April 26 Transcript

Texas Department of Transportation Commission Meeting

STAFF:

MR. WILLIAMSON: Good morning.

AUDIENCE: Good morning.

MR. WILLIAMSON: It is 9:06 a.m. and I would like to call the April meeting of the Texas Transportation Commission to order. It's a pleasure to have each of you here this morning.

Please note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of Secretary of State at 3:06 p.m. on April 18, 2007.

Before we begin today's meeting, please join with me in taking a moment to place your pager, your cell phone and any other electronic device you might have on the silent mode.

And if you intend to address the commission today, it would be helpful if you would also not bring your BlackBerry with you because the signal from the BlackBerry tends to disrupt the audio that we record and that makes it hard on the stenographer. Thank you very much.

It's our custom to open with comments from each of the commission members and we'll begin this morning with Commissioner Fred Underwood, then Mr. Holmes from Houston, Mr. Houghton from El Paso, and Ms. Andrade from San Antonio. Fred.

MR. UNDERWOOD: Good morning. I wish to welcome everybody this morning and also I want to give a personal thanks, and if you'll pass this back on -- I notice that Dave is not here this morning, but I want to thank him for all his hospitality last week in Corpus and everybody there at the aviation convention and whatnot. Also, thank Jay Joseph. I like the way he handles problems. He does it with a kind of laser mentality, right to the point. So be sure and tell Dave and Jay how much I appreciated everything. It was a great meeting.

MR. HOLMES: Welcome. Glad to be here this morning. It's kind of a light crowd this morning, Mr. Chairman.

MR. WILLIAMSON: Yes, sir.

MR. HOLMES: Must have a fairly short agenda. Thank you.

MR. HOUGHTON: I echo remarks of my fellow commissioners. It is a light crowd, we must not have much going on. They're all over at the pink building lobbying. But again, welcome this morning.

MS. ANDRADE: Well, I also would like to echo my fellow commissioners, Fred, Ned and Ted. Welcome to all of you to our April commission meeting. It is a light crowd which kind of concerns me, Mr. Chairman. Are we going to get out early?

MR. WILLIAMSON: I think so.

MS. ANDRADE: But anyway, I look forward to taking care of business today. Thank you for being here.

MR. WILLIAMSON: I add my welcome and I associate myself with the comments of my fellow commissioners. We appreciate everyone's participation in the developing of transportation policy in this state.

I would like to remind you that if you wish to address the commission today, we ask that you complete a speaker's card which you can find on the registration table out in the lobby to most your right hand. If you're going to comment on an item that's on the agenda, we ask that you fill out a yellow card, such as the one that's in my right hand.

If you're going to comment about whatever is on your mind in the open comment period, we ask that you fill out a blue card, again such as the one in my right hand. I would also like to take just a moment to ask you to limit your comments to about three minutes unless you're a sitting member of the legislature, in which case you may take as long as you wish.

And most of you would have found a card in your seat when you came in this morning. The card announces our Second Annual Texas Transportation Forum. It will be held this year in Austin, July 18, 19 and 20. The card that you found in your seat is similar to the one in my right hand. If you would note the website address is listed where you can register and get more information on the forum. It also has a preliminary agenda posted.

There will be more detailed information about the speakers as the time draws closer. We hope you'll give serious consideration to attending and participating in our forum as we discuss the array of challenges facing the transportation industry.

The first item on today's agenda is the approval of the minutes of the March 29 commission meeting. Members, a draft of the agenda is in your binder and you've had the appropriate amount of time to study it. Is there a motion?

MR. UNDERWOOD: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

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

Mike, I turn the meeting over to you.

MR. BEHRENS: Thank you, Chairman. Before we get to our business today, I'd like to recognize a group that is with us here. They're the Young Engineers group from our Amarillo District. They've been in town for a few days, visiting our divisions and learning about some of the things that take place here in Austin.

So if I could get you to stand. I know you're sitting back there on the back two rows. Welcome to the commission meeting.

(Applause.)

MR. BEHRENS: With that, we'll go to agenda item number 2 which is our Aviation item for the month of April. I'll ask Bill Fuller to come up and give you the recommendations for funding of airport improvements for this month.

MR. FULLER: Good morning, commissioners. I am Bill Fuller with the Aviation Division.

Item number 2, this minute order, contains a request for grant funding approval for 13 airport improvement projects. The total estimated cost of all requests, as shown in Exhibit A, is $15,508,055. That is comprised of $11,395,229 federal, $2,502,000 state, $1,610,826 local.

A public hearing was held March 22, 2007, no comments were received, and we do recommend approval of this minute order.

MS. ANDRADE: Members, you've heard the staff's recommendation. We do have a couple of citizens who would like to speak. Would you like to hear them first before we take action?

MR. HOUGHTON: Yes, please.

MS. ANDRADE: We have Pete Huff.

MR. HUFF: Commissioners, good morning. I'm Pete Huff from North Texas, specifically McKinney. I come wearing two hats. First of all, I happen to be a member of the TxDOT Texas Aviation Advisory Committee, and in that respect, I guess we're the oversight group for TxDOT Aviation staff. You probably don't get a report very often on that staff, but I'm here to tell you they do an outstanding job. We meet a couple of times a year and at conventions and so forth.

I personally fly to many airports in the USA and in foreign countries on occasion, and Texas's process for helping airports is head and shoulders above any other state, and largely because of the great staff that's been put together under Dave Fulton and Bill Fuller, Jay Joseph, and their facility at Bergstrom is really amazing. So my report is very positive on their efforts.

The second hat is I'm a city councilman in the great city of McKinney, Texas. We're building an amazing airport, you've been very helpful in the past. We come today because our project is to keep up with our growth. In particular, we have had airplanes even bigger than have been anticipated from G-5s, Gulfstream 5s, which is one of the very largest corporate airplanes, to Global Expresses which can fly from McKinney, Texas to Tokyo, Japan nonstop, and they have begun to deteriorate our runway faster than smaller planes would have. So this project is to rebuild and beef up our runway to take those planes as well as perhaps larger ones in the future.

So with me today is our airport director, Ken Wiegand, who is going to kind of present the project. Our city manager, Larry Robinson is here; he's available for questions but doesn't plan to speak. So if you have any questions for me, I'm available, but I'd like to thank you very much for your support in the past, and we'll probably be back in the future.

MS. ANDRADE: Thank you, Councilman, and also thank you for acknowledging our great staff.

Members, do you have any questions?

(No response.)

MS. ANDRADE: Thank you.

Next we have Ken Wiegand from Collin County Regional Airport. Good morning.

MR. WIEGAND: Yes, ma'am, good morning. Mr. Chairman, members of the commission, I'm Ken Wiegand, the airport director up in McKinney at Collin County Regional.

It's my staff's responsibility to work with the tenants and users and, of course, our consultants to make sure this project happens. It's an $8.7 million project, it's very aggressive, it's expensive, but we're going to save millions over the years in reconstruction costs. This is what you call taking care of what you have before you build new, and our motto is follow all the rules and do things as efficiently as possible, and this project is going to help us do that.

I would also like to compliment the Texas Department of Transportation Aviation Division for their work. I had a job in a former life in another state doing the same thing Dave Fulton does, known him for years, and now I'm working from a different perspective, and he's a tough nut to work with but he really helps and he represents you well and the taxpayers of Texas.

So thank you very much.

MS. ANDRADE: Thank you, sir, thank you very much.

Any comments or questions?

MR. UNDERWOOD: One quick question. Now, this is just going to be to redo your runway. Is that correct? Or are you going to extend it?

MR. WIEGAND: Actually, sir, what we're doing is we're rehabbing, we're doing some spot reconstruction where the sub-base has failed, and then we have overlays. Now the overlay over the runway is going to be 12 inches of concrete -- that's what we're planning -- and that will increase our weight-bearing capacity and also the number of frequencies that these larger aircraft that Mr. Huff addressed -- like the Globals and Boeing 737s, Boeing Business Jets -- can operate on there with a lot more frequency.

Our taxiway is in pretty bad shape. We're going to reconstruct about 1,100 feet of that and overlay it with asphalt. But when we're done, it's going to be a first class facility. This will also complement a replacement runway project we have planned over the next five years.

MR. UNDERWOOD: One other question or two other questions. By doing your taxiway, does this allow you to handle those heavier aircraft? Because they're the ones that are really going to punish those taxiways, aren't they, more so than the runway?

MR. WIEGAND: Yes, sir, absolutely. It's been a mixture of that and storm water. Storm water is the enemy on an airport and we've learned to manage that. We've been working that into all of our projects to ensure that we address storm water concerns and so it doesn't undermine those sub-bases. It's a mixture of that and the weight of those aircraft pumping our asphalt that's causing the damage.

MR. UNDERWOOD: Now, Cutter, is that your FPO now that's on the lease?

MR. WIEGAND: That's correct, yes, sir.

MR. UNDERWOOD: Thank you very much, sir.

MR. WIEGAND: You bet. Thank you, commissioner.

MR. HOLMES: Excuse me. Can I ask just one quick question? What is the runway length now?

MR. WIEGAND: The runway length is 7,001 feet, and don't ask me about the one foot, Commissioner, I really can't answer that one. But that is the official length and it's 100 feet wide.

MR. HOLMES: And the largest aircraft you're able to accommodate now is the 7-3?

MR. WIEGAND: We have had 7-3 traffic. We've limited them to four operations per month. They come in anywhere from 115- to 130,000 pounds, depending upon the fuel. But the Global Express is the next largest or heaviest. It's weighing in at just about 100,000 pounds, especially on departure going across the pond. It's a pretty good size aircraft.

MR. HOLMES: They are. Excellent. Thanks.

MR. WIEGAND: Thank you, sir.

MS. ANDRADE: Thank you.

Next we have Larry Robinson, city manager, City of McKinney. Do we have any questions of the city manager of the City of McKinney?

(No response.)

MS. ANDRADE: All right. You've heard staff's recommendations. Do you have any other questions?

MR. HOLMES: So moved.

MR. UNDERWOOD: Second.

MS. ANDRADE: We have a motion and a second. All in favor say aye.

(A chorus of ayes.)

MS. ANDRADE: All against, nay.

(No response.)

MS. ANDRADE: Thank you very much.

MR. BEHRENS: Agenda item number 3 under Transportation Planning, this will be a recommendation to appoint four members to the Port Authority Advisory Committee. Jim.

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

Item number 3, this minute order appoints four members to the Commission's Port Authority Advisory Committee. This seven-member committee provides a forum for the exchange of information between the Texas Transportation Commission, the department, and committee members representing the Texas port industry and others who have interest in Texas's water ports.

The terms of four of the current members expired on February 26, 2007. The following individuals are recommended to serve for a three-year term expiring on February 26, 2010: Wade Battles from the Port of Houston Authority; Chris Fisher from the Port of Beaumont; Robert Van Borssum representing Port Lavaca/Point Comfort; and John LaRue representing the Port of Corpus Christi.

