August 24 Transcript

Texas Department of Transportation Commission Meeting

MR. WILLIAMSON: Good morning.

AUDIENCE: Good morning.

MR. WILLIAMSON: It's 9:02 a.m., and I would like to call the August 2006 meeting of the Texas Transportation Commission to order. It's a pleasure to have each of you here this morning.

Please note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of the Secretary of State at 3:29 p.m. on August 16, 2006.

As we always do, please join with me in taking a moment to place your pager, cell phone, Booray, and whatever else you carry around electronically that might interrupt us, on the silent or vibrate mode. We'll all do it together. We thank you very much.

It is our custom to open with comments from the commission. Commissioner John Johnson had a family emergency, and at the last minute was unable to make our meeting today. We do have a quorum, three of us being present, and we will begin our comments with Mr. Houghton. Ted?

MR. HOUGHTON: Thank you, Mr. Chairman. I want to welcome all of you here today. I think we have a very interesting agenda. There's a lot of great stuff that I believe will happen today, in my opinion, and I welcome you to the Transportation Commission meeting here today. Thanks for coming.

MS. ANDRADE: Well, I echo Ted's comments. Thank you all for joining us this morning. As I was driving in from I-35, I saw the most beautiful sunrise, and it just reminds me how fortunate we are to live in the great state of Texas. And I agree, Ted, we've got a lot of business to take care of today, and we will just keep on working on moving transportation forward in Texas. So welcome.

MR. WILLIAMSON: And I associate myself with the remarks of my fellow commissioners. We do welcome you. We appreciate you taking valuable time out of your day to participate in advancing the cause of solving the transportation problems facing the state of Texas.

Before we start on the agenda items, please let me take a moment to remind everyone that if you wish to address the commission during today's meeting, we ask that you complete one of two speaker cards which can be found on the registration table to your right in the lobby. If you're going to comment on an item posted to the agenda, we would ask you to fill out a yellow card and also identify the agenda item upon which you wish to comment. If you wish to comment on a matter which is not on our agenda, we will take your comments in the open comment period at the end of our meeting. For those comments, we ask that you fill out a blue card, again giving us the information on yourself and the matter upon which you wish to speak.

In any event, our meetings traditionally last longer than we all wish they would, and it would be considered a favor to us if you would try to limit your comments to about three minutes per person.

Members, the first item on the agenda is the approval of the minutes for the July meeting. Copies of the minutes are included in your briefing materials. Do I have a motion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

Michael, let's skip around just a little bit. I don't want to take up the discussion items just yet. What I'd like to do is go to Aviation and Public Transportation and our Administrative Rules first.

MR. BEHRENS: All right, we will do that. We'll go then to agenda item number 3 which is our Aviation item for the month of August, and we have three minute orders that Dave Fulton, our director of Aviation, will present to you.

MR. FULTON: Thank you, Mike. For the record, my name is Dave Fulton, director of the TxDOT Aviation Division.

Item 3(a) is a minute order that contains a request for grant funding approval for 52 airport improvement projects. The total estimated cost of all requests, as shown in the Exhibit A, is approximately $18,600,000: $15 million federal, $1.5 million state, and approximately $2 million in local funding.

A public hearing was held on July 21 of this year, no comments were received, and we would recommend approval of this minute order.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation on this minute order. Do you have any questions or comments directed to staff?

(No response.)

MR. WILLIAMSON: Do I have a motion?

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.

MR. FULTON: My next item is item 3(b). This is a minute order for the purpose of continuation of the Routine Airport Maintenance Program for Fiscal Year 2006. The program allows the department to match local funds for airport maintenance and small capital improvement work items on a 50-50 basis, up to an approved amount in state funds.

The recommended changes we suggest to the program from the last year are to increase state participation from $30,000 to $50,000 per airport for Fiscal Year 2007. And we would recommend approval of this minute order, and be happy to answer any questions.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation. Do you have any questions or comments for staff?

MR. HOUGHTON: Dave, just one question. How many airports are listed here?

MR. FULTON: Last year we had 169 airports that participated. There are approximately 270 airports eligible but not all participate every year, so I think the listing here -- and I'm not sure exactly how many are in it -- but all those airports are eligible, so it would be something around 270 airports that we have in our system.

MR. HOUGHTON: General aviation?

MR. FULTON: Yes. And the program also covers the smaller air carrier airports like Victoria, San Angelo, and those airports as well.

MR. WILLIAMSON: Hope, do you have questions?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: Hang on a second, if you don't mind. It just struck me. Is there not a general aviation airport in the Austin area, or does Bergstrom not participate?

MR. FULTON: Well, Bergstrom would not be included in the program as it's structured today because it's pretty self-sufficient. The program historically has covered the smaller air carrier airports and the general aviation airports. We do no have an airport in Central Texas; we're continuing to try to work on that; there's some interest that's surfaced recently. We've been up and down on this for a long time, but we're still trying to establish a Central Texas airport.

MR. WILLIAMSON: So I notice Georgetown is listed. We don't consider that an Austin area general aviation airport?

MR. FULTON: Well, they are reliever to the Austin area, as is San Marcos, but it is not what I would consider an Austin airport. As you, I'm sure, recall, the legislature directed us a few years ago to establish a new Central Texas airport to serve the Austin-Travis County area, and it's been a difficult undertaking, we haven't been that successful to date but we're still working on that.

MR. WILLIAMSON: Is that because it's difficult to find a location?

MR. FULTON: It is. It also requires the concurrence of the local governing body, and initially Austin and Travis County were not that interested in a new general aviation airport.

MR. HOUGHTON: They believe Bergstrom is adequate? I don't want to put you on the spot.

MR. FULTON: I don't know what their reason exactly was. I will say that the Department of Aviation at Bergstrom has now been talking with us, communicating that they would like to try help encourage this, so I think maybe things are becoming more positive, hopefully.

MR. WILLIAMSON: Okay. That was all my questions. Further?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

MR. FULTON: My final item is a minute order to recommend reappointment of two members to the Texas Aviation Advisory Committee: Mr. Joe Crawford of Abilene, Mr. Greg Jones of Houston. Both individuals meet the statutory requirements for service on the committee.

Both Mr. Crawford and Mr. Jones had planned to appear before the commission, but were unable to do so due to scheduling conflicts. They both asked me to convey their appreciation for considering their reappointment.

We would recommend approval of this minute order.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation on this minute order. Do you have questions or comments?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you, members.

And Dave, tell those guys it was nice of them to think about coming, but time is the most valuable thing people have and we understand those things.

MR. FULTON: I'll certainly pass that on.

MR. WILLIAMSON: They've served our state well and they'll continue to do so. It wasn't necessary for them to be here.

MR. FULTON: I'll pass that on.

MR. WILLIAMSON: Thank you, Dave.

MR. BEHRENS: We'll go to agenda item number 4, this is Public Transportation. We have one minute order which will be adding some people to the Public Transportation Advisory Committee, and the other minute order would be amending an award to the Job Access/Reverse Commute Program. Eric?

MR. GLEASON: Good morning. For the record, my name is Eric Gleason, director of TxDOT's Public Transportation Division.

This first minute order appoints four members to the Public Transportation Advisory Committee:

Donna Halstead, representing the general public, this is a reappointment. Ms. Halstead is the president of the Dallas Citizens Council and a former member of the Dallas City Council.

Mr. Kari Hackett, also representing the general public, this is a new appointment for Mr. Hackett. Mr. Hackett is the Transportation Program manager for the Houston-Galveston Area Council and has more than 25 years of transportation planning experience.

Mr. Mark Maddy, representing transportation users, this is a reappointment for Mr. Maddy. Mr. Maddy has been an advocate for persons with disabilities in the Rio Grande Valley for much of the past 19 years, and serves on the Brownsville Urban System Advisory Committee.

And then finally, Mr. Fred Gilliam, representing the public transportation providers, this is a reappointment. Mr. Gilliam is the president and CEO of Capital Metropolitan Transportation Authority here in Austin and has over 43 years of experience managing and operating public and private transit systems. Additionally, he is our 2005 winner of the Friend of Texas Transit Award.

Current terms expire on September 30, 2006; terms for these appointments expires on September 30, 2009. We would recommend your approval of this minute order.

MR. WILLIAMSON: Members, you've heard staff's explanation and recommendation. Do you have questions or comments?

MS. ANDRADE: Eric, I just want to say that we're so appreciative of Donna Halstead willing to serve again, and also Fred Gilliam. They've just been great to this committee.

And I may remind you, Mr. Chairman, Mark Maddy is the gentleman that brought the young students to our commission meeting in the Valley. And I'm so pleased that we now have someone from Houston.

So you've done a great job, and thank you so much, Eric.

MR. GLEASON: Thank you.

MR. WILLIAMSON: Ted, anything?

MR. HOUGHTON: No.

MR. WILLIAMSON: I echo Commissioner Andrade's comments on Ms. Halstead and Mr. Gilliam and to Mr. Hackett and Mr. Maddy. Public service of a volunteer nature is often public servitude, and we appreciate people who are willing to participate in this process.

Do I have a motion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you, Eric.

MR. GLEASON: All right. The next minute order awards JARC Program funds for colonias projects. This minute order rescinds and withdraws Minute Order 110571, approved at your June meeting this year, and awards $2,379,023 of Job Access/Reverse Commute funds, as allocated in Exhibit A.

Subsequent to the passage of Minute Order 110571 on June 29, 2006, department staff discovered an error in the calculation of the award to each agency. Correcting the error resulted in additional funds being available to fund more of the projects submitted than originally anticipated. Exhibit A now includes allocations to each qualified project submittal.

Of note, the amounts awarded to the Community Action Council of South Texas, Lower Rio Grande Valley, and the McAllen Express are the result of a collaborative process among these three agencies on how to split up the available funds. The Pharr District staff and Mario Jorge, the district engineer from Pharr -- who is here today as well -- were instrumental in facilitating this agreement.

And then one final change from the previous minute order, on mutual agreement of the agencies involved, LULAC Project Amistad, will be the recipient of program funds rather than the Upper Rio Grande Workforce Development Board.

We recommend your approval of this minute order.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation on this minute order. I have a couple of questions. Do you have questions or comments?

MR. HOUGHTON: I don't.

MR. WILLIAMSON: Eric, I want to observe that every year we get to address the transportation world when we gather for our convocation at that school in Bryan -- no, no -- College Station, and each commissioner tries to deliver a message -- some of us try to deliver it on Jumbotron after today, I think -- each commissioner tries to deliver a message to the staff and the participants that kind of gives guidance to the philosophy of the commission at that time.

