March 30 Transcript

Texas Department of Transportation Commission Meeting

AUDIENCE: Good morning.

MR. WILLIAMSON: It is 9:06 a.m., and I would like to call the March 2006 meeting of the Texas Transportation Commission to order. It is a pleasure to have each of you here this morning with us.

Please note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of Secretary of State at 4:13 p.m. on March 22, 2006.

Before we begin today's meeting, I would appreciate it if we would all take a moment to grab our pagers, cell phones, Blackberries and all personal electronic devices, please reach into your pocket or purse and put those on the silent or vibrate mode so that we won't be interrupted by an important communication event.

(Pause.)

MR. WILLIAMSON: Thank you very much.

Before I turn to my fellow commissioners for opening comments, I would like to call your attention to the upcoming Texas Transportation Forum which will be here in Austin on June 8 and June 9. This will be the first of an annual event that the department, the Association of General Contractors, and other private sector industry partners will sponsor to offer the opportunity for transportation affiliates of all types to meet, talk and share information about the future of transportation in our state and what's going on in the rest of the country and the world that we might can learn from. Each of you are invited to attend; we would look forward to that.

There are postcards with more information about the forum located out at the registration desk in the lobby. I urge each of you to pick up a card and come attend with us.

Now, as is our custom, we will open with comments from each of the commissioners, and we'll start with Commissioner Houghton. Ted?

MR. HOUGHTON: Good morning, everybody. Welcome. Looking forward to a full agenda, it's going to be a lot of fun today. We had a lot of fun yesterday, Mr. Chairman, announcing a significant rail project.

But good morning. Should I leave it up to you to recognize an old associate? I don't mean old, O-L-D, but old associate.

MR. WILLIAMSON: We'll do that in a moment, yes.

MR. HOUGHTON: All right, very good. Thank you.

MS. ANDRADE: Good morning. I'd also like to welcome everyone to our March meeting, and thank you for caring so much about our transportation needs in the state of Texas.

MR. JOHNSON: Well, I'll echo what my colleagues have said. It's a delight to have you here and it's impressive to see the number of people who have a great interest in transportation matters of this state. We do have quite a varied agenda today which I find to be more the case than the exception. We're extending our area of concern and what we have to deal with over a lot of different areas, and to me, that's a sign of progress.

I think I now see who Commissioner Houghton was referring to, and this is sort of like playing Where is Waldo, but I'm going to leave that up to the Chair to recognize a great friend and a former colleague.

MR. HOUGHTON: Commissioner Johnson, what is the over and under today on the length of this meeting?

MR. JOHNSON: Well, since it's not daylight savings time yet, I'll shoot 2:30 out there and then let you take a side.

MR. HOUGHTON: All right.

(General laughter.)

MR. WILLIAMSON: You guys, I tell you. I echo the comments and associate myself with the comments of my fellow commissioners. Thank you for taking the time out of your life to be with us and help participate in the forming of transportation policy in this state.

Before I go any further, I need to call your attention to our registration system for testifying or offering comments to the commission. We have two postcards out at the registration table in the lobby -- that's the same table that our Transportation Forum cards are located on. If you're going to testify on an agenda item, I need for you to fill out the yellow card and tell us which item you intend to testify on. If you're going to testify in the general comment period at the end of the meeting, I need for you to fill out a blue card, and again indicate which item you wish to speak on.

In any event, because our meetings are long and we do want to hear from everyone, those who agree with us and those who don't, we would appreciate if you try to limit your remarks to three minutes.

I want to start the meeting this morning by welcoming a group that is visiting with us specially, but I don't want to recognize just yet the transportation fellow associated with this group. Would the Jacksonville Leadership Group stand up, please?

Now, Jacksonville, the last time I heard, that's over on the western side of Louisiana, or is that the eastern side of Texas? I can't ever remember.

(General laughter.)

MR. WILLIAMSON: Jacksonville is an upper East Texas community that is -- is Gretchen Wilson from Jacksonville, the country-western singer? Lee Ann Womack. Anyway, the home of Lee Ann Womack and the home of what will soon become one of the finest transportation senators the State of Texas has ever been served by, Robert Lee Nichols. And Robert, would you stand up? Robert Nichols, former commissioner.

(Applause.)

MR. WILLIAMSON: And if we're real lucky, he'll tell us a few jokes here in a minute and it will seem like old home day.

We do have an important meeting today. To launch the meeting -- I'm catching Amadeo by surprise, I hope he can answer my question -- to launch the meeting, I'd like Mr. Saenz to come to the microphone, I want to ask you a couple of questions. And if you need to help him, Mr. Behrens, that's okay.

In either fiscal or calendar year -- I don't care which, whichever one you feel comfortable answering in -- 2000, about how much money did the state and it's regional and local partners, as far as we know, spend on constructing new capacity on the state highway system? An approximation is good.

MR. SAENZ: 2000 new capacity, probably we were spending, I was thinking, like $300 million, $400 million.

MR. WILLIAMSON: Three to $400 million on new capacity. And new capacity reduces congestion enhances safety, improves air quality, extends economic opportunity to all of our citizens, and prevents us from driving on potholes. Correct?

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: In either fiscal or calendar year 2007, what will we likely be spending on new capacity in the state?

MR. SAENZ: I think in 2007 we will be spending between $800,000 and a billion dollars, because we're using the new tools.

MR. WILLIAMSON: $800,000 or $800 million?

MR. SAENZ: $800 million. I'm sorry.

MR. WILLIAMSON: Between $800 million and a billion on new capacity.

MR. SAENZ: I've given you a wide range.

(General laughter.)

MR. WILLIAMSON: And was that the case in '05 and '06 and will that be the case in '08 and '09, as far as we can tell?

MR. SAENZ: In '05 and '06 we've been able to accelerate our mobility projects through the use of the new tools, the Mobility Fund as well as the Proposition 14 bonding authority where we can bond our gasoline tax fund, and of course, some of it is new money. We're using up the new money. We're going to run out of the Mobility Fund, and of course then we can't use Mobility Fund because the money that's coming into the Mobility Fund will pay the debt.

So we've in essence kind of created a bubble between '05 and '08. In '09 we'll be able to accelerate the program, but after '08 and '09, we're going to go back to really less than what we were letting in the 2000 and 2001 and 2002.

MR. WILLIAMSON: Unless, of course, the Texas metropolitan mobility plans that we invested in in the past four years kick in and projects like 36 and 288 and 121 across the state are on their way, in which case we'll go past that $800- to a billion dollars.

MR. SAENZ: Yes, then we will do more than that.

MR. WILLIAMSON: Thank you. Mr. Chase?

MR. HOUGHTON: Mr. Chairman, may I ask a follow-up question to Amadeo? Does that include what the RMAs are doing in the state?

MR. SAENZ: No, sir.

MR. HOUGHTON: Let's say if you take CTRMA.

MR. SAENZ: CTRMA, their project, I didn't include that in our numbers because the CTRMA project 183 is not an on-system project, that's separate and apart.

MR. HOUGHTON: But when you talk about total mobility in Texas, you could add those, layer those on top.

MR. SAENZ: Yes, sir, you could add those. And again, they're utilizing the new tools that we have been given.

MR. HOUGHTON: Right, the legislation that was passed.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: I would apologize for catching you off guard, but after five years, you should be prepared for these things.

Mr. Chase, we'll see if you're prepared.

MR. WILLIAMSON: Now, I just took Mr. Saenz through a quick discussion about the difference in 2000 and 2006 on the amount of money we were helping supervise across the state in new capacity. Is it the case that we are at the end of building our Strategic Plan for transportation in the state?

MR. CHASE: I apologize.

MR. WILLIAMSON: Is it the case that we are near the end of building our Strategic Plan for the next few years for transportation in the state?

MR. CHASE: The staff is dangerously close to being finished with it.

MR. WILLIAMSON: And does the Strategic Plan match our legislative appropriations, legislative agenda as much as possible, our operational plan, the UTP?

MR. CHASE: Absolutely, and we're working closely with the Finance Division to match it up.

MR. WILLIAMSON: And what are the goals that that Strategic Plan will be focused on?

MR. CHASE: Reduce congestion, enhance safety, economic opportunity, clean air, and increasing the value of our transportation assets.

MR. WILLIAMSON: And what strategies have we adopted to support those goals?

MR. CHASE: We have adopted --

MR. WILLIAMSON: I'm sorry -- identified. We've identified private sector investment, that's one of our strategies?

MR. CHASE: We'll use our new financial options to build transportation projects, like private sector partners. We will empower local and regional leaders to solve local and regional transportation problems. We will increase competitive pressure to drive down the cost of transportation projects. And we will demand consumer-driven decisions that respond to traditional market forces.

MR. WILLIAMSON: And then the last thing that this body needs to identify and then we need to adopt in our Strategic Plan will be the tactics that will underlie those strategies.

MR. CHASE: Yes.

MR. WILLIAMSON: And those tactics are the legislative tools. And what sort of time line are we dividing those tactical decisions out over: short-term?

MR. CHASE: Short-term, mid-term, and long-term solutions. For example, the problems match up with the type of solution.

MR. WILLIAMSON: An example of a short-term tactic would be?

MR. CHASE: An example of a short-term tactic would be -- an example of a mid-term tactic would be the pass-through tolling, pass-through financing agreements; long-term would be the Trans-Texas Corridor; short-term -- and my memory is coming up a little short.

MR. WILLIAMSON: Would be that be when we redefined our categories from 36 to 12?

MR. CHASE: Exactly.

MR. WILLIAMSON: And quit telling the districts which projects and instead gave them a budget allocation?

MR. CHASE: Exactly, and allowed the regions to match resources with projects and not make all of those decisions have to occur here at this level.

MR. WILLIAMSON: Thank you very much.

Members, the reason I needed to take us through this, Mr. Jackson, one of our great lawyers in the department, reminds me that we had talked about this plan now for a year and we have it in various phases of implementation, but the commission itself has never formally spoken about the Strategic Plan, matching it to the legislative appropriations request, matching it to the operational plan.

And when Mr. Chase presents our plan to us -- which actually was started under the leadership of Mr. Johnson six years ago -- we'll need to be prepared to formally from the dais tell the State of Texas this is our plan by 2030 to reduce congestion, improve safety, provide economic opportunity, enhance the value of our assets, and improve air quality in the state. We are doing some significant things today that exactly match that Strategic Plan.

