.
MR. WILLIAMSON: Okay. Thank you.
MR. CHASE: As we also discussed last month, the legislature voted
down a measure to index the gas tax and almost approved a summer gas
tax holiday. That would have cost the state upwards of $700 million
this year. Instead, the legislature approved an additional $3
billion in Proposition 14 bonds that would, in effect, require us to
mortgage future gas tax revenues in order to pay for projects now.
As we all know, this is not new money for transportation and is
essentially a payday loan. Debt is never a substitute for new cash
flow. So while there's the ability to go into greater debt with the
gas tax, it is not new money, does not advance new projects.
MR. WILLIAMSON: Okay, stop. So the legislature said you can issue an
additional $3 billion in debt against the gas tax.
MR. CHASE: Against the gas tax, yes, sir.
MR. WILLIAMSON: And have we appropriated that money, James through
Coby, or is there a different law that governs our expenditure of
that.
MR. CHASE: It is appropriated to us to spend.
MR. WILLIAMSON: But that's not part of your appropriations report
that you made earlier.
MR. CHASE: Correct. They are part of our overall appropriations and
are reflected in that overall.
MR. WILLIAMSON: So we must have had debt that we were authorized to
spend in the previous biennium, otherwise, our appropriations would
be up $3.2 billion.
MR. CHASE: Yes.
MR. WILLIAMSON: So this is actually the second time the legislature
has said, Go borrow $3 billion against future gas tax receipts.
MR. CHASE: Right.
MR. WILLIAMSON: You can clarify it if you want to, James.
MR. BASS: James Bass, chief financial officer for TxDOT. The
original $3 billion of State Highway Fund bonds that the legislature
approved, voters approved, that is taking us a number of years to
expend because in addition, the legislature said originally you can
issue no more than $1 billion per year, and so some of that
expenditure from the original $3 billion will be expended in 2008
and 2009. In addition to that, we have, as you're all familiar with,
the influx of the Texas Mobility Fund that occurred in '06 and '07
and will continue through '08 and '09.
And so when we add all those together, along with our gas tax, you
get the 2 percent overall increase that Coby talked about. When you
delve into the individual pieces, the piece that's supported by the
ongoing gas tax revenue for TxDOT remained relatively flat.
MR. WILLIAMSON: Okay.
MR. CHASE: Another direct hit to our bottom line is continued
federal rescissions. On May 25, the president signed the U.S. Troop
Readiness, Veterans Care, Katrina Recovery and Iraqi Accountability
Appropriations Act which includes a rescission of $72 million in
Federal Transportation funds slated for Texas. This is in addition
to four previous rescissions over the last year and a half, now
reaching a total of $666 million.
MR. WILLIAMSON: So to date, the federal government has indicated a
withdrawal of $666 million in reimbursement authority for future
expenditure.
MR. CHASE: Right. To be clear, this $666 million that TxDOT and
local communities will no longer be able to count on in meeting our
goals, yes, this is future money that they can't spend,
absolutely -- plus $72 million.
And then I'd like to touch on two other things. A bigger federal
hammer falls in 2009. Early last year, the Bush Administration,
through Treasury and OMB and the Congressional Budget Office,
projected that the Highway Trust Fund will become insolvent by 2009
to the tune of $700 million. Earlier this month, the White House
increased their estimate to $4 billion. This shortfall could trigger
substantial cuts in the federal aid highway program across the
nation.
Since this is somewhat of a moving and debatable amount -- not by
much but different people agree just some fine tuning around the
edges -- I'm relying on some outside organizations to provide some
early analysis.
According to AASHTO, if this massive deficit were to be offset by
obligation limitation reductions, it would require reducing the
distribution of federal funding to states by as much as at least
$16-1/2 billion in fiscal year 2009. A rule of thumb is that it
takes $4 in obligation reductions to save $1 in spending. What that
basically says is don't enter into a $10 million project that spends
out over four years and you save that amount spread over four years.
According to the AGC of America, Texas would lose about $1.1 billion
in 2009 and increasing each year unless Congress finds new money.
Now, the House Appropriations Committee approved the House
Transportation Bill last week. Actually, the U.S. House of
Representatives approved the Housing Transportation Bill this week.
HR 3074 includes language calling for yet another rescission of
highway funds. Adoption of the proposed rescission will result in an
additional $259 million reduction in funding for Texas roads and
bridges. That's that last line down there.
So there is another rescission on the way.
The U.S. House of Representatives, nationwide cut transportation
funding, as it affects state DOTs, $3 billion. And of course, the
Senate hasn't taken action yet, but in the Senate version of the
bill, they have a very similar amount, it's just slightly less. So
in the ballpark of $260 million less that the state and local and
regional planners will have to plan against to spend on future
funding.
Because of the rather obvious frequency of these rescissions, we are
considering establishment of a working group among our MPOs,
metropolitan planning organizations, and possible others to solicit
input and establish priorities in anticipation of future cuts.
However, we hope that Congress doesn't take away our ability to do
this by predetermining, 1,434 miles away from Sugar Land, Texas,
what will and will not be cut.
In the current version that passed the House this week, there was
language in there that predetermined where the cuts would be made,
meaning it would be spread across categories, I believe, in a pro
rata manner.
MR. WILLIAMSON: As I understand what that means, Coby, the House --
I would be interested in knowing how the Texas delegation voted on
that, by the way -- the House decided that they would reduce federal
apportionments by an additional $258 million, and then presumed that
the best place to make those reductions for Texas would be on a pro
rata basis, treating roadside parks the same way they treat
construction of new highways, and treating preservation of
historical museums the same way they would treat safety projects in
inner city Houston.
MR. CHASE: Right. And if you've already taken money out of a
category -- name whichever one you like -- maybe at a healthier clip
than maybe other programs, that program will lose money again this
time. So at least the House has pre-guaranteed that the pre-selected
categories all lose money, even if they've lost more than what some
people would argue was their fair share in the past.
Congressman John Mica of Florida, who is the ranking Republican
member on the House Transportation Infrastructure Committee, tried
to change that around so states and localities could do it, and he
came very close on the House floor with his amendment, he picked up
a healthy number of Democrats on his side. So there is nothing in
the Senate bill that tells states how to make the rescissions, and
so we and other like-minded states -- which I believe is just about
all of them -- are going to talk to their senators about letting
states and localities together decide how to cut those funds.
And the department just went through this exercise with the $72
million rescission and received -- I could be wrong, somebody
correct me -- nine or ten letters from MPOs around the state
explaining how it should be done, and the commission authorized the
administration to take those and make the best decision, and they
honored that request and sent it back to the FHWA on where to make
cuts.
MR. WILLIAMSON: Okay. Please continue.
MR. CHASE: In a similar sense to what we saw in the Texas House and
Senate, the U.S. House Transportation Infrastructure Committee is
trying to figure out its position regarding public-private
partnerships. It was widely reported back in May that U.S. House
Transportation chairman, James Oberstar, and Highway Subcommittee
chairman, Peter DeFazio, sent a letter to all 50 governors
discouraging the use of public-private partnerships. As you know,
Governor Perry recently sent a response in which he alerted the
chairman to the circumstances we face in Texas with respect to our
transportation needs, we simply cannot wait for nor can we rely on
the U.S. Government to solve our state's transportation problems.
None of this is news to us. We can now expect rescissions rather
frequently, predictably now. We know that the state legislature has
a tendency to transfer highway dollars to other programs. We know
that in some quarters of the United States House there's wariness
when it comes to public-private partnerships. We are aware of the
precarious state of the Federal Highway Trust Fund. And we know
inflation is eating our lunch.
Notwithstanding these challenges, we devised a plan to continue
meeting our goals for building infrastructure in this state that
included a private equity component, and then came along Senate Bill
792. Before the session, one of our most potent tools available to
us to combat congestion was comprehensive development agreements, or
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 CDAs exempted from the
two-year moratorium expires in 2011.
For any given toll project, 792 requires that a market valuation be
conducted and it 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 it 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 don't know the precise
impact of 792 until the market valuations are conducted and tolling
authorities decide whether or not they want to build them.
What we can say is that unless the legislature takes a positive
action to renew the CDA program in 2009, then the cumulative effects
of the changes we've discussed would be quite difficult. It will
then be up to the Congress and the Texas Legislature to fill the gap
or our state will dull its competitive edge with respect to economic
development and our quality of life.
I'm hard pressed to find a silver lining in all this information at
this point, but I do welcome your questions in an effort to find
one. And with that setup, if there are no further questions for me,
I'll turn it over to James Bass -- who keeps telling me that someone
promised him he'd get to meet Goldie Hawn if he came to Sugar
Land -- to go through some of the details in a deeper fashion. And
following James, Amadeo Saenz will talk about some specifics.
MR. WILLIAMSON: Any questions of Coby at this point, members?
(No response.)
MR. WILLIAMSON: Okay. Thank you, Coby.
MR. BASS: Thanks, Coby. Again, I'm James Bass, chief financial
officer at TxDOT and the second layer of our three-layer dip
presentation today.
As you all know, we face transportation challenges in Texas and the
commission and the department have a plan for addressing those. Coby
talked about some recent actions at both the state and federal level
that had an impact. What I'm going to do is take those current
decisions and carry those out through 2030 to show what impact those
have on the challenges that we face. And then Amadeo will follow
behind me and bring in some additional operation challenges that the
department faces with our limited resources.
To jump to what Coby was saying a little bit earlier, if you take a
step back from just TxDOT and look at the entire State Highway Fund
on a statewide basis, gas taxes are forecast by the Comptroller's
Office to continue to increase, vehicle registrations are forecast
to continue to increase, population is still coming into the state,
we have more VMT on our system, it's growing faster than fuel
efficiency, so that revenue is forecasted to increase at a statewide
level.
What happened during the last legislative session, though, is that
that amount of the increase was directed to other agencies who also
operate out of the State Highway Fund, and the allocation of those
state gas taxes and vehicle registration fees to TxDOT remained
relatively flat. So the overall increase that we saw came in from
our bonding programs that, as you all know -- Coby referred to as a
payday loan -- the bonding programs are really interim financing,
they're not long term revenue sources or solutions to the problem.
MR. WILLIAMSON: Well, they're not a long term solution unless we
took every dollar and put them into a toll road that would
immediately begin the cash flow.
MR. BASS: Correct.
MR. WILLIAMSON: And since we don't have any toll roads that will
immediately cash flow, that sort of ends that option right there.
MR. BASS: Correct. And so over the early implementation until those
revenue-generating projects mature and start to spin off additional
revenue, what you see in our budget is an influx of cash coming in
not from the traditional sources but from the bonding programs to
invest in the assets that will serve us well, we think, in the
future.
So gas tax stayed flat, the growth went forward. What we were
thinking in our plan is we, as well as the Comptroller, know that
yes, gas tax in the near term is increasing, vehicle registrations
are increasing, and so when we a few months/years back looked at
that problem and came up with the $86 billion -- others have said
it's $80- or $68- -- it's a huge issue. In our estimate we said any
additional revenue coming into the State Highway Fund would be
allocated to TxDOT. In other words, the transfers would be at the
baseline level.
One of the reasons of taking that conservative approach is that
detractors would say, if we showed that increasing, that well, no,
you're just playing with that one number showing that transfers are
going to increase to try and make the problem look bigger. So we
took a very conservative approach and said, No, the baseline figures
for transfers are going to continue. But we just saw is the baseline
figures in 2008-09 increased by $242 million. So if we carry that
out to 2030 -- again, not assuming any increase, just changing the
baseline -- that's now $2.8 billion less than what we planned to
come in from those traditional revenue sources to try and address
the problem.
MR. WILLIAMSON: In other words, when we were mapping a 25-year plan
that would take us to a point where we had an acceptable level of
congestion and acceptable air quality, and continued to attract
jobs, continued to have safe roads and preserve the value of our
system, we're now going to be $2.8 billion short of the revenue
necessary to achieve those goals.
MR. BASS: Correct. I think the details behind the $86- gap was $188
billion of needs with $102- of revenue available. You now have less
than $100 billion of revenue available to address that $188- of
need.
The other main funding source is the federal funds that are coming
in that we use for reimbursement, and as Coby said, the rescissions
to date we know are $666 million, there's a $261 million being
discussed, as we speak, going through the process, and as Coby said,
because of the projections of what's going to happen to the balance
of the Federal Highway Trust Fund, everyone knows there are going to
be additional rescissions before the end of the current
transportation bill, SAFETEA-LU.
Different entities have different forecasts. I think Coby mentioned
a number somewhere about $1.1 billion, an AASHTO document I was
reading in the past couple of weeks suggested the share for Texas
would be almost $1.5 billion, so somewhere in that range, but we
know additional rescissions are coming.
Last week you heard from one of the independent auditors looking at
the operations of TxDOT and they looked at the funding gap and the
funding shortfall, and what they looked at and said, well, because
of this updated data and because of the recent actions of Congress
and the updated projections from the Congressional Budget Office as
to what that deficit is going to be in the Federal Highway Trust
Fund, this independent auditor told TxDOT: You were planning on and
counting on $7 billion more in federal funds than what we think
you're going to receive. And so if their estimate turns out to be
true, that means after SAFETEA-LU through 2030, we will receive
$4-1/2 billion less than what we had planned on.
So again, if you recall, we started at $102 billion of revenue
available to meet $188- of need, took away $3 billion for State
Highway Fund that is not going to be available to TxDOT, that got us
to $99-, let's say we're now at $92 billion because we're going to
get less in federal funds than what we had planned a couple of years
ago.
Then to fund that gap, to bridge the gap between our needs and
revenue, the plan was to look to the private sector and encourage
private investment in our transportation projects. Senate Bill 792
came in and places a sunset, an end to that authority of TxDOT and
regional mobility authorities to enter into these agreements where
the private sector would be financing the project in 2009. Now,
there are some exceptions to that: design-build projects that don't
involve private financing and other limited projects, managed lanes
or projects that have already started the process, have until 2011.
But after that, TxDOT and the RMAs will not have the authority to
continue down that path.
What this does is limits the opportunity for the state and regions
to receive the up-front dollars through a concession payment to then
go and build other needed infrastructure today. One way you could
step back and say well, if the project proves to be successful over
time, there's going to be surplus revenue that comes in and it's
going to be used throughout the region to build those projects. Yes,
if the estimates are true, though that risk is being shifted back to
the public sector that we hope our estimates are accurate and true.
And rather than monetizing that future revenue today to build needed
projects that are needed today, if not yesterday, we will wait for
that surplus revenue 10, 15, 20 , however many years before it
starts spinning off that revenue into the future, all the time
congestion, air quality worsening, and potentially economic
development opportunities being lost to other areas. So there's an
opportunity cost there that's difficult to assign a dollar figure
to.