And one of the things I've tried to emphasize to all of our employees, and by extension to our family of transportation participants, is that we should not be afraid to take a risk, we should not be afraid of failure, we should not be embarrassed to correct when we make a mistake, we're normal like everyone else.

I want to tell you how much I appreciate the fact that you caught and reacted to the miscalculation. I don't see it as a weakness in our system, I see it as a strength, and I think our ability to do those things and just move forward with business as usual is a compliment to the integrity of our staff. I just want to recognize you for that.

I think you're doing a wonderful job in the position we hired you for, and the state of Texas is blessed with having a foreigner come in and take over the program.

MR. GLEASON: I appreciate that. Thank you.

MR. WILLIAMSON: Members, do I have a motion?

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.

MR. GLEASON: Thank you.

MR. BEHRENS: We'll go to agenda item number 5, this is our Proposed Rules for Adoption. We'll go to agenda item number 5(a)(1) and this will be rules concerning the distribution of motor vehicles. Brett?

MR. BRAY: Mr. Chairman, members, Mr. Behrens. This item is a request to publish a proposed rule concerning qualifications for licensees -- I'm sorry -- I'm Brett Bray, director of the Motor Vehicle Division.

MR. WILLIAMSON: We were wondering who you were.

MR. BRAY: Qualifications for licensees of the Motor Vehicle Division specifically deals with criminal behavior and background.

In 1981, the legislature enacted Chapter 53 of the Texas Occupations Code, and it's entitled A Consequences of Criminal Conviction.@ It concerns criminal conduct by licensees and potential licensees of state agencies and it has two main components: it requires the revocation of an occupational license at the time somebody goes to prison which I think you can see the logic in that; and it authorizes boards and commissions to further develop standards and parameters for denying or revoking a license in the particular field being regulated because of past criminal conduct.

The gist of this proposal is to prevent someone from getting a license until three years has passed since serving a sentence for felony conviction or for certain other relevant offenses.

We believe that conviction of a felony is such a serious event and is very important in determining fitness to hold a motor vehicle dealer's license. Furthermore, certain other types of infractions, whether they are legally categorized as a felony or some lesser criminal offense, are also of prime importance. These would include an offense relating to the distribution or sale of vehicles, odometer fraud, title fraud, tax evasion, and vehicle identification number plate tampering.

Each of you can probably think of something else, and in lengthy discussions, it seems that no two people hold precisely the same view as to what is or isn't a relevant criminal conviction for purposes of holding a dealer's license; however, the list that I just gave you seems to be a consensus by all.

The same can be said for the number of years of a waiting period after serving a sentence for committing a felony. Some people say that an individual has paid their debt to society by serving a sentence imposed and should be immediately thereafter eligible for a license; others say that once a person has been convicted of a felony, they should never ever get a license; the rest would pick some time period in between.

And the question is why did we pick three years. It could be any number, really, and of course, ultimately it will be up to your decision what that number will be. We chose three years because we believe it gives someone an opportunity to be out from supervision a sufficient period of time to show that he or she is not prone to recidivism and has, in fact, been informed to the point where Texas can take a chance on them and allow them to get a dealer's license.

Beyond this three-year period for felonies, the proposed rule allows the department to further examine each individual case where the offense was one of the industry-related ones that I told you about earlier to determine if a license should ever be granted.

It could be that some licensees would be caught up in this rule and that's why we drafted a type of grandfather clause that prevents denial where conviction was disclosed to the department by December 1 of this year, 2006.

This rule, I think it's important to note, will apply to corporate directors and officers, as well as partners in partnerships. This follows our enabling statute and it's consistent with the regulatory mission we serve. Also, the rule talks in terms of all licensees which encompasses more than just dealers but virtually all of the licensee types that we administer at the agency.

Two of the department's five core goals are furthered by this measure. The proposed rule enhances safety for the car-buying public by preventing individuals that have been shown to be a threat to consumer safety and well-being from holding a license, and it also fosters expansion of economic opportunity by promoting a dealer body with appropriate credentials to be entrusted with important personal and confidential customer information, as well as funds and collateral belonging to lien-holders. It also encourages a business climate in which law-abiding individuals can fairly compete.

With that, I conclude by asking permission to publish this proposed rule pursuant to the minute order in your packets, and I'm happy to try and field any questions you may have.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation. Do you have questions or comments?

MR. HOUGHTON: Brett, do you think that the centerpiece is the three-year waiting period? Would you call that the centerpiece of it?

MR. BRAY: Yes.

MR. HOUGHTON: And what basis did you derive or come to the three-year, just a number?

MR. BRAY: It's just a number.

MR. HOUGHTON: Like other states or do we know what other agencies in this state do regarding licenses? I know they're quite different.

MR. BRAY: I haven't got an exhaustive study for you, and the examination that we did, it's how you described it, it's all over the board. How people treat chiropractors or beauticians, it's just all over the board.

If I'm not mistaken, three years has been part of the department's policy before. I think Vehicle Titles and Registration's similar rule embodies three years, or at least it used to.

MR. HOUGHTON: What about a driver's license?

MR. BRAY: I'm sorry, I don't know the answer to that. I don't think felons are precluded from driving.

MR. HOUGHTON: If they use a car in the act of a felony?

MR. BRAY: I don't know, other than what I read in the papers, because I think there is something. Obviously there's the trend for --

MR. HOUGHTON: DWI, DUI.

MR. BRAY: Yes, sir, right.

MR. HOUGHTON: I was just curious.

MR. BRAY: Like I say, just to reiterate, in my case the three-year period was picked because we just think that's long enough for somebody to be out. I mean, you can never, I guess, be totally sure unless you say never ever, once you've gotten a felony, you can never ever hold a license. Short of that, it seems to me that if you haven't been in trouble for three years, you're probably not prone to recidivism.

MR. HOUGHTON: Okay.

MR. WILLIAMSON: Any more questions or comments?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

MR. BEHRENS: We'll go to agenda item number 5(a)(2). This is another Proposed Rule under Contract Management being the Claims Procedures. Amadeo.

MR. SAENZ: Good morning, commissioners. For the record, Amadeo Saenz, assistant executive director for Engineering Operations.

This minute order proposes the repeal of rules and adds new sections to rules concerning contract claims and contract claims for CDAs. The proposed rules concern dispute resolution under the department's construction contracts. When a contractor or the department files a claim, it is processed by the department's Contract Claim Committee. The new rules will have specific provisions related to how you handle claims in the comprehensive development agreement projects.

Section 9.2 was repealed and reformatted, and current 9.2 adds a new section to 9.2 where we rewrote the rule to put the procedure in more chronological order for ease of understanding and to make the rule easier to use when a contractor or the department files a claim.

This proposed section also has some substantive changes. It adds a requirement that the contractors shall certify the accuracy of the claim. This is modeled after federal law and ensures that the contractor has reviewed the facts, verifies their veracity, and is authorized to file the claim. The section also provides that if the contractor files a false claim, he or she shall forfeit that claim. The provision is meant to preclude any other remedies at law when a person files a claim.

It also changes the procedure when a contract claim is settled by the Contract Claim Committee. The rules will no longer require the executive director to place the matter upon the commission's monthly approval agenda. The executive director can either approve the settlement himself or ask the commission to approve it, giving him the option.

New Section 9.6 is the new process that we're introducing for our comprehensive development agreements. It would authorize the department and a CDA developer to use this new type of contract claim procedure. The Contract Claim Committee would not consider these types of claims. Rather, they would be considered by a disputes board created under the CDA.

The justification is the ability of a developer under a CDA to effectively raise equity and debt financing for a CDA project depends on an administrative process where the disputes are resolved as quickly as possible, and the decision-maker is not a party to the CDA and that produces finality of the decision within reasonable time.

Under the description of what we have in the rules, under the proposed rules, a CDA can provide for the processing of a contract claim in the following manner: the claim shall be referred for some time to the informal dispute resolution process, just like our normal projects, where we at TxDOT and the developer are trying to resolve it as a dispute. If the informal dispute resolution process fails, the claim is then referred over to this disputes board.

The disputes board is a decision-making body created as needed on an as-needed basis. Each party will nominate one member to the disputes board and the other party can object to a nominee. When the disputes board makes a decision on the claim, the decision will be considered final and binding on both parties. There are some exceptions, and I'll go over those now.

The decision by the disputes board may be appealed if the party believes that there was disputes board error. This will be defined in the CDA but generally it will be very narrow. If the parties allege disputes board error, then that issue will be considered in the administrative hearing process of the State Office of Administrative Hearings.

The executive director, similar to his role in our regular claim process considered by the Contract Claim Committee, still approves the final resolution of the claim, but under the CDA the parties may restrict the executive director's discretion. The executive director may only implement a decision of the disputes board.

These rules are proposed. We will receive comments all the way till 5:00 p.m. on October 9, and after we receive those comments, we'll bring them back for final adoption.

I'll be happy to answer questions with respect to the rules.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation. Do you have questions or comments?

MS. ANDRADE: Is this for any dollar amount?

MR. SAENZ: Yes, ma'am. The CDA can set up a mechanism where you handle these different disputes -- and I'm talking for CDAs -- you can handle and set them up under that particular CDA for different dollar amounts that you can handle them differently, but that would be up to what would be negotiated in the CDA process.

The regular Contract Claim Committee is for any amount it follows the same process, for our regular contracts.

MS. ANDRADE: And through this process, the state is protected in that?

MR. SAENZ: Yes, ma'am.

MR. HOUGHTON: And this applies to the most recent negotiated contract?

MR. SAENZ: Yes, sir, it will.

MR. HOUGHTON: So moved -- oh, I'm sorry, Mr. Chair.

MR. WILLIAMSON: Other questions or comments?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

MR. SAENZ: Thank you.

MR. BEHRENS: We have one more rule for proposed adoption, and this is under Contract Management, and this concerns awarding a contract under building improvement contracts. Zane.

MR. WEBB: Good morning. I'm Zane Webb, director of the Maintenance Division.

This item proposes the adoption of amendments concerning highway improvement contracts to allow the department to award a building contract for less than $300,000 to the second lowest bidder if the lowest bidder withdraws its bid after bid opening.

The Transportation Code allows the department to award a maintenance contract for under $300,000 to the lowest bidder, however, department rules require all building contracts to be awarded to the lowest bidder or rebid. Authorizing the award of building contracts involving less than $300,000 to the second lowest bidder, if the bidder agrees to the unit price of the lowest bidder would expedite contract awards for needed building contracts, avoid additional expenses, improve continuity and efficiency of building contract lettings and management.