We take you through this because it's important -- we have to say everywhere we are that between now and 2030 the state will be $86 billion short of the investment necessary to have a transportation system that really will reduce congestion and improve air quality, enhance safety, bring jobs to this state, and prevent us from driving on potholes, and we have a plan to address that shortfall and be done with it by 2030.

If everyone will focus on that plan, if we'll work together as a team, we can make some significant improvements in the transportation system in this state over the next 24 years.

Often in government, words are used but thoughts aren't put into how those words are converted to action. The members of this commission and the employees of this department have a plan to address this problem, and we intend to carry it out.

Mr. Behrens, do you have anything to add?

MR. BEHRENS: Well, certainly I can assure you that the employees of the department are behind this plan and have helped develop the plan under the direction of the commission, and I guess having sat up here a while and been with the department a long time, we all know what the need is in the State of Texas and we know that we have to do some of these things to continue to enjoy what we have had back in the history of transportation in this state.

So we're all excited that we have these opportunities that we can deliver on this plan, and again, like the chairman says, we do need to partner with all of you. We need all of your help to help us move forward as we present these new ideas around the state.

MR. WILLIAMSON: Thank you, Mr. Behrens.

Okay, members, the first item on our agenda is the approval of our meeting minutes from the last meeting. Do I have a motion?

MR. JOHNSON: 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. Behrens?

MR. BEHRENS: We'll go to agenda item number 2 which is our discussion items for this month. We'll have four of them; the first two of them will be led by Amadeo. The first one is a status on where we are on the Trans-Texas Corridor 35 procurement process, and also the environmental clearance part of that corridor; and then he will lead the discussion on using CDAs and coordinating with our MPOs and RMAs in using some of these new tools, particularly the public-private partnerships in developing projects and getting those projects on the ground sooner rather than waiting for years and years if we would use our traditional funding.

Amadeo?

MR. SAENZ: Thank you. Good morning, commissioners, Mr. Behrens, Roger. For the record, Amadeo Saenz, assistant executive director for Engineering Operations.

Agenda item number 2(a) is a discussion item to kind of give you a status report of where we are on the development of the 35-TTC project.

Of course, the project involves two processes that we're running parallel. On one side we were doing an independent process of clearing the environmental for a corridor that stretches from the Rio Grande River to the Red River. And we're moving forward on that process and we're very close to being able to put out the draft environmental impact statement corridor which is basically we'll reduce the study area from the 50- to 60-mile wide study area to a 10-mile further study area where the corridor will eventually lie.

It is still in draft. Once that is posted out as part of the environmental impact statement requirements, the Federal Highway requirements, we will have a series of public hearings throughout the state, collect some additional information. Then we take all that information, as well as any other studies that are going on at the same time, and then we look at what we had proposed as draft, and if there's changes that need to be made, we will then make those changes to the draft EIS and send them to the Federal Highway Administration as a final environmental impact statement, and then they will allow us to then post it as a final. And that will allow us to now have identified the 10-mile corridor.

As far as time frame, we're in the draft phase right now. We figure once we get approval to move forward, it will take us somewhere about a year to get through the second phase of tier one where we will have a final environmental impact statement on the location of the corridor, the location of the refined study area. I need to continue to say that because the Trans-Texas Corridor is not going to be ten miles wide. We've refined the study area to ten miles, and then within those ten miles we will identify where the roadways are going to go, where the railroads are going to go, where the utility lines are going to go, and such and so forth.

So that's where we're at on that part of it.

The other side of it that's running parallel, as you may recall, we entered into a comprehensive development agreement with Cintra-Zachry. That agreement was executed on March 11, 2005. Their fast task, as part of that agreement, was to basically put together and finalize a master project development schedule or a plan, as well as a master financial plan.

From the business side, they were going to identify projects that they would determine to be near-term, mid-term, and long-term, and they would then tie the financial of how those projects could be developed.

Basically, the original CDA sets a general framework of how we would work with Cintra-Zachry and what was required of them and when it would be done and how it would be done. For example, as we move forward through the project development process, either one of us, we will first review their master plan. And as they're developing their master plan, if they identify a project that is a potential good project that they feel is ready for development, they would send us a letter -- very similar to what we got yesterday for the railroad project -- that says we've identified a project and we feel this project, based on the early work that we've done, is ready for development; it's a project in our master development plan, it's in the short-term portion of that plan, and we think that it has merits and we'd like to further study or further move forward with this project.

And that basically triggers a process. That submittal comes to the department, we evaluate their submittal, we agree whether the project is in the master development plan, we agree that it is a near-term project and there's a need out there, and then we respond to them. And then what comes into place was we had the original CDA that identified the original scope of work like I talked about that had the master development plan and the master financial plan, and then from that, those projects are identified, and projects can be identified by them or be identified by us.

Once they've come to us -- like they came yesterday on this railroad project -- that we've identified a project, we think it's ready for development, then we get into the next box of our funnel which is to develop a facility implementation plan preparation agreement. And basically what it is, we now start looking at that project from the development side and the financial side, and identify how the project is going to be paid for, is the project going to be done through a self-performance mode or is it going to be competed out. We will then look at all the risks and allocate those risk factors between ourselves and the potential developer, and we do that in this agreement.

And this agreement may require that we collect additional data to be able to make those decisions, and we will put in place a structure where our developer will go out there and collect additional financial data, additional project development data, cost data for the project, different methodologies for financing the project, and then present those to us so that we can make a decision whether we want to continue with this project. That's under that agreement.

And of course, we're going to require them to do some work so we would set up a structure that we would be able to compensate them for the work that we're asking them to do.

At the same time, on the environmental side, now we know that we've found a project and if we feel that it needs to be carried further, we would then be doing the environmental work to take that and finish the environmental work for that project. So we would then start doing what I would call the tier two, or the necessary environmental work to clear the actual location of that project. So again, we'll continue with the two-pronged approach.

As we get that agreement in place and we start collecting that data, if we think that the project bears merit, we will then move forward and ask the developer to put together a facility implementation plan. And for this facility implementation plan then, in essence, he's developing a work plan of how this project could be rolled out. He would include the schedule the budget for the project, some of the preliminary engineering numbers, the facility procurement terms, the business terms that we could use to develop this project.

From all of this, and at any time, the department would determine whether that project would be done as a self-performed project by Cintra-Zachry, or we would go out and compete that project. So we will be coming back to the commission with our recommendation as this project would come forward and make a recommendation whether we would move forward as a self-performed project under the original CDA, or that we would open it up for competition.

Of course, let's say and if we were to continue -- and I'll use the example of continue under self-performance, but it would be the same process. If we go out to compete it, we would have an inner step here, we would go out and compete the project and bring onboard the best value developer to develop this project for us in the future.

But once that's done, then the development work begins, where under the separate contract or under the self-development contract, the developer would basically put together the complete work plan, and then we would, in essence, close the project for financing, and then we could start basically building the facility.

And that's kind of the process that we follow for all projects.

Yes, sir?

MR. WILLIAMSON: I want to stop while you've got that up on the wall and ask a few questions that I know the answer to but for clarification for those who might be watching either live or via the ozone.

Be sure and tell us what NTP means.

MR. SAENZ: NTP means Notice To Proceed.

MR. WILLIAMSON: And that's an engineering term. In simple person's terms, what does that mean?

MR. SAENZ: In simple person's terms is we review their facility -- we put in place a facility implementation preparation agreement, it is executed, and now this is your authority to proceed with doing the work that we've outlined under this agreement.

MR. WILLIAMSON: So a thing called Notice To Proceed is in writing?

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: And it's a letter from us to the developer that says you may continue.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: So it's like a work order, similar to a work order.

MR. SAENZ: Right. It is a work order for them to start work.

MR. WILLIAMSON: Now let's talk about this notion of self-performance versus compete because that's always a confusing matter for some people. Self-performance, under the terms of our contract, means the developer is going to put up all the money, take all the risks?

MR. SAENZ: Yes, sir. Under the minute order that approved the 35-TTC CDA, there was a requirement in the minute order that said if there was any public money applied to this project for things other than environmental studies, I believe some of the right of way and some of the environmental mitigation, then those projects would have to be competed out, the developer could not self-perform any of those projects.

We still have the flexibility that even if the developer plans to finance the project 100 percent with private money or private equity, we still have the authority to be able to determine whether we want this project to be self-performed or competed out.

MR. WILLIAMSON: So for example -- because one of the criticisms, and I think it's a legitimate criticism we often hear, is well, this Spanish firm -- which is actually a partnership between a Spanish company and a Texas company -- this Spanish firm has a monopoly on all these assets, they're going to own all these assets in Texas. Are they going to own any assets?

MR. SAENZ: No, sir. We will own the assets. The right of way is purchased in the name of the state, the road will be built as TxDOT's. They will have a right to operate that facility, maintain that facility for the period of time of this CDA.

MR. WILLIAMSON: And if we think we can get a better deal, even though the individual construction project is offered to us self-performing, we can say, Well, we don't care that it's self-performing, we think there's a better deal out there on the marketplace, we're going to go to the marketplace and get competing bids.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: So we have the best of both worlds. We have a contract that permits us to let this Spanish-Texas partnership build assets on their own nickel, available to Texas citizens if they wish to use it, but they're not forced to use it, or we can choose to not let them build it on its own nickel and instead put it out for bid and let the entire world compete for that asset.

MR. SAENZ: That's correct.

MR. WILLIAMSON: I think it's very important to clarify what self-performing and compete means.

MR. SAENZ: That is exactly right.

MR. WILLIAMSON: And one more question, and I'm sure the other commissioners have questions. At every step in the process of this reverse triangle or upside-down triangle I'm looking at, are there people other than TxDOT employees watching this process?

MR. SAENZ: Yes, sir. We very closely have been working with, one, Federal Highway Administration, and we have Federal Highway Administration as our partner and included in everything that we're doing. And in fact, almost everything that we do needs to have Federal Highway Administration clearance because what we're trying to make sure is that even though the project is funded with 100 percent private equity, in the future some other work may need to be done to this project -- some expansions, for example -- and we may want to use federal funds, and we don't want to jeopardize the ability to be able to in the future leverage federal funds to do more work on projects of this type.