Staff recommends your approval of these appointments.

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

(No response.)

MR. WILLIAMSON: What's your pleasure?

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

MR. BEHRENS: Agenda item number 4 is our Proposed Rules and our Rules for Final Adoption for this month. Agenda item 4(a) is rules concerning Contract Management. Mark.

MR. MAREK: For the record, my name is Mark Marek. I'm the director of the design division for the Texas Department of Transportation.

Actually, this first set of rules is proposed. This minute order proposes amendments to Section 9.2 and 9.38 relating to the contract claim procedure in Contract Management to be codified under Title 23, Texas Administrative Code, Part 1.

Proposed amendments to 9.2 distinguish the procedures for a contractor making a claim against the department versus the department making a claim against a contractor. The department's authority to issue rules on the matter is contained in Transportation Code 201.112. These amendments are necessary to resolve confusion about where and when the department itself may file a claim.

Subsection 9.2(b)(3) is added concerning the department's authority to file a claim in a court of competent jurisdiction. Subsection 9.2(d) clarifies an ambiguity in the existing language to make the definition of "claim" consistent with the standard for filing a claim. Subsection 9.2(g)(1) amends and substitutes "prime contractor" for "claimant" to clarify that only a prime contractor may file an original claim. A provision is also added setting a deadline for the department to file any counterclaim. Subsection 9.2(g)(3) and (5) adds that the prime contractor shall be given the opportunity to submit a responsive report and recommendation concerning the counterclaim.

Finally, subsection 9.38(f), Errors and Omissions, is amended to show that the department will first give notice to a provider of an error and omission and will attempt to resolve the situation through informal resolution. The amendments also clarify that the department's authority to file a suit in a court of competent jurisdiction is established by other law.

Staff recommends approval of this minute order.

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

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. UNDERWOOD: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

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

MR. BEHRENS: Agenda item 4(b) is a rule for final adoption, and this rule concerns new language for toll projects. Amadeo.

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

Item 4(b) is a minute order before you that adopts amendments to rules in Chapters 27.2, 27.3, 27.4 and 27.5, and adds new Chapters 27.7 and 27.8. and also 27.9 concerning our comprehensive development agreements.

The amendments in the new sections establish criteria for pre-qualification of private entities to submit proposals for design-build projects; they adopt conflict of interest and ethics policies applicable to CDA procurements; they adopt procedures for imposing sanctions on private entities participating in a CDA program that engage in prohibited conduct; they establish additional requirements for the submission and evaluation of an unsolicited proposal; and they also make revisions necessary to ensure consistency in the processing of solicited and unsolicited proposals.

These rules were proposed, they were published in the Texas Register. We did receive comments and those comments were addressed. Staff recommends adoption of these final rules.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation. I will have some questions for Mr. Saenz, but I yield to you first for questions or comments for Mr. Saenz.

MR. HOUGHTON: I have a question, Mr. Chair. What kind of comments did we get back from the proposers? I'm assuming they came from the proposers?

MR. SAENZ: Yes. We received comments from one group. Those comments are all addressed in Exhibit A. Comment number one, that the department is creating a market disincentive by making an evaluation of unsolicited proposals consistent with solicited proposals. Our response to that was that Section 223 of the Transportation Code clearly contemplates that the evaluation of unsolicited proposals will be consistent with the evaluation of solicited proposals. For example, it requires the department to publish the notice advertising a request for competing proposals and qualifications.

It also includes the criteria that we will evaluate these proposals under and the relative weights that we will use to evaluate those proposals so that competitors can come forward and therefore know that these evaluations are ahead of time.

MR. HOUGHTON: Amadeo, do we have more than one?

MR. SAENZ: We received comments from only one developer.

MR. HOUGHTON: That was my question.

MR. SAENZ: I'm sorry, I didn't understand that.

MR. HOUGHTON: That's all.

MR. WILLIAMSON: Other questions or comments for staff, members?

(No response.)

MR. WILLIAMSON: I'll direct the question to you, Amadeo, but perhaps it's more logically directed to Mr. Behrens, we'll see.

If the commission adopts your recommendation, what plans have been made to educate, first, our staff on these expectations?

MR. SAENZ: I'd like to ask Bob Jackson, general counsel, because he's been working on setting up our program.

MR. WILLIAMSON: It's been so long since we've heard from Bob Jackson, I'm not sure we would recognize him. Oh, I recognize him. I'm just kidding.

MR. JACKSON: Apparently since they're not letting me take time off to get a haircut.

(General laughter.)

MR. JACKSON: Bob Jackson, general counsel.

These rules would become effective 20 days after filing which would most certainly be starting tomorrow. I intend, when we file the rules, to postpone the effective date for the ethics rules just a few extra days, make it effective June 1. We'll first start out with written notice to all employees that have anything to do with CDAs with a summary of what it means, particularly the zero tolerance on gifts, so they'll have some notice prior to the effective date of those rules. We then plan, after the session is over, to get everybody together, developers, consultants and all employees of TxDOT that have anything to do with CDAs for training.

MR. WILLIAMSON: So in addition to our own staff, we do intend to reach out to the CDA community, as it were, and train them as well.

MR. JACKSON: Absolutely.

MR. WILLIAMSON: Have we given any consideration -- and again, maybe this is directed to the Aggie at the bar -- have we given any consideration to including this in short course?

MR. BEHRENS: I don't think we've thought about that but that is a good idea, something where we do have a large group of people not only from our TxDOT employees but we always have a large attendance from the consultants and other partners that we do business with.

MR. WILLIAMSON: Well, I think it would be a good idea, unless my fellow commissioners object, that we think about making some time in short course for that because I think as we all watch what's going on across the street, we get the sense that some CDAs are going to move forward; some are going to be held up while the study group does its work, but it would appear that in some shape or form private partnerships are going to continue in our state and we kind of need to let everybody --

I like these rules -- you can't get them too Draconian for me, but for a lot of people, these rules are going to catch some people off guard. Zero tolerance is not the norm in our society anymore and when people realize that you break these rules and you're out of the game, it's going to be an item. So I think we probably are well advised to let people know.

MR. JACKSON: Yes, sir.

MR. WILLIAMSON: Thank you, Bob.

MR. SAENZ: On that same topic, we have several other conferences that go on during the year. We've got our Design and Bridge conference that we have a lot of our people that are from the districts that come to that and we could probably add that to those agendas also to start covering at additional times. That will happen sometime in June.

MR. WILLIAMSON: Anything further, members?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

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

MR. BEHRENS: Agenda item number 5 concerns toll projects. Agenda item 5(a) will be a recommendation about waivers for certain vehicles that use our toll facilities. Phil.

MR. RUSSELL: Thanks, Mike. And good morning, commissioners, Mike and Roger. For the record, I'm Phillip Russell, director of the Turnpike Division.

As the executive director just mentioned, the minute order before you relates to granting free passage for emergency vehicles on our TxDOT toll roads.

Commissioners, just refresh your memory. I believe we had a discussion item, probably last fall, where we began to discuss this in a public format. We had a commission meeting in DeSoto in about January where you all approved a minute order that effectively provided an interim policy on this issue.

So as that minute order was passed, effectively what we did was we provided two sets of guidelines: one for the Central Texas Turnpike Project because it is governed by a bond indenture, and another one that applied to all the rest of the TxDOT toll road projects, 121 and 49. On the Central Texas Turnpike Project, that minute order granted free passage to emergency vehicles in the conduct of responding to emergency situations. On 121 and 49 it was a bit more flexible. It provided that those vehicles had to be on duty.

In either case, those entities are required, at the end of the month when they get a statement from us, to certify which of these activities were for emergency services, respond back to us. And frankly, commissioners, there have been a lot of complaints, a lot of the entities don't like the bureaucracy of having to respond at the end of each month.

So what we've done in the interim since that January commission meeting, we got a traffic and revenue engineer to assess what the impact was, particularly here on the Central Texas project. And again, granted, it's a snapshot in time, there are probably a lot of entities that aren't allowing their vehicles to drive on the road, but based on that snapshot in time, our traffic and revenue engineer has sent a response back to us and their comment is the effect of allowing emergency vehicles on the Central Texas project is de minimis and it has no material effect on the project.

So the minute order before you, if you approve it, would create a consistent policy for all TxDOT toll road projects, not just on the CTTP but any other project, and effectively, what it would do is it would provide for the free passage of any emergency vehicles utilizing our system, and generally, it would not require those entities to provide any sort of certification at the end of each month.

So staff would recommend approval of this minute order, and I'd be happy to address any questions you might have.

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

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

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

MR. BEHRENS: Agenda item 5(b) will be the recommendation to accept the General Engineering Consultant progress report for the Central Texas Turnpike System.

MR. RUSSELL: Thanks, Mike.

Agenda item 5(b) is the quarterly update. This effectively goes through February of this year. The project continues to make good strides. We are quickly getting ready to open up the western segments of State Highway 45 piece as it relates to US 183. The sections of 130 continue to develop very quickly. Our general engineering consultant, PBSJ has indicated that the project is on track and on schedule to be completed by December of this year.

Currently the project -- and currently, as I say, as of February when this report was finalized -- the project is $368 million under budget. And so everything is in pretty good shape.

The one comment I would make, commissioners -- as you all know, we opened the project early, approximately a year early last fall, and we probably could have a done a little better job communicating to the public why we're opening it early. It seemed like it was pretty straightforward. We still do receive some complaints from people saying, why did you open this project; you still have some ongoing work there, and the idea always was we were not going to let that project sit there latent if it was essentially complete, as long as it was safe, we were going to open it up to traffic and let people move on through it.

But I think we probably should have done a little better job communicating to the public. As we continually work to fine tune some shoulder work or some toll collection equipment, we'll get a few complaints saying why did you open the roadway unless it was complete and in perfect condition. So we have some continuing work that goes on on those first two segments of 130, as well as pieces of 45, and it creates sometimes a temporary delay for the traveling public. Most of that work, we try to schedule it for the nighttime hours so it doesn't delay them. But anyway, I'll just go ahead and make you aware of that. For the most part, I think it's been very positively received.

And again, staff would recommend approval of this GEC report.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation. I will have a question related to 130 but not the minute order. Do you have questions or comments?

(No response.)

MR. WILLIAMSON: Phillip, this is the only place on our agenda that I can really talk about this. Again, listening to policy makers across the street, it occurs to me that not only on 130 and Interstate 35 but in all future parallels or supporting facilities that we move forward on that are toll facilities, we need to establish known points of measuring traffic on a regular basis.