If we look at it through the market valuation in 792, if TxDOT and
the local tolling authority agree to a market valuation and we
assume it's on a concession basis, a market-based toll, and if the
local entity says we agree with the valuation under those rules but
we choose not to develop projects under that set of rules, so we're
going to pass on this, TxDOT, this project is yours to develop,
under 792 we would not have the authority and the ability to deliver
it as a concession in order to reach that market value, we would be
forgoing any opportunity for that up-front concession.
As you know, you've tasked staff to move forward on 87 toll projects
throughout the state and market valuations are going on on all of
those projects, however, the ones that are more refined are the
projects that are happening now or will soon happen in that wave of
87 projects. And so unfortunately, I can't give you a very precise
number of what's that impact on cash flow of receiving up-front
payment because all 87 projects have not gone through a thorough
review on a valuation process and it's undetermined as to how the
various local tolling authorities will act in choosing or not
choosing to develop projects.
But looking at just the near-term projects in, I'd say, six, seven,
ten years, we would estimate that we would have, at a minimum, about
$2-1/2 billion less than what we would have prior to 792, again,
limiting our opportunity to address the problem, or conversely,
making the problem larger than what it had been prior to 792.
MR. WILLIAMSON: So perhaps a simple way of restating what you said,
is it prior to 792 we had a plan in place that we felt like would
have bridged the entire gap between $102 billion and $188 billion?
The $102 billion revenue is probably now down in the low $90s or
high $80s, and the plan has been impacted by the restrictions or
limitations of 792, and primarily the drop-dead date of two years
from now on all concession CDAs. The short-term impact, as best you
can estimate -- and you're still working on it -- that is $2.5
billion.
So as an example, when we put to the Harris County Toll Authority
which is a regional toll authority in this area, or the Fort Bend
County Toll Authority which is a county toll authority in this area,
when we put to them Grand Parkway, if they choose to take the Grand
Parkway on a market valuation basis, then roughly what we would have
projected would have been available to us from a private sector
concessionaire, Kiewit is going to be the same thing from HCTRA.
What they're, in effect, going to do is borrow the money and build
the other projects besides the Grand Parkway that would not have
been built otherwise.
But if they don't take the project and if they hand it back to us,
we can't turn around -- well, the Grand Parkway is a bad example
because it's going to be our test but how about Highway 36 in Fort
Bend County? When we put Highway 36 to the Fort Bend County Toll
Authority on a market valuation basis, they look at it and they say
we like it, love it, can't afford it; here, TxDOT, you do it, we can
no longer turn to Kiewit and Cintra and Fluor and say who's got the
best deal for the state of Texas. The project basically doesn't get
built.
MR. BASS: Right. We could still, through 2011, design-build or other
work form a partnership with the private sector, it just could not
include the financing of that project by the private sector at their
risk.
MR. HOUGHTON: Stop there. You said financing at their risk.
MR. BASS: Correct.
MR. HOUGHTON: But they can participate from an equity position.
MR. BASS: So I think the opportunity, in my mind, what's lost is
that up-front concession payment, monetizing the future revenues and
receiving them today to address additional projects that are needed
today.
MR. WILLIAMSON: As an example, if 36 had a market value of -- let's
play with some numbers for a moment -- well, let's don't play. Dr.
Harris, do you happen to remember the cost of 36 as we wish it would
be?
DR. HARRIS: [Inaudible from audience.]
MR. WILLIAMSON: Let's say for the moment that it's a $500 million
construction project, we go to the market and the market valuation
is $800 million, and the county toll authorities, for whatever
reason, elect to not come up with that other $300 million and do the
project, they hand it back to us. Under the prior law, we would have
turned and put it out to the private sector for proposals and let's
say the best proposal was $800 million, the road got built, the
state was paid $300 million -- which, by law, would have to have
been spent in the area or the region -- and so any number of other
projects in Fort Bend County that needed to be built would be built
by the $300 million. That's how that process would have worked.
And your best guess right now is the impacts of 792 will be the
elimination of that cash payment to build those roads or railroads
or air quality projects that otherwise would have been built by the
$300 million.
MR. BASS: Right. On the near-term, and if that market valuation of
$800 million comes true over the 40-year life of the debt or 50-year
life of a concession, the surplus revenue would equal, on a present
value stream, $300 million. And as you've probably heard me say
before, present value is great for analytical purposes. The problem
is I can't spend present value today. I haven't found a contractor
yet who will take a check written in present value dollars, they
want real dollars. So even if those estimates come true and it spins
off $300 million over the next 50 years, that $300 million of air
quality projects or additional mobility projects will not be built
until some point in the future, whereas, under the private
investment model, we would have received that $300 million up front
and been able to deliver those other needed projects today.
MR. WILLIAMSON: Now, what we can do, again, we put the project to
the local toll authority, we do a market valuation, they pass, what
we can do is turn to -- let's use Fluor again since they're
headquartered here -- we can turn to Fluor and say, Would you like
to design-build-finance this road for us and what rate of return do
you require in order to do that? And if their first answer is yes
and then their second answer is 11 percent, and if we can't get
somebody to give us a competing and better proposal, then we could
build a road and guarantee Fluor 11 percent rate of return, they
would be bearing none of the risk for the traffic showing up, they
would be getting a guaranteed rate of return, and the public would
be bearing the risk if the traffic doesn't show up and we have to
reach into the gas tax pot to make the payments every year.
Did I analyze that correctly?
MR. BASS: I want to check with Mr. Jackson. That may be true prior
to 2011 and then because all CDA authority for TxDOT goes away in
2011, so after 2011, we could not even do as you described.
MR. HOUGHTON: Well, there's two components, James: there's a debt
component and an equity component. You're assuming an 11 percent
debt component on that asset. We could still do it with Fluor, go
out to Fluor, and I guess we're missing a component step in here,
the TNR. Whatever that financeable TNR to the marketplace, now Fluor
may say we believe the TNR by TxDOT or the Comptroller, the new step
we have to take, is low, we think it's here, so we're willing to go
here instead of here. So there's still an opportunity for -- I hate
to say the word -- concession payment up front if they so choose to
do that on the equity piece or the debt piece.
MR. WILLIAMSON: But if I understand it, Ted, the state is still
going to be on the hook.
MR. HOUGHTON: Yes, we take the traffic risk and that depends on do
we, in fact, want to take that risk.
MR. BASS: And if we're holding the risk and in effect borrowing that
concession payment from the developer who's financing it yet we have
the risk, in paying 11 percent, I will tell you we might be able to
get --
MR. HOUGHTON: Don't get hung up on 11 percent but get hung up on the
two components.
MR. BASS: Some other expected equity return.
MR. HOUGHTON: The debt component, the equity component and it's
based on their TNR if Fluor decides, and then if Doug Pitcock says
I've got a better deal, I'm going to submit this, then we have that
competition going again as to who's got the best TNR, who's got the
best crystal ball.
MR. BASS: And again, I think, assuming all of that is accurate --
and I'm going to double check -- that all has to occur prior to
2011.
MR. WILLIAMSON: And you're right about that and we understand that.
Why we're having this discussion is to educate our great local and
regional leaders who are sitting out in the audience so that they
can be prepared to come help us in January saying to the legislature
we need to change this.
MR. BASS: I'm sorry I didn't bring the actual language, prohibited
from entering into a project that involves private financing other
than the exempted projects that are listed in the law, the
moratorium. And so yes, there may be an opportunity for availability
payments.
MR. HOUGHTON: That's what I'm talking about.
MR. BASS: I think if you start including in your availability
payment stream over time a concession payment up front for which we
bear the traffic risk, you've changed the dynamics considerably from
the previous model where they had the risk of that coming true or
not coming true.
MR. HOUGHTON: Yes, I think we all understand that.
MR. BASS: And so therefore, us borrowing the money at that level may
be a different policy question and issue for the commission to
wrangle with than it was prior to 792.
MR. HOUGHTON: How much risk does this department want to take?
That's risk.
MR. HOLMES: James, why is it a requirement that the department take
the traffic risk?
MR. BASS: And that's a question -- I may have to ask Bob to come up
here -- of interpretation of 792.
MR. HOLMES: We had this discussion two months ago or three months
ago, and I thought there was a way that you could craft the
financing to pass on the traffic risk. You'd have a portion of the
financing on availability of lanes and a portion of the financing on
the traffic.
MR. BASS: Right.
MR. HOLMES: And I don't understand why that can't be done.
MR. SAENZ: For the record, Amadeo Saenz.
Yes, sir, Commissioner, we can structure it so that you can include
or pass on to the developer a portion of the traffic risk. They're
going to price that and it still will become part of the overall
payment that they would want say per year, and the overall total
payment that they would want in reimbursement. Every project would
need to be looked at individually, but we could go in there and
price it in a way that they would keep some of that traffic risk so
that when they propose, they would not propose on a very high
traffic number that we could not attain and then would force us to
do that.
The problem with the availability payments, whether we pass on the
risk or a portion of the risk of traffic, is that should we not get
the traffic in any one year, we're still on the hook to make that
payment to that developer.
MR. HOUGHTON: Developer is the right word?
MR. SAENZ: The developer or the contractor, design-build, the group
that we have a contract with. So if there's not enough money coming
from the tolls, then we would have to go back and dip into Fund 6
and take money from what normally they call the common pool or money
from parts of the state, money from within the district that they
may have allocated for other projects to be able to address that
shortfall. It then becomes a cash flow management scheme that we
have to make sure that we have available the dollars to make their
payments.
MR. HOUGHTON: So we better make sure the TNRs are pretty good.
MR. SAENZ: Yes, sir, the TNR will be critical so that we can
minimize the risk on our part.
MR. HOUGHTON: Which on our part we're going to take less risk.
MR. SAENZ: Yes.
MR. HOLMES: Amadeo, can you separate the amount that is the
availability payment from the TNR risk and overlay the TNR risk
based on the actual traffic volumes and rate?
MR. SAENZ: Yes, sir, it can be worked out that you would have a
minimum payment based on without TNR and then they would have an
additional payment above and beyond that would be based on the
traffic that used the facility. It could be structured that way, and
that would all have to go in through as we develop the request for
proposals so that the developers or contractors could price it.
MR. HOUGHTON: So that we have competition.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: I want to be sure that I understand the question Ned
asked and the answer you gave him. We can't avoid the obligation, we
might can separate the payments, but if, for example, Kiewit says,
going back to Highway 36 -- we're going to get Highway 36 done,
Jack, I'm going to find some way to get it done -- Kiewit says you
guys say it's worth $800 million, I agree, I'll build it, finance
it, develop it, I need 11 percent rate of return, and I'll split the
payments and half of it you can string out over 50 years if
necessary. Fluor says 9 percent, Doug Pitcock says 6 percent but I
don't think it's worth $800 million, I think it's worth $700
million. We do a financial analysis of all three of them and we
conclude that the Pitcock deal is the best deal -- which it almost
always is -- we still in the end are going to have to pay Mr.
Pitcock the entire amount of the deal some way.
And if the tolls collected on 36 don't generate the funds, we'll
have to do 36 just like we did State Highway 130 in Austin, we'll
have to go to the common pool and take part of Dallas's gas tax to
pay for a Houston toll road.
MR. HOLMES: With Mr. Pitcock, that might be the deal. But my sense
is that if we can interject some competition that we can do what, in
effect, would be a liability loan to Fund 6 for the availability and
a cash flow loan that is based on traffic that does not obligate
Fund 6. And I would hope that we would be creative and try to
develop that kind of a financing structure.
MR. WILLIAMSON: Well, certainly if we can do that, that would be a
wonderful thing.
MR. HOLMES: That would be a better thing. I think we can do it
technically.
MR. SAENZ: We are working with our financial advisors to look at how
we can try to incorporate something like that.
MR. HOUGHTON: So they'd take a piece of the traffic risk under
Commissioner Holmes's example.
MR. WILLIAMSON: I just think it's important at every commission
meeting we're going to dialogue about the cash flow problem because
we obviously failed in our effort to educate the legislature two
years ago on our cash flow dilemma, so we're going to have to try it
a different way. As we talk about this cash flow problem every
month, we have to also talk about the impacts on our ability to have
a successful strategic traffic plan. If you continue to reduce the
cash and then also continue to reduce the options we have to do
something non-tax revenue, it's real important to emphasize that at
every turn of the page.
I mean, we're watching this 121 thing in North Texas develop and
it's going to be a crystal clear difference between the public
assuming all the traffic risk and maybe us having a larger piece of
the pie at some point in the future and the private sector assuming
all the traffic risk and the public never having to worry about what
happens if the traffic risk proves to have been real. The risk
component of a public investment is very important, I think, to
emphasize to the public. Right now everybody thinks every toll road
that will ever be built is going to make somebody rich, and in the
real world, that's just not the case, some of these roads never pay
for themselves.
MR. HOLMES: Hardy being one of them.
MR. WILLIAMSON: That's a great example, Ned, that's a great example
actually.
MR. HOLMES: The traffic projections never proved to be correct.
MR. WILLIAMSON: It's amazing to me.
MR. HOUGHTON: My question, you said that we are, in fact,
negotiating on 792, or did I misunderstand? We're valuing the
assets, we're in a valuation mode?
MR. BASS: Internally, not necessarily the market valuation in
coordination with the other local tolling entity because one of the
options when visiting with the local tolling entity is who will
perform the market valuation. It could be one of our financial
advisors, it may be the other party's financial advisor, it could be
yet a third party. Even if it is a third party and they come back
with a valuation, there's a period of time that either party can
then raise questions. Well, if you yourself don't have an idea of
what the value of that project is, then how are you going to have a
basis to ask questions if a third party does it. So we're building a
base of data.
MR. HOUGHTON: Have we had anybody approach us as to saying let's go
under 792 valuation?
MR. SAENZ: 792 had some specific requirements for the 121 project
and that's being done, and also for the State Highway 161 project.
So those two projects, because they were already under active
procurement, we went forward and are moving on those projects. We've
got training set up for the people that are going to be working as
our negotiators; that's scheduled to be next week on the 6th. And as
James says, we have asked our financial advisors to help us, we've
identified the projects and to come up with what we think a base
value or a range of values as to what the value of that particular
project is so that we know up front what we're looking for, we know
up front what toll rates, toll escalation rates we would be trying
to look at because each individual project will be different.
We're going to look at elasticity analysis to determine should the
toll rates start at 10 cents, can it afford a 20-cent or a 30-cent
toll rate. So that will use to be able to come up with our own
internal valuation and also to settle on some terms that we would
like to take and present forward to the tolling entity. So all those
will be happening in the next two weeks as we start doing the
valuation of projects.
MR. HOLMES: Amadeo, as we go through these training sessions, these
are with TxDOT employees or staff?
MR. SAENZ: Yes, sir.
MR. HOLMES: I would encourage you, once you're through that to
expand that to some of the MPOs around the state as well that are
going to be involved in those type processes.
MR. SAENZ: We will do that.