MR. WILLIAMSON: So an example of that instance that you just described would be that the Trans-Texas Corridor passenger car lanes are built and open between Dallas, Fort Worth, Austin, San Antonio and Laredo, and we decide that we would like to add four exit points for a particular reason to the corridor that Cintra-Zachry, a Spanish-Texas partnership, doesn't wish to add, we might want to add it on our own nickel for reasons not related to the toll road but related to local economic development.

MR. SAENZ: Yes, sir, we can do that.

MR. WILLIAMSON: And that would be one of the reasons that we would have the Federal Highway Administration reviewing everything that we did.

MR. SAENZ: Right, so that we have the opportunity to use the federal dollars which we leverage at 80 cents.

MR. WILLIAMSON: And as you know, the third most repeated concern about this process is that it's all done in secret and how do we know that it's not a back room deal. Well, the answer is there are people and organizations, other than TxDOT and a partnership of a Spanish and Texas company known as Cintra-Zachry, making these decisions.

MR. SAENZ: That's correct.

MR. WILLIAMSON: And one of those groups is the Federal Highway Administration.

Is there anyone else that's involved in this process?

MR. SAENZ: Of course, it's TxDOT, Federal Highway Administration. Federal Highway Administration oversees all our programs anyway, so it's those two people for Trans-Texas Corridor.

MR. WILLIAMSON: And to what extent do other agencies get involved? Do we ever ask, for example, the attorney general to be involved? Mr. Jackson, could you answer that question?

MR. JACKSON: Yes, the attorney general's office has always been involved in all CDA negotiations.

MR. WILLIAMSON: And do we ever ask the Public Finance Authority to participate in any of this, or is that not necessary? I don't know, I'm just asking the question.

MR. SAENZ: We haven't yet. Of course, just to follow up on Bob on the attorney general, the right of way acquisition process, even though at the beginning the developer will use their resources to go out there and procure the right of way, they have to follow the federal and state requirements, and should that parcel of land not be able to be acquired under the normal process that it has to go to eminent domain or condemnation, then that is done by the attorney general's office.

So the attorney general's office is in there because they want to make sure that all of the work that was done prior to having to take it to eminent domain followed the federal and state process.

MR. WILLIAMSON: And then one more question. With regard to the portion that's moving along the fastest -- I'm going to get to the rail in a moment, I want to talk about just the asphalt or concrete or limestone roadway, whichever it's going to be -- is it the case that the financial arrangement between the state and a partnership of a Texas and Spanish company known as Cintra-Zachry -- is it the case that all of those revenues will go to the partnership, or is it the case that any revenues collected from the use of that road at a certain point will be shared with the taxpayers of the state of Texas?

MR. SAENZ: In the negotiations that we have been working on right now, the negotiations is we are looking to get a concession payment up front, but we also want to be a partner and be able to get a revenue share of every car that uses the facility.

MR. WILLIAMSON: So my questions then can be boiled down to this: Notice To Proceed is a written letter from us to the partnership that says move to the next step; self-perform means the partnership pays all the cash and bears all the risk, the State of Texas, the citizens of Texas are not on the hook for anything.

MR. SAENZ: And we still have the say-so as to whether we want to let them self-perform even under those conditions.

MR. WILLIAMSON: And every step of the way, organizations, other than TxDOT and the partnership of a Texas and Spanish firm known as Cintra-Zachry, are present and watching and approving what we do.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: And at no point will any asset we're talking about now -- which is the road -- not include some revenue sharing for the citizens of the state of Texas.

MR. SAENZ: That's correct.

MR. WILLIAMSON: So we know that the things people are concerned about and frequently say publicly is the truth are not always the truth.

MR. SAENZ: That's definitely correct.

MR. WILLIAMSON: And even though they will probably continue to say those untruths, we're establishing for the record one more time the difference between fantasy and reality.

MR. SAENZ: That's correct.

MR. WILLIAMSON: Members, do you have any questions you wish to probe Mr. Saenz about at this time? And please do.

MR. JOHNSON: I have a follow-up. Amadeo, we've talked about the negotiation and the process and the oversight of the Federal Highway Administration. At what point in time does the contractual understanding become a matter of public record? Where in the process does that occur?

MR. SAENZ: Of course, the CDA, the master CDA, the initial CDA is part of public record right now. As we move forward on these facility agreements -- and let's say self-performed because I think that's what spurs a lot of the concern is that this is a negotiation between Cintra-Zachry and TxDOT and no one knows -- once the agreement has been executed, it then becomes public record. And it will define every single term and condition of the project that is being developed, and it's that one facility project that's being developed will have to abide by.

It will identify what the toll rates are going to be, it will identify if there's any non-compete clauses, it will identify the revenue sharing system we're going to be using, it will identify what the toll escalation is going to be set at.

And that's one area where people are concerned, that this toll escalation rate they'll be able to charge us the maximum amount every year. Really, it goes back to one of our strategies, it's market-driven. If you can go out there and you can raise the price on something so much just because you can and you raise it above a limit that people will not use it, guess what, no one comes, so you don't make any money. So the price on the toll road that will be charged over time will be based on what the market deems that they are willing to spend to use that facility.

MR. WILLIAMSON: That, of course, is a toll road which is parallel to an existing tax road.

MR. SAENZ: It's a toll road that is parallel to an existing tax road.

MR. WILLIAMSON: Which drops down to the second of our four strategies which is consumer choice, permitting Texas citizens to choose every day, every minute of every day whether they wish to use the road that their direct taxes partially paid for or whether they wish to use the road that they pay for when they use it, that being the toll road.

John, your question raised an interesting issue that needs to be brought up again. The self-performing facility, that means the partnership of a Texas company and a Spanish company called Cintra-Zachry, is bearing all the risk and putting all the cash into it. The citizens of the state of Texas have zero risk and zero cash in the deal.

MR. SAENZ: That's correct.

MR. WILLIAMSON: But if they say we want the State of Texas to put money into it, we're almost certainly going to go compete it because that's what the law is.

MR. SAENZ: That's what our minute order that approved the CDA.

MR. WILLIAMSON: But what your question highlighted is anything that requires that Doug Peacock's gasoline taxes were used for this road will automatically trigger a competitive process which will, of course, be exposed to the public at every step because that's what a competitive process is.

Because we are spending money to clear the environmental because we have to clear that independent of the consortium, so we are allowed to spend the money we need for environmental clearance, environmental mitigation and a few other things that we can put in there that will not trigger the requirement of compete.

MR. WILLIAMSON: But we do that because we anticipate that we will be clearing more than the footprint for a particular facility, we'll be clearing the footprint for facilities to come -- which ties to directly into this rail thing we'll talk about in a moment.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: I'm sorry.

MR. JOHNSON: No problem. And one other question, Amadeo. At any time during the process, either negotiation or when a final contractual understanding is executed, can the partnership, the Cintra-Zachry partnership, utilize any of the authority, either statutory or not, that the Texas Department of Transportation has, for example, the right of eminent domain?

MR. SAENZ: No, sir, not until we have a project that we've identified that they are going to go out there and acquire.

MR. JOHNSON: But in that case, the partnership does not utilize the right of eminent domain, the state still does.

MR. SAENZ: Yes, sir. It's always the state.

MR. JOHNSON: Thanks. That clarifies my two questions.

MS. ANDRADE: Amadeo, I have two issues. One is with our public hearings. I'm not sure that in the manner that we hold our public hearings it's the most effective, and I'm wondering if we could take a look at that, and perhaps also try to contact the chambers of commerce in each community that we're going to go into and give smaller group presentations. I don't think that when we have a public hearing we get all the right people at that public hearing. It's in the evening, they're crowded, there's a lot of conflict going on, and sometimes people will not attend.

So can we look at the manner that we hold our public hearings and try to do a better job, or try to contact more people in those communities that we're going into and educate them on that?

MR. SAENZ: Yes, ma'am, we can do that. Now, the actual public hearing that is required for the project, when we get the draft -- the approval from Federal Highway to proceed with posting of the draft environmental impact statement and we go out and post it, we're required to hold a series of hearings. Those hearings need to follow a set procedure that's in place, and a lot of times people feel that I come, I have a question, but you can't answer it. Well, that's part of the requirements. We're there to collect the information, we take it back, and then we will provide a written response.

But sometimes people feel that I'm asking you something real simple, it's a yes or a no, why can't you tell me. Well, we have to make sure we follow the process.

MS. ANDRADE: And I want us to abide by the process but I want us to do plus, more.

MR. SAENZ: And that's what I was getting to. There is no reason that we cannot have some additional informational meeting-type or workshop-type deal to be able to put more messages outside of maybe upcoming hearings and provide information so that the public is as educated as they can be before they go to the hearing, and we can do that.

MS. ANDRADE: I'd like for us to look at that.

And the second issue that I've got is when we say market-driven, I think that that's what makes people uncomfortable, the ones that don't know what market-driven means, and so I hear all kinds of stories as I travel throughout the state of incredible amounts of money. So if we could establish a guideline or just something to better explain that, I think it would help, it would appease the public on, you know, it's going to take them $9 every trip -- that's what I'm hearing.

MR. SAENZ: Right. And of course, again, as I mentioned earlier, a lot of people associate that maximum toll rate is what's going to be set automatically, and that's not the case. What's going to be the case is what actually people feel comfortable paying to use that facility. Because you can overprice yourself and no one comes, you can underprice yourself and everybody comes, and if you keep your toll rates much lower and more people come, you probably will make more money. And that's a business balance that needs to be done.

But sometimes it's not the market-driven but it's people thinking that automatically they're going to go to the maximum amount because they're a private company and they're out there to make the maximum profit. Well, I can almost assure you that if they go to the maximum amount and if they overprice themselves, they will wind up making less money at that time.

MS. ANDRADE: I think we understand that, those of us that are involved in transportation.

MR. SAENZ: We need to maybe get the word out better.

MS. ANDRADE: And maybe we can say market-driven with limits, just something to make people feel more comfortable that they're not going go be overcharged.

MR. SAENZ: Yes, ma'am.

MS. ANDRADE: Thank you.