I've had a lot of questions directed to me about what is happened to congestion on Interstate 35 since this segment of 130 has opened. I've also had some questions directed to me from policy makers who are concerned about the staff's decision to move forward with 130 Segments 5 and 6.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: I've tried to explain that the reason congestion in downtown Austin isn't any better with the opening of 130 is that congestion starts at a fixed point and works its way out and if you're not relieving the fixed point, you're relieving everything on the way out, you have to have a complete corridor to actually relieve congestion on the complete corridor. I think the traffic counts will help policy makers understand the implications of parallels, the implications of non-compete provisions that might have to be written into CDAs, and the implications of shifting traffic under different conditions.

And I think if we've got fixed points that we measure that, for example, Ms. Dukes in Austin could recognize well, you're measuring this point on 130 and you're measuring this point on 35 and traffic has decreased here and increased there, she can see those two fixed points and she can connect in her head how that may or may not have accomplished the policy that she expected to accomplish.

In addition, we need to establish some criteria, primarily for former Commission Member Nichols, I think, indicating why the completion of 130 has a financial impact -- I think he knows it has an impact but I think the question he might have is how much impact it has on the cash flow of 130-1, 2, 3 and 4. One of the things that we never could -- and my fault, I'm sure -- quite explain correctly was the positive cash flow impact on 130-1, 2, 3 and 4 when you open 5 and 6 up, and we might ought to think how we can establish some criteria for reporting on that when the time comes.

MR. RUSSELL: Yes, sir. Chairman, just a couple of thoughts, and I know Jim Randall is in the back of the room, so we absolutely will work with TP&P to make sure we have those abilities to track that traffic.

Just a couple of points I'd like to make. When we initially launched the project back in 2002, what those initial studies suggested is 130 had a relieving effect not only on I-35 but also other north-south arterials, and there aren't many of them in Austin, but primarily 183, MoPac, Lamar Boulevard, whatever. Would it be your intention to also try to track traffic on those, or just primarily I-35 as the major congestion point?

MR. WILLIAMSON: Well, thank you for expanding my thoughts about that. I think it's important, it's apparent to everyone, it's no secret that this is a highly emotional discussion the state is having about these things, and to the extent that we can offer objective criteria that demonstrates, perhaps to Senator Watson, the positive impact on the city and county budget of traffic congestion relief on Lamar Boulevard, if that were to happen, I think we need to be prepared to demonstrate that.

I think as we enter the era of more toll facilities and more privately financed toll facilities, we have to be prepared to show policy makers there are valid public policy reasons to do this that frequently aren't in front of us, that are not easy to measure but are, nonetheless, of a benefit to our citizens, and if traffic relief extends to Lamar or Burnet Road or 183, we most certainly should be able to demonstrate that.

MR. RUSSELL: Second point, Chairman, is regardless of whether 130 was a toll road or a non-toll road, the challenge always is you have the community of Hutto that is increasing from 700 population to 15,000, or whatever the numbers are, Georgetown increasing from 5,000 to 50,000, so you've got obviously a huge influx of people that are going to fill up those roadways regardless of whether you're building 130 or 35. So the challenge will always be to be able to show that reduction on 35, Lamar, Burnet Road, 183 when we have such a flock of people moving in.

I would anticipate that the traffic on 130 is going to move up incrementally very quickly. It will be interesting as we look at the traffic on 35, Lamar and Burnet Road. The concept, I guess, from a layman's standpoint, people get it -- you bet, Hutto is growing. Where would those people have driven if not for 130? I don't know. They would probably be sitting in traffic on 35 even more. I guess my point is when congestion gets so bad, sometimes it's a challenge to show how much that congestion is being eased.

MR. WILLIAMSON: It's difficult to make the case that if you hadn't had done this, how much worse would it have been.

MR. RUSSELL: Yes, sir, exactly.

MR. WILLIAMSON: Members, other questions or comments for Mr. Russell?

(No response.)

MR. WILLIAMSON: Okay, members, you've heard staff's recommendation.

MR. UNDERWOOD: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

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

MR. BEHRENS: Agenda item 5(c) is concerning a regional protocol that we have with the North Texas Tollway Authority, the protocol being used for the development, construction, operation and implementation of current and future toll projects in the Dallas-Fort Worth region. Amadeo.

MR. SAENZ: Thank you, Mr. Behrens, commission. Again for the record, Amadeo Saenz, assistant executive director for Engineering Operations.

Agenda item 5(c) deals with the actions that we can take with respect to the regional protocol that was put in place between ourselves and the North Texas Tollway Authority.

In August of 2006, the commission approved a TxDOT-NTTA regional protocol which implements procedures to allocate and speed delivery of transportation projects identified in the region's transportation plan of the North Texas Council of Governments. On March 26, the chair of the RTC Transportation Policy Board for the COG and the MPO sent a letter to our chairman of the commission and also the NTTA board, requesting the NTTA board to determine if it wishes to submit a proposal for the 121 project in Denton and Collin counties, and if they needed to do so, they were to report back to the RTC. If NTTA wishes to submit a binding commitment, the letter provides that that submission would be due back to the RTC by May 5 of 2007.

On April 11, the NTTA board of directors met and directed NTTA staff to prepare a proposal for the construction and operation of the 121 project with the understanding that the proposal would not be delivered or released to any party until the NTTA board subsequently reviews, approves and authorizes its delivery.

The submission of the proposal for the construction and operation of the 121 to the RTC would be inconsistent with the current provisions in the protocol which NTTA committed to support the CDA delivery by the department for 121 and it agreed that NTTA would not be making a proposal as a public sector comparator for that project.

But since the NTTA board has not taken formal action to approve and authorize the actual delivery of the proposal, we cannot determine the actual impact on the protocol agreement whether it violates it or breaches it, so therefore, staff recommends that we defer this minute order until we get formal action from the NTTA board, and at that point, then we can bring it back to the commission at our next commission meeting which is the day before the RTC has requested submission of the proposal, or we could do it on a special meeting so that we can take appropriate action so that we can know what we need to do to the protocol agreement.

So staff would recommend at this time that we defer the minute order and wait to see what the NTTA board does.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation. We have one witness on this matter. It's been this commission's tendency to want to hear the witness first before we dialogue. Is that your pleasure?

MS. ANDRADE: Yes.

MR. WILLIAMSON: Jerry Hiebert.

MR. HIEBERT: Good morning, Mr. Chairman, members of the commission. For the record, my name is Jerry Hiebert. I'm the acting executive director for the North Texas Tollway Authority. We also have in the audience Jack Miller who is one of the directors of the NTTA board; we also have Mayor Bob Day from the City of Garland, and also Michael Morris from the Council of Governments, should you need those folks as resources.

I think Amadeo did a great job of summarizing the history on all of this. Our board did meet in early April and direct the staff to prepare a proposal on 121 for construction and operations, but as Amadeo said, in the letter did reserve the right to review that, obviously, and approve it before it would actually be submitted.

That puts us up against it, if you will, because prior to that time, prior to the invitation from the RTC, we had agreed with you that we would not bring forward a proposal on this, and so we're in a bit of a quandary. I think even Amadeo's letter to us that said please feel free to move ahead; we'll put this on the April agenda to consider it, anticipates that this would, in fact, be a breach of the protocol and that's something that our board takes very seriously. We have an agreement with you; it's our intention to comply with that agreement. So my concern is that a deferral right now continues to put us in a tight place.

We heard clearly from the RTC and district engineer Bill Hale indicating that there is a firm drop-dead date on the private sector proposal that's before you of June 25. We heard from the RTC that we need to have this information as soon as possible because nobody wants to play brinkmanship with this procurement process. We certainly heard that loud and clear, and I will tell you from the staff's perspective that our commitment is to get with our board sooner rather than later.

We have no desire to push anyone to the point of having to make a decision that is less than fully informed, that is somehow driven by drop-dead dates, and so our intent is to try to move more quickly than the May 25 date as opposed to pushing it up to that date.

And my concern would be that if you defer action today, we're still stuck in this middle. We take seriously the agreement that we have with you, but we would certainly like to know that we have your blessing in moving forward and bringing a proposal forward, as opposed to having to act more expeditiously, but to have a caveat on that proposal that this is only a proposal if subsequently the commission approves a waiver.

I don't think that's the best way for us to move forward and to get clear numbers, so I'm here to sincerely ask that you waive that requirement and if it's a waiver for a set period of time, from today until May 26, that would be fine, that if we don't submit a bid in time, that this waiver is off the table and the protocol still stands.

I think that would be acceptable to us, but we certainly would like to know that we have the commission's blessing in the form of this waiver for us to bring forward a proposal that hopefully the RTC can determine which one best serves the region.

So I'm here to answer any questions that you might have and we also have some other resource folks here too.

MR. WILLIAMSON: I have a few questions for the witness, members, but I defer to you if you have questions or comments, dialogue with Mr. Hiebert.

MR. HOLMES: In the process of making a determination as to whether NTTA would bid on 121, would you also evaluate the balance of the protocol, the projects that are called for in the protocol and reconfirm that you continue to be committed to those as well?

MR. HIEBERT: Absolutely.

MR. WILLIAMSON: Any other questions or comments at this time?

(No response.)

MR. WILLIAMSON: You know, Jerry, we're all in kind of a difficult situation in this.

MR. HIEBERT: Yes, sir, I understand that.

MR. WILLIAMSON: Let me tell you how I evaluated this. I've spent the better part of three weeks reading all the various documents that all of us have exchanged, and I pondered carefully the actions of your department a few weeks ago where your board apparently -- and I said apparently because I don't find a vote, I don't find an action item of your board -- your board apparently authorized you to prepare internal documents for your board to consider. Now, that's not a proposal to the RTC, that's nothing more than a dialogue.

I've compared it to how we would deal with our staff. If our staff came up here with a discussion item on the impact of regional toll authorities on the CDA process and we had a dialogue about that and then said to staff go back and prepare for us a minute order that will reflect the following policy objectives, that would not be a formal action that we took to roll the process of posting of meetings, posting of drafts, taking public comment, and so on. There would be nothing formal about it.

The difficulty that I think the commission faces is that your agreement is with the RTC, it's not with us -- not the protocol but your agreement to either provide or not provide a formal proposal on 121 -- and for us to do anything would be, once again, viewed by some as inserting ourselves into the relationship between NTTA and RTC.

I liken this, Ned, to us inserting ourselves into an agreement or disagreement or discussion that might be going on between HCTRA and the HGAC MPO. For us to take any action or inaction could only be viewed as inserting ourselves into the dynamic tension that ought to occur between a toll authority or a regional toll authority and its planning organization with which it has to conduct its business.

So while I hear what you're saying and I understand what you're saying, and I will tell you, at least from my perspective, if it's necessary for us to amend the protocol to protect your board when your board presents a formal proposal to the RTC, we'll do it like that, because if your proposal is better than what's out there, it's our objective to support whatever is best for the citizens of North Texas, once again, we don't care who builds the road.