Staff recommends approval.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation? Do you have questions or comments? I'll have one.

MR. HOUGHTON: None.

MR. WILLIAMSON: Mine is in the nature of a comment, Zane.

MR. WEBB: Yes, sir.

MR. WILLIAMSON: This is the next step in the evolution of creating a Department of Transportation that acts like a business. I appreciate your work on this. I know this is a different world for us but this is the way to become more effective and more efficient with the taxpayers' dollars, and I appreciate your work on it very much.

MR. WEBB: Thank you, sir.

MR. WILLIAMSON: Do I have a motion, members?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

MR. WEBB: Thank you.

MR. WILLIAMSON: Mr. Behrens, I see that we have the Honorable Roy Blake, Jr. with us. Roy, I apologize, we jumped the schedule on you. I knew you were going to be here and I didn't realize it, so please accept my apology.

MR. BLAKE: Mr. Chairman, commissioners, Roy Blake, Jr. State Representative, House District 9. I appreciate the opportunity to be here and thank you for allowing me to come before you and express my thanks for already acting on this item on the agenda.

As someone who has worked closely with the city in my role as mayor several years ago, and having worked with the chamber of commerce and the economic development group in Nacogdoches, I certainly understand, Mr. Behrens, the importance of a good airport facility, and now, as a newly licensed pilot, I really am excited about this project.

The airport has got a long history there in Nacogdoches and it's always good to see continued improvements. We have a very active FBO there now that has a flight school, obviously, and we're making improvements out there. They've invested, they have over five or six employees, instructors and mechanics, and so things are looking well out there, and I appreciate your confidence in our community with your actions today.

MR. WILLIAMSON: Well, we thank you for the kind words.

Members, do you have comments?

MR. HOUGHTON: Do you plan on using that new pilot's license to get to and from Austin in a more expeditious way?

MR. BLAKE: Actually, I flew today, and the old saying if you're in a hurry, don't fly, certainly does apply. But we left early this morning and the forecasted winds weren't exactly the actual winds, so it took us a little longer.

MR. HOUGHTON: On the nose of the plane.

MR. BLAKE: That's right.

MR. HOUGHTON: It's pretty bad when the cars, you look down, they're passing you.

(General laughter.)

MR. BLAKE: And the little plane that I flew in, that happens sometimes, you're exactly right. But it was an uneventful flight, so that's what we want.

MR. WILLIAMSON: Thank you, Representative Blake, and thank you for your service to the state of Texas.

MR. BLAKE: Thank you, appreciate it.

MR. WILLIAMSON: Let's go back to 5(b), Mike. I'm not quite ready to start the rest.

MR. BEHRENS: Okay. We'll go to agenda item number 5(b). This is one rule we have for final adoption, and this concerns amendments to our International Bridge rules. Jim.

MR. RANDALL: Good morning, commissioners. Jim Randall, director of the Transportation Planning and Programming Division.

Item 5(b), this minute order adopts amendments to Sections 15.70 through 15.76 to be codified under Title 43, Texas Administrative Code, Part 1, relating to International Bridges. Amendments are necessary to implement the provisions of House Bill 1653, 78th Legislature, Regular Session 2003, to clarify certain terms and definitions, update statutory references, clarify existing information, modify requirements for public involvement, and allow for a comparison of competing applications.

The amendments were proposed by Minute Order 110539, dated May 25, 2006, and published in the June 9, 2006 issue of the Texas Register for the purpose of receiving comments. No comments were received. 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 or comments?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you, Jim.

MR. BEHRENS: Agenda item number 6, and Jim will present you two minute orders, one appointing some new members to our Bicycle Advisory Committee, and the other concerning authorization for some bridge replacements in Jefferson County.

MR. RANDALL: Again, Jim Randall, Transportation Planning and Programming Division.

Item 6(a), this minute order appoints four new members to the Bicycle Advisory Committee. The committee's primary mission is to advise the commission on bicycle issues and provide a forum for communication between the department, bicyclists and the public. The committee functions under Title 43, TAC, Section 1.85 concerning Advisory Committees. Originally Senate Bill 602, 79th Texas Legislature, Regular Session 2005 tasked the committee with advising and making recommendations to the commission on the development of the bicycle tourism trails in the state.

When appointing the members, the commission may consider facts such as geographic desirability and occupational diversity. Upon your approval, the new members will be appointed as follows: terms expiring August 31, 2009: Robert Gilbert of Houston, Kristy Hansen of Austin, Tracey McMillan of Austin, Sheila Holbrook-White of Austin.

These candidates are recommended for the Bicycle Advisory Committee.

MR. WILLIAMSON: Members, you've heard the explanation and recommendation of staff on this minute order. Do you have questions or comments? I will have one.

MS. ANDRADE: Does this include the gentleman that came before us that --

MR. RANDALL: Robin? He's the chair. We have seven already; we're adding four additional members to help us with the Safe Routes to School.

MS. ANDRADE: He didn't resign after all?

MR. RANDALL: We didn't accept, and I don't think the commission did.

MR. WILLIAMSON: No, we didn't accept his resignation.

MS. ANDRADE: I'm glad he stayed.

MR. WILLIAMSON: Ted?

MR. HOUGHTON: No.

MR. WILLIAMSON: I thought Carlos usually brought these kinds of minute orders to us.

MR. RANDALL: The Bicycle Advisory Committee is under TPP's responsibility.

MR. WILLIAMSON: Is that a recent shift?

MR. RANDALL: No, sir.

MR. WILLIAMSON: Is my memory beginning to fail me, as it does with older people?

MR. RANDALL: No, sir. The relationship is that we decided that we needed to expand the Bicycle Advisory Committee to look at the Safe Routes to Schools Program, and help them in judging proposed applicants and stuff like that.

MR. WILLIAMSON: So let me ask you, where's Tommy?

MR. RANDALL: I don't know, we haven't seen him in a long time.

MR. WILLIAMSON: Is he still on our committee?

MR. RANDALL: Yes, sir, he's still on our committee.

MR. WILLIAMSON: But he's not showing up?

MR. RANDALL: Well, they haven't met in a while, to be honest with you, sir. And this fall we intend on starting to look at the tourism trails issue, and so we'll either have a meeting or we'll do some kind of teleconference situation so we can meet with them.

MR. WILLIAMSON: Tell Tommy we miss him.

MR. RANDALL: Okay, sir.

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

MR. RANDALL: Yes, sir.

Item 6(b), this minute order authorizes CONSTRUCT authority for two bridge replacement projects in the Beaumont District in Category 6, Structures Replacement and Rehabilitation Program of the 2007 Statewide Preservation Program. Both bridges are on County Road 257 in Jefferson County.

The first bridge, located over South Fork Taylors Bayou, was recently closed due to accelerated deterioration after the recent flood. The southernmost span is collapsed and the south approach is failed. The bridge is also on a bus route and essential for the movement of local residents and industrial traffic. The increased travel time due to the road closure detour is approximately one hour, and the county requests replacing this structure as soon as possible.

The second bridge, located over Mayhaw Bayou, was recently inspected and it has extensive damage and deterioration to the pilings, bed cap and beams. The bridge is load posted at 24,000 pounds which restricts truck traffic serving a petroleum reserve of strategic national significance in the area.

In order to provide Jefferson County citizens with a safe and efficient transportation system, it is necessary to advance these bridge replacement projects to CONSTRUCT authority at a total estimated construction cost of $1.1 million. We recommend approval of this minute order.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation on this minute order. Do you have questions or comments?

(No response.)

MR. WILLIAMSON: What is 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.

MR. RANDALL: Thank you, sir.

MR. WILLIAMSON: Mike, I think for purposes of letting the audience know where we're headed, I'd like to take up at this time Mr. Chase and find out about our legislative program, and then we'll ease into Mr. Saenz on comprehensive development agreements, if that's okay with you.

MR. BEHRENS: That's fine. We'll go to 2(a) then, and as you know, for several months Coby has been bringing recommendations for you to consider that we take to the legislature in the next session. Coby.

MR. CHASE: Good morning. For the record, my name is Coby Chase, and I'm the director of TxDOT's Government and Business Enterprises Division. Today I'll further discuss the formulation of the commission's legislative priorities for the 80th Session of the Texas Legislature.

For the benefit of those in the audience, let me point out that while we've had these discussions once a month here at the commission, my staff and I have been traveling the state, speaking to anyone who will listen about what the commission is considering. Not surprisingly, there has been some push-back but there's also been a lot of active engagement in what we're doing.

And as I reported at the last commission meeting in El Paso, we've mailed it to a number of interest groups, cities, counties, to over 1,800 organizations this week and last week. We didn't do that two years ago but we did it this year, and we'll see what kind of feedback we get from that. And we probably missed somebody, it's a big state with a lot of people and a lot of organizations, but we'll see. It's almost 1,900 letters that we sent out this week and last.

Clearly, there are those who have a deep interest in how TxDOT conducts its business. We work very well with both our public and private sector partners, and there's a healthy back-and-forth that we have when it comes to proposing change. While we strive to find a common ground on details on any given issue, let me emphasize that we need to be clear up front about what our goals are and what problems we are trying to solve. Any compromise that can be reached must remain faithful to our goals.

With that, I have organized some of the major issues you are considering based on the goals that they are designed to attain. This is not a comprehensive listing of all the issues -- I've done that in the past two months -- rather, this is a rundown of our major issues.

Clearly, those issues that enhance the department's ability to expand capacity in the highway system will help us achieve all five goals. I'm talking about more resources for transportation.

One measure we've discussed is a proposal designed to enhance the Texas Mobility Fund. The department collects fees from the trucking industry for General Revenue for oversized permits and motor carrier registrations. Since these fees are directly related to transportation, they should be re-evaluated, possibly increased, and redirected to the Texas Mobility Fund. By depositing these fees in the Mobility Fund, we can leverage this revenue in order to get projects on the ground faster.

Another issue that impacts our bottom line is the expense associated with relocating utilities along the interstate and US highways. Whether the utility was there first or whether they jumped into our right of way for free, taxpayers pick up the tab when it is time to move utilities from one strip of free right of way to another strip of free right of way.

We have started some active and interesting, and I will say animated discussions with the utility industry about that concept, and you'll be hearing more, and I imagine quite a bit, about that issue as we press ahead.

MR. HOUGHTON: Let me stop you, Coby.