MR. HOUGHTON: Well, Amadeo, you and I are intimately involved in the process of the negotiations and I think we glossed over something that is very important is the participation that we will have for every transaction -- that means every car that hits the gantry -- we will have a piece of that revenue coming back to the Texas Department of Transportation.

MR. SAENZ: Yes, sir, that is correct.

MR. HOUGHTON: And in fact, the $86 billion shortfall that we are facing will get whittled away by that transaction. That's new revenue to the department. I think that is extremely important that we articulate that to the public that are participating, we have not turned over this, we get some up-front payment depending upon what asset we're talking about.

And then that begs the question on -- not the question, but the subject matter on assets like SH 121, 1604 in San Antonio, and others that people want to use our facilities to expand or put toll facilities on where we will, in fact, get a fee or an up-front payment for the use of that asset or right of way which will then, again, whittle away at the $86 billion.

So there's a recurring revenue stream coming in on Trans-Texas Corridor, and soon to be 5 and 6, that will, again, address the $86 billion.

So I don't really have the question because I've been involved in the process with you, but I think we've got to articulate to the public that we are participating in these projects.

MR. SAENZ: Yes, sir, we are participating. In fact, one of the things that we have been doing is to put in place what we call programmatic business terms, that the TxDOT toll program will be guided by these business terms. And one of the key business terms is that we want to make sure that we retain the ability to be able to get the revenue share for every car that uses any facility.

MR. HOUGHTON: It's a good business practice -- when we hear about the demographers, we hear from this dais on the 64 percent anticipated growth in the state -- we want to participate in that new revenue source and those new people that will have a choice and will probably drive on the fast roads.

MR. SAENZ: One thing that I think we've talked about but we might have glossed over it a little bit is on any toll project, and let's say a project that's 100 percent financed by the private sector, they are taking all of the risk. The business terms that we're putting in place allows us to take advantage of up-front cash that's based on what they project the traffic will come, but the revenue-sharing will allow us to make sure that if more people drive on that facility, we get a piece of that also. If it's more than what they projected was going to come, we get a piece of that.

And the way that we're structuring it, the larger that amount, the more people that come, the higher the percentage that we will get. But on the contrary, if the people do not drive on the facility, we have no risk.

MR. WILLIAMSON: Now, we've adopted this forum, this public discussion forum precisely to have this opportunity to talk with each other and with our staff on the record about public policy decisions we'll have to make at some point in the future. I love it that one of the unintended consequences of this is our conversations sometimes take us into areas that we didn't intend for them to and permit us to share information with our partners from Tarrant County, for example, or with ourselves about aspects and things that we think about and never say publicly.

I think the commissioner's suggestion to have more information meetings up and down the footprint of TTC-35 is a good suggestion.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Frequently we get caught up in the public hearing process because we know that's what is required of us by law and we don't want anyone to accuse us of shortchanging the law, and we don't realize that probably our House and Senate supervisors would appreciate it if we would have more informational meetings and the public themselves would learn.

And then the other thing in Ted's conversation with you that it triggered in my mind needs to be fleshed out here. Now, I'm going to catch you off guard again on this one, but we can only hope the answer is the answer I desire.

There is a theory in some parts of the state that if you build a tolled asset, you ought to set your toll rate according to what is acceptable to the leadership, business, community, civic leadership of the area. Is it the case, or would you think it's the case, as a traffic engineer and a lifelong employee, that that was the same thought process that set the gasoline tax rate at 15 and then 20 cents? That was what the political, civic, business leadership felt like was an acceptable level of tax?

MR. SAENZ: This is what we're willing to pay, to put into this pot so that we can get roads built.

MR. WILLIAMSON: And is it the case that that tax rate has generated, all the other market forces considered, population growth, numbers of cars per person in the state, miles per gallon, cars driven, is it the case that that tax rate has generated sufficient cash flow to maintain and expand the system with its use?

MR. SAENZ: The money that we're collecting from the gasoline tax -- I guess at the time when the gasoline tax was set and the system was much smaller, we did a good job and we built some good roads, and that led to people moving to the state of Texas, businesses moving to the state of Texas, more cars, more people. I've got four cars at home, I've got five cars at home -- I've only got four drivers, I don't know what the fifth one is for but it's still there -- it's a standby car, so my wife tells me.

(General laughter.)

MR. SAENZ: So that the tax of those cars driving on our system are forcing us to spend more and more, in fact, almost all of our gasoline tax, just to maintain it.

So in essence, we grew it as much as we could with the money that we had, that led to more people, and now we can't afford to build any more but more people are still coming and we're spending it all with maintenance.

MR. WILLIAMSON: So it is the case that tax rates and toll rates are similar in that if you set that tax or toll rate at an artificial level to admittedly accomplish one good thing -- which is encourage people to use the asset, don't overtax citizens in the state, encourage businesses to move closer to the asset -- you might at the same time, in setting that rate artificially at a certain level, you might also be preempting yourself from improving and expanding that system at some point in the future when more people locate next to the asset or start using it.

MR. SAENZ: Yes, sir. It takes more to maintain our asset.

MR. WILLIAMSON: So I think, Commissioner Andrade, when we speak of market-driven, we need to find a different term to describe market-responsiveness or use-responsiveness. Because I wouldn't want us to communicate to the public that the rates aren't influenced by the amount of use. I mean, that's our key strategy to solving this problem by 2030 is to associate truthfully what it costs to consume a public asset with the consumption of that asset.

And I think there's a growing body of political leadership in this country on both sides of the aisle which recognizes it's in none of our best interest to mislead the citizens we represent about the actual cost of doing business with their assets. If it costs a dollar and a quarter a gallon, that's what it costs; if it costs 21 cents a mile to operate a toll road, that's what it costs. Don't set it artificially low or artificially high, set it where it needs to be in order to match the use and the consumption of the asset with the revenue you're generating for the asset.

MR. SAENZ: I want to touch a little bit on what Commissioner Houghton talked about is the toll roads and our strategies on revenue-sharing that will basically put in place a revenue stream available to build more assets. And we have statewide assets like the Trans-Texas Corridor, like the interstate system, roads that are statewide, the trunk system. Those projects that are on the statewide system that are developed, like TTC, the revenue that we can generate from that can be used to build more of that asset much quicker, as he mentioned, can be used to address some of the connecting roads that we need, the connecting roads that we need, very importantly, to connect back to 35 and the 35-TTC model. Because we need to be able to have an avenue for people to go from one to the other so they can have their choices and have a good, smooth transition.

Now, as we get into toll roads in the regions, like the Dallas-Fort Worth or the San Antonio area, you all have said that the revenue that is generated from those same tolls, in surplus money and in concession fees, stays in the region for the region to identify how they can solve more of their transportation problems with that extra revenue source.

That's very important because the region needs to look at themselves as a whole and say, Okay, if I do this toll road and that toll road and this other toll road, this extra money that's generated, I can then go out there and address these other transportation needs that I couldn't get to under my traditional gasoline tax fund.

And that's one of the things that we're working on and we'll probably talk about that in the next item a little bit, but that's one of the guiding principles behind the whole toll system: the regional toll roads, money stays in the region; statewide facilities, we can use it for the statewide facilities and to address statewide needs and connectivity needs.

With respect back to 35-TTC, where are we now, I kind of outlined the process in general. The CDA allowed them to identify projects that they could use as connectivity projects, and those are very important, as well as projects that may be needed to help finance the remainder of the corridor. And one of the projects that they outlined very early on was the extension of 130, 5 and 6, the extension of 130 from the airport where it's kind of been built to today down to Sequin.

They followed the same process they followed for this rail proposal that they sent us. They submitted that project as we think this is our project, we identified it as a near-term project in our original proposal, we've looked at it, you have already done environmental clearance, we think it's ready for development. And of course, we went back and we agreed with them and we have been working on that project, developing the facility implementation plan as well as the business terms.

And of course, being the first project, it's taking us a little bit longer because we're learning as we go. But we want to get to the point of having a facility agreement which is this is the agreement that's going to build this project with them hopefully in the next three to four to five months. But it followed the process which is a very similar process that will be done for all the other projects.

The beauty of it is that most of the business terms that are general in nature or program related will have already been put in place for the project, and we don't have to go back and start from square one to develop them.

Now, will they be different, can they be tweaked? Yes. We want to be able to have that flexibility because every project has its own merits and its own good points and bad points, and we may have to change what the toll rate or the revenue-sharing rates are going to be depending on the project. But we have now basically the guiding principles of how we're going to negotiate any type of facility agreements or any type of projects.

MR. WILLIAMSON: So we've invested -- we being the department's staff -- we've invested a considerable amount of time and treasure to build a template we can negotiate from, not only with Zachry-Cintra, a Texas-Spanish partnership -- I've got to say it 100 times to get it through people's heads --

MR. JOHNSON: You're at five so far.

(General laughter.)

MR. WILLIAMSON: But we can use that template for any public-private partnership or public-public partnership. For example, anything we would do with NTTA or HCTRA, we could use those business terms.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: One of the criticisms we hear from our construction-engineering community is that we take too long to make up our mind, and our response is well, we're learning a little bit about how to do this and we want to do it right from the start, so if we're taking a little bit longer right now, it's because we are building a knowledge base that will permit us to move faster in the future. This is what you talk about developing standard business terms.

MR. SAENZ: Yes, sir. And then, of course, the beauty of it is that these business terms that we're developing, that we're using, we've been making presentations basically to all the potential developers that are out there to get some feedback, and we'll have those and they're open to the public, so the public knows kind of what is it that we're using as guiding principles and general business terms as we develop CDA projects across the state.

MR. WILLIAMSON: So for example, if we choose to move forward on your recommendation to design-build a project in northern Texas and to solicit a CDA, a different project in northern Texas -- both of which now are more important because of the rail proposal yesterday -- the citizens of those affected communities can know that we're able to move much faster on those two projects than we have moved on some other public-private partnerships before because of what we've learned in that process.

MR. SAENZ: Yes, sir, most definitely. And some of the policies and business terms and technical terms and technical provisions that we've been developing that we're trying to use as we roll out the first CDA, you might say, now those become more standards, and so we've, in essence, gone through a learning curve to have those in place so that future projects can process much, much faster.