So I'm inclined to follow staff's recommendation. Staff's recommendation is that they've looked at all the documents, there's no reason to amend the protocol at this time because you haven't made a formal proposal, the protocol is intact.

MR. HIEBERT: Well, if I may. If we go down that track, then what are the optics to the public going to be because we, like you, are a public agency, we cannot conduct any kind of official business outside the public eye, and so when we come to our board with the information that they have requested us to bring to them, then all that information is going to be present and open for public dissemination and obviously the formal submittal will have to take place after our board has acted on it.

So that's going to put the commission in a position of either: A) as the RTC has indicated, actually slowing down the consideration of this because our proposal can't be acted on until the waiver is reviewed, and so our region may be subject to your meeting schedule; or it's going to be in a position of well, there will be a waiver there if you like the proposal that comes from NTTA, but if you don't like it for some reason, then there's no waiver.

MR. WILLIAMSON: Listen, Jerry, I most strenuously object to what you just said because it will not be up to us to approve your proposal. That is a business relationship between NTTA and RTC. And frankly, it appears to me that we are constantly being tempted to get into the middle of that relationship, and we're not going to do that.

MR. HIEBERT: Well, that's certainly not our intent because we take that agreement very seriously.

MR. WILLIAMSON: We wouldn't dare. If the RTC said to us please stop the procurement, we're going to go down this path, we wouldn't dare dream of making any other decision but supporting that. We believe in regional planning, we trust county commissioners, city council persons and local transportation planners. If that's their decision, that's fine with us.

MR. HIEBERT: Okay.

MR. WILLIAMSON: And if you want an expression from the commission that we will call an emergency meeting and do whatever is necessary to keep the protocol whole for you on your other projects, we'll do that. We will not sit in judgment of this decision.

MR. HIEBERT: And I think we're very driven by what we heard at RTC of not wanting to push any of this procurement to the brink, and so we're moving with all haste and all deliberation to try to make this decision and present this information to our board as quickly as possible as opposed to pushing up against the outside time limits. So I wanted to make sure you were aware of that.

MR. WILLIAMSON: Listen, all Paul has got to do is just send us an email that says we are preparing to make a formal proposal pursuant to Cynthia White's letter of whatever, and I will call a special meeting of this commission and we will amend that protocol immediately. But until a formal proposal is forthcoming, this has been a tough session and we just don't want to be drug into. We've taken the policy position that we want local toll authorities, county toll authorities, RMAs to deal directly with the MPOs and plan regional solutions to regional problems, and we're trying mightily to stay out of the way. We do believe in it, we really do.

MR. HIEBERT: Okay.

MR. WILLIAMSON: I'm sorry. Go ahead.

MR. HOLMES: Mr. Chairman, just for clarification, I've heard some inconsistent dates, and I don't think this is a question directed at Jerry but it probably would be useful information. I hear that there is a drop-dead date in June but I've also been told that it's actually really July.

Amadeo, can you shed light on that?

MR. SAENZ: The dates that we have with respect to the CDA and the proposal that we have in hand, John can give us the dates that we have.

MR. MUNOZ: For the record, my name is John Munoz. I'm the deputy director of the Finance Division.

The date of May 25 is the date that the RTC had requested that the North Texas Turnpike Authority submit the proposal for the comparative purposes.

MR. HOLMES: And the CDA date?

MR. MUNOZ: Yes, we have some additional dates for evaluation purposes of the proposal should the North Texas Turnpike Authority submit that proposal. We are going to be going through a comprehensive evaluation, we're going to be supporting the Regional Transportation Council in the evaluation effort, and we have set up a timetable that allows for commission action, if necessary, on June 6.

MR. HOLMES: But the current proposal, not NTTA but the Cintra proposal, I've been told it's sometime late June, I've been told it's sometime late July, and there's some extension provision.

MR. MUNOZ: Yes, there are extension provisions within the arrangement that we had, what we call the instructions to proposers. The initial deadline was April 30 for commercial and financial close. That was 61 days after the commission had made a best value determination on the project. We have an ability to extend that, the proposer has the ability to extend. They can extend a total of 105 additional days beyond that. Some of that is at our discretion; some of that is at the proposer's option.

In addition to that, the proposal itself, from January 26 to 180 days beyond that is good, they're committed to that proposal, and there's an option to extend another 90 days, and so it's a total of 270 days that their proposal is good for. That brings you all the way out to October 23 of 2007.

MR. HOLMES: What I was concerned about, Mr. Chairman, if there ultimately is a proposal from NTTA, is there an appropriate amount of time to actually be able to evaluate it, and that was the concern.

MR. WILLIAMSON: Thank you for helping establish that. Apparently there is an appropriate amount of time.

MR. HOLMES: It sounds like it, yes.

MR. WILLIAMSON: Anything else, members?

(No response.)

MR. WILLIAMSON: Mr. Hiebert, please return to Dallas knowing we don't care. If you get the better deal, that's the best deal for Texas.

MR. HIEBERT: I hear that loud and clear, yes, sir.

MR. WILLIAMSON: That's the best deal for Texas, that's the best deal for Texans, that's all we care about.

MR. HIEBERT: Thank you. And let me say we appreciate Mike and Amadeo and their staff. They've been very accommodating as we've gone through this, and we appreciate that.

MR. WILLIAMSON: You're always welcome here.

MR. HIEBERT: Thank you.

MR. WILLIAMSON: Members, I think we will defer this item until a special meeting is necessary or until we have our regular meeting in May.

Proceed.

MR. BEHRENS: Agenda item 5(d) is also for Dallas County, and this will be to consider recommendation for final approval of a request concerning the extension of the President George Bush Turnpike. Amadeo.

MR. SAENZ: Thank you, Mr. Behrens. Again for the record, commissioners, Amadeo Saenz.

Item 5(d) has several items that are up for consideration. It concerns basically the George Bush Parkway, State Highway 190 between 78 and 130 in Dallas County which is the eastern extension of the President George Bush Turnpike.

Let me give a little bit of history before I move forward. In January 2007, the commission granted preliminary approval of a request from NTTA for financial assistance of $160 million to be used for the acquisition of right of way, relocation assistance, utility adjustments and related costs and services with respect to the eastern extension of the President George Bush Turnpike. It's a planned 10-mile facility extending from State Highway 78 to Interstate 30 and it was also contingent on the execution of a revenue-sharing agreement.

We have been working with the NTTA on the finalization of this agreement and the terms we're still negotiating, so at this point we're not ready to move forward with the toll equity request.

Also required for this project to move forward are several things. One is the removal of State Highway 190 from the state highway system. It is currently on the state highway system and designated as a state toll road. Also, the NTTA must make improvements to some highways that this facility crosses over. For example, there's some improvements on 78, some improvements on 66, and of course, there may be some improvements on Interstate 30, and then, of course, the public entities' connections to all these facilities need to also be approved by the commission.

NTTA has not submitted the written request for the connections as well as for the work on the public right of ways, so we're not acting on those yet. What we do want to act and move forward on to allow the NTTA to proceed with their project is to remove this segment from the state highway system. This will allow NTTA to continue and start purchasing the right of way for the portions of the facility that are the turnpike. They can then designate the facility as a turnpike and not waste any time.

If you all recall, at the last meeting when we had the presentation from the Dallas-Fort Worth area, they were talking about overruns in that project that would equal to something like $4 million a month, so this will allow them to move forward with the project as we get all the other things that need to be done on this project concurrently.

So staff would recommend that we approve the minute order that would remove the State Highway 190 between 78 and 130 off the state highway system, the main lanes of that facility.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation, and we do have witnesses. This is a little bit of an exception to our established rule. I think before we hear again from Mr. Hiebert and Mr. Day, who is the mayor of the City of Garland, it would be useful for all of us to engage Mr. Saenz in a bit of a discussion about cash flow. With your permission, I would like to do that.

I take it James Bass isn't here today and we would be catching John off guard if I started asking questions out of the blue about cash flow.

MR. SAENZ: That would probably be correct, yes, sir.

MR. WILLIAMSON: I know that you haven't mis-stated the minute order, I know that you're continuing to negotiate with NTTA, but to what extent is your decision to continue to negotiate details with NTTA driven by the department's concern for having to revise its cash flow for the next five years?

MR. SAENZ: We have been working on the negotiation of the minute order for the toll equity grant and the other requirements that were part of that agreement, including the revenue-sharing for the President George Bush eastern extension project independently. Separate and apart from that, we've been looking at our cash flow with respect to what we can project coming from Federal Highway Administration, what we can project we will need in the different areas, for example, what do we need in the area of preservation and rehabilitation of our pavements.

We received our annual report from our Construction Division dealing with the conditions of our Texas pavements, and if you'll recall, back in 2001 we have set some goals that we wanted to have our pavements -- 90 percent of our lane miles needed to be what we call good or better condition, and what that means is we wanted 90 percent of our lane miles to have at least a pavement condition rating of 70.

Every year we do an evaluation of all of those lane miles and a report is generated, and from 2002 when we started trying to accomplish our goal and set our 10-year plan which we wanted to accomplish by 2012, we have been moving forward and making some good strides. In fact, our pavement scores have gone from the low 84 in 2001 all the way to a little bit over 87.3 in 2005. This year's report that involves last fiscal year, our pavement scores dropped almost one percentage point, in fact, three-quarters of a percentage point, from 87.34 to 86.69. Part of that could be attributed to our drought conditions that we have had, but also part of it is attributed to additional traffic that has been using our facilities.

We are, at this point, evaluating the impact as to what do we need to do with respect to moving our resources around, our funding around to put enough money in pavements and rehabilitation to try to get back on course. One of the things that we looked at very closely is how much have we been actually expending in the last few years on preservation, rehabilitation, and preventive maintenance.

In the last few years we've increased from about $1.1 billion to almost $1.4 billion, but yet in 2005 where we spent $1.4 billion, our 2006 ratings -- which is for work done after 2005 -- showed the drop. So it shows that we need to somehow look at our pavement conditions, determine how much more resources we need to apply to that to get us back on track.

MR. WILLIAMSON: So it's fair to say that there are legitimate contract issues that you have yet to work out with NTTA, but it's also fair to say that in the back of your mind you're beginning to suspect we're going to have to rearrange cash flow and direct more towards rehabilitation and maintenance?

MR. SAENZ: Yes, sir. And that will have an impact of cash flow since we are capped in what we project that we will get from state gasoline tax as well as from federal reimbursement. You have a set amount, so if you have to put more money in preservation, you have to take money from the other categories which are mostly the mobility categories as well as the commission's strategic priority category which is usually most for mobility. But we'll have to shuffle money around to be able to address our pavement needs, and then we also need to look at other conditions.

When we look at pavement needs across the state, we see some of our major corridors, like the interstate, specifically the interstate in the metro areas, that are suffering quite a bit.