MR. CHASE: Yes, sir.

MR. HOUGHTON: On that animated conversations with utilities, what kind of utilities?

MR. CHASE: Right now it's been telecom and then an energy company.

MR. HOUGHTON: Okay.

MR. CHASE: And I believe we're going to be creating a working group to discuss that and the value of those things that occur in the right of way, the value of things that are transmitted or moved, or whatever the case may be. As the commission has pointed out over and over again -- that's not to put too fine a point on this -- that there is no free ride on the state highway system. There's been one for many, many years and utilities that are in the right of way need to understand that as well too, because it can cost many hundreds of millions of dollars to move these utilities and put them back.

MR. HOUGHTON: Well, I'm sorry the chair is not here, I was going to ask him, since he's in the business, and maybe our legal counsel knows. But when you transmit -- not transmit -- oil and gas through a pipeline, there's got to be a transportation cost to that product. I would imagine we would be looking at a transportation cost through hard wire and digital and fiber optics that may lay in our right of way.

MR. CHASE: I think that's a good point, and we will certainly bring that up in our discussions and dig into that deeper, so to speak.

MR. HOUGHTON: Thank you.

MS. ANDRADE: So Coby, are we considering leasing?

MR. CHASE: Yes, that is certainly something we're talking about.

MS. ANDRADE: That's been brought to my attention before.

MR. CHASE: And not to be one-sided, it's not all just the department's version of this is correct, the utility side of the table certainly has some legitimate issues related to this, but it has been a very expensive relationship over the years, and leasing is certainly something that's going to be at the top of our list of things to try to resolve.

MS. ANDRADE: Thank you.

MR. CHASE: An alternative to increasing our resources would be to receive better prices. This is accomplished by ensuring greater competition. Competition improves our bottom line, certainly, but it also increases the productivity and effectiveness of our program. The competitive process provides the means for finding out who can offer the best ideas, designs, technology, delivery, and quality of products and services. Competition motivates potential contractors to offer better value if they are to obtain TxDOT contracts. All of these factors contribute toward our five goals.

The proposal to establish a quality-based, best value method of procuring professional services certainly enhances competition and therefore meets all five of your goals.

There are also opportunities to ensure greater competition for TxDOT projects by enhancing the comprehensive development agreement process. There are numerous issues regarding CDAs that need to be included in your recommendations to the legislature. These include the repeal of the CDA sunset date and the statutory cap on CDA-related expenditures, and the 50-year cap on concession terms, and a few other issues that we've discussed previously.

MR. HOUGHTON: What are we talking about concession terms, Coby, going to, 100, 99?

MR. CHASE: I don't have that number in front of me, but it is definitely lifting the cap, and 70 years -- and I'm not saying that's the number, but I know that's one that's been used quite a bit.

MR. WILLIAMSON: I think our challenge in explaining that to the legislature is unlike other ways of approaching business in state government, the comprehensive development agreement contemplates that you will negotiate, and I don't know if you've touched upon making sure that, for example, the NTTAs or the HCTRAs of the world have this same authority, but we're going to support that.

The notion that you would tie our hands or NTTA's hands or HCTRA's hands or CTRMA's hands, or whoever it is, in how they negotiate the best value deal for their community is sort of contra to our idea of extending authority to local and regional governments to solve problems. I think the fear in government always of privatization is people don't know what they're doing and they'll make bad deals, but that's a fear that all of us live in our private lives every day, those of us who are in the corporate world live in our corporate life every day, and the reality is you don't become stronger as an individual or as an organization if you're protected from the impacts of your own decisions.

So what we have to convey to the legislature is the laudable goal of protecting people in the end makes everyone weaker and results in a higher cost transportation asset.

MR. HOUGHTON: Well, not only higher cost, but undoable, not doable deals.

MR. WILLIAMSON: Possibility of not getting the transaction done at all.

MR. HOUGHTON: Right, can't get a transaction with some of these things that we're now finding out.

MR. WILLIAMSON: As you know, Hope, if we were in a relaxed mode in San Antonio, if we had all of the road space and public transportation and clean air we could stand in San Antonio, we wouldn't be worried about these things, but the reality is when I woke up this morning, Coby, what did I first think about?

MR. CHASE: You had an $86 billion problem.

MR. WILLIAMSON: I had an $86 billion problem between now and 2030.

MR. HOUGHTON: That's not what I thought about.

MR. WILLIAMSON: And if we don't do something, that problem is going to get worse, not better.

MR. HOUGHTON: It's that LED legislation we're talking about.

MR. WILLIAMSON: I read about that. What's the deal with you're A&M kids and that LED thing? We'll talk about that in a minute.

MR. CHASE: Okay. Other toll road related issues include granting the commission the ability to acquire toll roads.

MR. WILLIAMSON: Before you get off CDAs, I need to ask you another question.

MR. CHASE: Yes, sir?

MR. WILLIAMSON: Is it my understanding -- and Bob Jackson may have to answer this -- is it my understanding that our position is a unit of government, whether it's an elected unit, Harris County, or whether it's an appointed unit, NTTA, cannot themselves propose a comprehensive development agreement, law prohibits them from competing for a contract?

MR. CHASE: I believe so.

MR. WILLIAMSON: Bob, can we talk about that for a moment?

MR. JACKSON: That is correct.

MR. WILLIAMSON: Okay. I understand -- I don't agree with but I understand the government rationale of we don't want TxDOT competing with Kiewit to construct a project for TxDOT, and I understand that. Like I said, I don't agree with it but I understand it. But I'm not sure I understand the rationale that says the Permanent School Fund cannot, after thoughtful consideration, propose a comprehensive development agreement that is, in effect, a financial transaction, not just a construction contract. Are we sure about our position on that?

MR. JACKSON: Yes, sir, we are. Under state law, TxDOT's CDA statute only applies to the private sector. I don't think that was done purposefully to exclude the public sector, I don't think anybody thought about it at the time that law was enacted in '03. There are federal regulations restricting public-private competition.

MR. WILLIAMSON: Is it possible for us to recommend or is it possible for the legislature to pass statute? And I want to give you a real world example because we have some people from Dallas here today. I read where my friend, Margaret Kelleher, voiced some concern about transactions occurring in North Texas that might result, in her view, of Dallas County maybe needing to think about withdrawing from NTTA and taking their Dallas-based assets and running their own toll authority -- which I happen to think is not a bad idea. If I lived in Dallas County, I would be thinking about that also.

But it occurred to me that as the county judge or Mr. Blades, as a city council person, if they saw a transportation project in the city of Dallas or in Dallas County that they legitimately believed was beneficial only to them and felt like they should compete for a solicited comprehensive development agreement to build that project for the region of the state, if I understand the law, they couldn't do that.

MR. JACKSON: That's right, they cannot.

MR. WILLIAMSON: And I think that's silly. I mean, I think people elect city council persons and county government persons to make those kinds of decisions. So can the State of Texas redefine its laws where they can do that?

MR. JACKSON: Yes, with some federal restrictions.

MR. WILLIAMSON: Federal restrictions being we couldn't get reimbursed from the federal apportionment for any money the state spent on that project?

MR. JACKSON: At the least, yes.

MR. WILLIAMSON: Thank you, Bob.

Coby, I would think we would want to do some research, I would think we would want to notify stakeholders and begin to educate -- from Jerry Patterson to Bill Blades, we would want to begin to educate people. Again, that's in direct contravention to our strategic plan to encourage competition, to empower local and regional government. We ought not to be afraid of that.

MR. CHASE: Oh, no, absolutely not.

MR. HOUGHTON: Also, Mr. Chair, I would like to encourage looking at not only concrete and steel but transmission, electrical transmission in the corridors, water transmission. I think we're restricted there also under the CDAs in those corridors. I think we need to look at the cap to make those economically viable for the private sector.

MR. CHASE: Okay.

MR. WILLIAMSON: That's a very good suggestion, because in light of the current water crisis, if I understand the law correctly, for example, Tarrant County Water Board couldn't give us a CDA to build and operate a water line inside the corridor.

MR. HOUGHTON: We have a great opportunity in the very near future with Trans-Texas Corridor and water transmission from different parts of the state, electrical transmission. Are we restricted, Amadeo, as to the concession we can give, the terms of the contract under, what, 75 years?

MR. SAENZ: The Trans-Texas Corridor, the concession is 50 years.

MR. HOUGHTON: Fifty years. I'm sorry. So I think that precludes a lot of the private sector from being involved in those types of transactions.

MR. CHASE: And just to clarify just because this is something that comes up quite a bit when we're talking about water being moved around the state, it is not the state taking somebody's water --

MR. WILLIAMSON: Yes, we're not empowered to take water.

MR. CHASE: Right, and we're not being empowered. That just gets misinterpreted.

MR. HOUGHTON: Right. It's a private sector initiative.

MR. WILLIAMSON: And we don't even want to be empowered, that's one we don't want.

MR. CHASE: This does not give us the authority to require anybody to send any water anywhere. I just wanted to make that clear.

MR. HOUGHTON: It's a private sector initiative to transmission water from one sector to another and we're providing that right of way, but at the same time, we're participating in the transmission of that through fees.

MR. CHASE: Yes. Just like we could take nobody's electricity or nobody's oil or nobody's gas. That issue just kind of gets misinterpreted and spread around that we are in the business of taking people's water and reselling it.

So yes, absolutely, we'll dive deeper into that, certainly.

There is perhaps no more important issue before us this next session than seeking to capitalize the Rail Relocation and Improvement Fund, and this matter certainly impacts all five goals. We've started initial discussions -- let me put it this way -- with some of the big rail companies and are pushing some ideas back and forth. There's been some active discussion about some of the ideas that were originally put forth by us through a study that an engineering firm did.

Our rail partners are digesting those and seeing what works for them and what doesn't, and then we're kind of re-igniting the discussion of why the legislature created the Rail Relocation Fund and the voters overwhelmingly approved it. BNSF in particular has really done a lot of outreach to understand that better and see how they can make that work.

MR. WILLIAMSON: My understanding, also, is that Kansas City Southern is most aggressive in trying to seek funding for the rail relocation.

MR. CHASE: Yes. I personally haven't met with them yet, but yes, you're exactly right, Mr. Chairman.

And enhancing safety on our highways is, of course, tantamount to all other goals you have established for the agency. Authorizing a system of sobriety checkpoints is proven to lower the incidences of drunk driving. It should be established in Texas as well.