MR. WILLIAMSON: Please continue.

MR. SAENZ: Okay. Continuing on the negotiations, we continue to negotiate segments 5 and 6. Our original CDA -- in fact, it was in our request for detailed proposals -- allowed the opportunity for the successful developer to have the opportunity to self-perform up to $400 million worth of projects as part of the 35-TTC. That was one of the things that we put out there to make sure that we enticed people to submit proposals to us.

So the 5 and 6 project was submitted by Cintra-Zachry -- I keep on thinking Zachry-Cintra but it's Cintra-Zachry -- as a project that they wanted to do as a self-performed project, and we are treating that and we are moving forward with developing the project as a self-performed project. But at the point even before we finalize the facility agreement, when we get their final numbers, if we think that they are not giving us the best deal possible -- and the way it was proposed, this deal is still going to be a deal where they are funding all of the project, 100 percent their cost, no cost to the state -- if we feel that based on the work that we've done -- and we have a lot of financial advisors and legal counsel onboard -- if we feel there is still a better deal out there, we still have the right to take that project and compete it.

And of course, everything that we've said, all these business terms would be the same business terms that we would put out so that the remainder of the private sector has an opportunity to submit a competing proposal so that we can look whether we have that.

And that's going to be on every project, and that's very important for people to understand is that this is not just a deal that's done behind closed doors and it's only with them, we always have the flexibility that if we feel that there's a mechanism that through competition we can get a better deal, we're going to take advantage of that.

Any questions on this?

MR. WILLIAMSON: Go ahead, John.

MR. JOHNSON: I have one. I wanted to go back briefly to the discussion about economics. Do we have any studies -- Phil Russell might have more information on this -- about the elasticity of toll rates? I mean, it occurs to me that -- maybe I'm missing something -- that toll rates are probably pretty elastic, that people have a choice and you've priced them out of their zone, they're going to look for an alternative which would be a corresponding path that there was no toll.

Just as if you were driving between here and somewhere and there was one filling station, that filling station charged $5 a gallon for gasoline, you would stop there if you were about to run out of gasoline, but otherwise you wouldn't stop there. I know that Judge Eckels has told me that the Harris County Toll Road Authority has a study, a poll that people would pay 75 cents to avoid two stop lights. Would they pay a dollar, would they pay a dollar and a quarter? Who knows the answer to that unless they're asked.

So I'm wondering do we have any studies or sense of just how elastic toll fees are.

MR. SAENZ: And Phil, you can jump in if you'd like. Every project that we are working on as part of a toll project, one of the studies that we do is we get our financial folks and our traffic and revenue folks to do an elasticity analysis because every project will be a little bit different than the other.

So for example, I think one of the projects that we have been working on in the Dallas-Fort Worth area on 121, the elasticity analysis for that project is that the travelers would be willing to pay I think it was up to 25 cents a mile. And of course, as soon as someone mentions 25 cents a mile, people say What?

But the study showed, and it was done through -- and Phil can probably clue us in as to how they're actually done -- but they're done through a lot of surveys, I believe, and a lot of data that's collected to show that people would be willing to pay that much because it's of benefit to themselves.

So every project we will do an elasticity analysis, and that's what we'll use to kind of start setting potential toll rates.

MR. JOHNSON: There is no certainty, however, that that number is in excess of the continued maintenance cost of a particular road somewhere. I mean, pick one. Twenty-five cents sounds like a lot of money, and it probably is in excess of the maintenance cost at the origin, but as these things age, the maintenance cost goes up. But there is certainly no certainty on all roads everywhere that are considered being tolled, whether it's added capacity or new roads, that that number will exceed the maintenance cost. Is that a fair statement?

MR. SAENZ: That's a fair statement, yes, sir.

MR. JOHNSON: Thank you.

MR. WILLIAMSON: Well, your question and Amadeo's response sort of reinforces the point that needs to be made continually which is in our effort to provide the absolute best transportation system in the world by 2030, we have to remind ourselves, and hopefully our successors will remind themselves, the closer you can get to a market-sensitive consumer-driven system which exactly matches the cost of consuming an asset with the use of that asset, the better served the public is because then the public never has the congestion problems that they've been forced to live with the last 20 years, the air quality problems related to automobiles that they've been forced to deal with the last 20 years, the loss of jobs that have left the state because of the transportation system, the admittedly disagreed about level of safety, and the cracks in the roads. When you match up the consumption of the asset with the cost of using the asset, the system balances itself out.

I want to take the discussion, Amadeo, to the letter we received yesterday.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: There's some things I know that staff needs to hear from the commissioners about how to proceed and how fast to proceed.

I want to establish, once again for the record, the process as we do these things leaves the decision about whether or not this asset is a good thing for the state of Texas in the hands of the professional staff at this point. Is that the case?

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: It's not the case that the political appointees at this point have any role to play in approving or not approving that concept.

MR. SAENZ: That's correct.

MR. WILLIAMSON: It is the case that according to the terms of our Trans-Texas Corridor 35 contract with Zachry-Cintra, a partnership of a Spanish and Texas company --

MR. SAENZ: I think the formal name for that one is Cintra-Zachry.

MR. WILLIAMSON: I'm going to say Zachry first because I'm a bit tired of hearing about a Spanish company only. The Zachry family has a proud tradition of investing in and building assets in the state for generations, and it needs to be emphasized that they are partners in that business.

But it is the case that Cintra-Zachry could not have sent us that letter were they not ready to build that asset.

MR. SAENZ: That's correct.

MR. WILLIAMSON: And they, in all likelihood, although we don't know this, but in all likelihood they already know who some or all of their probable partners are in the building of that particular asset.

MR. SAENZ: Would make that assumption, yes.

MR. WILLIAMSON: So we wouldn't have received the letter in such detail as to things such as the Tower 55 problem in Fort Worth, and recognition of the Union Pacific transfer facility that's being expanded in the Wilmer-Hutchins area, and recognition of the BNSF facility over on the west side of the Metroplex, and recognition of the RTC's preferred freight corridor around Dallas-Fort Worth, we wouldn't have received that letter and they wouldn't have gone into such detail about those matters had they not been sensitized to those matters and prepared to deal with them.

MR. SAENZ: Yes, sir, that's correct.

MR. WILLIAMSON: And in fact, if you read the letter correctly, without saying what they can't say because of environmental laws, soon-to-be County Judge Whitley, they basically have said the rail corridor would be the freight corridor that the RTC has preferred.

MR. SAENZ: Just in the little review that we've done of the letter, and in comparison to what the RTC had put in place as their rail plan, it pretty much matches.

MR. WILLIAMSON: Because one of the concerns we hear out of North Texas leadership, from county commissioners in Dallas County to city council members in Fort Worth, from transportation planners at the COG to county commissioners in Hill County, one of the things we hear is you don't appear to be listening to us and our local and regional desires about where the corridor lay and along what process. And we continue to say we are listening, you are our partners, we know this has to be done as a partnership.

The letter would indicate that what we're trying to communicate to our partners at the local level and the regional level is, in fact, is the case, we understand what they're saying.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: We understand that a direct rail connect to Dallas-Fort Worth Airport is very important. We understand that not forcing expansion of residential construction away from the core of the city centers before we're ready is important. We just have to balance, respectfully, that the RTC's and the individual constituency of the COG's interests against the state's interests and figure out where that balance is for the best interests of both of us.

MR. SAENZ: That's correct.

MR. WILLIAMSON: Did you see anything in that rail proposal that would suggest to you we should not immediately move forward with analyzing and responding?

MR. SAENZ: In my personal reading of it, I did not see anything major that worries me. I think I need some more information and I need information with some additional financial information so that I can look at is this going to be a 100 percent privately funded project. They did mention the possibility of using some of the tools to handle some of the additional costs, because the corridor that was submitted in the letter is a corridor that's grade separated -- that means there's no at-grade crossings -- and so they talk about application of some possible state and federal monies. There's federal loan programs under the Federal Railroad Administration.

So I think what my recommendation -- but I want staff to look at it and really hash it out -- is we need to maybe get some additional clarification with respect to financing, with respect to how the project would be developed, the time frame for the project, I want to see how it fits with the environmental, and then from that we go back to our funnel, we can come back and reply to their letter that says yes, we agree, or we don't agree.

And let's say we agree that the project is a good project, it is in your master development plan, it is in your near-time projects of the master development plan, but I need some additional to make my decision whether this project would be a self-performed project, or for the commission to make the decision whether the project is a self-performed project or a competed project. And we want to also sit down and discuss some of the risk allocations that would be associated with building a rail.

And then at the same time we can learn about what the environmental requirements are going to be that we can then pass on to them so that they can make sure that they've taken that into account with respect to their timing, and then we can determine which direction to go. This will not take that long.

MR. WILLIAMSON: Now, sometime in the next month or two months or weeks or two days, or whenever it is, we anticipate that we will be given permission to proceed on the environmental impact statement for the Trans-Texas Corridor 35 original road route.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: The letter states that all or a portion of this proposed rail facility needs to be in the same study area, but it also states that, to address the Tower 55 problem, it may be that the concentration for the rail project starts west first.

My question is if it's the staff's recommendation that we move forward with this rail proposal, because the entire freight corridor proposed by the RTC lies within our initial TTC study area, will it then be comfortable for us to instruct you to proceed with the right of way clearance if it goes around the west side and the north side of the Metroplex, even if the environmental impact statement on the road portion is in a different direction around the Metroplex?

In other words, to simplify it, if I lived in Dallas-Fort Worth and was concerned about the state not moving or the private partnership not moving fast enough to bring vehicle and rail transportation to my part of the Metroplex, should I be less concerned today knowing that the department will begin clearing the right of way the minute that we make sure that just the rail piece by itself is supportable?

MR. SAENZ: That's exactly correct. Really, the way the 35-TTC CDA is concerned, we have additional work that we can do on connectivity projects within the study area, projects that are needed for financial needs for particular projects on the Trans-Texas Corridor. So this allows us the flexibility to do exactly what you say, where we can do the environmental as a separate environmental document for something that falls out of the immediate area that's needed as a connectivity project -- you can do a separate environmental for that.

So I'll use the example that if the corridor were to go east towards Dallas, and it could be the same example if it were to go west towards Fort Worth, we can do a separate environmental study for the rail elements as a separate project.