MR. HOUGHTON: The MPOs will be part of the triad at the table. We
determined that we were going to bring the MPOs, as I remember in an
earlier discussion, in at the beginning to set the business terms?
MR. SAENZ: The MPOs are included in the process, as part of Senate
Bill 792, in an area where an RMA exists. The 792 was silent with
respect to having the MPO in the loop or have a say-so with respect
to the negotiations. What we have been working with through the MPOs,
because they are the planning entity for the region, is identifying
what potential business terms that they would like to implement for
projects within their region so that we can coordinate their
planning efforts because they projected some revenue coming from
these projects. So we're trying to get information from them and
make that part of the information that we have to come up with
valuation.
So the training will be good for them because it's something that's
new to them, and we will work with them independently but they will
not be part of the official negotiation. And then for MPOs where an
RMA exists, they do have to have a vote or pass a resolution that
they think that the market valuation is right, too high or too low.
MR. WILLIAMSON: We have Alan Clark, I notice, with us here today and
at least one county official and we probably have more. I just think
it's real important to take this opportunity to emphasize over and
over and over again the market valuation process that's envisioned
in 792 and how we all go about figuring out how we're going to build
these toll roads implies that someone is going to have to take a
risk. Either the Fort Bend County Toll Authority is going to take a
risk, Harris County Toll Authority is going to take a risk, Central
Texas RMA, or us, or the private sector, but somebody is going to be
taking a risk. It's not an at-cost deal as many toll roads in the
state were originally developed. The only way we will reduce
congestion in this state is to find a way to generate more instant
buying power than normal on all these toll roads to address 25 years
of consuming of assets and not replacing them.
MR. HOUGHTON: Mr. Chairman, it's not only risk, it's the ability to
have equity in the deal based on shortfall because most of these
projects don't cash flow, they're not going to be able to fully
finance 100 percent of the debt, most of the RMAs are young and
fledgling type organizations, so they don't have that kind of
revenue, so other than the risk factor, it's the equity to put into
these things. I would assume that's a big issue, other than HCTRA
and NTTA.
MR. WILLIAMSON: Well, to put it simple, if you're trying to 100
percent finance Highway 36 and at the same time finance the
expansion of the 15 farm roads that connect people to 36, somebody
is going to be taking a chance. We had a system in place where the
private sector would take all that chance, and if they guessed
right, they would make money, but the legislature obviously, for the
next two years, is uncomfortable with that approach -- which is
fine, that's their decision.
But it's important that we make sure that our county toll authority
partners understand the inherent risk of 100 percent financing plus
the connectors to make the deal work because we have practical
knowledge that not every toll road in the state is going to make
money, doesn't matter what you do, it's not going to make money.
MR. HOUGHTON: So you're talking about fully loading a project with
the connectors.
MR. WILLIAMSON: Well, that's what the market valuation might imply
in some cases. We have reason to believe Highway 36 is a probably
higher valued highway than most people think it is.
MR. HOUGHTON: In the past we have subsidized those projects by
building the connectors.
MR. WILLIAMSON: Not going to do that anymore. We don't have the
money to do that, it's not a matter of not wanting to, we don't have
the case.
MR. HOLMES: Well, there are going to be projects that require
significant expenditure on the connectors.
MR. WILLIAMSON: Right.
MR. HOLMES: Otherwise, the project doesn't have a chance to work,
and so as a necessity, the connectors will need to be built;
otherwise, it can't possibly work. Some have connectors that need
enhancement but not necessarily new construction.
MR. WILLIAMSON: James, we interrupted you and we apologize. Do you
want to finish your presentation?
MR. BASS: I'm actually done, ready to hand it over to Mr. Saenz.
MR. WILLIAMSON: You're going to hand it over to Amadeo?
MR. BASS: Yes, I am.
MR. WILLIAMSON: Questions of Mr. Bass before we release him
temporarily?
MR. HOUGHTON: Do you have good news, Amadeo?
MR. SAENZ: I'm sorry?
MR. HOUGHTON: Do you have good news?
MR. SAENZ: No.
(General laughter.)
MR. SAENZ: I think since this is kind of our first discussion item
that we're talking about revenue, I kind of wanted to take the
opportunity to kind of talk a little bit about our money that we
have available to build projects comes from state fees and taxes,
from our gasoline and we also get federal reimbursement from a
portion of the federal gasoline tax that goes up to Washington, and
of course, we have the ability through our --
MR. WILLIAMSON: Amadeo, what are we looking at?
MR. SAENZ: I'm not, I'm trying to close this thing. I'm going to do
a non-slide presentation. I'm going to have to get you all to just
visualize it.
And we talked about today that we were losing revenue at the state
level, we're losing revenue at the federal level, and those are all
intertwined and affect each other. So in other words, if, for
example, we had $100 million in state money and we get a reduction
of that $100 million, that $100 million that we would have, we would
go out there and we would build 100 percent state-funded projects
and we could spend $100 million and we would use it and $100 million
worth of projects would be built.
If we take that money and we use it to build federally funded
projects, we then will get a reimbursement from the Federal Highway
Administration of 80 percent. So we invest $100 million, we spent
$100 million of state money, but we've asked the federal government
and they give us $80 million back.
MR. WILLIAMSON: And it's important to stop and focus on that for a
moment. When you say $100 million and you went out in one year and
collected from all the citizens of the state $100 million in
gasoline taxes and that was your budget for the next year, you could
build a state-only project, put the $100 million in it, you wouldn't
have the money at the end of the project, and the state would own
the $100 million project.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: Let's play Highway 36 game. Let's assume Highway 36
is a $100 million project so we could collect all the gas taxes for
a year, pile them up, go build Highway 36, and it's over, Highway 36
done, citizens of this region enjoy it every day and the citizens of
the state enjoy it over the long haul.
MR. SAENZ: Right. And then, of course, we would be maintaining
Highway 36 from that point forward.
If we decided to use the federal process and build it following the
federal guidelines, then we would build Highway 36, still spend $100
million of state funds, but then we could ask Federal Highway
Administration for reimbursement of their federal share which is 80
percent.
MR. WILLIAMSON: So then at the end of the year we'd have the asset
paid for and $80 million that the federal government reimbursed us
to go spend on the next project.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: That was, in fact, sort of the whole basis of the
federal program, wasn't it?
MR. SAENZ: That is the basis of the federal program. You have to
have the state dollars, you spend them, you ask for reimbursement,
and they reimburse you.
MR. HOUGHTON: Up to your authorized amount over the life of a bill.
Right?
MR. SAENZ: Yes. But the bill continues.
So if we do this as a federal project, at the end of the year the
project is built, we have $80 million. And if you just keep on
cycling that way, you're able to take that $100 million of state
asset or state investment and carry it all the way down till you
can't get any more back from the federal government and you probably
can get up to about $500 million worth of projects.
MR. WILLIAMSON: Of assets.
MR. SAENZ: Of assets.
MR. WILLIAMSON: And then you're out of money unless you're taxing
again, you've got $500 million worth of assets, nobody is paying a
toll and nobody is paying any taxes.
MR. SAENZ: Right. So when we go out there and we get a reduction of
our state appropriation, of our state gasoline tax money that we
don't have for a project, it would impact us in multiples and not
just in that amount. So when James mentioned that we lost $242
million over the biennium, it's $242 million that we could have used
and we could have leveraged that to billions of dollars -- I don't
have that number. I was working with $100 million because it makes
it easy for me.
MR. WILLIAMSON: Well, let's use Highway 36 again. Instead of having
$100 million to build it, we only have $75 million. So one of two
things would happen: we would either go to the local authorities and
get them to put up $25 million, or we wouldn't build the whole
project.
MR. SAENZ: Those are our two options, and then, of course, we would
build it with federal dollars and then we would get reimbursed based
on the $100 million, but if we couldn't and all we could spend was
$75 million, then we could only get 80 percent of $75-. So in
essence, we would lose the buying power of our state dollars by
reduction in the original state dollars.
On the other side, because we are getting the federal rescissions
and that will result in less federal money available for us in the
future, if we run out of obligation authority in any one year, we
can build $100 million but if we've already used it up, we cannot
get any more than what the federal government has. So they drop our
obligation authority, say if we had $100 million, same $100 million,
to only $80- or to $60-, we can build then the $100 million but all
they can give us is $60-, so we again lose buying power. We did
build the asset up front but we don't have the full 80 percent to
build future projects.
MR. WILLIAMSON: Well, you'd be getting 60 percent of $100 million,
not 80 percent.
MR. SAENZ: Well, I would be eligible for 80 percent of the $100
million but if it was not enough, then all they could give me was
what they had which was $60-.
And of course, the same thing would happen if we were able to use
the private sector to help us, then that private sector money is
just like if it was 100 percent state money. We can use it to
leverage federal dollars, we can use it to build projects, so we can
build more projects.
MR. WILLIAMSON: You mean private sector debt.
MR. SAENZ: Private sector debt.
MR. WILLIAMSON: Not private sector equity but private sector debt.
MR. SAENZ: Private sector debt. We can't use private sector equity
right now.
Let's look a little bit, we've been talking over the last couple of
months about maintenance and expenditures and the cost of
maintaining our system, and of course, there's several strategies
that we can use to try to leverage our dollars here, and that's kind
of what my talk today is, how do we leverage our dollars and the
impact of losing money on those leverages. And of course, on the
maintenance side, to maintain and rehabilitate our state highway
system, we can basically take three strategies.
The first strategy is that we consider that our priority and we put
enough resources in the rehabilitation and preventive maintenance
strategy to be able to preserve our asset. We have minimal
maintenance losses, we have minimal damage and our asset lasts for a
long time. Traffic will still continue to build so we'll have to be
putting more money in every year to address because the more traffic
on a facility, the more damage it causes and the more it will take
to preserve it and then eventually we're going to have to
rehabilitate it, but we're spending all our money. What that does is
it minimizes the amount of money that we would have available to us
to do in mobility projects.
The second strategy would be let's just cut down on the amount that
we spend for maintenance and rehabilitation, change our level of
service, you might say, or our level of acceptance from a high level
to a medium level. What that does is our roads will still have
traffic, we will not maintain them on a set cycle of seven years for
seal coats, ten years for overlays, and every 20 years we'll come
back and rehabilitate it, we'll just say we'll not do anything for
the first ten years and we will save some money but the road will
deteriorate faster and by the time we have money to spend on that
road or set aside money to spend on that road, we now have to do a
lot more than a preventive maintenance strategy. In essence, instead
of a seal coat, we're going to have to put in a complete overlay or
a cut-and-restore overlay or we might have to rehabilitate it.
So we've saved some money, we could use that money in the early
years to go out there and add some mobility or some capacity, add
more lanes to other highways, but in that latter year when you've
got it planned, you have to plan for a lot more money to spend on
that particular road to bring it up to the standards so they can
carry traffic from then forward.
And of course, the third strategy is to take the strategy that we'll
go ahead and build it, use minimal dollars to preserve and maintain
the facility, and try to maximize the amount of money that I have to
build more lanes with the understanding and logic that you're trying
to build additional highways, parallel highways, new highways so
that the traffic will then disperse and you'll have less traffic on
the original facility, thus damage will be at a lesser rate, but
you'll still, in the long run, now have to maintain two facilities.
So it's going to be a balance and we're going to have to come up
with a strategy to follow. What I have presented to you all last
month had to do with that we were looking at to be able to preserve
our maintenance to our goal of having 70 percent of our roads at
good or better condition, we needed to increase our money
expenditures in the maintenance and rehabilitation, and in essence,
was going to take all our money that we had in mobility in the years
to come. So that's the bad news.
When I take the money from mobility, money can only come from
certain categories. It can come from the mobility categories for the
corridors, it can come from the district discretionary, it can come
from the commission's strategic priority, but based on what we had,
to be able to address and take it to the highest level of
maintenance -- which we would still not get there -- we would, in
essence, use up all of our mobility resources to maintain our
facilities.
MR. HOUGHTON: Amadeo, you said years to come. What years to come?
MR. SAENZ: What we talked about last month, if you recall, is that
for years 2009, '10, '11 and '12, we would then be re-allocating
maintenance dollars to address areas of the state that had the worst
pavement conditions, and that would result in having less money.
MR. WILLIAMSON: Less money for construction.
MR. SAENZ: Less money for new lanes, for construction.
What we looked at last month was looking at it from the point of
what we had programmed and what we projected that we would have
available to us over the life of SAFETEA-LU till 2009, and then we
knew that SAFETEA-LU was going to deplete the trust fund, so we knew
that post 2009 we were going to have less money available to us, we
just didn't realize that it was going to be depleted by as much as
what they've just announced, almost $4 billion.
That, in essence, paints a much bleaker picture in that we are
programming projects or resources, money available to us for both
mobility and preservation that we will not be able to have after
2009. So it's going to be very, very important that we find out how
much we have to adjust so that we can keep our program going in the
right direction.
Staff right now, we've got meetings set up next week to review the
impact and try to evaluate the impact of that so that we can come up
with some adjustments to what we have given to the MPOs and the
districts out there with respect to future funding allocations, and
they can have a chance to re-strategize how they're going to develop
the transportation system.
The one thing we do know is the money that we've already allocated
is not going to be there, so there's going to have to be some
re-strategizing and re-prioritizing that's going to have to be done.
And some of these we've already talked about with respect to how we
can develop projects now, and of course, we have the projects that
we can develop them as a tax road which I would call that our
traditional method, we can do projects that we can develop as toll
roads using what I call the public debt model. We can use the
availability payment model which I would call that private debt
model. And of course, prior to 792, we could use your concession
model which was what I call private equity model. So those were our
four strategies that we had, and we had put up a plan and we were
counting heavily on our private equity model to help us meet the
future needs that would have addressed our shortfalls in the future.
Now that we can't do 792, we're going to have to come back, and let
me talk about the different models and how they work. Of course, the
tax model is our traditional funding, we either have enough
allocation in the district that you prioritize for one project and
we use our tax funds, our Fund 6 money to get that project built. If
there's a shortfall in that project, then we usually would get a
request from the district and the local entity about funding the
project but we don't have enough, and we could take from strategic
priority or take from the common pool to be able to address that
project, and it would be built. The project is built, the asset is
in place, and then it continues, but we don't get any benefit from
it.
Under the public debt model, in essence, it's what we did on State
Highway 130. We identified it as a toll road, we went out there and
went to the public bond market, found out how much toll viability it
had and we found out how much we could borrow from the bond market,
and lo and behold, we knew that to be able to complete that project,
we needed an additional $700 million to be able to build that asset.
MR. WILLIAMSON: And where did we get that $700 million?
MR. SAENZ: That $700 million came from the common pool of money from
the state, so it might have come from Houston, it might have come
from Dallas, it might have come from the Rio Grande Valley, but we
needed that to help complete so that we could build that particular
asset. That is a model that had been used for many, many years in
that we would take from the common pool to go address transportation
problems in different parts of the state.