Like I said, this is a very short version of my usual comments, that's not ever single issue that we're pursuing. Like I said, we hope to get some active participation from the 1,800 or 1,900 letters we sent out this week and last.

I want to end on one thing, unless there are any questions. Posted yesterday on our website is our new Strategic Plan -- this is a poorly printed version of it -- and the printed copies will be available tomorrow and they will go out to everywhere, all the districts, everyone else. This was the Strategic Plan that you approved at the El Paso meeting, and it will be hot off the presses, but right now it is on our website.

MR. WILLIAMSON: Complete with goals, strategies, tactics, time lines, environmental solutions?

MR. CHASE: Yes, sir.

MR. WILLIAMSON: External factors, a real plan?

MR. CHASE: Some maps, some pretty pictures.

MR. WILLIAMSON: As opposed to the word plan.

MR. CHASE: Absolutely.

MR. WILLIAMSON: Members, other questions or comments directed to Mr. Chase?

MR. HOUGHTON: Good job.

MR. CHASE: Thank you so much.

MR. WILLIAMSON: Coby, we don't want anybody to be surprised, no one needs to be able to say we didn't warn them or we didn't tell them, we didn't disclose where we thought we should be.

For purposes of scheduling for the audience, I want to make you aware of what's fixing to happen. We're going to take up items -- unless Mr. Behrens objects -- we're going to take up items 2(b), 7(b) and 7(a), and we don't want to run anybody off, but it's going to take a little longer than the time we've taken to snap through the administrative items we've just moved through. And in conjunction with taking those items up, I need to read into the record the following statement which is very important for the commission and the agency. If you'll bear with me.

The public involvement phase for the Tier One Draft Environmental Impact Statement for the Oklahoma to Mexico element of the proposed Trans-Texas Corridor project, or TTC-35, ended on August 21. The report and the discussion which will follow this statement are all intended as a means to inform the commission of the nature of the oral comments received during the public hearings, not only in the Dallas-Fort Worth area but in the state. Any comments received from the public today will not be made a part of the record for the Draft Environmental Impact Statement.

The commission will not be acting on this item. Any opinions espoused by a commissioner today are the commissioner's individual opinion and will not be a part of the record for the Draft Environmental Impact Statement. Commissioners, no doubt, will make statements during the day but they will be only and solely their individual opinion, not intended to influence the decision by the Federal Highway Administration.

Having said that, Michael, I would like to take up item 2(b), please.

MR. BEHRENS: Okay. Item 2(b) is another discussion item, and the purpose of this one is to inform the commission of the status of identifying the next generation of comprehensive development agreements for toll road projects in Texas. Amadeo will lead that discussion.

MR. SAENZ: Good morning, commissioners. Again for the record, Amadeo Saenz, assistant executive director for Engineering Operations.

Agenda item 2(b) is a discussion item where we provide you some information as to what we are doing in the area of developing and looking into potential future CDA projects across the state.

We have put in place a procedure and a main goal of our procedure is we basically look at accelerating projects to improve mobility. We want to take these projects and we analyze these projects under some different criteria, the criteria being: readiness, qualitative risk, mobility needs that the project addresses, and also the financial feasibility of that individual project. We take these projects that we have identified across the state that come from metropolitan mobility plans and projects that also our districts submit, and we run them through these criteria and try to identify if these projects are good potential CDA projects, and then when these projects would be ready to move forward. We want to develop a priority project pool so that we can direct our resources more effectively.

MR. WILLIAMSON: Amadeo, we all know what some of those things mean, but I want to be sure that the audience understands. What do you mean, at an executive level, when you say readiness?

MR. SAENZ: Let me jump to that.

MR. WILLIAMSON: Well, if you're going to explain it later on, don't.

MR. SAENZ: It's part of my presentation.

MR. WILLIAMSON: Then continue.

MR. SAENZ: Projects will be screened for suitability as potential concession CDAs or what type of CDA we will try to move forward with. The screening exercise is a work in progress. As we gather more information on the project, as we drill down and get more detailed information with respect to financial traffic and revenue studies, engineering costs, and such and so forth, we're able to refine and determine which way the project goes.

The project pool to be screened will evolve over time and new projects will continue to be added to this project pool, and of course, these projects include those projects that can be developed by TxDOT or projects that can be developed by others such as regional mobility authority or the NTTA or HCTRA, depending on where that project is located.

The first of the screening criteria we call readiness, and the readiness basically means it's an estimate of the earliest time a procurement could begin either for the entire project or for a portion of the project. The primary drivers that we look at for the readiness criteria is we look at: how long is it going to take us to have environmental clearance; what additional traffic and revenue studies do we need to do; what additional engineering studies do we need to do; and then what kind of regional support is there for the project.

What we're trying to do here is we're trying to look at this project, we're trying to run the environmental process and the environmental time line with the potential for when we would need to start the CDA procurement process with the goal being that we want to have the project environmentally cleared and also the project go through the six-month potential appeal process before we execute the CDA, the goal being that once the project goes through the environmental appeal process and we bring onboard a CDA developer, there is no more delay and basically the CDA developer can move on that project. It's important to have those coordinated.

The area of risk assessment, the qualitative risk assessment. Basically we look at the system interface, we see how is this project integrated with other existing and planned projects and infrastructure that's being developed in the area. What is the level of design that has been done on this project; what is the level of planning that has been done on this project; have all the geotechnical studies been done; have all hazardous materials; what is the project schedule.

We look at the operation and maintenance cost of the project, how are those going to be handled. We look at the traffic demand on the project. We look at the acceptability, does this project have the local support. You notice it was also in our readiness category. Does this project have the local support; is it in a plan of the particular metropolitan area. We look at what approvals and what scheduling needs to happen so that we can determine the risks this project has with respect to its development.

We look at what mobility this project addresses. Is it a critical mobility need that has been identified for an immediate congestion issue to resolve; has it been identified as a regional priority; is it a near-term project, something that needs to be done early, or is it something that maybe can be done in the long term. Does it meet the anticipated needs for a near-term facility when it's expected to open, what is this going to do from a mobility need when it's open.

And the final criteria that we look at, and it is very, very important, is that we do a financial analysis because what we want to do here under the financial analysis, we want to assure that this project, if it's been identified, that there are resources enough, if we move it through the CDA process, and if the process, for example, is a revenue-negative process that requires toll equity, that there are necessary funds allocated through the planning process that will cover that toll equity requirement so that the project can then proceed with the private equity and the toll equity complementing each other and be developed. If the project is a revenue-positive project, then we don't have to worry about trying to find other resources to make up that delta.

We look at the analysis to determine what the project will do, how much money will it bring, if it's going to bring some, or how much money will it need, and that will be a factor in determining how fast this project can move forward. If the project needs money, for example, and the locals have not addressed any resources to this project, then it may not be as high of a priority for them, this project may have to sit and wait.

We determine the net present value, and what we're trying to do is determine how much money do we need either in toll equity or how much concession fee could this project bring and what else will this address by bringing in a concession fee.

What we've done so far is we've identified some projects that are currently under development and they've come before you all, and these projects are being developed by other parties. I'll go over that list in a minute. We've also gone through and evaluated quite a few projects and we've identified some projects that are ready to begin procurement within the next two years. That means with respect to the readiness criteria, they're ready to go, they're moving forward, they're low to medium risk projects, these projects are critical or they meet near-term mobility needs, and they can result in an expected concession fee or they have the required toll equity already assigned to them that will allow these projects to move forward.

The second list of projects are projects that are a little bit further down the road, they're more than two years away from being ready for a CDA procurement because either the environmental is not ready or we do not have enough information to move those projects forward to determine exactly where they fit in the analysis. As I mentioned, this is an ongoing process, and as we drill down into the project and we get more data, we're able to do a much better evaluation.

Looking at the projects that are currently being worked by others, of course here in Austin the Central Texas Regional Mobility Authority has taken the lead and is working on 290 here east of town from 130 back to 183, and they're moving forward with a CDA, a design-build type CDA, and it's well underway.

In the Dallas-Fort Worth area, pending your approval of the protocol minute order that we have under another agenda item, agenda item 7(b), then in that case the 190 eastern extension of the President George Bush Toll Road, as well as the Lake Lewisville Bridge and the 121 Southwest Parkway in Tarrant County, those projects will be developed by NTTA under the terms of that protocol.

And of course, in the San Antonio area we've worked with the Alamo RMA and they're working on the development of the Wurzbach Parkway, State Highway 16, and the I-35 Northeast project.

The projects that we've identified as priorities, these projects are ready for development within the next two years. They may be ranked using the following criteria: they're already ranked for readiness, they focus on what project is ready for procurement first; they're ranked by financial, they focus on the project that generates concession or has the required toll equity; and then they also are ranked based on where these projects fall with respect to mobility, focusing on is this a critical project, is it a near-term or a long-term project.

This table here shows what projects we've identified as projects that are ready to move forward. For example, when we look at an extension of the 121 project that I spoke of earlier, it's ready for development now because we should have environmental clearance by early next year. When we ran the financial feasibility, that project is a concession project, it brings in enough revenue for a concession fee. It's a near-term project, and of course, it may be done through NTTA or it may be done through the CDA process, depending on the protocol.

We have other projects that we've identified in the different areas of the state, and these projects are kind of what I would say are projects that we're ready to move forward.

MR. HOUGHTON: Amadeo, I counted nine projects in the Dallas-Fort Worth Metroplex, if I know how to count, and five or so in the Greater Houston Area, a significant amount of projects.

MR. SAENZ: Yes, sir. We've been working closely with the Dallas District, the Fort Worth District, the RTC. As they've identified their plan, they've really taken the lead and are moving forward with putting together their comprehensive plan that includes both tax roads and toll roads, and these are some of the projects that are moving forward. We're now running them through the analysis, and our next steps with respect to these projects -- which I'll cover in a few seconds -- is going back to them and identifying and moving those projects forward to see what impact it has on the transportation system that they're trying to develop.

MR. WILLIAMSON: Later on in the morning -- in fact, I would suspect rather shortly -- we're going to have a public discussion on the RTC's proposal to expand the study area for TTC-35 in the northern part of the state. Which projects on this list that we're looking might reasonably be thought of as portions of the final product potentially or as connectors or supporting arterials to the RTC's view of the north end?

MR. SAENZ: Right now I don't have a project on this list here, I have it in the next list of projects. These are projects that I call future projects. And the reason I go back and say that, these projects are basically screened and ranked based on the readiness criteria. These are projects where the environmental process has moved forward, and we've got under readiness environmental clearance within two years.