MR. WILLIAMSON: And then proceed the same way as we have proceeded on the original TTC-35 footprint which is clear the environmental and begin the right of way work for the entire corridor, not just the passenger lanes or the train lanes or the water line lanes. Because the original vision of the corridor was once you've made a decision that one asset can help you pay for the entire right of way and environmental, go ahead and do that and reserve that pubic corridor for the expansion you know will occur.

MR. SAENZ: That's exactly correct. And that's really the purpose and the reason for having this master development plan up front that identifies all the projects that will be built on the corridor so that you don't wind up clearing something and then having to come back and re-clear for something else. We can clear for all of them and be able to protect the right of way and protect the whole corridor.

MR. WILLIAMSON: Somewhat like perhaps cities and counties do now.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Members? Any questions, members?

MS. ANDRADE: Amadeo, I have a question. Let's assume that we proceed, what time line do you see this getting done, in the next ten years, five years?

MR. SAENZ: I hope it's not ten years because I'll be retired by then.

MS. ANDRADE: Okay. Just give me an idea.

MR. WILLIAMSON: Hey, don't say stuff like that.

MR. SAENZ: I'm talking about 20 years.

(General laughter.)

MS. ANDRADE: Just give me an idea.

MR. SAENZ: Well, I'm going to take a perhaps example that this follows the Trans-Texas Corridor. Under our Trans-Texas Corridor process that we have right now, we are in the draft of the tier one corridor portion of the environmental, we think that if we're released to move forward within a year, we'll have the tier one completed. That triggers that we can start doing the tier two portion which is actually determining those alignments, and that's going to take us probably between a year to two years.

So I would say that from today, three years we would have environmental clearance for the entire corridor, we could then start purchasing right of way and construction could start. So I could start, let's say, as early as three to four years from now. And I didn't have in their proposal what it is, but in their short-term projects, the Cintra-Zachry proposal, they were identifying those projects to be built within the first ten years, so we would say if this is a near-term project, it would be done within the first ten years of the process.

MS. ANDRADE: How many trucks do we think this project will take off our roads?

MR. SAENZ: We haven't done a detailed study, but some of the early and very preliminary numbers that we've looked at, a possibility of taking, I would say, from 8- to 10,000 trucks off the 35 corridor that could use the rail. And of course, it always is going to be a business-driven process.

MS. ANDRADE: And I think it's very pro business and it certainly addresses all our goals. Have we talked to the trucking industry about what we're doing with this?

MR. HOUGHTON: Yes.

MR. SAENZ: Well, we have been talking to the trucking industry about the corridor from the inception. In fact, we even had them as part of the original teams and got feedback from them. But I would imagine that the developers would not have brought us something unless they've already talked to the trucking corridor, just like I'm sure they've talked to rail people, I'm sure they've talked to business people that are using one mode and looking into the possibility of other modes.

MR. HOUGHTON: Did Bill Webb leave? I think he did.

MR. SAENZ: So I would imagine, yes, all of those people have been included, and the developer would not bring us something that they're willing to put their own money to move a project forward unless they were prepared to do so.

MS. ANDRADE: Thank you.

MR. HOUGHTON: Of course, Amadeo gives the engineering perspective. The private sector perspective is that the rail asset could be utilized today. Without disclosing anything to me, they believe they have the commitments to make it work today. So what's the constraint, obviously, Amadeo, is the environmental process.

MR. SAENZ: The environmental process.

MR. WILLIAMSON: I think an additional constraint, Ted, that has been expressed to me is we wanted to be sure you guys (a) were serious, and (b) can pull it off.

MR. HOUGHTON: Right.

MR. WILLIAMSON: And I think now they realize the governor is serious, the legislature is serious, we've gone through three legislative sessions where the serious public has had the best of all opportunities to refashion and recreate and it hasn't changed much.

You know, we're all four independent business people and we all know the most important thing in our business is surety, knowing what the rules of the game are, not that the rules might be against us or for us, but just what they are so we know how to compete.

Well, I think that the truck and the railroad guys and gals are the same way: as long as they know what the rules are going to be, then they're ready to invest and risk their money and compete, and I think that's had as much to do with it as anything.

MR. SAENZ: And I think that this project, the little that we've looked at it, and looking at this thing as part of the proposal, they talk about addressing major issues/problems in the metropolitan areas, and one of the things that we've heard lately is getting rail out of the big metro areas, that has been one of our goals, one of our strategies. And so this project as a whole is a tremendous project, but some of the projects within it would also make a tremendous impact.

For example, if you can address the Tower 55 problems in the Metroplex by putting in that section, that section could stand alone and could be done very quickly and be operating very quickly, as you continue building your corridors out. You can go out there and look at what can you do around Central Texas, in Temple, what can you do in San Antonio. So I think it's something that is very important.

One thing that we've also had, I had the opportunity to make presentations in Mexico in the last three or four months, and one of the proposals that's out there from the state of Nuevo Leon is they're looking at building a rail bridge and extending a rail corridor into Monterrey that they're considering, so that has some potential impact on this. I mean, it's something that we all need to look at.

MR. JOHNSON: Let me mention an observation. I didn't have any questions, but you know, first blush, the view from aloft, if we look at our meaningful and measurable goals, I think this project, this proposal, if brought to fruition, has huge impact -- and I'm guarded when I use words like huge. But when you think about the impact that it's going to have on mobility, on safety, on the environment, on what I refer to as the quality, maintaining and improving the quality of our transportation system, I think the numbers are going to speak for themselves and they are going to be huge, the impact will be. And if you add all that together, the economic impact is going to be even greater because it's synergistic, it's larger then the sum of those parts.

So I think this has great meaning, and you know, if it happens, it's not going to happen soon enough, but it's going to be a tremendous benefit to not only the Metroplex but the main artery of our state and it's going to set a template or an example of what can be done in a lot of other areas, and I would say that a lot of others are going to follow suit.

MR. WILLIAMSON: Mike, I know we have several citizens from North Texas who have to catch a plane and I know that they want to hear the discussion item on 2(b) as well as see our action on some of the other things. So if you don't mind, Amadeo, if you've gone through most of 2(a) that you feel like we need to go through, if we could proceed to 2(b), I would appreciate it.

That's okay, members?

MR. SAENZ: I think I pretty much have covered 2(a). I guess just in moving forward, going back to the 35-TTC current project on Segments 5 and 6 of 130, we're moving forward and we hopefully will have a facility agreement and facility implementation plan approved so that we can determine the actual process of proceeding probably in the next two months. And that project is moving forward because it's been our learn-by project is kind of what I'm calling it, and I think we've covered a lot of ground in getting to where we're at but it's going to simplify our projects in the future.

MR. WILLIAMSON: That's good news for the San Antonio Rose.

MR. SAENZ: Moving forward to item 2(b), this is kind of a follow-up to a discussion item that we had, I think last December, concerning how would we work or coordinate with our regions in the development of CDA projects.

Some of our regions, like San Antonio, have a regional mobility authority, and the regional mobility authority has basically the same authority and powers as TxDOT, and they can develop comprehensive development agreements. Some of the other regions that don't have RMAs, and we work directly with the metropolitan planning organization. Some of the regions have a county toll road authority -- of course, the Dallas-Fort Worth area has the NTTA.

And so one of the things we talked about is how do we develop projects and include them in the project development process for CDAs within the region. One of the things that you told us to look at is see how we can make sure we do that, and we have been working on that. And one of the things that we have been working on -- and it was mentioned a little bit earlier -- is working with them to identify the business terms and the technical terms that they want toll projects in their area to follow.

And I'm going to use the Metroplex because of the 121 project because it presents some challenges. We have been working with the RTC -- which is the MPO for that area -- for them to go through and identify and recommend to us what business terms they want to use in the development of toll facilities within their area. For example, what toll rate would they recommend: do they want to go with 10 cents a mile, 12 cents a mile, 14 cents a mile, 25 cents a mile? What escalation rate do they want to use? Do they want to use a value pricing where they can have variable toll rates depending on the time of day?

And we have been working with them directly with the MPO, and Michael Morris, as the MPO director, has been leading the charge. In fact, they've had public meetings to solicit public input as to see what the public would kind of consider to be good business terms.

And in their April meeting, April 13, the RTC is scheduled to adopt what they think are good terms and make recommendations to TxDOT for what business terms they want to include in the project. And these business terms will include the toll rates, they'll include the toll escalation methodology, the timing of the payments, do they want their money up front, do they want their money over time. And these recommendations would be made and provided to TxDOT, we would look at them, and then use them and develop the request for detailed proposals that we would bring to the commission for you all to accept the recommendations and proceed with the CDA procurement process.

So that was one area that we identified that was important for them to have a say-so, for them to have input into the terms and conditions of our comprehensive development agreements that we're developing in their area.

The second area that we're looking at in trying to get input from them and recommendations from them has to do with the evaluation criteria that we will be using to evaluate these comprehensive development agreements. And by evaluation criteria or the evaluation process that will be used, again, we're working with them where they can make some recommendations to us, and we're including them in helping us come up with these recommendations so that we can set all those, again bring them in, include them in the request for detailed proposals, and bring them to the commission so that you all can accept our terms and conditions, and then the developers will know under what terms they will be submitting projects within the area.

What we're trying to do here is up front knowing the business terms, up front knowing the technical terms that were developed, and everybody knows about it is, in essence, trying to ensure that it is a transparent process. Everybody knows what you're going to be weighted against.

The third thing that we've identified that we want to use is we want to allow the opportunity for the RTC to have some of their members, some of their staff to be part of the committee structure that we use to evaluate those proposals as they come in based on the same terms and conditions that were submitted before so that, in essence, it's a verification of the process.

We think that using these three scenarios or these three processes will ensure that they feel comfortable that the process that we have out there is transparent and that they were included in helping put together the process as well as the implementation of that process.

So far we've used this model, we started it in San Antonio with the Alamo RMA. You may recall we had some very lively discussions about coordination, but it's worked very well in San Antonio and I don't see why it would not work in other regions of the state. As we tweak it, this will be the same process we could use as we develop projects in other metropolitan areas.