That project gets built, that project will open as a toll road,
traffic will come through, we will collect the tolls, we will pay
the debt service, and then in time, after a period of time, we will
have enough revenue available to us for surplus that can be used to
build other projects within the region. It will probably take
anywhere from 15 to 20 years.
MR. HOUGHTON: State Highway 130 is a great example of what
Commissioner Holmes and I and the chair were driving home a little
earlier is the original TNRs on State Highway 130 were here, the
real TNRs realized today are somewhere here, so it was financed at
this level. So when we're looking at the TNRs today on State Highway
130, there's an opportunity there to use that embedded equity to
build that road north.
MR. SAENZ: Yes, and the public bond market at the time that you go
to them to build these green projects, they price or give a pretty
good haircut to the construction risk.
MR. HOUGHTON: And not only construction risk but transportation
risk, and at that point in time, Ric, I don't know if you had the
authority to do concessions.
MR. SAENZ: At that time you couldn't.
MR. HOUGHTON: So in the interim, there was concession authority that
came into play.
MR. WILLIAMSON: The State Highway 130 experience was a lot of what
drove us to look for a different private financing model because
what happened was about two-thirds of the way through the State
Highway 130 experience, it suddenly hit people who lived in Houston
and Dallas and El Paso that they were paying gasoline taxes into the
common pool, providing equity for basically an Austin toll road, and
people realized that that couldn't continue when we were rapidly
running out of tax revenue for even our maintenance.
MR. HOUGHTON: So we haven't gone all the way back to that model but
we're pretty close, with the exception of Commissioner Holmes is
talking about the availability payment and separating a part of that
availability payment to traffic risk to the private sector which we
could do on certain assets like that.
MR. WILLIAMSON: Well, not only have we not gone back to that model,
we don't have the cash flow to do it, so it wouldn't matter if we
did.
MR. HOUGHTON: That's my point.
MR. WILLIAMSON: We don't have the spare cash. State Highway 130 was
the last hurrah. In the current financial structure, that's the last
time the state will have the excess cash day-in and day-out to pull
something out of the common pool to invest it as equity in a major
toll project. There just isn't any left.
MR. HOUGHTON: I interrupted, I'm sorry.
MR. SAENZ: That's okay. The third model is what we talked earlier is
what I call private debt or the availability payment model, and I
think we pretty well talked about that while James was up here, so
unless you have any questions, I'll pass on that.
And of course, prior to 792, we did have the concession model and in
that model we were able to, in essence, transfer the risk of
traffic, transfer the risk of construction to the developer where
they will bring in equity and they bet on that traffic will be there
and that they can build that project at the cost that they estimate,
and they're able to bid on that and give us good results. The
perfect example was State Highway 121.
MR. HOUGHTON: Or State Highway 130, Segments 5 and 6.
MR. SAENZ: State Highway 130, Segments 5 and 6. When we looked at
State Highway 130, Segments 5 and 6, the cost of that project was
$1.3 billion.
MR. WILLIAMSON: We've got a report coming up on it -- oh, I guess
that's 130, 1, 2, 3 and 4 we've got a report on.
MR. SAENZ: State Highway 130, 5 and 6, it's a $1.3 billion project.
When we looked at it trying to use the public finance model, we
would need almost $700 million in equity. We could get about $600
million from the bond market. So we couldn't find $700 million in
the public pool.
As we negotiated, we kept the same toll rates, we kept the same toll
escalation rates, we kept the same business terms as we would have
used in the public model, but yet when we negotiated with
Cintra-Zachry -- and that project is ongoing now -- we were able to
get not only the cost of that project, we got an additional $25
million, and then based on their traffic projections which they're
risking, they are projecting that we would get another $245 million
net present value over time for traffic above what the base model
was. So in essence, we're able to get that asset at no cost to the
department.
In this case we got a small stipend or a small concession fee to
build other projects that we needed right then and there, and we've
also identified a mechanism to address future revenue needs because
the other thing we negotiated on that project was that we collect a
percentage of the revenue for every vehicle that drives on that
facility, and based on the number of vehicles, the percentage
increases once we reach certain traffic amounts, and it varies. And
of course, in the future, the other thing on this project, State
Highway 130, should this project become part of TTC-35, and then
under TTC legislation traffic speeds can be increased, that would
also increase the amount of additional up-front payment as well as
the percentage that we would collect.
That model was an example that we were using as moving through and
trying to implement across the state for projects where we would get
the private sector to come in, invest equity, take the risk, and
they bet on that traffic will be there or increase and they will get
a return on their investment.
We talked a little bit already about the market valuation and the
process that's going to go on and the impacts. The market valuation
will allow us, and if the local tolling entity agrees to take the
project and put that value amount into that fund, then it's really
almost identical to what we had in the concession model. But should
they choose not to and say TxDOT, you take it, because we don't have
the concession model available to us, the only way that we could
move forward on that was to, in essence, take the value of that
project from the common pool to apply to that project.
MR. WILLIAMSON: Let's be sure that Alan and the county officials
understand that. Say that again.
MR. SAENZ: If the local tolling entity chooses not to take the
project under the market valuation and that project then becomes
part of a project --
MR. WILLIAMSON: But your other statement was if they do take it,
it's almost the same as the concession model we had.
MR. SAENZ: Yes, sir, if they do take it, because the project is
valued at what the private sector would value that project at.
MR. WILLIAMSON: The only difference being the previous concession
model and what we have now, in the previous concession model we
would have had competing private sector organizations defining what
the value over the cost of the project is. In this case, we have a
series of financial institutions doing that valuation, and it might
be different, who knows.
MR. SAENZ: In that case, if the local tolling entity takes the
project, they place the money into the sub account for the region to
do more projects and it's very similar or almost identical to the
concession model. But the flip side is should they not choose to do
that and then turn it over to the department, the only way that the
department could do that would be under the traditional which we
have no money to do, so the project would not move forward. Or the
only model where we could bring in some private would be the private
debt model, but even in that case, we may need some additional
equity to be able to cover that.
MR. HOLMES: That will be on a case-by-case basis.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: Well, I know you said it accurately but I think we
should also say it honestly. If it is the case that we have to put
equity in it, then that project is not going to get built. It's not
a matter of we were going to put equity in it because we ain't got
the equity to put in it, it's that project won't get built.
MR. HOLMES: Amadeo, you're talking about the projects that were not
exempted by 792.
MR. SAENZ: Yes, sir, I'm talking about the projects that are subject
to the market valuation that were not exempted.
MR. HOLMES: Remind us which ones were exempted.
MR. SAENZ: The projects that were exempted from the valuation
process here in the Houston area we had the completion of Beltway 8,
we had the 290-Hempstead Highway project, and I'm probably going to
forget one but I know Gary is here and he can help me. Those were
ceded to the Harris County Toll Road Authority.
MR. HOLMES: But the projects that were exempted from the moratorium,
that were not ceded to HCTRA or NTTA, what are those projects?
MR. SAENZ: The projects that were exempt from the moratorium and not
subject to the valuation -- well, 161 was exempt from the
moratorium, we can develop it as a concession CDA, but we have to go
through a modified market valuation, so it's exempt from the
moratorium. The 121 project was exempt from the moratorium but it
required that the NTTA submit a proposal to the RTC. Then there were
other projects, especially in the Dallas-Fort Worth area, that were
managed lane projects that are exempt from the moratorium and
because they're already active CDA procurements in a near
non-attainment area, those could continue following the traditional
model.
MR. HOLMES: There's one in El Paso.
MR. SAENZ: And of course, projects in El Paso were exempt from the
moratorium but those projects that they were working on were
projects that they had already identified in their plan as of May
26. And then, of course, we had projects down in the Rio Grande
Valley in Hidalgo County and in Cameron County that they are also
exempt from the moratorium and they can be developed. So there are
projects out there that can be developed using the concession model.
MR. HOLMES: And 69 from the border up to Refugio.
THE WITNESS: And 69 from the border up to Refugio County is also
exempt from the moratorium. The 35-TTC is exempt from the moratorium
because it was already active.
MR. HOUGHTON: Exempt from the moratorium but we cannot concession
that project.
MR. SAENZ: The I-69 project is exempt from the moratorium which
means that we can concession that project from Refugio County which
is just north of the Corpus Christi area south to the Valley.
MR. HOUGHTON: And 35.
THE WITNESS: 35 was exempt from the moratorium, Bob? I'm going by
memory.
MR. JACKSON: 35 is not explicitly exempt from the moratorium but we
already have a CDA for 35.
MR. HOUGHTON: We have a CDA for 35, and we can use a concession
model there?
MR. JACKSON: We can use a facility agreement.
MR. HOUGHTON: Okay.
MR. HOLMES: And Amadeo, the Grand Parkway?
MR. SAENZ: The Grand Parkway was set up as a special category which
it goes through a special market valuation which in this case MPO
here, HGAC, the TPC is involved in the setting and determining of
the valuation parameters.
MR. HOLMES: And then it's a right of first refusal to HCTRA?
MR. SAENZ: Yes. Under the market valuation, the local tolling entity
would then have the right of first refusal.
MR. HOLMES: And if they elected to do it, then they go forward, if
they do not elect to do it, then we can do it under a CDA process
because it was exempt from the moratorium.
MR. SAENZ: I believe so.
MR. WILLIAMSON: I think we're allowed to entertain a concession
proposal on the Grand Parkway
MR. HOLMES: That's what I believe.
MR. SAENZ: I believe so. The Grand Parkway was exempt from the
moratorium.
MR. HOUGHTON: What is the anticipated cost of the entire Grand
Parkway?
MR. SAENZ: About $5 billion.
MR. HOUGHTON: $5 billion?
MR. SAENZ: Yes.
MR. HOUGHTON: And this morning, who was talking this morning about
the TPC has $13 billion in their TIP right now?
MR. HOLMES: James Patterson.
MR. HOUGHTON: James. And is that $5 billion in that $13-?
MR. SAENZ: No, sir.
MR. HOUGHTON: It's not. Okay.
MS. ANDRADE: Amadeo, help me understand. So right now, everything is
up for negotiation. If we have a project that we need toll equity
and we at the department don't have that to give to the locals, they
can still negotiate with the private sector to build that project if
the private sector wished to invest in it. The only thing we can't
do is we can't lease the asset. Right? In other words, the private
sector, if they're interested in providing some toll equity, they
can still do that.
MR. SAENZ: Yes, they would be interested in providing toll equity
and then the local tolling entity, the RMA or the county toll road
authority, or RTA or TxDOT could get into, and that's the model that
I talked about, the private finance model.
MR. WILLIAMSON: Not private equity, private finance.
MR. SAENZ: Private finance model where they can finance the project
and then they pay them over time.
MS. ANDRADE: So we're still very interested, we can still work with
the private sector, there's no question about it, but each project
will be up for negotiation.
MR. SAENZ: Each project will be up for negotiation. The impact with
the private finance model is that there may be a need for some
additional toll equity to be put in place by either TxDOT or the RMA
or somebody, that if the money is not there, we can't move forward
because we don't have that.
MR. HOUGHTON: Well, the chairman just talked about if there's equity
required by us, that project is not getting built. That should give
some pause to everyone in this room listening or watching, how many
of those 88 projects will not require toll equity.
MR. SAENZ: Until we go do our internal market valuation, we won't
have that information.
MR. HOUGHTON: We've discussed in here there's very few roads, like
121 up in Dallas, that finance plus concession. We've heard maybe a
handful of 88? That's kind of a chilling thought that you can build
just a handful of projects without our involvement.
MR. SAENZ: That's correct. And until we do the actual run the
numbers, we won't know exactly what the true impact is.
MR. HOLMES: Amadeo, I think kind of following on one of the comments
the chairman made, this really is likely to have the most dramatic
negative impact on counties or areas without established toll road
authorities that have positive cash flow and money in the bank that
would be able to provide that toll equity. Is that correct? I mean,
it really could put them out of the game.
MR. SAENZ: Yes, sir.
MR. HOUGHTON: And then it's safe to say first come, first served
under 792?
MR. SAENZ: We will bring them to the commission.
MR. HOUGHTON: Well, I'm talking to not us bring them but the RMAs,
toll road authorities.
MR. WILLIAMSON: Well, in a broad sense, no, since we haven't got the
money to put into them anyway.
MR. HOUGHTON: But I mean to sit and negotiate, Ric.
MR. WILLIAMSON: Oh, yes, we've only got so much time.
MR. SAENZ: The only problem that we have is that we only have so
much time to be able to get these projects moving before we lose the
authority to do CDAs altogether.
MR. HOUGHTON: Right, you're not going to be able to negotiate 88
projects.
MR. SAENZ: We've broken them up into -- and I think Commissioner
Holmes asked that the last time -- we're breaking the projects up
into the different areas, we're having enough people trained so that
we can cover as many as possible, but there will have to be a
prioritization within those projects because you want to get the
projects that we can move forward quicker.
We're looking at the status of the environmental on those projects
but it's not as important because part of the project development is
the completion of the environmental studies, if they have been
started or if they're starting and doing the environmental studies,
and whoever takes the project would take on that responsibility
also.
MR. HOLMES: Amadeo, the reason I asked the question a month or two
ago about how you prioritized them -- I guess it was last month --
was that I was afraid that if we tried to do all of them, we would
end up doing none of them.
MR. SAENZ: We have had plenty of discussions during the month over
that and trying to break them up and having enough people and
resources, and at the same time, be able to prioritize within the
different areas. And I would imagine as we look into projects in the
Alamo RMA area for evaluation, they themselves are going to want to
move on one project faster than another, so we'll have to work that
out as we sit down and negotiate.
MR. HOUGHTON: RMAs and toll road authorities need not sit on their
hands. Like, I said, first take a look and prioritize those to see
who's serious about building transportation assets.
MR. SAENZ: We hope to have our people trained in the next week after
the 6th and do our internal work and make initial contacts within
the week or two after that.
MR. WILLIAMSON: Other questions of Amadeo?
MR. HOLMES: Just one last comment, Amadeo. I'd encourage you to be
as creative as possible -- I know you are -- in using availability
payments, traffic payments, and maybe the provisions of Senate Bill
1266. It might allow some type of additional economic support.
MR. SAENZ: We will do that, and I guess for the audience and
everybody else, Senate Bill 1266 is a statute that falls under a
pass-through toll program of which a county or a local entity, a
county or a city can set up a transportation reinvestment zone that
they pledge future revenues from tax increases into a secondary
account that would be available for more pass-through toll projects.
And we've had some interest from folks across the state that are
looking at establishing those so that they can create a potential
future funding source, because my funding source that we were using
for the pass-through toll program, as you all know, has been the
strategic priority category, and with the impact that we have on our
pavements and the need to be able to address our pavement scores and
our pavement problems, my money available under that funding
category is very quickly drying up.