The project that I'll talk about in a few minutes, Commissioner, to answer that, if you bear with me, will be a project that we call Loop 9 that's being developed in the Dallas-Fort Worth area. And that project is in various stages, it's a long project, it's a 200-mile loop project. Part of the project is under environmental work right now, some of it is just beginning, some of it is still in the planning phase. So because it's not really completely ready, we don't have, but we will be looking at that and collecting more data and seeing how we can evaluate the readiness criteria, the financial assessment criteria, and the mobility need I think we've already identified -- they have it in their plan and they need and they've identified it as a priority. But we can see how we can make that project move forward.

MR. WILLIAMSON: So it falls in the second group you're talking about?

MR. SAENZ: It will fall in the second group that we'll be talking about.

There's some projects, Commissioner Houghton, you mentioned about Houston, if you recall, last month in El Paso we asked you to pass a minute order to allow us to move forward with some of the projects in Houston that we felt are ready for development to go through the CDA process, and if you notice, these projects fall under this priority list. We have been working on those projects, collecting the necessary information and running the analysis, and those projects are ready to move forward through a CDA process.

What's the next step for these priority projects? The next step these priority projects is basically we're going to continue requiring environmental approvals because, if you notice, there were some that we still needed a little bit more information. We're doing the environmental process. Some of them need to be done over the next two years, we need to get that done. We're going to continue the discussions with the regional stakeholders. We're going to go back and visit with the people in Dallas and Fort Worth, the RTC, go back to Houston, visit with HCTRA and visit with the Houston District, go down to Pharr and visit with the MPOs and the RMAs in Cameron County and in Hidalgo County, and kind of put in place a mechanism on how these projects will move forward.

Who is going to take the lead and develop the CDA and what model brings the most resources back to the region is what we're going to try to do. Try to resolve those issues so that then we then assign someone to be the champion and take the lead on that project.

We're going to identify a project team to continue working on these projects. We're going to discuss project-specific policies; what approach to tolling, what are the toll rates going to be, we're going to be looking at toll rates and toll rate regulation; what is the business terms that we want to apply to this project from our programmatic terms; and then are there any unique circumstances on these projects that need to be addressed a little different than the normal way we've been doing CDAs.

At that point that gives us the opportunity to move forward putting out a request for qualifications and the other project documents to move the project forward through the CDA process. At the same time, the environmental process continues in parallel with the idea that both of these processes come together by the time that we receive the final proposals.

MR. HOUGHTON: Amadeo, this then begs the question. We've, in the past, looked at a CDA project in general as Point A to Point B. If there's value in the real estate in that piece of property, that then begs the concession, get the value out, spread it to the region. My understanding is -- you and I have talked about it -- instead of just looking at Point A to Point B, bring your intellectual capital, private sector, and tell me what else you can do in the greater region, whether it's connectivity to maximize the transportation assets. Is that something else?

MR. SAENZ: That's something that we're looking at. In fact, we are setting up some one-on-one meetings with potential developers to put in place exactly that mechanism where we identify a project but we want to be able to give them the flexibility. They proposed that project, but add to that project and make that project a much better project using your intellectual property, your ideas, your innovations, and what do you bring to that project. And the way we'll evaluate is we'll evaluate on the base proposal but also what else you bring and how fast you can bring it.

At the end of next month, September, we're scheduling some one-on-one meetings to go over that. Some of the push-back that we're getting from what we hear on some of the developers has to do with environmental risk, and it says I can't commit to bringing you the next project unless I already know that it's environmentally cleared, because how do I do that. We're going to try to get past that and find out how we do that.

Well, one way you do that is if the project is already in the plan, it's been modeled by the region, if it's in a non-attainment area, it's been modeled in their conformity plan, and if environmental has been done or is underway, there is a manner that that risk can be managed so that the developers will bring those projects.

So it's another opportunity that you can compare where they can bring additional elements to the project that will make not only this project better but also put in place improvements to the transportation system instead of just bringing cash.

MR. HOUGHTON: And are we going to involve our partners like RTC and Alamo RMA and others as to our thinking about the vast intellectual capital that some of these --

MR. SAENZ: Right. The first meetings, I'm trying to get the feedback from the developer side, and then as I get the feedback to address our concerns, then I want to bring in our partners, like the MPOs and the RMAs and the NTTA, to try to see how we can come up with a mechanism to solve those problems.

MR. WILLIAMSON: What I hear him saying is he's kind of asking for at least a nodding assent from us -- this isn't a minute order, we're not voting on it -- to proceed with -- and don't let me put words in your mouth, let me be sure I understand it -- your objective is to be sure that you've got the most amount of information about these projects that you can then share with the MPO and local governments so to sort of put you in a position of saying: Here's a project, we think the concession investment in your region will be X, if you choose that route; if you don't choose that route, that's your business, but we want you to know fully what the possibilities are with this project because we think that somebody ought to be moving forward with it, whether it's us or you or someone else.

MR. SAENZ: That's exactly our goal. We're trying to identify what is the highest potential for this project. We'll meet with the MPOs and say: Look, you have these projects that are in your region that you've identified; if we use this model, it will bring you this, if we use this model, it will bring you that, and we can weigh the differences.

If we develop a project, for example, that they've identified and it's a high priority project and we're willing to fund this project all with our local allocation, if we can bring this project as a toll project and free up some of their allocation, the different models that we can use or the different schemes that we can use in putting this project together with maybe intellectual properties or additional projects will maybe allow them to not only free up that money but bring in additional money or projects to the table.

So we want to get as much information as we can to see how we can improve, and our goal is to, in essence, build a transportation system in an area and help them as much as we can.

MR. WILLIAMSON: That's our objective. Our goal is to reduce congestion.

MR. SAENZ: Yes, sir.

MS. ANDRADE: I have a question, Amadeo. And I'm glad when I hear that we're going out to communities and talking about this, but I just want to make sure -- and you and I have had these discussions before -- that we give the respect to the RMAs that are set up already in making sure that they understand what we're doing in their particular communities, but also, as I understand correctly, they also have a choice of taking this project on.

MR. SAENZ: Yes, ma'am, that's exactly right.

MS. ANDRADE: But they need to know that the way we see it is it's a very CDA-appropriate project.

MR. SAENZ: We're trying to give them as much information so that they can make the best decision that is possible.

MS. ANDRADE: For their community.

MR. SAENZ: Yes, ma'am.

MS. ANDRADE: But I do want to make sure that we give them the respect that they're owed, that they are the mobility authority.

MR. SAENZ: We want to treat them as partners. We see that an RMA, in essence, can do everything that we can do, they have the same authority with respect to CDAs. What we have is we have the manpower and the resources already here and we have the data that we can evaluate the project. We want to share that with them to show them the potential those projects have.

MS. ANDRADE: And then they can choose.

MR. SAENZ: And then they can choose.

MS. ANDRADE: Okay, thank you.

MR. WILLIAMSON: What does the second list look like?

MR. SAENZ: Before we go to that second list, one of the things that we woke up this morning, we had an $86 billion problem, we go to bed tonight, we still have an $86 billion problem, we're not selecting any projects today. So what I did is I looked at the projects that we approved --

MR. WILLIAMSON: But when we open State Highway 130, Segments 1 through 4, we're only going to have an $82 billion problem.

MR. SAENZ: Right.

MR. WILLIAMSON: Well, it's important for people to understand. We've got a plan, we can close the gap. Closing that gap requires that we do certain things.

MR. SAENZ: Right.

MR. WILLIAMSON: Not just talk but do certain things.

MR. SAENZ: This list is the same list I had a little while ago but I've highlighted in yellow the projects that we had identified last month in Houston, and I also highlighted the 121 project in Tarrant and Johnson counties. And those projects, if you look under the financial assessment, they show that they bring in a concession fee.

So the areas have already identified in their area what their funding gap is, so if I look at Houston, HGAC has identified a mobility funding gap of $13.1 billion. These projects from the list before are projects that bring in a concession fee. The projects cost almost $3.4 billion to construct. They also will bring in a concession fee, or if it's in parentheses, they require a little bit of toll equity but since it was so close to zero, I left it as I'm showing it. These six projects will bring in $950 million additional concession fee. So when I look at Houston's gap, that $13.1 billion is reduced by the cost of the project. The project can be built by the private developer without any tax dollars, and it also could pay up to $950 million in a concession fee. So in essence, we lower the gap by $4.3 billion in Houston just with these projects.

MR. WILLIAMSON: And our gap doesn't include a value for the time Houston drivers would save if these projects were built. That's a question I'm asking you: that $4.3- doesn't include any value for that.

MR. SAENZ: No.

MR. WILLIAMSON: That $4.3- doesn't include any increase in the property tax rolls for those areas served by the new transportation infrastructure. That value doesn't assume any additional sales tax collection for businesses that expand or move into the area because of that. And does that include any value for the cleaner air that occurs because congestion is reduced?

MR. SAENZ: These projects will result in cleaner air.

MR. WILLIAMSON: But is there any value in that $4.3 billion?

MR. SAENZ: That's not included in the $4.3-, that's above and beyond.

MR. WILLIAMSON: That's just cash.

MR. SAENZ: This is just cash, this is just cash to build the project and cash to build other projects.

These numbers are still early numbers. As I mentioned, as we get more into the project and we're able to get higher level traffic and revenue studies and are able to refine the design, we're able to adjust those. These are also based on a 40-year -- I have to say that because that's what my staff told me -- they're only based on a 40-year concession, not the normal 50 or more, and they're set on certain interest rates.

So these, we think, are some preliminary numbers that we can use in the planning phase to make some decisions on this project and also to plan what other projects can be brought in, and as we go down, we feel these numbers will probably go up.

Next project that I have, a real simple example, I did the same thing for Fort Worth, and I just took this 121 project that is south of the project that we were talking about earlier. And that project, Maribel, costs about $250 million, am I correct? About $250 million. And when we ran up the numbers, this project, because it's such a low cost, can bring in additional concession fee of up to $635 million.

So just this one project now can be built with no tax dollars and we've got another $635 million to invest in other projects. This project we think has a tremendous impact. We're able to lower the gap that the Fort Worth District identified of $7.5 billion by almost a billion dollars. This is what some of these CDA projects can do for the area.

Now let's talk about the future projects. Future projects are those projects that because of where they're at in the project development are probably more than two years away from a CDA procurement because maybe the environmental is not there and we haven't carried them that far. And of course, we have a list of projects, and Mr. Chairman, you asked me about what project in Dallas-Fort Worth, and this is where we show that Loop 9 project.