Again, the whole key is we give them the authority to go out there and have input in the local project selection, in local priorities, and then of course, they put together their plans, and those plans will then come to the commission for final approval or concurrence. So this is just one more step to keeping with the same process or the same philosophy that the locals have an input into how they're going to develop their transportation systems, and what we've identified is we want your input, go out there and do it, we will measure your success by the five goals that we've identified. And so that's kind of where we're at on that.

The second thing that we're doing, because the Dallas-Fort Worth area, we do have the North Texas Tollway Authority, and we are working with NTTA to develop a memorandum of understanding on how they can participate, maybe not as a separate proposer but where they can participate in providing services or have their services available to any of the CDA proposers that are proposing on a CDA project.

By law, they can't propose directly, it has to be in kind of an indirect or a separate evaluation, and that's one option of doing it, but the other option is for NTTA to be able to provide the services or have their services available so that if the CDA developers want to use them, they certainly can.

And we have been working with NTTA over the last couple of months, we have a memorandum of understanding pretty much in place. The framework provides for them to provide the services for future CDA contracts within the region, it outlines the process and what services they will provide as well as the prices, it outlines the process that they will use in communicating with the separate developers and the requirements, and hopefully they will be acting on this memorandum of understanding at their April 19 meeting.

So we will have basically a process where if we're doing a CDA, we have the availability to be able to say okay, there is a toll operator that can provide you these services so you're welcome to use them if you want. And the other alternative would be that if NTTA says no, I don't want to serve as a toll operator, of course they don't have to, and if they want to submit a project, we're kind of working on a process so that we can then evaluate or have an evaluation and comparison of an NTTA proposal that would come versus what a separate CDA procurement would bring to the commission. And I guess it goes back to our strategy that we want to make sure that we have competition in everything that we do.

Pretty much, that's where we're at on that. April 13 we hope to be able to get the recommendations on the business terms from the RTC. The terms on the evaluation process are falling a little bit further behind, we hope to get them soon afterwards. And then on the MOU, we hope that April 19 when NTTA has their meeting, they will adopt our memorandum of understanding. We will then bring this to you all at our meeting, and we will then know how we move forward with projects in the Metroplex. And this could be pretty much of a model we could use for developing projects in other metropolitan areas of the state.

With that, I'll be happy to answer any questions.

MR. WILLIAMSON: Members, I'll have several but I'm willing to defer if any of you have some you need to ask first.

MR. JOHNSON: I had one or two. Amadeo, the RTC, are they enthusiastic about their role, the way this is going to play out?

MR. SAENZ: I'm going to ask Bill to answer that because I haven't been at any of their meetings, but I know that he has been working with them.

MR. HALE: I'm Bill Hale from Dallas. Yes, they are enthusiastic about the role they're in. What we had gotten into, though -- and it came to a head in February -- was that there was some education and some information we had to get back and forth between both the RTC and NTTA board members and people like that. It became very evident at that time that we needed to work with the region.

But it had gotten into simply a toll or not-toll situation on all the roadways -- 161 was that way, 121 in Collin County was that way -- but when we got to Collin County after Denton, it became a delivery method, and we never had had a delivery method problem in the past, in fact that whenever we were asked to build a roadway, no one ever said you can build this roadway if Zachry builds this roadway or if Granite builds this roadway. But here we were in a situation where they were saying, Well, NTTA has to build this roadway.

We had to stop and look back because we were going down our plan, delivering our plan and I wasn't listening to the people out there as well as I should. When I got to looking into it, what needed to be done -- and then the region was saying how is NTTA in here, are they going to build and deliver projects or work on the projects or what, and I didn't deliver this to Michael Morris as well as I should have at the time.

So I discussed with him, and after that February we had discussions, and what we needed to have happen is we needed to have education from each entity: NTTA, RTC, and TxDOT. And we got to having a meeting with Michael Morris and with Allan Rutter and we determined that we needed to have a way that they could actually compete against or be on the CDAs, and we worked out the details.

And Michael has worked very well to get these things going and the region is coming together now on that and I think you're going to see, especially at the April 13 meeting right there, that the RTC is coordinating it, that the delivery method is being determined but it's being determined between me and Allan so they can go talk to their board members and we can make this thing happen in the region.

And I think you're going to see that there are projects in our region that will be good projects for NTTA to work with us on because the CDA may not want to get involved, but there are projects like 121 that is very good for a CDA for all the reasons we talked about. The method has been set up by Michael that NTTA will be competitive on all of them. There's competitive ways so we can make sure we get the best bang for the buck for what we're doing, with whoever does it. And I think you're going to see in the next few months -- and it's being spurred by Michael Morris -- that the region is beginning to come back together. We fought like little brothers and sisters out there, but they're beginning to come together now, I think, and I think it's going to work well.

MR. JOHNSON: Bill, I'm glad that you brought up the relationship or the role of NTTA. Amadeo talked about they're certainly going to hopefully have an opportunity to perform an operations function, and I believe statutorily they don't have the right to submit a CDA. In our memorandum of understanding with them, will there be a mechanism where they can make a proposal to, in essence, be the project provider?

MR. HALE: Yes. Well, there's actually two things we worked on. First is the ability to compete, and they can't compete heads-up, by law, with a group, and that's because in every case if you do it that way, then the public would always win out because the locals are familiar with that group. But there is a way to do it, and people didn't understand it. They thought we'd go to a meeting, like we did in February, and they'd step up in front of us and they'd say here is NTTA and here is this one, and then everybody vote now. Well, that's not the way it's going to be.

We have these terms set up that we've been working on, we explained to them that's how it will work, you'll have definite criteria so everybody is on a level playing field. And then once they see that, then they will understand who got what and why and that everybody is on the same terms.

You know, go to a Subway and you go into a Subway and they're franchise owned and they all have to live by certain rules, whoever does it, and most of them are owned by somebody different or they're operated by somebody different, but then you go in there and you have the same menu and everything else.

That's no different than we're doing with NTTA and with the CDAs in our region right now, and they can actually do that process and they can compete with them in a legal way, or they can actually compete on the CDA's team as the operator which NTTA is one of the best operators in the nation, they're recognized worldwide for their operation abilities.

And with that, we've had CDAs come to us and say why can't we use them as our operator, and we're seeing with this MOU that we may get -- it's going to the board and I talked to Allan about this, they may have that ready in April -- if that happens they may decide they want to work that entire section of 121 as the operator for these people.

They will have to compete because you don't want to create a monopoly. They want to be able to say our terms, our rate may be per transaction, say 25 cents a transaction, we know that a good transaction is 10 cents a transaction, but they have to have a little competition there to know that they have a good rate on that so they can compete on those CDA. Or they can compete separate with them in competition with them so that we all know that they have the same terms that the CDA people have and live by that. So yes, there's two ways of doing it.

MR. JOHNSON: Thank you.

MR. SAENZ: Thank you, Bill.

MR. HOUGHTON: Bill, don't leave. I want to talk about -- which seems we're glossing over something -- is the asset that is owned by the State of Texas Department of Transportation and realizing the value of that asset for the region. We continue to talk about this toll rate and elasticity and limits, but we know embedded in the toll rate is the cost of capital to finance that and whatever that number is. And we'll just talk about 121 in this case, or any other asset in the state of Texas that if we do not recognize there's significant value in that asset, then we may in fact be shortchanging the region, and that's concerning me that we keep kind of glossing over.

I understand we're trying to hold hands and be happy, but at the same time we have to realize if there's an $86 billion shortfall -- I don't know what it is, Bill, in the Dallas-Fort Worth area.

MR. HALE: $55 billion in Dallas.

MR. HOUGHTON: $55 billion -- that we've got to maximize the value of these assets.

MR. SAENZ: And I think, Commissioner, the value of the asset is included. It will become part of the procurement process where the value of that asset will be taken into account by all of the developers as they prepare a proposal for us so that we make sure we're not going to go out there and give them the facility and not expect anything for it.

But that will be one of the things that we will look at is that value of that asset that they're taking, that piece of land or that piece of land with a highway on it they will be using has value and they need to incorporate that and they submit it back in the proposal as either a concession fee or a concession fee with revenue-sharing.

MR. HOUGHTON: Plus a revenue share, right.

MR. SAENZ: Yes, sir. And so that's basically inherent and one of our guiding principles.

MR. HOUGHTON: I can't express that enough, I cannot express that enough when you talk about $55 billion in the Dallas Metroplex that what we saw originally --

MR. WILLIAMSON: It would be Dallas-Fort Worth Metroplex.

MR. HOUGHTON: Yes, Dallas-Fort Worth. Pardon me, I apologize. What we see is it was all based on a toll rate at one time and discarding the value of the asset and not recognizing the $55 billion gap.

MR. SAENZ: Yes, sir. That is the goal and the goal is just like in any project: if I am going to provide money for this project, in essence I own a share of that project. Well, the value of the right of way, the value of the road that we're providing also has value, and both of those together, any toll equity and any land equity, basically will be something that is used, and then we will make sure that that value is included in what we get back.

And of course, as I mentioned earlier, being a regional project, it's going to stay in the region for the region to take that and apply it to other projects that they have identified.

MR. HOUGHTON: And it should spur on other communities to understand, whether it's Houston, El Paso, San Antonio, and to recognize and look for these assets that you can in fact convert and go a long way to solving the gap in those communities.

MR. SAENZ: I guess one thing, you mentioned the word convert, and that's also a word that in our everyday world nowadays people start to shrivel.

MR. HOUGHTON: No, not convert.

MR. SAENZ: That's what I want to make sure it is not convert, because what we are tolling is something that doesn't exist today.

MR. HOUGHTON: Right, something new.

MR. SAENZ: Something new. We're tolling the added capacity, something that you do not have today, it's something new that is being built or will be built, and that is where the toll, so that is part of the market-driven.

Going back to a little bit of what Bill was talking about -- don't leave, Bill, because I may need some clarification -- what we did is we, in essence, have two processes in place. Because NTTA is there and they have been very successful in the past in the development of toll roads, they may want to have the opportunity to submit a proposal to the department -- and you all told them that, that you welcome a proposal from them -- that we could evaluate and compare it to any of the CDA proposals.