MR. WILLIAMSON: When you say metro areas, is it primarily Dallas-Fort Worth, Houston-Galveston, Beaumont?

MR. SAENZ: The districts that have the pavement condition ratings that are at the low end are the metro districts, specifically Houston and Dallas, so we need to look at that. Where the state as a whole is at 86.34, our pavement scores in Houston and Dallas are in the low 70s. So we're going to have to look at, one, what's happening there, what do we need to do to address and put more resources to bring our pavement conditions up in that area, and then what impact will that have on the mobility money that goes into that area as well as mobility money and maybe other pavement preservation money that will have to be shuffled from other parts of the state to address those needs in that area.

MR. WILLIAMSON: To what extent are your concerns driven by your -- well, let me ask the question a different way. To what extent do our cash flows over the next ten years assume a certain level of comprehensive development agreements?

MR. SAENZ: Well, we had a plan, we have projects that are well underway, those projects are mostly being developed in the metro areas. What those projects would do, for example, projects like the 121, would also include the maintenance of 121, so it would have freed up maintenance money that we're currently using on 121, maintenance money that we were going to be using on 161, maintenance money that we were going to be using on LBJ and on some of the other projects, that would have freed up that money to use on the rest of the system. So it could have allowed those metro areas to use that money to meet some of their needs of the other non-CDA facilities with respect to maintenance.

MR. WILLIAMSON: Could the same be true of San Antonio?

MR. SAENZ: The same thing in San Antonio. When we move forward with the CDA on 281 and 1604, the maintenance is part of that CDA, so any maintenance money that we had set aside or apportioned for the 1604 or the 281 now is freed up to use on the other facilities within the district within the San Antonio area. By not moving forward, it impacts cash flow.

MR. HOUGHTON: Excuse me, Mr. Chairman. To what extent are our partners at the MPOs aware of what we've been talking about today?

MR. SAENZ: We had a video conference call with the MPOs on Monday to roll out this situation and try to get some feedback from them and start preparing them to look at the potential impacts that this would have in that in the future, based on the revenues that we project, and some of these are still unknowns because we do not know what exactly will happen after 2009 when the new federal bill comes in.

If you all recall, we've just gone through some rescissions, that we expect to probably have another rescission between now and then, and of course, the federal bill itself included a potential $600 million rescission in 2009. So if that happens, we're going to have to adjust what we've projected as available resources, what we've projected as programming amounts in the different categories. Compounded with the preservation needs that we have to shuffle, it will result in much less money for mobility.

MR. HOUGHTON: So if you were to summarize, from what I'm hearing you say, is that Category 2 mobility will take a hit.

MR. SAENZ: I think all of the mobility categories.

MR. HOUGHTON: All of the mobility categories will take a hit, including pass-through.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Including pass-through?

MR. SAENZ: Including pass-through. In fact, we have been in communication with the people that have been submitting projects or are working on projects and told them that the pass-through toll projects are being funded through your commission strategic priority. We set aside about $225 million in that.

If we have to adjust our resources and move money from the mobility categories, including Category 12, to preservation, we'll have less money to do pass-through toll projects, we'll have less money to do economic opportunity projects that come in, we'll have less money to do emergency projects which is what we use Category 12 for. So the other thing is we're going to have to probably take some of that mobility money and apply it to preservation and rehabilitation.

MR. HOUGHTON: So toll equity grants are at risk here.

MR. SAENZ: That's correct, yes, sir.

MR. WILLIAMSON: But not what we've already signed.

MR. SAENZ: Any agreement that is already executed and the locals are already working on their projects, those are already contracts and in place.

MR. HOUGHTON: So nothing that's contracted.

MR. SAENZ: But anything that has not been contracted, that we don't have an executed agreement, depending on what comes out of our evaluation, we'll have to see what impact cash flow will have on that.

MR. HOUGHTON: And you see a shifting of the formulas, a reallocation of the current formula method?

MR. SAENZ: Yes, sir, and I think it's also we did the formulas in 2001 where we brought in the work groups, and one of the recommendations from the work groups was about five to six years later they wanted to come back and look at that. I think as we address what our pavement preservation needs are, address what our rehabilitation needs are, we're going to have to come back and review those formulas so that we can see how that money would be allocated throughout the state.

MR. HOUGHTON: Do you see a shifting of dollars -- and I'll pick on El Paso -- from El Paso to the Metroplex?

MR. SAENZ: If you look at El Paso's scores -- I have them here.

MR. HOUGHTON: I mean, in all reality?

MR. SAENZ: In all reality, yes, I would probably say that we will see a shift within metropolitan areas but we may also see a shift from the non-metropolitan areas into the metropolitan areas, from the rural areas into the urban areas, from the urban areas into the metros to be able to address, because the mobility needs are still the greatest in the metro areas. And if our preservation needs are also greater in those metro areas, we're going to have to bring in resources from somewhere and the only place you can bring them is from the outside.

MR. WILLIAMSON: So you will be recommending to the commission that we reapportion or reduce cash flow towards those projects that will have the most impact on reducing congestion and improving air quality.

MR. SAENZ: Yes, sir. When you have limited resources, you've got to apply them to the areas that will give you the most benefits.

MR. WILLIAMSON: Well, I was aware that you had some contracting issues with the current minute order, but I felt like in the back of your mind, based on what we see, considered that there were some concerns about cash flow.

MR. SAENZ: Yes, sir. And of course, all of these projects, even these toll equity grants that we're providing to projects, will have an impact on cash flow. So we're going to have to look at everything that we have, look at what impacts come out as we see what additional tools we have or we do not have after the legislative session, and then see what impact they will have on cash flow. And then, of course, we need to see what commitments are already out there and those commitments that are already executed need to continue, and then we need to readjust to see how we address the rest.

MR. WILLIAMSON: Now, members, we have three witnesses.

MR. HOLMES: Mr. Chairman, may I ask Amadeo? First of all, I appreciate your bringing this to the attention of the commission and the public. Funding pressures are really significant.

Amadeo, you mentioned that if 121 and some other projects in the Metroplex went forward on a CDA-type basis, that the future maintenance costs would be passed on and not borne by the department.

MR. SAENZ: That's correct.

MR. HOLMES: Clearly, any time you have a project that has an ongoing maintenance project that is assumed by an entity other than the department, it's a benefit, but have we actually quantified any of that in terms of the relief the department would have on maintenance costs on those specific projects?

MR. SAENZ: We have some numbers. For example, I'm going to talk a little bit about what we're doing on the 190 agreement in that even in that agreement, as we were working with NTTA as part of the revenue-sharing, they were going to take over the maintenance of the access roads that would be built as part of that project. And I think they were providing something like $10,000 per lane mile per year.

So as part of the agreement we're working, we were going to have a revenue-sharing because we were providing toll equity to the project, and at the same time they were also going to take over and pay for at least $10,000 per lane mile of maintenance on those frontage roads.

MR. HOUGHTON: That's not the complete cost, though. I would say at least $10,000.

MR. SAENZ: Well, they were going to provide $10,000 towards the maintenance.

MR. HOUGHTON: I remember, Mr. Chairman, when we were looking at SH 130 and we looked at CDAs and at that time then-Commissioner Nichols was real focused on the CDA process and how we transfer the maintenance and we had charts on the actual maintenance transfer. That was a big issue with then-Commissioner Nichols on transferring that maintenance. We still have that information, don't we?

MR. SAENZ: We have.

MR. HOUGHTON: I mean, there are some interesting numbers on the dollars that are transferred to either the public or to the private sector on these maintenance transfers.

MR. SAENZ: We can go back and get that information and pass it out to the commission.

MR. HOLMES: Ted, don't I recall that it was like a billion seven in the 121 for operating and maintenance over a 50-year period?

MR. SAENZ: The operating and maintenance on the 121 project had a net value of $1.7 billion over the 50-year life.

MR. HOLMES: And that's one roadway.

MR. SAENZ: Yes, that one facility.

MR. WILLIAMSON: Ms. Andrade.

MS. ANDRADE: I have a question for Amadeo. Let me make sure I heard you correctly. Because of our cash flow situation, future toll equity, future pass-through agreements may be at risk.

MR. SAENZ: Future toll equity, future pass-through toll agreements, and the amount of money that we have available to maintain and preserve our system are going to be impacted.

MS. ANDRADE: They're going to be affected.

MR. SAENZ: Yes. And then, of course, it's going to be up to us to make an evaluation and come before the commission to tell you what would be the recommendations of where to apply that money with respect to making sure that we preserve our system which is one of your strategies, and then how do we reach a balance to allow for mobility and then where that mobility would be addressed.

MR. HOUGHTON: In the risk of seeming to negotiate new formulas, Michael, what's been the increase in vehicle miles traveled up in the Metroplex area?

MR. WILLIAMSON: Mr. Morris is one of our witnesses, members. Would that be a lead-in to let the witnesses speak?

MR. HOUGHTON: I saw his card.

MR. WILLIAMSON: He saw where we were headed.

MR. MORRIS: Michael Morris, director of transportation at the North Central Texas COG. I did not plan to speak on this particular item until certain things were registered, and you don't know where we're headed within the region and I think it's important to give you an early discussion.

With regard to vehicle miles of travel, vehicle miles of travel in the region is increasing 3 percent a year, a million people are coming every seven years, truck vehicle miles of travel -- which is the cause, in my opinion, of why your pavements are seeing a little bit of decline -- is increasing at two to three times that rate.

So no different than that aviation discussion you had about heavier airplanes, when you have more trucks on pavements and you have drilling operations in rural areas whose roadways were never intended for those type and size of vehicles --

MR. HOUGHTON: Well, Michael, I remember giving a speech up in Dallas at the Dallas Chamber of Commerce and I got some facts from either you or the department that over the last ten years the Metroplex has seen a 48 percent increase in vehicle miles traveled but they've only seen an increase of 14 to 15 percent in lane miles.

MR. MORRIS: Yes. We're presenting tomorrow to four senators population changes of 40 to 50 percent over a 10/12/15 year period, vehicle miles of travel about that same magnitude, lane mile changes 10 to 12 percent. So our demand is outstripping supply changes by four to five to one.

MR. HOUGHTON: Houston was similar.

MR. MORRIS: Yes. All of our urban regions are facing that.

MR. HOUGHTON: And that gets me to the question if I look at El Paso and vehicle miles traveled, I think it's significant less lane miles a corresponding number. So Amadeo, what I'm looking at there is you're going to be looking at Amarillo and El Paso and Lubbock and those that don't have those big ramp-ups like the Metroplex and Houston have and potentially shifting those dollars to where they need to be.

MR. SAENZ: Yes, sir.

MR. HOUGHTON: To match the population growth, to match the vehicle miles traveled.

MR. SAENZ: We'll look at all that criteria.