MR. WILLIAMSON: Well, I was just curious if any lay in the footprint envisioned by the transportation leadership in North Texas.

MR. SAENZ: This project here is the project that the RTC has identified in their long-range transportation plan as their Loop 9 project.

MR. WILLIAMSON: So it doesn't just lay in it, it is the footprint.

MR. SAENZ: It is the footprint.

MR. WILLIAMSON: That they would envision. 

MR. SAENZ: Yes.

MR. WILLIAMSON: So would it rationally be called a connector or the actual footprint?

MR. SAENZ: It could be a connector or it could be the footprint. We don't know what it will be until the environmental process goes through its full course, and that won't happen until we get through Tier Two.

But the project could be developed as a stand-alone project and it could be developed as a connector project to the TTC corridor.

These projects, like I said, are projects in Houston, a couple of projects in Houston, the Bolivar bridge that replaces the ferry system. Hidalgo County, we're looking at a couple of loops in Hidalgo County that we'll be working with the Pharr District and also with the Hidalgo County RMA. Of course, we have the second causeway on South Padre Island that we're looking at, also with the Pharr District, and that would be a Cameron County RMA project that we would be working with.

These projects are more than two years away. They need a long-term need that's been identified. We don't have enough financial information yet to be able to make a full detail. As we gather more information, these projects could jump into the priority projects as we move forward and we also move the environmental forward. So these projects would be the ones that are ready to jump into the priority projects, you might say.

These are also some future projects that really we're working on this thing. As I mentioned, we're working on a lot of projects, over 40 projects that we're working on. We don't have enough information to really fully assess these so they're a little bit further behind. Based on our preliminary evaluation, these projects look like they have good potential, that they can have good potential to develop these projects.

Some of the projects that we show here, for example, we show some of the projects that we're working with San Antonio on Wurzbach, the projects on Interstate 10, both on the west side and the east side of San Antonio.

MR. WILLIAMSON: With a great deal of respect, Amadeo, we're at the time mark I need to stay with to make it through the day.

MR. SAENZ: I've got about one page or two pages and we'll finish this item.

MR. WILLIAMSON: If you could shorten it up, please.

MR. SAENZ: Yes, sir.

And this is the last list of projects. These are projects that were just brought in and we've just started our investigation, and as we move forward, we will provide you all updates of where we're at.

As I mentioned, we're looking at over 40 projects. The projects are at various stages of preliminary screening. We're assessing the readiness and looking at all the different criteria, then we'll characterize the projects for further analysis. We're going to continue to do T&R work for the priority projects. We'll be visiting with the MPOs, RMAs, NTTA, et cetera, and we'll be identifying how we move the project.

In essence, this is what we're setting up because we wanted to identify a program that will help our partners plan those projects and do better planning and get those plans into their long-range plan. It will help us in that we can allocate our resources. It will also help the private industry in that they can see kind of what projects we are looking at out there and what potential projects could be coming down the pipe.

That is a brief discussion on where we're at and what we're doing in the CDA process to kind of keep our program going. I'll be happy to answer any questions.

MR. WILLIAMSON: Members, I think what Amadeo wishes is to at least observe as to whether any of us object to this path of activity on the part of the staff, and I would like to reserve, if you don't mind, giving him any indication of that until we work through 7(b) and 7(a) so that we can fully understand the impact of what he's working on.

MR. HOUGHTON: Reserve comments.

MR. WILLIAMSON: That being the case, Mike, I would like to move to 7(b) and I would ask Mr. Morris if he has his team ready. Let's do something new in the world of transportation, Michael.

In order for the audience to be fully informed, we're going to try this and we're most comfortable trying it with our partners from North Texas because we've had the most interplay with North Texas over the last year in matters of regional agreement and disagreement. And if this works, this may well set the pattern for a lot of things that we do in the future, and that is on certain discussion items and in the resolution of certain differing positions that might reflect a legitimate state's interest, a legitimate region's interest, and a legitimate local interest, we're going to just start sitting down and talking during our commission meetings and air out our views and our opinions about different things in a way that maybe can bring us to resolution faster.

If this fails, it's my fault; if it succeeds, it succeeds to the credit of a governor who has a vision about transportation that he intends to deliver during his time in office.

Amadeo.

MR. SAENZ: Thank you, Mr. Chairman, commission members, distinguished guests. Amadeo Saenz, assistant executive director.

Item 7(b) is an action item. The minute order approves a protocol that has been negotiated between the NTTA and the Texas Department of Transportation for the development of projects in the Dallas-Fort Worth area. What I've done, I've prepared a power point because I think that we need to maybe fully hash this thing out.

The department has the Strategic Plan, as Coby talked about earlier. It's based on five goals and four strategies. Our goals are to: reduce congestion, enhance safety, expand economic opportunity, improve air quality, increase the value of our transportation assets. And the strategies that we'll use to meet those goals or to accomplish those goals is: we're going to use all the financial tools that are available to us that we've been given by the legislature; we're going to empower local and regional leaders to be able to go out there and identify and solve your problems; we're going to make sure that whatever we do we always include competition to ensure that we get the best value for the project; and we want to demand consumer-driven decisions be made as we develop those projects.

MR. WILLIAMSON: Let me interrupt you, Amadeo. I know that particularly our guests here at the table who know us so well hear us talk about our plan over and over, but not everyone who watches what we do gets a chance to see it. And it's just real important to the commissioners to emphasize all of us have experience at some levels of government and we know that a lot of people in the world of government use words without really understanding what those words mean or really serious about the words they use.

When we talk about having a plan, it's very important to us that you understand that we really have a plan. Now, it may not be the best plan, somebody might have a better plan; we might not have the best strategies, there might be better strategies; somebody else, Grady Smith might have a better tactic that needs to be executed than what we choose. But we do have a plan to solve the $86 billion problem this state faces, and this department is completely committed to the implementation of that plan in order to solve our problem. We are really serious. We're not doing anything around here if it doesn't reduce congestion and we're real serious about surrendering authority to local and regional government, we're not afraid of that.

I saw a PBS show about George Washington a few weeks ago up in the North Texas area -- I don't know who else in North Texas watches PBS besides me -- but it was real interesting to watch the portrayal of our first president in a context that I never thought about. In his times he was the first political military leader to lead an army to victory and then turn over the power of the purse to someone else. That had never occurred in the history of the world until President Washington did that. He led the military to a victory, had the entirety of the United States in his hands, and gave it to someone else and went home.

And that's an instructive lesson for the Department of Transportation. Rick Perry believes in local and regional government and we don't have any hesitation to hand that power to you.

Go ahead, Amadeo.

MR. SAENZ: As I mentioned, the purpose of the minute order is the minute order approves the protocol agreement with NTTA that implements basically a procedure to allocate and speed delivery of transportation projects in the region.

I guess if you look at it, the old relationship that existed between us and NTTA, as projects have been developed in the past -- and I'll use the example of the President George Bush Turnpike -- is that the taxpayers of the state provided NTTA with about $834 million in gas tax receipts to develop the George Bush Turnpike. NTTA then went and got the toll payers that use that facility, financed the additional $850 million so that they could build this project. With that, they were able to set the toll rates at 10 cents a mile. These toll rates would have been at least 15 cents per mile if the $834 million had not been provided and if we depended solely on the toll payers to pay for that asset.

The 15 cents a mile is pretty close to what the RTC has done in the last few months in identifying, under their CDA business terms, the toll rate that they want to use, so it's pretty comparable to what that is.

MR. WILLIAMSON: Let's let us stop and talk about that for a moment. One of the things that's come up in the last few months as a point of, Jack, sometimes some contention between us is this business of the toll rate. And this is our opportunity as commissioners and as staff to explain, we completely understood all along this transaction and didn't object to it. I mean, this is what the leaders at the time decided to do and no one faults anyone for that.

I think our view is our Strategic Plan requires us to begin to be as honest as we can with the taxpayers of the state and say it doesn't matter if we go to the market and borrow the money and build the road, it doesn't matter if you borrow the money and build the road, and it really doesn't matter if Cintra borrows the money and builds the road, the toll rate is going to be somewhere around 14-1/2 to 15 cents if you're going to finance 100 percent of the asset.

The problem this state has faced is we've been financing 180 percent of our assets on the backs of our children. By using a gasoline tax that only yields about 20 percent of the true cost of an asset, we are, in effect, shoving off to the next generation the inevitable cost of building new roads and maintaining the roads we've got built.

So I think this is our opportunity to say to you we maybe regret the hard feelings between us but our view all along was it's just a cash flow deal. We just have to all recognize what the true cash flow ability of these assets are and if the cash flow comes from gasoline tax, well, that's okay, if it comes from tolls, that's okay, but somebody has got to recognize that building assets is a matter of cash flow.

MR. HOUGHTON: And the other part, Mr. Chairman, is there's value in the real estate that's been purchased by the State of Texas that needs to be realized and monetized for the greater region, we just can't leave the value in the ground. And that's some of the things, Michael, you and I have talked about, getting that sunk value out and spreading it to the region.

MR. WHITLEY: Well, I think as we go forward, also, we've had a lot of discussion on the RTC with regards to this toll rate and I think there's a lot of fair about someone can just be able to take the tolls where they want to take them. I think ultimately, when you're looking at the tolls, the reason someone is willing to pay a toll is because they can get on that road and reliably go from Point A to Point B at what they think will be an appropriate speed.

So if we set the tolls too low and we end up with congestion on the toll road, then we've really not accomplished that purpose, and I think that's what the RTC has said. We've got a mold that we're starting with and we've set how we think we would like to increase those but I think ultimately we've got to look at what's going on in the corridor.

MR. MORRIS: Commissioner, would you read your name into the record, and then when we speak the first time, we need to say our names.

MR. WHITLEY: I'm Glen Whitley, Tarrant County commissioner and member of the Regional Transportation Council.

MR. SAENZ: To make it easy, when they do speak just repeat their name, that way the court reporter can pick up who's talking.

MR. MORRIS: Michael Morris. Let me add, Mr. Chairman and Mr. Houghton, to this particular question. During this particular discussion, I think there's two phases to this. The Regional Transportation Council, because of a broader view of responsibility of creating a financially constrained plan, there was a lot of pressure put on the Regional Transportation Council to have a similar view, probably as this commission would, to try to get as large a rate as possible and still not alienate the customer as part of that particular process.

The role of a transportation authority, say the North Texas Tollway Authority, doesn't necessarily have that same view because they don't have the same responsibility. So we can't be critical of a transportation authority, or frankly, an RMA that would set the rate at a different rate because their goals and objectives are completely different.