We're not completely dried up and projects will be looked at very
closely, but we're only going to be able to pick the projects where
we get the best return for our investment and the project makes also
good sense with respect to solving our five goals, in essence,
reducing congestion, improving safety on the state highway system,
providing for economic opportunity, preserving the asset value, and
of course, air quality.
MR. UNDERWOOD: I have one quick question. You say the word
rehabilitate pavement. Explain what that really means, Amadeo. To
me, that means you're going to really tear it all the way down and
start over. Is that correct?
MR. SAENZ: Rehabilitation is, for all practical purposes, we take
the existing road and it's outlasted its life, we tear it up and
build it right back up, but we build the same number of lanes that
we had before.
MR. UNDERWOOD: No, I understand that. But you say words like this to
the public, you say we're going to have to fix it, we have to
maintain it, and at some point in time we have to rehabilitate it.
To me, you think rehabilitate them, you put them in jail for a week
and let them out or whatnot, but they don't do that anymore.
(General laughter.)
MR. UNDERWOOD: In the case, ladies and gentlemen, of transportation,
when we have to rehabilitate a road, what does it cost us, six times
as much as it would be just to fix it? Isn't that correct? Just to
maintain it, I should say.
MR. SAENZ: Probably if we look at -- and Gary can correct me -- in
your area, if you look at cost of projects, a seal coat will cost me
about $1 a square yard, $1.50 -- seal coat will cost me maybe $75-
to $100,000 a mile; an overlay will cost me about twice as much.
When I have to rehabilitate the road, rebuild it, we're talking in
the millions of dollars per mile.
MR. UNDERWOOD: So my point is that rehabilitation is basically
building another road, we don't have any money, what money we have
we're trying to use to maintain the roads so that we don't get to
the point of rehabilitating because then it's going to be the same
thing as if it's original construction.
MR. SAENZ: Yes, sir. What we're trying to do is try to use some of
the strategies of maintaining which are seal coats and overlays and
repairs and routine maintenance to try to extend the life of that
original road before we have to spend the big dollars to
rehabilitate it.
MR. UNDERWOOD: But in doing that, we're basically, what I call from
West Texas, robbing from Peter to pay Paul, we're taking money that
we're supposed to receive in the future and we're spending it right
now.
MR. SAENZ: Yes, sir.
MR. UNDERWOOD: Thank you.
MR. WILLIAMSON: And as I understand it, you're going to make this
similar presentation again to us in Austin.
MR. SAENZ: Yes, sir, I'll make this presentation and I will have
examples of the different project development models and how the
funding would work on that same particular project.
MR. WILLIAMSON: And I thank James and I thank Coby for the
presentation.
Mike, we've got some people that need to catch a plane. I'd like to
take up 6(b) at this time.
MR. BEHRENS: All right, Chairman. 6(b) is under our RMAs, and 6(b)
would be recommending that additional counties be added to the North
East Texas Regional Mobility Authority, those counties being Bowie,
Panola, Wood, Cass, and Van Zandt and Titus. Phil, would you lay
that out for us, please.
MR. RUSSELL: Will do. Thank you, Commissioners, Mr. Behrens and
Roger. For the record, I'm Phillip Russell, director of the Turnpike
Division.
As Mr. Behrens just laid out, the minute order before you would
provide for additional counties on the NETRMA. Just to take you back
quickly, almost three years ago this group really was just two
counties; Smith and Gregg counties petitioned the commission to form
the regional mobility authority. The group continued to work hard
and gain some momentum. About a year ago, they petitioned to add
four additional counties, Upshur, Harris, Rusk and Cherokee, and now
the petition before you would add six additional counties, as Mr.
Behrens just laid out.
All of the six new additional counties would have a single
representative on the board. That would provide for a total of 17
board members on this RMA, and we think that would fairly represent
the area.
So staff would recommend approval of this minute order. Jeff Austin
is here if you have any questions or comments of him, as well.
MR. WILLIAMSON: Members, we have one witness, with your permission.
Mr. Austin, is it your intention, sir, to just grow this thing until
it contains every county in the state of Texas?
(General laughter.)
MR. AUSTIN: If the mayor was here, I'd say we haven't made it to
Sugar Land yet. If the mayor was here, I know he also talked about
planting roses. If I'd have known, I would have brought some Tyler
roses.
Mr. Chairman, commissioners, thank you for allowing us to be here
today. We are looking to grow. A few years ago, we heard your
message of trying to come up with ideas and ways and mechanisms to
fund and solve problems locally. We started out with two counties.
You've heard me say this before, we've moved beyond the boundaries
of Friday night football, and we've come back to try to do what's
possible in the local areas to work together.
We added four counties and now we've had some counties that have
petitioned to join us. I think most people understand there's a
four-step process to add counties. First, the county wishing to
join, their commissioners court passes a petition wanting to join.
Then the RMA board passes a resolution allowing them and accepting
them. Third would be the existing counties -- which would be six
right now -- would also pass a resolution allowing them to come in.
Now, my dad, I was talking to him, he said it sounds like a
fraternity or sorority rush, you just hope you don't get a
blackball. The last step rests with you, we would ask for your
consideration.
I've been asked the question why and how, why is this working and
how is this working. We've tried to take a little different approach
than some other areas of the state of working from bottoms up. The
last presentation -- I listened to all the speakers -- really
signify why we've got to come together locally to come up not only
with local equity but to prioritize. And we've been able to do this,
we opened up our toll road in Tyler, Toll 49, a year ago. We just
have one segment and it is not exempted from the moratorium.
But what's unique about that, our local city council, our mayor,
county commissioners court, state reps, senators, chambers, EDC, MPO
and the TxDOT district all came together and said this is our number
one priority. And I think with using that model that we're going to
continue on with our other members counties is to go back for their
designated board member, help us prioritize what's happening in your
county, that way we can look at the common projects that we have and
then try to move these forward.
We do have some counties -- and I was glad to hear the conversation
about the SB 1266 -- we are working on a couple of our counties
right now, have had discussion with the county judges looking at the
transportation reinvestment zones. What is unique about our
additional counties, one county wants to move forward with a rail
project; another one we're working in moving in with the airport,
tying in a road project; another one we're looking at a toll
project. So we're not just looking at one mode of transportation, we
re trying to address all facets and also work with economic
developers to make this become a reality.
There's a lot that can happen but we are trying to strengthen
ourselves regionally to come up and try to identify new ways to
fund. I'd like to share one thing we are in the process of doing
right now. We're working with University of Texas at Tyler, the dean
of the business school has taken an MBA team and they are doing a
study for the RMA to try to identify other sources and some best
practices and also looking at the local tax rates, what can we do,
what might be possible.
And we're trying to partner with other agencies and entities to come
up with something locally because we know while we depend on the
state -- well, we have in the past and the state depends federally,
that's going to come to an end sometime, and so we know in order for
us to move forward, we have embraced the Toll 49 project and we're
looking to move forward and hope to participate with other projects.
With that, with our other counties, they do understand that there's
not just a pot of money out there but we do understand that with
cooperation and collaboration regionally, we're going to be able to
come up with better solutions and try to move forward.
And we would ask for your consideration and approval today to add
the six counties, that will bring us to twelve. That does encompass
two TxDOT districts and three MPOs. And yes, we do get along. I was
asked how do you manage that. Everybody has a job, has a committee,
we're looking at multiple items, and that's where from bottoms up we
have some really good discussions.
I'll be happy to answer any questions.
MR. WILLIAMSON: Members, what questions do you have for this
witness?
MR. UNDERWOOD: I see you've surrounded, it looks like, Camp, Morris
and Marian with this so far. Is that correct?
MR. AUSTIN: That is correct. There are a couple of counties that are
not immediately adjacent to. One, I'll say, Bowie County is going
all the way up into Texarkana. They have a project that is moving
forward right now, they're working on the TNR study. We see
commonality of geography and common denominator. For example, TTC-69
coming up from the Lufkin-Nacogdoches area up to Texarkana, we might
possibly be interested in working with TxDOT or someone else later
to help see that move forward.
And we've taken the motto it doesn't really matter who does the
project but if locally it's supported and we've prioritized that
project as important, we want to help facilitate that project
getting done. It's not all about us in the RMA, it's about how can
we get the projects accomplished.
MR. UNDERWOOD: And I would commend you on your leadership and I
appreciate what you are doing.
MR. AUSTIN: Thank you.
MR. WILLIAMSON: In other words, you just want the road built. Is
that what you're saying?
MR. AUSTIN: Yes, sir.
MR. WILLIAMSON: Your credibility is so good, no one wants to mess
with you when you come up here and you testify. We hope everything
is well with your family.
MR. AUSTIN: Thank you.
MR. WILLIAMSON: Thanks a lot, Jeff, we appreciate it.
MR. HOUGHTON: Thanks, Jeff.
MS. ANDRADE: Thank you.
MR. WILLIAMSON: Phillip to close?
MR. RUSSELL: Thank you, Mr. Chairman. If there are no further
questions of me, staff would recommend approval of this minute
order.
MR. WILLIAMSON: Members, you've heard the staff's explanation, the
witness testimony, and staff's 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: Opposed, no.
(No response.)
MR. WILLIAMSON: Motion carries. Thank you. Thank you, Phil. Thank
you, Jeff and other members.
MR. BEHRENS: We'll continue with agenda item number 2 and go to 2b.
This will be a discussion of a proposal to re-designate some Houston
area HOV lanes to HOT lanes. Carlos.
MR. LOPEZ: Thank you, Mike. Good afternoon, commissioners. My name
is Carlos Lopez and I'm director of the Traffic Operations Division.
Thanks for the opportunity to discuss Metro's proposal to convert
Houston area high occupancy vehicle lanes to high occupancy toll
lanes.
Currently Metro, in conjunction with TxDOT, operates over 100 miles
of HOV lanes. As shown on this picture, the HOV lanes are on the
Katy Freeway, on US 290 Northwest, IH-45 North, the Eastex Freeway,
the Gulf Freeway, and on the Southwest Freeway, and arguably, over
the years this has probably been the best planned, some of the best
operated HOV lanes in the country. They're often used as a model for
one-lane reversible HOV lanes.
They carry a lot of folks to work in the morning. One of the HOV
lanes near the peak period will carry the same amount of people as
2-1/2 regular freeway lanes. That's because they can keep moving
with those occupancy requirements. They offer a fast travel speed
and a reliable travel time. In fact, I can personally vouch for that
because I was here in late May trying to get my passport for
vacation and I had my whole family with me so we were a four-plus
vehicle that day and it was just great to zip by all those folks
that were in the adjacent main lanes. That success, though, has led
us kind of to where we are today in this proposal.
This slide shows what the typical life cycle is of an HOV lane, and
for example, the vertical axis shows the amount of volume in an HOV
lane compared to its capacity, and the Y axis shows time. At the
beginning of time when these HOV lanes were opened, the capacity was
probably about half of what the lane would have, and in fact, I
would probably venture to say that Houston started off a little
higher than halfway there, and they have always had a two-plus free
requirement in there.
Now, as time has gone on, volumes have gone up, and there comes a
point in time -- and this happened in 1998 here in Houston -- where
you reach that dashed vertical line up there where your two-plus
vehicles, since there are so many in there, that reliable travel
time is starting to get affected, so you want to do something to
maintain that advantage.
So most operating agencies at that point go to what's called a
three-plus requirement. Well, it's a lot harder to form a three-plus
carpool than a two-plus carpool, so what will happen is those
volumes will drop tremendously, and even though they're still
carrying a lot of folks, people don't perceive that lane as being
used very well because they see a lot of empty usage.
So what Houston did is they implemented Quick Ride program back in
1998 on the Katy Freeway. That's where they allowed during the
three-plus periods for cars with two people in it to pay a toll, a
$2 toll to ride in that lane in order to get more volume in there,
and that has worked fairly well, but there's still some capacity
left. So what Metro is proposing at this point in time is not a
completely new concept because Houston has been doing a HOT lane for
a while on the Quick Ride program.
So what Metro, in short, is proposing is to re-designate all the HOV
lanes, except the Katy Freeway, into high occupancy toll lanes. This
is going to make maximum use of the capacity because other folks
around the country have done this, and it's going to try to maintain
that reliable trip time that Houstonians have been used to for the
past 20 years on their HOV lanes. And the way that trip time will be
guaranteed is through something called dynamic pricing, and I'll get
into that in a little bit.
Now, under the concept of operation that TxDOT received -- and our
understanding is there have been further drafts after that first
draft was given to us -- it would be a toll requirement for people
with two people in their car on the North Freeway and on 290
Northwest. Two-plus people would still continue to ride for free on
all the other HOV lanes. Single occupant vehicles would also be
allowed in all of those HOV lanes for a toll. So it would only
affect two corridors where two people are riding for free right now
would subsequently be tolled. That was in an earlier concept of
operations; as Metro goes through the public process, that could
change.
Now, the goal is going to be to maintain at least a 45 mile per hour
speed limit, and they'll do this through congestion pricing. Simply
put, the less cars in the lane, the lower to the toll, the more cars
in the lane, the higher the toll could be.
In their concept of operations, one example that they laid out was
on the Eastex Freeway. If you were starting out in Kingwood and
going all the way downtown, if you went during one of those periods
where there are not a whole lot of cars on the HOV lane, the toll
could be about $1.25 to go that whole 20 miles. If that same vehicle
rode during the super peak, it could cost as much as $4.50. So there
is some elasticity in there, and with the use of ITS, the cameras
and detectors, we can keep track of the speeds and then change the
toll accordingly. And the toll would be whatever is flashed on that
dynamic message sign as that car is entering in, so if conditions
change while that car is in there, their toll does not change, they
paid what they were supposed to pay when they first got in the lane.
Now, the concept of operation, the way Metro would enforce all of
this is, for example, at the T ramps that go into the park-and-ride
lots that feed the HOV lanes, they could put two lanes -- and
they're calling them declaration lanes -- with a booth in between in
the middle. If you are a customer that shouldn't pay a toll, you
would go in the lane that doesn't have a gantry over it. If you're a
customer that should pay a toll, you would go in the lane that does
have a gantry over it and you'd pay your toll and there would be
somebody in that booth to verify that occupancy requirement as they
would go into the lane. If there was a violator, then they would
radio enforcement and pull that violator over.
Now, all vehicles would have to have a toll tag or an EZ Tag or a
TxTag in order to ride on the HOT lanes. Anybody that didn't have a
toll tag would be considered a violator.
Now, among some of the benefits of HOT lanes, one in particular for
TxDOT in this case is that under this proposal the Houston District
would be relieved of all maintenance responsibilities that they
currently have on HOV lanes, so that's a big deal, no more sweeping,
no more straightening of barriers, no more sign replacement. And
that's not an easy thing to do when you go on these narrow HOV
lanes, so that's a definite benefit for TxDOT.