MR. HOUGHTON: That may seem heresy to folks, coming from an El Paso commissioner that I'd be talking like that.

MR. SAENZ: We're just going to have to look at the resources we have and then properly allocate them.

MR. WILLIAMSON: So as a lead-in to the return of Mr. Morris to the witness stand, I can presume that your recommendation on this minute order to proceed with a portion of our plans and to not proceed after you can finish some contract arrangements, or a combination of finishing those contract arrangements and having to re-calibrate for the commission what future cash flow might be.

MR. SAENZ: That's correct. It would be really looking at the cash flow impact, the completion of the agreement on this particular project, but in the meantime, our recommendation is to move forward with the minute order today to take it off the state highway system and that will allow the NTTA to proceed with the project, that way they can start doing some of the other work that needs to be done and not waste time and let the project costs escalate, as they've indicated.

MR. WILLIAMSON: Mr. Morris, will you continue.

MR. MORRIS: Mr. Chairman, thank you very much for your indulgence.

Staff is here and we support Amadeo's recommendation to you today. I think it's important to establish what the policy context should be on your right of way discussion as you move forward.

The Regional Transportation Council has taken a position that transportation policies within the region have to be more consistent across corridors. If you're building a toll road versus a gas tax roadway, there should be similar implications with regard to policy and if RTC and/or TxDOT build a toll road through a CDA process versus NTTA building a toll road, then that right of way policy should be consistent too. It shouldn't be depending on what name badge you have depends on what the implication to local government is with regard to right of way.

Now, I'm just talking historically. Historically, North Texas Tollway Authority would build a project, the right of way was the responsibility of the local community to obtain that particular right of way, and then they would build that particular toll road. If you build a gas tax roadway, you have a right of way fund on your system to build that. So on the one case the local government is not paying and on the other case the local government is. And of course, the local government is purchasing the right of way when it's a little bit more difficult for the local government because they're not getting a gas tax roadway, they're actually getting a toll facility.

One of the policies that is integrated in this protocol that we're trying to work out with North Texas Tollway Authority is the following: that the burden of right of way should not be on the local governments but should be on the state agency to procure, be it the NTTA or TxDOT.

The idea we're toying with is for you to continue -- I know financial elements are going to continue to be tough -- but for you to continue to use your right of way fund to be leveraged in corridors where there are toll roads. Now, the importance of leveraging is important because right now when you put your right of way into a gas tax roadway, it's a sunk investment, you're not getting any return of that. This particular idea is when it goes into a toll road project, either by a CDA or an NTTA toll road, that revenue would come off of that toll road to repay for the right of way that's in that particular corridor.

I think it's the best way to expedite projects. The last thing you want is to have the construction cost to build the project waiting on the right of way of $4 million or $12 million from a local government with regard to the right of way on a particular project. You've got pennies that are holding up dollars.

The thought then would be if your right of way money is brought in, as you continue to contemplate this policy over time, then you get your right of way money back and the thought is you keep it in a revolving right of way loan program within the particular region. So in this case, if you could follow through in the coming months, send the $160 million up into that particular project, have your partnership with the North Texas Tollway Authority; we negotiate with the North Texas Tollway Authority the return of that $160 million at some point over time; that money stays within the region in a right of way revolving loan program that will be used to build other projects; that money then builds those projects, that money is then returned.

And you have the ability of having: a) consistent policies within the region; b) don't have the public policy issue that when you have to take the toll road, the locals actually have to come up with more money. And hopefully we can work out with NTTA the return of that cash to a particular program so you are held whole with regard to your commitment of that particular project. It doesn't change what you're doing today but one of the things that I think will be very detrimental is if the burden of right of way purchase gets pushed onto the locals, then we're going to be slowing down what is a whole host of projects we're trying to expedite.

MR. HOUGHTON: Question/statement. Should we not formulize right-of-way dollars to regions?

MR. MORRIS: Yes. You sent that out two or three months ago, the RTC sent a request back to the Planning Division for a little bit more data. I think your proposal is something like -- I could have this wrong -- 10 percent for design and 12 percent for right of way, and then what you just do is formulize those accounts, add them to Category 2, and then you don't have to worry about it. All we simply asked was could you go into the large metro regions historically for the last ten years and is engineering about 10 percent the right number for large metropolitan regions -- I assume it is. Our suspicions is 12 percent may be a good statewide average, I'm not convinced it's the right number for the metro regions.

MR. HOUGHTON: Well, I mean, that's something that we may want to look at as a formula.

MR. MORRIS: But we agree.

MR. HOUGHTON: I have another follow-up question. This may involve Jerry, and I hate to put you on the spot, Jerry, but if we put $160 million in this project -- and I understand we're talking about an equity toll grant into that project -- are we not subsidizing the toll road, are we not subsidizing that road, and the toll rate?

MR. MORRIS: Yes, you are subsidizing.

MR. HOUGHTON: So it's not a market rate, we are subsidizing that toll.

MR. MORRIS: You have two options: you could go ahead and say to the North Texas Tollway Authority this is your toll road authority, you go ahead and you pay the right of way costs, we'll pull the gas tax money out, you pay the full construction costs, we'll go ahead and let you set the rate, they're more than happy to set the rate. NTTA might come back and say okay, just turn it over to us, we'll go build it, take your nickels out of it, and we'll just move forward. That may be the best way to proceed, that's what we call option one in the strategies that we're working out.

Another strategy may be more of a hybrid approach, that you move the right of way funds in, maybe move your gas tax out so we can move it to LBJ and other projects, and then negotiate a smaller amount of money in the out years that goes back into a right of way fund or some sort of fund for others in the future.

That's exactly the conversation we're having with NTTA right now.

MR. HOUGHTON: But you haven't finalized it.

MR. MORRIS: We haven't finalized it. Here's six, seven, eight toll road projects within the region, go ahead and do two sets of math on them: one that keeps us as government as a financial partner to the roadways, therefore, we have a larger share of potential either out-year revenues or excess revenues or mobility payments or something, or you minimize our shares to those particular projects, probably eliminating any funds that come back from those particular projects. And I think we just need NTTA to go through those two scenarios to do it.

But I'm still at least throwing out the idea that in the case of right of way, the de facto burden, maybe not in this project but generally in projects being shifted back to the locals versus creating a revolving loan program is something we need to think through as we go through the next couple of months.

MR. HOUGHTON: Jerry, since I've picked on you --

MR. WILLIAMSON: Well, Jerry signed up to testify also.

MR. HOUGHTON: I picked on him anyway.

MR. WILLIAMSON: Did any other members have questions of Mr. Morris?

MR. HOLMES: Just a comment. I think Commissioner Houghton had a good point, and that Michael spoke to, in that 10 percent for engineering, 12 percent of right of way may be a good statewide average, but these districts around the state have very different characteristics and there are going to be some areas that 12 percent is going to be high and some where it may be extremely low, and different on roadways within a district. So it's a nice measure but it isn't a formula that is going to fit every project.

MR. MORRIS: The response we got, Commissioner, was we, the state, TxDOT can't answer that particular question. It was somewhat surprising to us but that was the answer we got. So we said, Okay, we'll go ahead and take the formula allocation of 10 and 12, but why don't after three or four years we'll see what it really is and then hold us harmless with regard to that. If we discovered 16 percent and some other district is 7 percent, then eventually we'll be caught up and held harmless with regard to the formula allocation of engineering and right of way. That's the last thing you send back.

Instead of holding up progress, let's go ahead and jump in the deep end but let's do an accounting system from here on out because my suspicion is the right of way costs in large metropolitan regions are going to be higher than what they are in smaller metropolitan regions.

MR. HOLMES: And you simply are building a mechanism to re-calibrate, what did you say, every three or four years?

MR. MORRIS: Yes, just do the accounting and then we go into the hole a little bit but eventually we're made up and we're all partners in this, and this way we can proceed.

MR. HOUGHTON: Well, let me tell you where I'm going with this, Jerry. We've gotten a whipsaw --

MR. SAENZ: If you don't mind, because we were already working on what we call tracking projects and allocating project funds on total project cost, and from the monies that we receive from the gasoline tax and the federal reimbursements, we would keep and set aside so much to take care of the engineering and the right of way and then we would only allocate the construction apportionments. So there is only a set amount of money that was set aside and our position was that instead of setting it aside, we were going to leave all the money in one pot and then allocate it based on the formulas that we currently have from the regions.

With respect to in the metropolitan areas, of the total mobility money we would put back the right of way allocation and the design allocation into that total mobility allocation and then allocate it based on the formulas that we had for allocating the construction dollars. That way we were using the formulas that had been set by the groups. Category 2 group had set their own formulas but we would put the 66 percent that we normally put in the metropolitan monies in there and let the formulas take care of that.

Now, then the regions, like Michael, would get his total amount and he tracks his projects and sets his priorities as far as right of way and such. It's a little bit different than what he's talking about, but what it is, it makes it fair that instead of carving out some money that we set aside for right of way here in Austin, we just let all that money stay in the original pot and then just allocate it based on the formulas that we have today and as they're changed through the process that we have for those areas.

MR. HOUGHTON: Do you want to ask a question before I get into this?

MS. ANDRADE: Yes, I have a question for Amadeo.

Amadeo, clarify something for me. So are we considering a $160 million grant or loan?

MR. SAENZ: It was submitted as a toll equity grant to cover right of way costs.

MS. ANDRADE: But Michael talked about paying it back so that we could set up a fund.

MR. SAENZ: But the way that the application came in, it was submitted as a toll equity grant towards the right of way and utilities and some of the incidentals for that project.

MS. ANDRADE: But are they going to pay it back to us, because now they're talking about paying it back?

MR. SAENZ: We're still working on that. We're still working on that because as part of that agreement there's revenue-sharing.

MS. ANDRADE: I'd like to hear they're paying back, I mean, if it's a grant or a loan.

MR. SAENZ: Let me go through, Commissioner, because it's a bigger picture on this project. This project was set up in one, there was a toll equity request, and in addition to that, as part of the application, TxDOT was going to let the construction of a portion of that project at the intersection of Interstate 30, and that project, I think, was somewhere about $170- to $180 million. So in essence, TxDOT and the RTC were providing $180 million in construction to be done by the department, plus $160 million in a toll equity request, and we were working on a revenue-sharing mechanism where the region would then receive 20 percent of the revenue from that project.

MS. ANDRADE: Right, I remember that.

MR. SAENZ: So that's what we're working on right now. We're calling it a grant. It's a toll equity request, but there is a revenue-sharing that we're trying to negotiate and that's what we've been working on to try and get this whole package together.

MS. ANDRADE: So that revenue-sharing was what was going to pay back the $160 million, or that's what we told them we were leveraging.

MR. SAENZ: The revenue-sharing would continue forever, and that would be money that would be back to the region so that the region could then apply to other projects.