The next hurdle we're facing is between now and 2012 our region proposes to go to time-of-day pricing, and we will lower the off-peak period and we will raise the peak period. Why? Because our officials on this side of the table have an added responsibility, more so than even you, not just the financials of the system but the air quality obligations of air quality conformity. So we will have to do before and after studies to see what people's behaviors will be, but we have to reduce single occupant vehicle traffic if we're going to sustain ourselves in that non-attainment situation.

So if you increase the price during the peak period, you encourage car-pooling or transit usage, or discretionary trips to the off-peak period. We just need to do the before and after studies to be able to understand that particular behavior. If your goal is to reduce congestion, you should be charging higher in the peak period than in the off-peak period. It's an old school notion. Private sector doesn't use it, you know, if you want to use your cell phone during the peak.

I tried to get a rental car yesterday. The rental cars were used because there's a lot of things going on right now with conventions and people going back to school, the cost of that rental car was significantly higher than if they had 5,000 rental cars.

So you're going to see even the Regional Transportation Council get into a peak period pricing situation because of their goal towards transit, air quality, reliability and other structures, and I think what's critical, Mr. Chairman, is to communicate our objectives. Amadeo led it with this presentation. We need lots of time to talk to a region of 6 million people when between now and 2012 we introduce a time-of-day pricing situation.

MS. KOOP: I'm Linda Koop and I'm the chairman of the Transportation Committee for the City of Dallas and Dallas City Council member and the secretary of RTC.

I think what Michael is saying is true, and an interesting side light to that is when we did some focus groups and found out that the folks that live in our region didn't think that air quality was a problem, so it is a huge education that we have to be doing right now because we know that we're not going to meet attainment by 2009.

Some of the things that Mr. Whitley had said are very true about raising the price and having time-of-day pricing. We know that we're going to be moving to that, but our region doesn't necessarily know why and they don't understand how this could help their air quality. So I think the two go hand in hand and I think we do have a huge education before us.

MR. WILLIAMSON: Amadeo, have you got some gas tax stuff in your presentation?

MR. SAENZ: Yes, sir.

MS. ANDRADE: I have a comment. I'm Hope Andrade, TxDOT commissioner. The only thing that I would say, Michael, is that it's easier if the public knows that you've got planned toll rate increases than waiting around ten years and then all of a sudden hitting the public with what it has to be current. And then the other thing that I want you to think about is that this is a revenue source that I know, as we look at it, can be applied also for other modes of transportation so it's just hopefully not just for road-building, but as you and I know, Michael, public transportation.

MR. MORRIS: I'm going to talk about that in my presentation.

MS. ANDRADE: Good. And so just keep that in mind that this can be a revenue source for that too. Thank you.

MR. SAENZ: I think Mr. Chairman talked about the revenue and we've been looking at our projects and looking at our roadway, looking at our gas tax that we collect, and we have found that probably there's not a single road -- I haven't found one yet, there might be one -- so far I have not found a single road that generates enough gas tax revenue to pay for its operation and maintenance.

And we do what we call this tax gap analysis, and I've got a couple of examples here, and you've probably seen them before because I've used them in a prior presentation, I didn't want to reinvent the wheel. We look at a particular segment of highway, we have the capability, and over a 40-year period we look at what revenues the people that drive on this road generate in the form of gas tax and a percentage of their vehicle registration fees. We look at the cost of that facility to build it and maintain it for 40 years as well as adding capacity. We take the difference of how much the costs are from the revenues and we determine what we call is a tax gap ratio.

For example, for this project here in Collin County in the city of Frisco, over a 40-year period we can generate almost $41 million in revenue from the gas tax. We look at the cost and it's almost $80 million. So we look at the gap, we're short $39 million. That $39 million comes from somewhere else, it comes from gas tax that's collected elsewhere to help pay for addressing this project.

MR. WILLIAMSON: Or it comes from increasing congestion, decreasing air quality, increasing traffic safety problems, and loss of jobs.

MR. SAENZ: That's correct. When you look at it, the ratio is .51, 51 percent. So this is a good road.

So what would the equivalent gasoline tax have to be, if this road was the only road and that's all we had, what would be the gas tax we would need so that we could break even? That comes out to about 57 cents.

Most of our roads kind of fall under this other category that we see across the state.

MR. WILLIAMSON: This is a great one.

MR. SAENZ: This road here, 2251, also in Collin County, over a 40-year period we only generate $14 million of revenue, the cost is almost $107 million, so the gap is almost $93 million. The ratio is only 13 percent, we only cover 13 percent of the cost with the revenue that the users of this road are paying.

So what would be the equivalent gasoline tax if this road was the only road? Well, it would be $2.80. This is what the gas tax would have to be to cover so that this road could be self-sufficient.

MR. WILLIAMSON: Let's stop and explore that a second, Amadeo. And the reason I want to do this -- I don't see Ben -- one of our transportation reporters that watches us like a hawk is a fellow here in Austin, Ben Weir, who is also trained as an engineer -- a lot of people don't know that -- and he made the observation to me that the $86 billion we talk about, Michael, that, well, isn't that pie in the sky, isn't that what it would cost if everybody got what they wanted. And I said, No, remember the goal, the goal is to reduce congestion, not to be satisfied with what we have now and live with it, but to reduce congestion, improve air quality, improve safety.

I said, One of the problems we face, Ben and Gordon, is that people who write about transportation, frequently it's not interesting enough to write about the financial analysis of transportation, as Glen Whitley, a CPA, would. One of the things, when I was in the legislature, that struck me about the transportation world, being from a CPA family, is that no one ever sat down and said what is the cost and what is the revenue of this asset, no one ever does that, because they kind of think about, well, we're all paying gas taxes and putting it into the pot and there's plenty of money, right; just go down there and get your share.

But if you're really a good business person, if you run a successful barbecue restaurant franchise, if you have to manage a successful engineering firm, you look at your cost and your revenues to see if you're creating wealth or diminishing wealth.

And the truth is in Texas there are three revenue streams to build roads: the state's gas tax, its share of the federal gas tax reimbursed, and motor vehicle registration. We don't get a piece of the increased property value in Dallas County; the state transportation system doesn't get a piece of the sales tax; we don't get a piece of the corporate franchise tax; we have to build and maintain roads on those three revenue streams.

So it's real easy to do the number of cars that drive across your road, do the miles per gallon, do the average age, do the registration fee, and then do an apportionment to see which roads are paying for themselves. And I'm here to tell you there ain't a road in Texas that pays for itself. You can pick any point A to any point B and it doesn't matter, there's not a road in this state that pays for itself. The question is how bad is the subsidy in the out years.

And one of the reasons it's important to this discussion is getting back to the toll rates. You know, if you don't have a toll system that makes sense, you'll be right back in the same situation that we're in right now. You'll be undercharging tolls and subsidizing the future and suffering increasingly poor air quality and congestion.

MR. SAENZ: Moving on a little bit, so the minute item goes back that this is a protocol, this is basically a partnership that we're putting in place and identifying a relationship of how we're going to work from now on. You might say it's a new wave, how we're going to do it the new way.

The protocol basically does four things:

It specifies projects that are going to be procured as CDAs for which NTTA will not be submitting competing proposals or comparatory proposals, they'll be providing services, and I'll discuss that in a little bit.

It also specifies certain projects that NTTA will use their delivery system to bring this project forward, provided that we sit down, and along with the RTC, come up with an acceptable revenue-sharing mechanism for those projects. Again, those are the projects that probably have had toll equity that the RTC has put money, so in essence, you all have a partnership in there that both of you are funding that project so you've got to have a proper revenue-sharing mechanism so that as the project is paid for, then you get your share or a share of that project back, and you're able to use that revenue to do other projects.

It also commits and sets up a procedure of how we're going to work together in identifying and how we get and help each other in developing projects in the future. Who is going to do those early financial studies or preliminary studies, environmental studies? How do we identify and set up procedures so that instead of duplicating efforts, we, in essence, sit down and work together and say, okay, you take the lead on this, these are the parameters that we want you to apply to this project, and then at some point you bring that study back and we'll validate that study and then we all jointly decide which way and what direction to go next, who does the project and how is it going to be done.

And then, of course, the protocol is also put in place because we realize that NTTA is there and they already have a great base in their current toll system, we're going to require our CDAs for the first five years to use NTTA as their back office, providing the back office service, to provide toll collection services, and that includes providing the back office, the clearing house services and customer services that they're doing for their current projects. At the end of that five-year period, the successful developer that has that CDA will then sit down and negotiate a price for them to continue or will bring in their own resources.

The price that we will have will be agreed upon prior to -- will be based on what is normally what we think or what we agree upon as a fair price to provide those services, to make sure that that service does not really force the region to maybe lose some money up front because that service is very high.

MS. DICKEY: You mean the cost per transaction.

MR. SAENZ: The cost per transaction, yes, ma'am, that's correct.

MS. DICKEY: I'm Maureen Dickey, Dallas County commissioner.

MR. SAENZ: We will sit down with NTTA, they will give us a cost per transaction to provide those services, we will agree to that, we will set some standards and some guidelines that have to be followed with respect to how fast you pay each other, how fast you pay back after the transaction, and how do you treat violations, is it different from what you're doing, and this and that. All that will be in place in the CDA, all the developers will have that information and will prepare their proposals based on those terms and conditions, and all parties have to abide by those conditions for five years. At the end of five years then they can sit down and renegotiate and set new standards to move forward.

That has nothing to do with the setting of the toll rate. The setting of the toll rate was already done through the recommendation of RTC and is included in the CDA based on what you all recommended and the commission approved.

The goal of the protocol is basically to establish a partnership between RTC, NTTA and TxDOT to develop projects in the North Central Texas COG area, within the MPO area, and try to do that, and also it's geared to defining roles and responsibilities, and allows the region to utilize all the project delivery methods available, all the tools available to them to put projects out in the field and put projects on the ground -- one of our strategies, we want to use all the tools.

Why do we need to do that? Well, right there in that area right now TxDOT works with two partners, we work with NTTA in developing projects. Right now NTTA is only in the four counties, Collin, Denton, Tarrant and Dallas, but they have the flexibility of expanding to a much wider area, they can expand over an additional ten counties.

Now, some of those counties are not part of the RTC regional area, they're not part of the COG area, I believe. Right, Michael?

MR. MORRIS: That's correct.

MR. SAENZ: Cooke, Grayson an