So what the plan of action would be from this point forward, or
after the commission would take some formal action at some future
meeting, would be because of Senate Bill 792, HCTRA gets first dibs
on this deal, they would have to formally be approached and see if
they want to develop this project. I think early indications are
that HCTRA does not want to do that. If HCTRA declines, then we
would recommend that Metro be allowed to pursue this particular
project.
After that, Metro would have to get approval from the FHWA to allow
for this additional tolling on interstates and they subsequently
would have to get approval from the Federal Transit Administration
also because they provided some initial money to build those HOV
lanes in the first place.
After that, we believe a significant public involvement process
would be needed. Even in a community as toll-savvy as Houston is,
congestion pricing is still a new concept, and we would recommend
that a number of public hearings be held along each of these
corridors to explain HOT lanes, to explain what the benefits are,
and to explain why there's the elasticity in tolls and to explain to
the public the benefits that can be gained by doing that type of a
toll setup, and basically it would be to maintain that reliable
travel speed.
After all that, then Metro would have to let two contracts, one to
actually do the physical infrastructure improvements, like the
gantries and some of these declaration lanes, and another contract
for an operator to actually collect the tolls.
According to the concept of operations, the corridors could begin to
be opened up in 2009 and 2010. The construction cost is estimated to
be about $50 million to make all these improvements on all the HOV
lanes, and based on some early pricing scenarios, that, again, could
change. The initial estimates of gross revenues are between $8- to
$11 million a year; expenses could be anywhere between $8- to $9
million a year; so the low end, according to this concept of
operations, $95,000 a year to $2.3 million a year. So this is not a
money issue, a money generation issue, the reason most operating
agencies do this is to have good operation.
Now, the Dallas District may propose to re-designate their HOV
lanes, just like Houston is doing, in the future, so any action the
commission takes on this Metro proposal could have some statewide
precedents.
So as we see it, there's some issues in front of the commission that
you might want to give some guidance on. First of all, should the
commission support the concept of going to HOT lanes from HOV lanes,
our recommendation would be yes. If you have some unused capacity,
why not try to use it up, whether it be with people that have
occupancy requirements or don't have occupancy requirements, let's
make that lane used as best as possible, but at the same time, not
degrade the level of service.
The second issue is what to do with excess revenue. We're the owners
of the right of way, Metro would be the operator. We think anything
in excess revenues ought to be a 50-50 split on net revenues.
MR. WILLIAMSON: Let's clarify what you mean by that, Carlos.
MR. LOPEZ: Any excess revenues that would be split, half would go to
Metro, half would go to TxDOT, the Houston District. That money
would stay within the region for whatever improvements they deem
would be necessary.
MR. WILLIAMSON: It would be important, I think, members, for us to
make that point to the greater community, if there is any positive
revenue, the 50 percent Carlos proposes for the department, he
actually proposes for the Houston District and not for the common
pool in Austin, Texas.
MR. LOPEZ: That is correct, Chairman.
Another issue that we see is the whole re-designation policy that we
have in place right now, our rules are pretty much a TxDOT-driven
policy. The world has kind of changed, we probably need to redo
those rules to some extent to recognize that other folks are going
to be taking the lead on some of these issues, just like Metro is on
this one. And our rules are a little bit weak on public involvement,
they need to be beefed up. Especially for this type of situation, we
believe a high degree of public involvement is necessary.
Another issue is the future expansion of the corridors themselves.
The Katy Freeway right now is being expanded. It has an HOV lane
like on all these other freeways and there's going to be four
managed lanes in the middle. If some of these other corridors are
improved, any HOT lane agreement that's in place should be null and
void and some new agreement developed because of the different
operating characteristics that would be in place at that time.
And finally, there's the issue of the Federal Transit Administration
I mentioned earlier. They require an HOV component because that's
why they paid for those lanes. I believe Metro will be able to claim
there's still an HOV component because they're going to allow cars
with three people in it to still ride in it for free. But if for
some reason FTA wanted their money back because of what this
proposal does, we would obviously recommend that Metro be
responsible for that repayment.
That's all I have, commissioners, at this point in time.
MR. HOUGHTON: What would that payment be?
MR. LOPEZ: I think the initial investment from FTA was about $270
million to build HOV lanes and a minimal investment from TxDOT.
Any questions, commissioners?
MR. HOUGHTON: What's the likelihood of a request for repayment?
MR. LOPEZ: I think it's low because there will still be an HOV
component. This is not a new issue, it's been done in Minnesota and
Denver and Orange County, so I think it would be a low probability
that they'd want their money back.
MR. HOLMES: Carlos, I think this is something that is very useful to
explore and to try to fully flesh out. My observation, in being an
occasional user of these HOV lanes, is that they're not really
user-friendly in where you get on and get off, it's not obvious, and
my assumption is that there will be improvements made in how you
access these HOV lanes. Is that correct?
MR. LOPEZ: We've learned a lot since HOV lanes became open. In fact,
we've got a whole brand new, and I think improved signing scheme
that we're going to put in place on the Katy Freeway. That type of
signing can also be put in on the HOV lanes as they're improved.
MR. HOLMES: And the three-plus would still be toll free. Is that
correct?
MR. LOPEZ: Yes.
MR. HOLMES: I think that's really important to encourage higher and
higher occupancy per vehicle.
MR. LOPEZ: That is correct.
MR. HOLMES: And there is clearly spare capacity, and so you have a
tendency to want to utilize that, but I think we need to be careful
in how we approach this.
MR. LOPEZ: That is correct.
MR. HOLMES: There has to be some issues that are resolved in terms
of just physically converting them into a HOT lane.
MR. LOPEZ: Yes, correct.
MR. HOUGHTON: What's the hours of operation?
MR. LOPEZ: In the mornings, I think they start about 5:00 in the
morning and run to about till 11:00 on the inbound, and then they
shut them down to do all the reversing, and they open back up at
2:00 in the afternoon and run till 8:00 at night. It used to take
three hours to turn it all around, now it's one hour.
MS. ANDRADE: Carlos, is Metro receptive to sharing the revenue?
Without committing them, but have you heard?
MR. LOPEZ: I think if the commission feels good about that
particular position, Gary will take that forward to them and see
where they land on that. We think it's fair.
MS. ANDRADE: I commend Metro for doing this or taking this on, I
think it's real visionary and I think the rest of the state will be
watching.
MR. LOPEZ: Yes.
MS. ANDRADE: Thank you.
MR. WILLIAMSON: We have two witnesses, members, James Gallagher and
Clark Mathison. I think I might want to hear from Clark Mathison
first. Clark, are you still here?
MR. BEHRENS: He had to leave.
MR. WILLIAMSON: Probably just wanted to tell us that we're all
nuttier than a fruitcake. I just wanted to tell Clark to his face
he's not the first one to make that observation.
(General laughter.)
MR. WILLIAMSON: James Gallagher.
MR. GALLAGHER: Good afternoon. James Gallagher, Houston Metro.
Coincidentally, our board is meeting today in Houston, and
otherwise, perhaps other of those individuals would be here to
address you. However, I'd like to make three clarifications only on
the remarks that have been made.
First, we're receptive to 50 percent, and I'll be very brief because
I'm sure you have important business to do.
Second, on the matter of repayment, the Federal Transit
Administration has issued rules which accommodate conversions of HOV
lanes into HOT facilities as long as certain parameters are met,
those principally being that higher occupancy vehicles not be
tolled, and that the facility operate at a reasonable level of
service -- I think it's C -- and there are some parameters about how
many days in a row you must do that, and there's a reporting
procedure and everything, and we're going to take that on as a
responsibility to make sure that we maintain a good relationship
with FTA. So those are two things.
The last comment I want to make is on the occupancy, and Carlos
mentioned that there's been a number of drafts and work has gone on
since the latest set of materials that we sent to the Houston
office, and just to clarify for everyone, our view on opening day is
that we will use the existing occupancy rules. That's two-plus
continue to go free. On the Northwest Freeway there's an hour and a
quarter or so where the occupancy requirement is currently three
that's connected to the Quick Ride program, and we want to maintain
that. But just for clarity for everyone that's here, we'll start on
opening day with the existing occupancy rules as we have today.
And that's all I have. Thank you.
MR. WILLIAMSON: Questions of this witness, members?
MR. HOLMES: It would be two-plus toll fee, single occupant tolled?
MR. GALLAGHER: Tolled. Bus free, motorcycle free.
MR. HOLMES: And what do you think the opening toll rate would be?
MR. GALLAGHER: The testimony that was given is fairly accurate.
Again, it's a dynamic pricing system. On the low end when there's
not a lot of traffic on the general purpose lanes and not a lot of
traffic in the HOT lane, the price will be lower because we want a
few people in, and the reverse, but the range that was given you is
probably fairly close to where we'll end up.
MR. WILLIAMSON: I'm just smiling at how easily we talk about market
forces these days. It's just wonderful.
MR. HOLMES: It wasn't that easy a month ago here.
MR. TRIETSCH: I'm Gary Trietsch, district engineer. And I might say,
just to amplify -- and I'm not Metro -- I think when we talk about
the prices, obviously we'll start out with something but in a week
or a month Metro may find out differently and everything shifts, so
you have to understand it may be higher or lower. If it's wildly
successful and everybody is paying it and we jam it up, we can't
afford that.
MR. WILLIAMSON: Hey, Gary, we have been fighting the battle of
market pressure now for about three steady years, so we completely
understand.
MR. TRIETSCH: Well, I knew you would but just for everybody
listening. And I want to make sure that folks that talk to Metro
realize that this will be not only dynamic pricing, it will be a
dynamic learning experience.
MR. HOLMES: Well, I think the dynamic pricing is one of the most
attractive parts of it because it will help prove that system.
MR. GALLAGHER: Correct, I agree.
MR. WILLIAMSON: Don't get too far away, I need to ask Carlos
something and you might want to respond to it.
Carlos, we touched on this last night during social hour, and I
thought about it after we talked about it and I'm still interested
in a concept that I would like for you to at least explore while
you're negotiating with Metro and with Gary, and that's the
notion -- well, in your view is the high occupancy lane used now as
much as we wish it was by cars with two or more people?
MR. LOPEZ: Yes. They're very close to capacity here in Houston,
they're very well used.
MR. WILLIAMSON: In that case, the idea might not work, but I want
you to explore it anyway, and that's the notion of if you want to
put three or more people in your vehicle, we'll forego our 50
percent of the revenue if HCTRA will give toll credits to the owner
of that car. In other words, put some positive incentive in place
for someone to go round up three people every day and take them to
work, as opposed to two, if she knows not only does she get a free
ride but she's also going to get a credit on use of the toll road
elsewhere, that might be even more incentive to put more people in
the vehicles and use it even more.
And I, at least speaking for myself and not the other four, would be
interested in that as an experiment and willing to give up our share
of Houston District's construction money to see if it worked.
(General laughter.)
MR. WILLIAMSON: I've always been curious about that kind of
experiment. You know, we spend a lot of time trying to talk people
into getting into your buses, and I understand that, but we really
don't pay them to get into your buses, we really don't have a
program in the state of Texas where we pay people to get off the
roads. It would be interesting to see if that experiment worked, and
where else better to try it but Houston, Texas.
MR. LOPEZ: It's another incentive for them.
MR. WILLIAMSON: It's at least worth you arguing about it even if we
don't do it.
MR. GALLAGHER: We'll talk it through.
MR. WILLIAMSON: Members, do you have other questions of the witness,
of Gary, of Carlos?
MR. HOLMES: No, but I like your idea, I think it's a good idea to
explore.
MR. WILLIAMSON: It's just something to think about. Okay, members,
what's your pleasure?
MR. LOPEZ: It's not an action item, it's a discussion item.
MR. WILLIAMSON: You don't want any action?
MR. LOPEZ: You already gave me some action.
MR. WILLIAMSON: Do you want a sense?
MR. LOPEZ: We got a sense.
MR. WILLIAMSON: I like it. What do you think, Hope?
MS. ANDRADE: I like it very much.
MR. HOUGHTON: Onboard.
MR. LOPEZ: Thank you, commissioners, I appreciate that.
MR. WILLIAMSON: You've done a good job of persuading us.
MR. LOPEZ: Thank you, sir.
MS. ANDRADE: I just have one comment. Gary, you need to remind your
local tolling authority that Metro is willing to share their
revenue.
MR. WILLIAMSON: I'm not touching that one.
(General laughter.)
MR. BEHRENS: We have item 2(c), our last discussion item for this
meeting, and Amadeo will lead it in talking about the creation of
some committees to help advise us in the development of the
Trans-Texas Corridor.
MR. SAENZ: Good afternoon, commissioners. For the record again,
Amadeo Saenz.
This discussion item really is talking about the establishment of
what we call a corridor planning committee to help us develop the
Trans-Texas Corridor at a corridor level. We're looking at trying to
set up something that we work with the locals along the corridor as
we develop those projects through the environmental process and the
project development process.
Currently, of course, as you know, we have the TTC Advisory
Committee that is more looking at the TTC on a global basis, but
they're looking at it at a very high level. And this started during
the session there was some legislation that was looking at setting
up rural planning organizations which would be the equivalent of
MPOs in the urbanized areas for the rural areas. There are some of
those areas that already have the rural areas working together. This
would, in essence, put them in legislation so that we could have
some formal planning process in the rural areas. It was looked at
favorably, but unfortunately, at the time those bills didn't pass
about setting up a corridor planning organization to develop
corridors around the state.
Having a corridor planning committee would allow us to work closely
with the elected officials along the corridor that we're developing
as part of TTC, and have them help us address some of the concerns
that they would see from their constituents and give us some
guidance with respect to moving forward.
What today's item is we talked to the chairman and the chairman said
to put it as a discussion item so that we can discuss the
feasibility of this committee structure to help us for developing
TTC, and some of the things that we'd like to hear from you is
basically a little bit of the definition on the roles and
responsibilities other than what I've just laid out; the makeup of
the committee, what you think the makeup of the committee should be;
what interaction would there be between the department and the
committees as we develop those projects; and then from these
guidelines we will then move forward, develop rules, and then
present them to you all for moving forward should you want to
continue forward developing and putting in place these corridor
planning committees.
So with that, I'm going to turn it back over to you and get some of
this feedback.
MR. WILLIAMSON: So we would establish a committee, as I understand
it, for each corridor for which there is either a contract or
environmental going on and we think a contract is eminent.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: In other words, we wouldn't necessarily set up a
corridor planning committee for TTC-20 because we don't have
anything pending on 20 right now.
MR. SAENZ: Right, but as we move forward and we identify that it is
probably eminent that we will be working on 20, this may be the
first group that we would set up to start laying some of the
groundwork for identifying the needs along, say, Corridor 20, or
Ports to Plains, or one of the other corridors we're not working on,
and then we start working on a grassroots basis to get some early
feedback and some early support for the development of the corridor.