MR. HOUGHTON: I want to ask Jerry the question. Jerry, you know and you've been involved with us, and what I was leading up to is with the grants that we are making, whether it be right of way or construction, whether it's Harris County or the Metroplex or El Paso, if we make these grants, we're subsidizing a project, in my opinion. So you're not really seeing what the really market-driven rate is.

Like on SH 121, the private sector is going to take it from end to end, build the connectors, and it's at their expense and then they build that into, obviously, the toll rate. We have been whipsawed in the misinformation coming out on toll rates or potential toll rates out in the future are going to skyrocket because of these private development deals.

So my question to you is if we take all of our money, tax money out of these projects and say Jerry, go build it, fully loaded, end to end, build the connectors, what's that going to look like? And let these folks who have been using this toll rate increase as a scare tactic, what does the public sector, NTTA, HCTRA, the RMAs, what are those toll rates going to look like? Because right now we're subsidizing these projects.

MR. HIEBERT: Again, my name is Jerry Hiebert. I'm the acting executive director of the North Texas Tollway Authority.

Will they be different than they are today? Certainly. I think there's no question about that, and I think the DFW region has benefitted from a relationship with TxDOT on the President George Bush Turnpike, the right of way was acquired, certain interchanges were provided. The toll authority came back in and issued bonds to build the construction earlier than it would have been built under tax funding, and I think our region, as a result of that, now enjoys a toll authority that has a lot more opportunity to leverage those projects into something else in the region, and so as a result, I think we do enjoy a lower toll rate within the DFW region than we would if it were completely provided by the private sector.

The challenge that we all have now -- and I think that we've been talking about it this morning in two or three different ways -- is that the funding paradigm is changing within the state, there is no question about that. And what our region is doing is now taking a look at the asset that we have in the form of a toll road system and finding ways to leverage that asset more quickly, more extensively than we ever have in the past.

And I think that's a discussion that Michael Morris just mentioned. We're meeting again with Bill Hale and Maribel next week to talk about these different options of do we, as a toll system, take on the complete cost and then let the system find support for these projects that are marginally feasible, but we all know they're getting further out of reach the longer that we wait because construction cost increases, right of way cost increases are going up faster than we can find financing for, or do we have a relationship where there's a revenue-sharing, an equity stake, if you will, with the tax dollars that's created on these toll projects. And we all just have to decide what's the smartest thing to do.

We proposed to the RTC these projects that were listed for study, our board authorized us to propose, we will build those, as they become feasible, with no tax money on all five of those projects. That's a commitment we would make to the region. I think the same thing holds true on the Bush eastern extension. If there's no investment of tax money, we're prepared to advance that project with no tax money at this point, but then at the same time, there won't be a revenue-sharing because you have to have the full financial leverage of that project to retire more debt.

So that's the policy discussion that's taking place right now and it needs to take place right now.

MR. HOUGHTON: And the purpose that I bring up the subsidies and the real toll rate and the hysteria that we get whipsawed on that these rates are going to be astronomical if the private sector does it, but what hasn't been in focus is our contribution is equity to the current regional transportation authorities in building connectors in Harris County and building connectors in all sorts of different assets, but we are subsidizing that toll rate.

And I think those things, Michael, need to be looked at as is do you want the tax dollars in another project and let NTTA build this, fully fund this one and let that toll rate be a market rate, or whatever it costs to build that entire project. Those are the things that need to be fully looked at, in my opinion, Jerry, and I'm all for looking at the new paradigm.

MR. HIEBERT: And that discussion is taking place right now.

To the issue at hand, we understand there are funding issues, there are procedural issues that have to be dealt with with these agreements, and again, Amadeo and the staff at OGC are working hard at a very busy time of the year anyway to try to advance those, and we appreciate that.

This is an action that is really needed to allow us to begin to go out and start doing the right of way acquisition work that's necessary. We're hopeful that we can get to a resolution of this in the next month or so, so we know exactly how the funding is going to take place. But we need to start getting offers out on these projects, or else, as Amadeo said, the costs on this project just continue to drift upward and upward, making it less and less affordable.

So we really would appreciate favorable consideration to allow us to get this off the system, designated as a turnpike project so that we can begin the right of way acquisition process.

MS. ANDRADE: Thank you. Any more comments, Michael?

MR. MORRIS: Madam Chair, just a quick response. One of the things that we're doing in this planning evaluation I think is pretty exciting, and it speaks, Commissioner Houghton, exactly to your issue, is NTTA was sitting at about 12 cents in 2010 and the RTC set it at 14-1/2 cents. One of the things Jerry is doing in this evaluation -- now, it doesn't have the support of the board or anything at this particular point -- is to assume all the toll rates in the region are the same.

And this gets at the RTC's position of having consistent policies, so one of the things that is being looked at -- I think George Bush extension was already being looked at at 14-1/2 cents so that was consistent with our 121, but we've got 360 and 170 and Trinity -- and the thought is why don't we look at them all at 14-1/2 cents, see if we can develop a consistent policy on right of way, develop a consistent policy on toll rate, and then let's see which of these two financial options is better. Is it better for us as government to have a stake and share in the revenue, or is it better for us to pull out and let the system financing deal with those and then we dedicate 100 percent of our money to managed lanes or something else. But that's exactly the conversation we're having now with consistent 14-1/2 cent rates in 2010.

Now, RTC can't set toll rates for the NTTA board, of course -- that's a discussion they're going to have to have -- but it sure would be nice to have consistent policy within the region to help combat the issue that you're facing. One is subsidized. I think on George Bush, we have $800 million in George Bush, so we're subsidizing the toll rate on George Bush at 10 cents or 11 cents or whatever it is. So we're getting beat up at 14-1/2, yet we're the ones that subsidized the 11 to begin with.

MR. HOUGHTON: That's my entire point. Of course, you could follow New York City's Mayor Bloomberg's pronouncement of eight bucks if you want to drive into the city.

MR. MORRIS: I don't think we have that one on the table right now.

(General laughter.)

MS. ANDRADE: Michael, I have a question for you. You always seem to understand my mind to clear it. On this $160 million request, am I to assume that if we invested into the NTTA project that when it comes back, it's going to contribute towards the gap that you have in you region?

MR. MORRIS: I think the question you asked is exactly the policy question we're evaluating. Do you go ahead and formulize design and right of way, just put that in the formula? I guess this issue then goes away because our monies will be already sent to the region. If you don't do that, then there may be an initiative to go ahead and be a partner in right of way so we can expedite the projects, but if you do that, then you should have a cash position with regard to the response. And what Jerry is doing through the protocol, working with the TxDOT districts and us, is going through two basic philosophies: do we all put money in and we all share revenue, is that the best way to build seamless transportation in the region; or do we go ahead and truncate the systems, you take those, we take these and minimize any financial transfer?

And the answer will be in the data and it may be better to put $160 million in but take the gas tax out, maybe it's a hybrid approach, and slide our gas tax over. I think, Amadeo, you said it's $190 million. Why do we subsidize George Bush $190 million when LBJ is waiting on $200 million in order to get the CDA across the goal. So those are exactly the evaluations we are doing will speak to that answer.

MS. ANDRADE: Well, good luck.

MR. MORRIS: We need more than luck.

MR. HOLMES: May I explore that just a little further?

MS. ANDRADE: Please.

MR. HOLMES: Michael, would you, in your evaluation look at that? First of all, I tend to agree with you that having uniform toll rates in a region sounds very sensible.

MR. MORRIS: I've found, though, Commissioner, when I come closer to this building across the street, sense often has little bearing on things. But I agree with you.

MR. HOLMES: I actually have noticed that as well.

Clearly there are going to be some roads that are going to have a higher demand and would justify a higher price toll rate, and I'd like to hear further discussion sometime in the future -- not necessarily now -- about how you kind of square a uniform toll rate with the fact that some roads would literally provide a greater toll rate and more revenue just because of their location, design, communities they serve.

MR. MORRIS: I don't mind answering it now for you.

MR. HOLMES: Okay.

MR. MORRIS: If you are the city manager of a small town and you're in charge of putting in water meters, and in this part of the town it's softer soil and in this part of the town it's Austin chalk but everyone needs a water meter, do you charge the homeowners in the Austin chalk $186 for their meter and the other people charge $38 and say well, the true cost of getting you a water meter is more expensive because you happened to locate your house in that. Or do you take a policy position, you're all citizens of our town and we will spread that across the public policy argument of equity and you'll all be charged $78. And I tend to fall on the equity position of we're all users of the same system and we should be creating system and seamlessness.

And yes, this project, the super connector in our region that NTTA just built which connects Interstate 35 over to 635 near the airport -- probably the best project the region has ever built, takes 15 minutes off of travel times -- 80 percent of that corridor is on structure. If you charge the true cost of that particular project, it would be much more expensive.

So I happen to be in the notion that you systematize the numerator, you systematize the denominator, everyone is part of the region and you do it in that way. And that's largely where we're going with Jerry on the notion of system financing is taking advantage of his system revenues to see how big a bite he can make with regard to taking on more of those toll road projects that are in the plans.

MR. HOLMES: Well, I think I fall on that side of the line as well. The other question that you're looking at is whether you subsidize certain toll roads. It seems to me that you're not going to really know the full cost or value of that toll road if you subsidize it, and if doesn't support the entire cost of providing it, it just makes the evaluation more difficult.

MR. MORRIS: That's correct.

MR. WILLIAMSON: Well, since we've chosen to go ahead and have this discussion about the philosophy of toll rates now instead of at some point in the future, let me just suggest to you a different viewpoint that you might consider. One of the reasons I love this particular position in state government is frequently we have a chance to, in a civilized manner, talk about different approaches to solving problems.

MR. HOUGHTON: Versus what kind of uncivilized manner are you referring to?

(General laughter.)

MR. WILLIAMSON: Versus whatever uncivilized you care to point to.

But I want to take your example, Michael, and as you know, you and I, over six years, have developed a great relationship. We can disagree, we can argue and we can go out and have a cup of coffee afterwards and still appreciate other for what we contribute.

In the example you gave, I think it is precisely the case that either the city or the developer or the owner of the Austin chalk water meter should pay more for his water meter, because either the developer or the homeowner made the choice to take that asset worth $1 and make it worth $10 and he or she benefitted by the $9 less the cost to get there. Why in the world should I, who chose to live in the softer soil part of town, and perhaps didn't have quite as wealthy a house, subsidize that water meter in the Austin chalk.

Similarly, and to strike right at 121, why should I, a user of the North Dallas Tollway, subsidize the construction of 121 when it doesn't benefit me unless a large prepayment has been made that built tax roads that do benefit me. So I appreciate the argument that says we need consistency and we ought to charge the same rates, I just ask the question why.