They can't compete head-to-head but we can have the NTTA proposal that is based on the same terms and conditions that were put in place for all of the CDAs, and that is very important so we can have an apples-to-apples comparison. If they're based on that it's toll rate, this toll escalation rate, if the region has identified and we have concurred with their recommendation to ask for 50 percent up-front money or 100 percent up-front money and no revenue-sharing, then all proposals need to be made on the same baseline or the same requirements so that later on we can then compare to find out which is the one that brings the best value to the region, and it's going to be very important.

They won't compete head-to-head, but we're looking at a process where we evaluate the CDA proposals under the CDA process independently, and once we have a CDA best value, then we can compare to what NTTA and what the Texas proposal is so that we can see which one provides the best for the region.

MR. WILLIAMSON: Mr. Houghton brought up a good -- I'm sorry, go ahead, Ms. Andrade.

MS. ANDRADE: I just have a comment, Amadeo. You said they're taking our asset. They're not taking our asset, they're maximizing our asset.

MR. SAENZ: That's correct.

MS. ANDRADE: Okay. And Bill, I'm glad to hear that Michael Morris is involved in this because he seems to have a real knack for bringing people together. So I'm hoping that he's going to continue working with that until it all comes through.

MR. HALE: And let me address that tolling issue about the rates and stuff, and this came up. But with the public hearings that we've had, and we've had public meetings that have been very informal, we've had people asking questions and we've bantered back and forth with the issues that we had there, but at the meetings it became very evident and this spurred on after the December meeting, we had a long discussion about how much rate would be, and at one point in the discussion there was a paraphrase that we're in this for -- the agency, we need to have it market-driven as much as we can, that's what we're interested in, and the comment came out, well, it could be a dollar or two dollars.

Well, that little excerpt got sent around the whole region up there but they didn't see the rest of the excerpts, so we had to go back and educate a lot of the people there. And Michael, and at those meetings we were able to show that, that we did say we would like on the TxDOT side a dollar, two dollars, that's what it is, that's what the market drives, but we know there is a political and a governmental issue up there that wants to keep it as low as possible, and somewhere in between there -- and we stated in the commission meeting -- somewhere in between there is what the region needs to make the decision on.

And that wasn't ever getting out there. When we told them, they said, Oh, we have the ability to make that decision? We said, Yes, you do; here's the biggest bang for your buck, here's the most money you can make, here's the least money you can make, and somewhere in between there the region can decide how you want they want to do it because you have all these needs that need to be met. And when they started hearing that, they started coming around to it, and they began to realize there's more to the story than the excerpt from one little saying. If you listen to the whole story, the whole story tells you that the region is making this decision.

And we've had to educate them that they have the ability to make the decision, they have the ability to set the toll rates, they have the ability to escalate the rates, and whether they want the money up front or over time, and when people have heard that, they got excited about that thing.

And now Michael has worked with a system, and maybe even like your cell phone, during your peak hours you have a 17 cents a mile rate but in off-peak hours you might have a 12 cents a mile rate, and he's doing that with the region up there and they're beginning to hear that and understand that. And the average would be somewhere in between, of course, but with that, the region is beginning to look at it and the plan is put into action and working on it up there, it is beginning to come together.

MR. WILLIAMSON: I want to talk to Amadeo in a second about the point Mr. Houghton made, but I want to give you a chance to correct something I don't think you meant to say. You didn't mean to say the unfunded gap in the Dallas District was $55 billion, that's the total need.

MR. HALE: That includes maintenance. That's unfunded but that includes the maintenance part of it.

MR. WILLIAMSON: The unfunded gap for construction, I think, is considerably less than $55 billion.

MR. HALE: $23- or $24 billion.

MR. WILLIAMSON: So the point still needs to be made, right now looking at just the Dallas District, if we don't adopt a plan and stay true to that plan which includes using the tools the legislature has given us, reaching out to the private sector for investment in our assets, adopting a consumer-driven approach to pricing the assets, and using competition -- and that even means competition between TxDOT and the private sector, between NTTA and the private sector, between engineers, between construction companies, wherever that competition can be encouraged -- to drive down the cost of the asset to the consumer.

If we don't stay focused on those four strategies and stay hooked up to the plan, then we will not by 2030 reduce congestion, improve air quality, enhance safety, attract jobs to the state, and avoid driving on potholes. Those are the choices.

And the Dallas District's portion on that gap is about $24 billion on the construction and capacity side.

MR. HALE: And Fort Worth. And yes, we're mapping the plan with Michael, and he's understanding that that's what he's doing right now is doing.

MR. WILLIAMSON: Thank you. A couple of questions, Amadeo.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: If the gas tax rate was a dollar and a quarter a gallon, would we be needing to build this toll road?

MR. SAENZ: If the gas tax was a dollar and a quarter and it stayed like that for the next 25 years, we probably would not need to build this toll road.

MR. WILLIAMSON: So one way to contextualize these decisions we all have to make -- Bill, you can sit down, you don't have to stand up -- one way to contextualize these decisions is to understand the relationship between the tax rate, the toll rate and the consumption of the asset.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: The higher the tax rate, the less toll rate or the less tolls you need; the lower the tax rate, the higher the toll rate and the more toll rates you need.

MR. SAENZ: You could build all the assets that were needed and if you didn't want to toll, you'd have to set a certain tax rate.

MR. WILLIAMSON: With regard to State Highway 121 in particular, there has been, I think, a considerable amount of perhaps emotionally charged words and phrases used as we work through this. One of the things that's probably been most egregious to this body is the statements by some that the department doesn't like North Texas or doesn't like a part of North Texas or is trying to punish individuals in North Texas.

Are we approaching the 121 project any differently than we approached the 1604 project in Bexar County?

MR. SAENZ: No, sir. In fact, we enhanced what we were doing on 1604 for 121 because we learned how to get it done faster, but we are basically treating them the same.

MR. WILLIAMSON: And when anyone says we are not permitting local and regional leaders to make the final decision about this matter, we recognize that the state has the constitutional and statutory authority and responsibility to make decisions about the state's and the nation's road system, and while we can't avoid that at the commission level, what we have adopted with regard to RMAs and what you're adopting locally in the districts and we're now telling you from this podium to adopt, is a system of recommendations that local and regional government to make to our district engineers and to this body that we will accept, we will follow.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: While the final decision is ours by statute, we can't avoid that, that shouldn't be confused with the fact that if the RTC says our recommendation, TxDOT, is we do it this way, that is what we're going to do. And if there's any confusion between us and you about that or between us and Maribel and Bill, we'd want to make it clear there shouldn't be.

MR. SAENZ: Not with me.

MR. WILLIAMSON: The county judges in Denton and Collin and Dallas and Tarrant counties are duly elected state officers, and we respect their authority and their leadership, and if they say through the RTC this is the way we recommend it being done, that's what we're going to do.

And we don't view NTTA as our enemy and we don't believe we're at war -- I can't believe someone would use that term about civic matters -- we're not at war with any of these counties or any of these officials. But this body does recognize that there is an $86 billion deficiency in what needs to be spent and what's available to be spent in this state in the next 24 years, and we're going to discharge our responsibility by closing that gap where we can.

MR. SAENZ: The whole goal of our process is we want to make sure that it's efficient and it's transparent so that there is no question on anybody's mind that the group that we calculated provides the best value to the state and the region is exactly that.

MR. HOUGHTON: Efficient, transparent, and maximize the value of our assets.

MR. SAENZ: Yes. And that's the whole goal so we have business terms that are known up front, that they're recommended by the region, and by law they have to be approved by the commission, and we've heard exactly what you've said, the process, the evaluation terms, same thing. So that it would be apparent that these are the business terms, this is the process, the process was followed to the letter, there is no question that Company A provides the best value over Company B, or NTTA provides the best value.

MR. WILLIAMSON: And this is the same process we'll use for every old asset in North Texas, not just 121 but whatever we do on the south side of Dallas, whatever we do on the west side of Fort Worth, whatever we do in Weatherford, Texas, whatever we do in Benbrook, wherever we are involved in this type of approach, it will be exactly the same process.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: So that every citizen that lives in that COG will ultimately be exposed to the same market pressures as are the citizens of Frisco, McKinney, North Dallas, Denton, Flower Mound, Grapevine, and on and on, on this particular project.

MR. SAENZ: That's correct. In fact, this process can be used in any metropolitan area of the state.

MR. WILLIAMSON: So we either think like a region and execute like a region, or we don't.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Members, we have some guests from North Texas who have to catch a plane and who wish to speak about things other than item 2(b). With your indulgence, I'd like to lay 2(a) and 2(b) to the side for a moment and move to -- it item 7? We're going to move to item 7 right now then.

MR. BEHRENS: We're going to move to agenda item number 7(a), and this will be under Comprehensive Development Agreements, or CDAs, as we've ben calling them. The first one deals with Tarrant and Dallas Counties, and this would be to recommend to the commission to go out for request for qualifications on projects on Interstate 35W, Loop 820 and State Highway 183.

Phil, if you would lay that out, please.

MR. RUSSELL: Happy to, Mr. Behrens. Again for the record, my name is Phil Russell, director of the Turnpike Division. Good morning, commissioners and Roger.

As Mike just laid out, the agenda item before you relates to a project over in Tarrant County. And again, just to quickly provide a bit of historical background, as you recall, we received an unsolicited proposal a couple of years ago for a section of 183. That project had several issues, several challenges. One of the critical issues was getting the environmental clearances; funding was an issue; the project ran between not only two counties but two districts; there were some priorities that we were having to work through.

And the bottom line, at the beginning of this year we elected to terminate that procurement. We short-listed four firms down and we elected to terminate it. But we did that with the promise that we would bring it back at an appropriate time and re-energize that procurement. And so from a staff level we think it is the appropriate time. We've had some close discussions with the district, with Maribel, and the MPO, and we've kind of re-geared this procurement. The project that we're conceiving right now would be a section of 183, a piece of 820 and then up 35W.

Maribel and her staff, working with the MPO, have really cobbled together significant amounts of money to build this project but there still are significant funding shortfalls, and so we think by opening this up to a comprehensive development agreement now gives us a fighting chance of hopefully attracting some private capital into developing this project.

I would also say that there's always a little bit of misunderstanding. We still have some environmental work to do on these projects, the 183, 820 and 35.