Then as we move forward through the environmental process, we would
then rely on them more to kind of be our eyes and ears, you might
say, and our boots on the ground to help us move forward on this
corridor, provide us some additional support, provide us some
comments with respect to issues/concerns that they see are coming
out in that area, and then the commission could take that into
consideration as we move forward with the development of the
corridor.
MR. WILLIAMSON: And would the CPC on 35, for example, would we ask
for their counsel on not just Corridor 35 but Interstate 35 as well?
MR. SAENZ: We could set it up on a corridor and as we're developing,
say, for example, TTC-35 that is parallel to 35, we can put that in
the rules and ask them to give us counsel on the corridor itself and
not necessarily the specific project. That could be something that
we could put in the rules.
MR. WILLIAMSON: I would think that would be a wonderful thing.
MR. UNDERWOOD: Amadeo, how long would these people be involved in
this project? Is it a year project, two years, what are you looking
at?
MR. SAENZ: Well, some of these projects will be multi-year. For
example, Trans-Texas Corridor 35, we've been working on it for quite
some time. So this group would continue to serve as we're working on
the environmental on the corridor and as we're developing projects
along the corridor. I think with time, as some of the people change
within the area, and political situations change within the counties
and such along the corridor, we could probably get people that are
replaced. And that's something that we can put in the rules with
respect to the terms of those groups, and who should they be, who
should name them, what are potential terms that they can serve and
how would we work with them.
MR. UNDERWOOD: I like the idea because what you're really saying is
getting the real information out is what you're trying to do through
these committees. Isn't that correct?
MR. SAENZ: Yes, sir. And we want to focus them on a project specific
corridor instead of looking at something global.
MR. UNDERWOOD: I understand. Regional, so to speak, where they can
talk to the region and they can actually have input with the people
that they know and see every day and whatnot. I like the idea, other
the fact that if we wait too late to get involved in the process, do
we want to get them involved before the environmental, so to speak,
so they feel like they have their feet on the ground. But you don't
want them involved if it's going to be a ten-year project, that's
going to be wrong, that's too long and whatnot, they're going to say
nothing is ever happening.
MR. WILLIAMSON: Well, I think it's safe to say, in looking back, had
we known five years ago what we know now, we might have approached
it this way, but I know the thrust of the legislation that was filed
was to begin to recognize that we needed to surrender as much -- I
don't want to use the word authority, but maybe that's the right
word -- we needed to empower these suburban and rural communities
who were most affected by this big swath, at least as much as the
federal government has empowered the MPOs in the urban area, to
basically say if you're going to build this, these are the things we
think you ought to pay attention to; this is the area that you ought
to focus on; these are the considerations that need to be made for
cross traffic, emergency vehicles, impact on agriculture, things of
that nature.
MR. UNDERWOOD: Exactly. I like that idea because they're going to do
the groundwork, the legwork for TxDOT, so to speak, in getting the
message out.
MR. WILLIAMSON: Are all MPOs elected officials only?
MR. SAENZ: No, sir. They have elected officials and they have other
transportation officials. A majority of the MPO must be elected
officials but they don't all have to be.
MS. ANDRADE: But they also have staff.
MR. SAENZ: Of course, they also have staff, and the MPO structure,
you have a policy board and you have a technical board. The
technical board is usually made up of staff of the different
entities that are part of the MPO, and they're the ones that do a
lot of the legwork that they use to present to the policy board.
MS. ANDRADE: Amadeo, how would they work with the TTC-35 Advisory
Committee we have now?
MR. SAENZ: Well, right now the TTC Advisory Committee is looking at
basically TTC as a whole. Here we would be concentrating and moving
forward, as we are now working on 35-TTC, we would set up a
committee for the 35 corridor and we would be working specifically
with them on the development of that 35 corridor as we identify
projects. As that project development plan comes back and updated
from Cintra-Zachry, we meet with them, show them what's going on,
get some feedback from them, they go out there and see what impacts
it has to their particular areas.
MS. ANDRADE: Would you recruit some of the members from that
advisory committee, or would they be completely new members?
MR. SAENZ: The membership could be, for example, if we're looking at
a corridor and a corridor is going through a certain county, we
could get it so that the county names the member that they want to
represent them within this corridor committee.
MS. ANDRADE: So walk me through Segments 5 and 6 of TTC.
MR. SAENZ: Well, 5 and 6, one alternative would be if we wanted to
set up for this project since it's by itself, and there will be a
gap between 1 through 4 and TTC to the north, you could set up and
we would go, for example, to each county within where the corridor
is going and ask the counties to name a member to this committee.
MS. ANDRADE: So it would be kind of their representative that would
be helping develop this.
MR. SAENZ: Yes, ma'am. And probably, I would say, since the corridor
does go through areas that encompass metropolitan planning
organizations, we would ask the MPO to put somebody there. What we
want is all the people that are involved in the planning of projects
and transportation development to, in essence, be working together
so that we can coordinate.
MS. ANDRADE: I like it.
MR. WILLIAMSON: I would think that we would want each county
impacted between the urban and metro MPOs to have representation, we
would want the urban and metro MPOs to have representation, and
because it's usually a regional or cross-state endeavor, I would
think we would want to appoint some members to the CPC.
MR. SAENZ: And you may also, in areas on some projects where you
have, for example, interaction with a port authority, you may want
someone from the port authority that would be there that can
interact and bring in the issues/concerns, things that would be
affecting the corridor, how the corridor could affect the port.
MR. WILLIAMSON: I'll tell you one of the things that triggers
this -- and I haven't visited with Amadeo at length about it, and I
don't think that, thus, you have been briefed, although you may have
been briefed anecdotally -- we're trying to figure out how to expand
Interstate 35 right now from --
MR. SAENZ: Williamson County north.
MR. WILLIAMSON: -- Georgetown all the way to Waco, and we're doing
our initial contacts of the businesses and homeowners that are
fixing to get condemned, and it's a pretty pointed discussion we're
having with some people about losing their homes and businesses. And
out of it what's coming is well, why do you want to tear me down
when you're fixing to build a parallel, why don't you just go on and
build a parallel. Kind of an interesting twist on the discussions
the last few years.
MS. ANDRADE: The only thing I would ask is that we clarify with the
TTC-35 Advisory Committee what we're doing because they've put in a
lot of time and we don't want them to think their work has not been
a contribution to this department.
MR. WILLIAMSON: I would bet you that a huge chunk of a CPC would
have been from the group that's already there, that would be my
guess.
MR. SAENZ: I think so too.
MS. ANDRADE: Thank you.
MR. WILLIAMSON: This is particularly attractive if it includes the
entire corridor from the interstate to the Trans-Texas side and
everything in between.
MR. SAENZ: And I think we can do that because as we're narrowing
down the study area, we start wide and we're narrowing it down, and
we always have to consider even in Tier 2, the option of expanding
existing, so that's always going to be a requirement, so that would
be very easy to do.
MR. WILLIAMSON: In theory, it might be as many as 25 people in the
case of 35, but you'd have North Central Texas COG MPO and two or
three rural counties, and then the Waco MPO and two rural counties,
Temple MPO.
MR. SAENZ: You could have all the MPOs and the counties that would
be represented along the corridor.
MR. WILLIAMSON: How would Hill County pay for their representation?
MR. SAENZ: Well, one option that we have is we have the option where
this will put some additional planning and coordinating efforts on
the part of the county. We can enter into agreements with the county
where we can provide planning funds to the county for them to use to
do these planning functions, so we could enter into a contract. And
then, of course, since the representative is the one that's
expending the money, the county can then compensate the
representative of the county that's doing the work for them.
MR. HOUGHTON: I'm having the good fortune and privilege of visiting
six or seven counties in this part of the world on 69, county
judges, county commissioners, mayors. I think it's a great idea. I
think you already have a built-in organization in the I-69 Alliance
consisting of county judges, mayors, et cetera, from Texarkana all
the way down to Brownsville-McAllen. I would utilize, instead of
recreating the wheel, those people that have already put a lot of
energy and a lot of capital, both human and intellectual capital
into that, maybe adopt that organization, morph it into something
else, if they're so willing to do that.
Again, I've gotten an education, and I hopefully believe that
they've gotten an education. The misunderstanding that exists out
there is unbelievable about the corridor, and we have let others
dictate what the message has been. But after visiting, and others
have gone with me from the department, I think there's a new vision
or a new outlook by these county judges and county commissioners on
what can be done, and their role to effectuate the route, to change
economic opportunity for their regions.
So Mr. Chairman, I think you take some of those existing
organizations, whether I-69 Alliance, morph them into these planning
groups that already have mayors, county judges, county commissioners
on them.
MR. SAENZ: Yes, sir. And I guess really as we go through, following
a little bit on the lead of the chairman, he says that the counties
would name a person. These counties are members of the alliance so
they could decide yes, the person that's representing me on 69
Alliance would be my person.
MR. WILLIAMSON: Well, we would want to be very thoughtful about how
we set it up because my guess is had the idea not surfaced late in
the session, it would have probably been passed as legislation,
therefore, what we do is probably going to be the basis for
legislation in 2009, so we would want to be thoughtful about how we
did it. And certainly we need to pay attention to everyone that has
spent so much time on 35 and 69.
MR. HOUGHTON: And they have spent a tremendous amount of time,
years.
MR. WILLIAMSON: What I hear, Amadeo, in the discussion is start
drafting some proposals for each commissioner to consider, maybe
start sitting down with aides and start going through different
ideas, pose a series of questions to each for their commissioner,
and let's bring this up as a discussion item again in August, and
we'll see where you get between now and then.
MR. SAENZ: Yes, sir.
MR. WILLIAMSON: Do you think that will be suitable? Thank you. Good
idea, Amadeo.
MR. BEHRENS: Moving on to agenda item number 3, which is our
Aviation item for the month of July, and this is a recommendation to
approve funding for several airport improvement projects. Dave.
MR. FULTON: Thank you, Mike. Again for the record, my name is Dave
Fulton, director of TxDOT Aviation Division.
This minute order contains a request for grant funding approval for
nine airport improvement projects. The total estimated cost of all
requests, as shown in the Exhibit A, is approximately $8 million:
approximately $2.9 million federal, $4.2 million state, and
approximately $800,000 in local funding.
Public hearings were held on June 12 and June 25. No comments were
received. We would recommend approval of this minute order.
MR. WILLIAMSON: Never let it be said that Dave doesn't think about
where he's going whenever he lines up these deals. Take a look at
this: Brazoria County, City of Eagle Lake, City of Sugar Land.
MR. FULTON: You'd never believe that was coincidental, I take it.
MR. WILLIAMSON: What a politician this guy is.
(General laughter.)
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, Dave.
MR. FULTON: Thank you, commissioners.
MR. BEHRENS: Agenda item number 4 is under Public Transportation and
we have two minute orders for your consideration, one that concerns
5316 funds and the other one 5304 funds. Eric.
MR. GLEASON: Thanks, Mike. Good afternoon. For the record, I'm Eric
Gleason, TxDOT director of Public Transportation.
Agenda item 4(a) awards just over $4.6 million in fiscal year 2006
federal Section 5316 Job Access and Reverse Commute, or JARC, funds,
approximately $426,000 in state funds and approximately $297,000 in
transportation development credits for urban and non-urban area
employment-related public transportation projects.
The selection criteria and the process for awarding Section 5316
funds is established in Title 43, Texas Administrative Code, Section
31.17. On February 2, 2007, the department published a notice of
request for proposals for JARC projects in the Texas Register.
Proposals were received requesting funding for operating assistance,
capital and planning, and many proposals included requests for
transportation development credits, TDCs, to match federal funds for
capital elements of the proposal.
Title 43, Texas Administrative Code, Section 5.73 establishes the
process by which TDCs may be awarded at the discretion of the
commission. Furthermore, in December of 2006, the commission
expressed its intent to reward TDCs to support fleet replacement,
fleet expansion, maintenance facilities and projects supporting
coordination of services, and JARC was envisioned as one of the
programs consistent with this intent.
A total of three urban area and 15 non-urban area proposals were
received. The proposals were evaluated based on consistency with
department goals and criteria examining project planning and
coordination, demonstration of need, anticipated benefits and
service sustainability.
A scoring oversight committee, consisting of three industry
professionals, was convened to comment and provide guidance for our
decision-making. And based on our review, we are recommending that
each of the three urban area proposals and eight of the 15 non-urban
area proposals be awarded funding, as provided in Exhibit A.
Texas is responsible for the distribution of two categories of the
federal grant apportionment, the urban and the non-urbanized areas.
The department requested and was approved by the Federal Transit
Administration to move $1,406,617 from the surplus of the urban
allocation to the non-urbanized allocation, allowing the department
to recommend for award additional non-urbanized area projects that
otherwise would not be funded.
Additionally, the Texas Workforce Commission has requested that the
department apply just over $426,000 of funds appropriated to the
Texas Workforce Commission for workforce-related transportation
services to projects being conducted in partnership with local
workforce development boards.
These projects represent an exciting step forward for public
transportation in Texas. Justification of all of these projects is
found in the recently completed regional service coordination plans
and partnerships with local governments, employers, universities and
medical facilities and local workforce boards bring additional
resources to these projects and the promise of continued support in
the future once grant funds are exhausted.
We recommend your 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 of 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, members. Thank you, Eric.
MR. BEHRENS: Go ahead with 4(b), Eric.
MR. GLEASON: Agenda item 4(b) awards a total of $81,201 of federal
Section 5304 State Planning and Research Program funds and $20,300
in state matching funds to three transit districts, Alamo Area
Council of Governments, City of Brownsville, and Colorado Valley
Rural Transit District, for planning projects as described in
Exhibit A.
While each of these planning projects has a different focus, they
all contribute to advancing the quality of public transportation in
Texas. Planning for new service, evaluating the impacts of existing
services, and improving fleet maintenance capacity, these projects
address some of the barriers and constraints to coordination that
were reported to the commission last year following the conclusion
of the first round of regional service coordination plans.
We recommend your 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 of staff?
(No response.)
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, members. Thank you, Eric.
MR. GLEASON: Thank you.
MR. BEHRENS: Agenda item number 5 was a proposed rule for adoption
and we found that we need to do some more work on that, and we'll
bring you the proposed rule in August.
Going to number 6(a), again another one under the RMA, and this
concerns Bexar County where we're looking for a recommendation to
approve some funding requests for several projects there in the San
Antonio area.
MR. RUSSELL: Thanks, Mike. Again for the record, I'm Phillip
Russell, director of the Turnpike Division.
The minute order that Mike just described is our normal toll equity
loan process. That being said, it's a two-step process. This, of
course, is preliminary approval, followed next month, hopefully, by
the final approval. However, this has a little nuance to it that's a
bit confusing. Let me see if I can try to explain it.