MR. MORRIS: I think it's a similar argument, Mr. Chairman, as a person who uses a library. I, unfortunately, haven't been to my local library for two or three years, yet I assume my property tax is going to the libraries. You could not use property tax for libraries and one person goes in and says, Well, sorry, Johnny, you're the only person that came in today, that book is $4,212.

I don't think there's a right answer to the question, I'm not debating the question. What I'm saying is the process we are in with toll roads within the region is to establish a partnership between NTTA and TxDOT to explore the very issues that you raised so this is a very transparent item so when we come out and say here's what we're going to do and this is the scenario we tested and this is what we think is in the best interest, everyone can look at it and poke holes in it and see if in fact it is. And that very question is going to be at the heart of these particular debates.

MR. WILLIAMSON: In the example you used, you describe an asset that's equally available to me as it is to the person across the street. In the case of the water meter or the toll road, we're talking about an asset that only practically speaking is going to be available to the person who benefits from it.

And it just seems to me that one of the reasons that the entire state is kind of in this discussion statewide -- which is wonderful, I think -- is because we're having to come to grips with whether or not the financing of highways ought to be looked at the same way as the financing of public schools. Because generally speaking, all divisions of government are kind of looked at the same way because it's easier to understand or easier to explain. It's less easy to explain, for example, why does it cost 14 percent to engineer a road in Dallas County versus Parker County. Well, there's a reason: population density, that's why. Why does right of way cost more? There's a reason: population density, more utilities, more disruption on more numbers of people to accomplish a similar asset construction in a lesser populated county.

And it will be a lot of fun to go through this in the next year and try to get a resolution to it. I just observe that as we're discussing these things here at the commission level, Ned, and at the regional level, we ought to consider that some assets cost more and the users should pay more because they're unique to the people who choose to use that asset.

MR. MORRIS: I've got a good example supporting your position, Mr. Chairman, that's the Southwest Parkway from downtown Fort Worth out towards Alta Mesa. Because of the urban design amenities and because of the design speed and others, it's anticipated that that particular toll road is going to be more expensive and therefore is going to be different. Others have weighed in, including myself, and say wait a minute, we're jamming a brand new toll road in well established neighborhoods, of course we're going to have a high urban design standard, and of course the roadway isn't going to be as straight as an arrow because people have lived there for a hundred years and we're sort of raining on their parade, they could always say we're not interested in any roadway at all, go take it.

So those are the discussions that should be made and vocalized. My whole issue is eventually we need to complete them and then we implement something because I'm being paid to build projects, not to discuss projects.

(General laughter.)

MR. HOUGHTON: Let me ask Jerry, not to belabor the point, but a one-size-fits-all, just 14 or 15, 12 cents for every mile you drive, I just e-mailed my daughter who lives in Houston and I said, What do you pay per mile on Beltway 8? And she said, I don't know. I mean, Jerry, I think price elasticity is one thing but the convenience is number one.

MR. HIEBERT: It's a complicated kind of human behavioral calculation.

MR. HOUGHTON: And you guys know better than anybody.

MR. HIEBERT: Well, absolutely. The value of your time at five o'clock in the evening is going to be different than it is eleven o'clock on a Saturday morning which speaks to at some point in time the migration to time-of-day kind of pricing.

I will tell you that the early years of the Bush Turnpike, you didn't have adjacent development, it was a brand new road, people have to find it, you can structure the debt but people still want their debt service payment in those early years. And it's a little bit rough if you don't have that other system, it's a little bit rough to carry those projects in the early years. Now, five, six years later when you have development adjacent to it, as Mayor Day can tell you, it stimulates economic development, people get into a habit, housing decisions are made, then it becomes a lot less of an issue about what people are willing to pay, it becomes a matter of habit.

And that's really what we're dealing with as you go into new corridors is there's a lot of risk on the front end. It's hard to prove those things up. We all know intuitively that if you pick a good corridor and you've got the support of the adjacent municipalities and it aligns with their land use decisions in the future and they're wiling to extend utilities and do all those other kinds of things, then the corridor may have great potential. If they're not willing to do that, then your Point A to Point B, you may have not the economic support that you really need in the corridor.

So the unified decision is a laudable goal but it doesn't always work in a business perspective, and so sometimes you have to start slow and grow it based on the demand, and that's, I think, the art of the toll business as opposed to just a complete science.

MR. HOUGHTON: Well, I appreciate you being a guinea pig today and taking the heat.

MR. HIEBERT: It's always a pleasure to come up here.

MR. HOUGHTON: Yes, I bet it is. But thank you very much, Jerry.

MR. WILLIAMSON: Bob Day, the honorable mayor of the City of Garland, who is wondering why in the world we've been making him wait all this time.

MAYOR DAY: Mr. Chairman, commissioners, I'm used to waiting. I waited till eleven o'clock last night to testify before another committee across the street in that building that we all complain about.

I appreciate you being here and taking this on. I and the City of Garland are very much in support of the action you're taking today in terms of the NTTA and TxDOT. I am disappointed the grant is not there and I understand the complications of that, but I personally and the city have seen what 190 and the toll road have done in Garland economically and transportation wise, but I also have seen the frustration, and I think you're beginning to hear some of the frustration about the extension.

About four years ago the environmental clearance was given and I serve on the RTC and at one of the meetings -- it's a footnote on page 35 of one of the reports -- had an estimate of what the cities would have to come up with in the difference, some $80 million in roadway and right of way acquisition, and that three cities being Garland, Sachse and Rowlett. And I made the objection at that time, even though it wasn't on the agenda and I had to get special permission, that I said if the cities were expected to come up with that $80 million, you are going to wait a long time to complete this road. That was about 25 percent of the Sachse budget, about 30 percent of the Rowlett budget, and about 20 percent of the Garland budget for a year. That's just unbelievable. Yes, we get economic development, yes, we do other things from that roadway, but that's unbelievable in terms of it.

So the partners all got together some 3-1/2 years ago, we talked about it, RTC brought some money to the table, Dallas County brought some money to the table, Garland, Rowlett and Sachse brought money to the table, TxDOT brought money to the table, and we had an agreement. We decided how to get this thing built some 3-1/2 years ago. Well, it hasn't happened. Part of it was probably due to Rowlett and some other things, but it has not happened, and as you heard testified earlier today, we're looking at some $4 million a month in increased costs on this project. It has to be done more timely.

Let me give you a little history about Garland and toll roads. Loop 9 was supposed to go through Garland some 40 years ago or so, and it was put on hold because they couldn't just get it done. The then mayor of Garland, Charles Matthews -- as some of you may know, is later on with the Railroad Commission and now with a university -- said, This needs to be done and we're willing to get the right of way. And we did. Some of it we bought, some of it was donated because of the implications of an improved road, and we built 190, just the access roads. And TxDOT and the others said it may be another 15 or 20 years before the main roads get there, the mainlanes get there.

But we in Garland said that's going to be too long and we approached the Texas Toll Authority before it was the NTTA and said, Hey, we can do it a little sooner than that. And so we said, Build the toll road through Garland. The access road is still 190, the toll road is now Bush. And we didn't want extra money coming out of it, we didn't get any extra roads built in the area, near neighbor, we just did it because it was the right thing to do. And it has been very successful there in our community and all the other communities in the area.

But I'm very frustrated about the slow progress of the extension. I have been fighting for the last two years to keep us out of the CDA discussion about 121 and all the other roads because we had an agreement of how to get this accomplished. Well, as you can see, most of the discussion today has not been about the eastern extension and getting it done, it is about 121 and other projects. And I understand times have changed but at the same point, I'm very frustrated, my neighbors are frustrated, Dallas County is frustrated because we can't accomplish what we agreed to some 3-1/2 years ago.

So in summation, commissioners, I need to quote from the Cable Guy, Just get her done.

I appreciate your time and I'll answer any questions.

MR. WILLIAMSON: Do we have any questions or comments?

MR. HOUGHTON: Mayor, how much money do you have in that 190?

MAYOR DAY: In the extension?

MR. HOUGHTON: What have you committed?

MAYOR DAY: The original agreement was $15 million for right of way acquisition. Originally, when it first came forward and I raised the red flag, we were looking at $50 million for right of way. The agreement that was signed some three years ago, 3-1/2 years ago, we would have put $15 million in it. Under this agreement that TxDOT and NTTA had at the moment that we're trying to get approved that seems to be in limbo and maybe won't be accomplished, we may be at $9-1/2 or $10 million in terms of right of way acquisition for the extension.

Now, I want you to understand this is an important project to Garland but it doesn't benefit Garland real directly. We have two ends of the project, none of which have any developable land along the edge of it. At I-30 we have an interchange, people are going to be 80 feet tall as they pass through any land in Garland. We have at the other end the Firewheel Town Center which is at 78 and the Bush, it's already there. As soon as it leaves that, it goes over another long bridge over Rowlett Creek. So in terms of Garland developable land, we don't have any more, but we think it's an important project and we're going to put some $10 million into it.

MR. HOUGHTON: How much stress do you put on -- or focus do you put on toll rates?

MAYOR DAY: We were just commenting back there about the discussion about how much do you pay and all that sort of thing. I have no idea what my toll rate is, I have no idea how much I pay. The only thing I notice is about every two or three months I will get a bill on my credit card that puts back into the account the $40 or $50 that I spent. I don't know how much I've used it, I don't get an accounting, I could, I could ask for an accounting of how many times I've passed through a toll. We don't, we just use it. If it's the fastest way to get there, I'm going to use it. Sometimes I use LBJ because that's faster where I'm going, sometimes I go up and take the Bush. It just depends on it's a cost of doing business, it's a cost of getting from one place to another.

MR. HOUGHTON: So if you told Jerry Hiebert back there to increase the toll rate by half a penny that would reduce or eliminate your equity into this project, would that be all right?

MAYOR DAY: It wouldn't impact our citizens in the least. They would not notice it.

MR. WILLIAMSON: What a loaded question.

(General laughter.)

MR. WILLIAMSON: Mayor, thank you for being so direct. We appreciate it.

MAYOR DAY: Thank you.

MR. HOUGHTON: I can't say, Mayor -- don't leave -- we're working to get this done and I know Jerry and Michael, we're working to get all these things done up in the Metroplex, it's just going through the maturations of it, but we'll get it done.

MR. WILLIAMSON: Anything to close, Amadeo?

MR. SAENZ: No, sir. Just the minute order is basically to take 190 off the state highway system and also directing staff to continue to negotiate with NTTA.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation, you've heard the witnesses' testimony.

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you, members. Thank you, Mr. Saenz. Thank you, witnesses. We appreciate it.

Mayor, who is your House and Senate member?

MAYOR DAY: We're split between several. We have Deuell and Carona as our senators; we have Hill, Goolsby, Allen.

MR. WILLIAMSON: I thought Mr. Carona might be a part of your area. Let me just say, without taking anything away from the others, what a pleasure it's been to work with him this session on transportation matters. The citizens of Garlan