The Alamo RMA, of course, has received two loan approvals from the
commission, one for about a million dollars, one about $7-1/2
million. Those loan requests identified specific projects for the
RMA to work on: State Highway 16, Wurzbach, I-35, and I think some
others. Neither loan described 1604 or 281 because those were
subject of a CDA, comprehensive development agreement, that the
department has been working on. Of course, Senate Bill 792 threw a
little bit of a monkey wrench into that procurement because US 281
is not an exempted project and we won't be able to utilize the CDA.
So the RMA has requested that the 281 and 1604 projects will be
transferred to the RMA so that they could begin analyzing and
working it. They've got to begin the market evaluation process, but
the dilemma is it wasn't named in those original loan agreements,
1604 or 281. So the real purpose of this minute order would
effectively allow them to begin some work on 1604 and 281. The loan
shows $3.9 million, but effectively, that's money that's left over
out of those two previous loan agreements that you all have already
approved. So effectively, it's clawing some of that money forward so
that they can utilize it for the purposes of beginning the
evaluation for 1604 and 281.
Commissioners, I'd be happy to try to address any questions you
might have on this.
MS. ANDRADE: So it's not in addition.
MR. RUSSELL: No, ma'am, it's not new money. It's pulling money
forward from those two previous loans.
MR. HOUGHTON: Are we transferring the projects?
MR. RUSSELL: The anticipation is that it may be transferred, but we
have not formally transferred it.
MR. HOUGHTON: Not until we do the valuations? Okay.
MR. HOLMES: Hopefully this is all legal.
MR. WILLIAMSON: Well, I don't think Mr. Jackson would let us keep
talking, he'd be up here wailing on us.
MR. RUSSELL: I think I've gotten good direction from Mr. Jackson in
preparation for this.
MR. WILLIAMSON: Yes, ma'am.
MS. ANDRADE: We've got our Alamo RMA director here. Do you have
anything to add?
MS. BRECHTEL: Members, my name is Terry Brechtel. I'm the executive
director of the Alamo Regional Mobility Authority.
I think Phil did a very good job of describing. Essentially you're
right, it's not additional dollars, it's taking some remaining
dollars and allocating these to allow us to work on the development
of 281 and 1604. I'd be happy to answer any questions you have.
MR. WILLIAMSON: Questions, members? Always good to have you here.
MS. BRECHTEL: Thank you. It's been very informative, very
educational.
MS. ANDRADE: Do you have a message to take back to our community,
Terry?
MS. BRECHTEL: A message to take back to our community? We need
roads.
MR. WILLIAMSON: Members, you have heard the staff's explanation and
recommendation, and you've heard witness testimony. What's your
pleasure?
MS. ANDRADE: 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, Phil.
MR. RUSSELL: Thank you, commissioners.
MR. BEHRENS: Agenda item number 7 is the quarterly progress report
on the Central Texas Turnpike System that the commission needs to
approve, and if you'd lay that out, Phil.
MR. RUSSELL: Thanks, Mr. Behrens.
As Mike described, this is the General Engineering Consultant report
for the Central Texas Turnpike project that was completed by our GEC
Post Buckley. The report covers the time line between March to May
31. The GEC reports that the project continues to run well under
budget, something in excess of $375 million under budget.
The GEC also reports that the remaining two segments of 130, that's
Segment 3 that goes down to the airport/71, Segment 4 that runs
around behind the airport back up to 183, that both of those
segments are on schedule. If memory serves me, Segment 3 was about
September, Segment 4 was about December.
I would also note that the GEC has a bit of a precautionary note in
that weather continually over the past several months is beginning
to impact some of our schedules and time lines on State Highway 130,
and I think their comment is subsequent to this report which will be
June 1 forward, they'll need some good weather to complete those
projects.
And commissioners, obviously I don't need to remind you of the
rainfall that we've had in the Central Texas area over the past
couple of months. So I have the Austin District, they're assessing
what schedule impacts, if any, and we'll be happy to report that
back to you.
MR. HOUGHTON: You can't lay concrete on mud or in the rain, huh?
MR. RUSSELL: Sometimes it's a challenge, Commissioner.
MR. HOUGHTON: I'll bet it is.
MR. WILLIAMSON: Members, you've heard staff's explanation and
recommendation on this minute order. Do I have a motion?
MR. HOLMES: 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, Phil.
MR. BEHRENS: Agenda item number 8 is under Finance. 8(a), James will
lay out the Quarterly Investment Report as of the end of May, and
8(b) will the annual review of the Investment Policy that the
commission is required to do.
MR. BASS: Thank you. Again, James Bass, chief financial officer at
TxDOT.
MR. WILLIAMSON: Have we lost any more money since you were here a
while ago?
MR. BASS: Oh, always, yes.
MR. WILLIAMSON: Just thought I'd ask.
MR. BASS: Every minute of every day.
Item 8(a) presents the Quarterly Investment Report for the third
quarter of fiscal year 2008 which ended May 31, 2007. The
investments covered in the report are associated with the 2002
project of the Central Texas Turnpike System and with the lease with
an option to purchase for the Houston District headquarters
facility. At the end of May, the balances of invested funds for the
Houston headquarters was $20.7 million and for the 2002 project it
stood at just about $765 million.
The details of the investments have been provided to you in the
quarterly report, and staff would recommend that you accept the
report.
MR. WILLIAMSON: Members, you've heard the staff's explanation of
this minute order and recommendation. Do you have questions of
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: Under item 8(b), the commission is required by the Public
Funds Investment Act to review and re-adopt the Investment Policy
and strategy at least annually. Staff has reviewed and we've made
some non-substantive changes that I could walk through and give you
the highlights, or staff would recommend your approval.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation on this minute order. Do you have questions of staff?
MR. HOUGHTON: So moved.
MR. HOLMES: Second.
MR. WILLIAMSON: There's 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,
James.
MR. BEHRENS: Agenda item number 9 is a request from Brazoria County
for a State Infrastructure Bank loan that they will need to cover
some utility relocation costs. James.
MR. BASS: Item 9 seeks your final approval of a loan to the City of
Brazoria in the amount of $163,000 with a 20 percent contingency to
pay for utility relocation along State Highway 332. One thing I'll
point out, since this is considered a small loan, this is the one
and only time this item comes before the commission.
Interest would accrue from the date funds are transferred from the
SIB at a rate of 3.7 percent, with payments being made over a period
of no more than 14 years, but I will point out that the schedule is
to have no payments in the first three years.
Staff would recommend your approval.
MR. HOUGHTON: Interest only or just no payments?
MR. BASS: Interest would be accrued during that time but there would
be no payments due.
MR. HOUGHTON: Okay. 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 number 10 under Transportation Planning.
Agenda item number 10(a) is to recommend some amendments to the
Statewide Mobility Program concerning Bexar County and El Paso
County. Jim.
MR. RANDALL: Good afternoon, commissioners. Jim Randall,
Transportation Planning and Programming Division.
Item 10(a). This minute order amends Category 12, Strategic
Priority, of the 2007 Statewide Mobility Program. Strategic Priority
projects generally promote economic development, provide system
continuity, increased efficiency on military deployment routes, or
address other strategic needs. Two additional projects are being
proposed in the El Paso and San Antonio districts for the amounts
shown in Exhibit A.
The first project located in the El Paso District includes
construction of a new location of a six-lane divided roadway and an
interchange on State Spur 601 between US 54 and Loop 375, a distance
of approximately 7.4 miles.
The second project in the San Antonio District includes replacing
the Walter Street Bridge, adding turnarounds, reconstructing and
widening frontage roads, and main lane operational improvements on
I-35 from New Braunfels Avenue to AT&T Center Parkway, a distance of
approximately 1.4 miles.
We recommend approval of the project selections for the amounts
shown in Exhibit A.
MR. WILLIAMSON: Members, you've heard the staff's explanation and
recommendation on this minute order. Do I have a motion?
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, members.
MR. RANDALL: Item 10(b). This minute order will authorize the
reallocation of funds from Segment B-1 of the Grand Parkway to
Segments E, F-1, F-2 and G in order to complete the development
stage for the segments from I-10 West to US 59 North, a distance of
approximately 52 miles.
Minute Order 107844, dated May 27, 1999, authorized $8 million to
the Grand Parkway Association for the development of Segments E,
F-1, F-2 and G. Minute Order 110046, dated April 28, 2005,
authorized $2-1/2 million to the association to conduct additional
studies for these segments, including revisiting alternative
alignments for Segment F-2.
Harris County, in association with the department have now
determined that $1 million in funding is necessary to complete the
environmental studies for Segments E, F-1, F-2 and G. The department
has determined that reallocating $1 million in funding from Segment
B-1 to these segments will not delay the development of Segment B
and will expedite the timely construction of Segments E, F-1, F-2
and G.
Staff recommends 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 of 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, staff.
MR. BEHRENS: Agenda item number 11 is under Traffic Operations and
this will be a recommendation to approve funding for the 2008
Highway Safety Plan. Carlos.
MR. LOPEZ: Thank you, Mike. Good afternoon, commissioners. My name
is Carlos Lopez. I'm director of the Traffic Operations Division.
The minute order before you seeks approval of the FY 2008 Highway
Safety Plan which is designed to reduce the number and severity of
traffic crashes, injuries and fatalities through enforcement,
training and education efforts. The 2008 program consists of a
budget of about $68 million that will fund approximately 390 traffic
safety projects that cover such areas as occupant protection,
selective traffic enforcement, DWI countermeasures, and roadway
safety.
We recommend approval of this minute order.
MS. ANDRADE: Members, you heard staff's recommendation. Any
questions?
MR. HOLMES: Move approval.
MR. UNDERWOOD: Second.
MS. ANDRADE: All in favor, say aye.
(A chorus of ayes.)
MR. LOPEZ: Thank you, commissioners.
MR. BEHRENS: We will skip across agenda item number 12, and let's go
to Contracts. Agenda item number 13(a) is our Highway Improvement
Contracts, both the Highway Maintenance and Building Projects, and
number 13(a)(2) will be also our big Highway and Transportation
Projects. Thomas.
MR. BOHUSLAV: Good afternoon, commissioners. My name is Thomas
Bohuslav. I'm director of the Construction Division.
Item 13(a)(1) is for consideration of the award or rejection of
Highway Maintenance and Department Building Construction Contracts
let on July 10 and 11. We had 24 projects, an average number of
bidders of about four per project. We recommend award of all
projects. Any questions?
MS. ANDRADE: Members, you've heard staff's recommendation. Any
questions?
MR. HOUGHTON: So moved.
MR. HOLMES: Second.
MS. ANDRADE: I have a motion and a second. All in favor, say aye.
(A chorus of ayes.)
MR. BOHUSLAV: Item 13(a)(2) is for consideration of the award or
rejection of Highway and Transportation Enhancement Building
Construction Contracts let on July 10 and 11. We had 74 projects
let, an average of 4.7 bidders per project, and again, we recommend
award of all projects. Any questions?
MS. ANDRADE: Members, you've heard staff's recommendation. What is
your wish?
MR. UNDERWOOD: So moved.
MR. HOUGHTON: Second.
MS. ANDRADE: I have a motion and a second. All in favor.
(A chorus of ayes.)
MS. ANDRADE: Thank you.
MR. BOHUSLAV: And then item 13(b), I'm handling for Zane Webb today.
It's for award to a second bidder. This project was let July 12,
2007, the low bidder did not want to take the project, the second
bidder has agreed to take on the project at the same prices that the
low bidder gave us, and we recommend approval of the minute order.
MS. ANDRADE: Members?
MR. HOLMES: Move it.
MR. HOUGHTON: Second.
MS. ANDRADE: We have a motion and a second. All in favor?
(A chorus of ayes.)
MS. ANDRADE: Thank you. Motion passes.
MR. BEHRENS: We'll go back to item number 12 concerning Right of
Way, and this is in Harris County and is a recommendation to
authorize negotiation of options to advance acquire right of way on
the US 290/Hempstead Highway corridor. Amadeo.
MR. SAENZ: Thank you, Mr. Behrens and commissioners. Again for the
record, Amadeo Saenz, assistant executive director for Engineering
Operations.
I would like to present for your consideration a minute order under
agenda item 12 to authorize the negotiation of options for contracts
for the advance acquisition of right of way along the proposed
corridor route for the 290-Hempstead Highway project. This project
will reconstruct, widen main lanes, improve the combined corridor to
alleviate congestion and improve traffic flow. The majority of the
right of way that's needed on 290 has to do with the 610
Interchange; being able to acquire this right of way sooner after
the environmental is complete, we'll have a savings.
This project also is a project that is going to be developed by
HCTRA, we just don't know how that connection at 610, 290 and
Hempstead will all come together, so this would allow us to move
forward should right of way be available, purchase options to
preserve the right-of-way corridor, as well as keep costs low, and
if HCTRA were to develop this corridor, then they would pay for the
option, and if we are going to develop the corridor, we would pay
for the option.
Staff would recommend approval of this minute order.
MR. WILLIAMSON: Members, you've heard staff's explanation and
recommendation. There are no witnesses. What's your pleasure?
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.
MR. HOLMES: I abstain, Mr. Chairman.
MR. WILLIAMSON: Let's back up. Mr. Holmes is abstaining from any
vote on this matter. Would you withdraw your motion, Ted?
MR. HOUGHTON: I do withdraw my motion.
MR. UNDERWOOD: I withdraw my second.
MR. WILLIAMSON: Now what's before us is the minute order with Mr.
Holmes abstaining. All those in favor of the minute order will
signify by saying aye -- I need the 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 motion carries 4-0, with Mr. Holmes abstaining
from the vote. Thank you, members.
MR. BEHRENS: Agenda item number 14 is our Routine Minute Orders.
They've all been duly posted, as we're required to do so. Be glad to
go over any of them that you'd wish to. I have looked at them, I
don't think any of them, to my knowledge, affects any of the
commission members. Recommend approval of the Routine Minute Orders.
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, members.
Mr. Jackson, did we post for Executive Session?
MR. JACKSON: Yes, we did.
MR. WILLIAMSON: And I think at this point we are going to recess
pursuant to the appropriate laws and rules for Executive Session in
the room directly to your right, members, and we will be back
momentarily, for the purpose of discussing the replacement of the
executive director in the unlikely event that we accept the current
executive director's letter of retirement.
(General laughter.)
(Whereupon, the meeting was recessed, to reconvene this same day,
Thursday, July 26, 2007, following conclusion of the Executive
Session.)
MR. WILLIAMSON: We will resume regular session. The most privileged
motion is in order.
MR. HOUGHTON: Move to adjourn.
MR. UNDERWOOD: Second.
MR. WILLIAMSON: We adjourned the Executive Session one minute ago at
1:50. 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. We stand adjourned at 1:51.
(Whereupon, at 1:51 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: July 26, 2007
I do hereby certify that the foregoing pages, numbers 1 through 181
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.
7/30/2007
(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.
