August 23 Transcript

Texas Department of Transportation Commission Meeting

COMMISSION MEMBERS:

Ric Williamson, Chairman
Hope Andrade
Ted Houghton, Jr.
Ned S. Holmes
Fred Underwood

STAFF:

Michael W. Behrens, P.E., Executive Director
Steve Simmons, Deputy Executive Director
Bob Jackson, General Counsel
Roger Polson, Executive Assistant to the
Deputy Executive Director
Dee Hernandez, Chief Minute Clerk

MR. WILLIAMSON: Good morning.

AUDIENCE: Good morning.

MR. WILLIAMSON: It is 9:05 a.m., and I would like to call the August 2007 meeting of the Texas Transportation Commission to order. It's a pleasure to have each of you here with us this morning.

Please note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of Secretary of State at 4:41 p.m. on August 15, 2007.

Before we begin today's meeting, I would appreciate it if you would take a moment to pull out of your pocket or purse your pager, your telephone, your PDA, I-phone, or whatever else would make a noise, and put it on the silent or vibrate mode so that our guests will not be disrupted during their testimony. And I thank you very much for that.

It's our custom to open with comments from each of the members. We traditionally start with the member on your far left, Mr. Underwood, then Mr. Holmes, Mr. Houghton, and Ms. Andrade. Fred.

MR. UNDERWOOD: Good morning, everyone. Good to see everybody. I see all the pretty ladies on the front row, I appreciate that, that makes our day a lot better too. Thank you.

(General laughter.)

MR. WILLIAMSON: He's a flirt, isn't he.

MR. HOLMES: Well, good morning. It's a historic meeting, Mr. Behrens, and I know you're proud to see a big group and family. Welcome.

MR. HOUGHTON: Welcome to everyone who has come to address and partake in our activities here today. Mr. Behrens, going to miss you, it's been a great three years for me. And again, good morning and welcome.

MS. ANDRADE: Good morning. Well, certainly echo what my fellow commissioners said, and I won't name them because then I'd have to laugh. But anyway, it's great to be here, I also welcome you all. And Mike, we had a great evening last night, and I hope you captured that moment because all the people that came were there to honor you and to pay respect and appreciation for everything that you've done for this department. So it was a great evening that we shared with Mike and his family.

Karen, it was great to see your beautiful family there last night. So thank you.

MR. WILLIAMSON: Thank you, members. I associate myself with all the remarks, and again welcome each of you to our meeting.

Let me remind everyone if you wish to address the commission today, we ask that you complete a speaker's card. You can find the card at the registration table in the lobby which is generally to your right. If you're going to comment on an item on our agenda, we ask that you fill out the yellow card, such as the one in my right hand. If you're going to comment on whatever it is that's on your mind in the open comment period, we ask that you fill out a blue card, such as the one in my right hand.

Regardless of the color of the card, we ask that you limit your remarks to three minutes, unless you're a member of the legislature, in which case we ask that you take as long as you wish.

Before we begin today's business, we have a matter of personal business. Last night at 7:10 p.m., I accepted the letter of retirement from Mr. Behrens. I did so reluctantly; I waited until what I thought was the very last moment because we wish Mr. Behrens well in his next phase of his life. We don't wish that he leaves us. He's been a remarkable bridge between young and old, public and private, TxDOT as it was, TxDOT as it is, and TxDOT as it will become. I can't think of a person who could have done a better job at guiding the commission　-- sometimes a cantankerous bunch　-- and the staff towards looking at transportation in a different way.

The film that we were all, as employees and associates of the department, allowed to see last night touched on many things in Mr. Behrens career, but I think the highlight for me, in my position, was observing that when most of us were still in the private sector, this agency had about $300- to $400 million a year to invest in the transportation infrastructure of this state. In Mr. Behrens's last year with the department, this agency will expend almost $4 billion in one year in the infrastructure of this state.

Now, there's no question that that remarkable increase is the result of the labor of thousands of people, from the governor to the legislature to ourselves to the staff, but there's also no doubt that the governor and the legislature would not have been moved in that direction without the artful leadership of Mike Behrens.

So Mike I didn't want to do it, but last night I accepted, so you're now free to take Karen and go to Giddings and you're going to build a house. That's retirement, you're going to go build a house? But you've got a barbecue pit and he can fix dinner.

(General laughter.)

MR. WILLIAMSON: I could make you stand at the podium but you probably wouldn't since you don't have to comply with anybody's request anymore. So I'm going to read this from here.

And no jokes about giddy up and get on down the road, please. I want to read into the record this resolution from the five of us.

A Whereas, the Texas Transportation Commission takes great pride in recognizing Michael W. Behrens and his 37 years of service to the Texas Department of Transportation, serving most recently as the department's executive director, while managing, directing, and implementing changing TxDOT policies, programs and operating strategies during a time of major challenges;

A And whereas, he has witnessed and played a large part in many monumental changes in transportation, including a record- setting letting in fiscal year 2006 of $5.3 billion in highway construction, implementing new state authorized financial tools to accelerate TxDOT's response to growing population demands, while reducing congestion;

A And whereas, he was recognized in 2007 by the Texas A&M University with the Engineering Alumni Honor Award, served as president of the Western Association of State Highway and Transportation Officials, served as a member of the Transportation Research Board executive committee, served on the board of directors of the American Association of State, Highway and Transportation Officials;

A Now, therefore, be it resolved that the Texas Transportation Commission hereby honors and thanks Michael W. Behrens, Professional Engineer for his professional career achievements and loyal service on behalf of the State of Texas and its citizens.

A Witnessed this day, the 23rd of August, 2007.@

Michael, we're going to hand this to you down here in a second and take a picture, but we're going to let everybody clap for you right after we give you your going-away gift, and the going-away gift from the commission is, I think, especially emotional for me because we arranged to have the gift bound in beautiful and brilliant burnt orange which I know will be forever in your heart as a moment of inspiration as you put a period to your career.

Do you want to say anything?

MR. BEHRENS: Yes, I do.

MR. WILLIAMSON: We'll hold our applause.

MR. BEHRENS: Thank you, chairman, and appreciate those remarks, and other commissioners, appreciate the opportunity to work with all of you for some a shorter time than others, other commissioners who were here until their term expired. It's been a good journey, it's been a fun one.

Someone mentioned to me a while ago when you signed up to be an engineer, you never know you're going to get into all this other stuff. Well, that's really the truth, you know, you get away from the true practice of engineering when you get into some of the management.

But you know, as I said last night, we have a real close TxDOT family and that's a family that goes back for Karen and I a long time, back to 1971, and you know, you live and breathe with the TxDOT family and you laugh with them and then sometimes you cry with them because all kinds of things happen over a period of time. But we've been truly blessed that we've been part of this family and we thank you all.

I want to thank my cohorts over here, Amadeo and Steve and Ed is probably here somewhere, but they've been as solid folks as they can be as part of our administration. And when you talk about all these things that happened, well, especially those two guys had a big part of it, and a lot of others that are in this room and a lot of others that aren't in this room, because it takes everybody to make it all work when you cover a state as big as Texas.

The second floor bunch is sitting down here in front, and they've done a lot of work and supported me and others over the years, but I want to recognize my first supporter, Shirley. She took care of me when I was over there in Amadeo's chair and Shirley is from Schulenburg, Texas and from Fayette County where I was born, so that's special. And then of course, Nancy, who has taken care of me the last six years, and Nancy is from Giddings, Texas and we graduated from the same high school, so that's was sort of special and that doesn't happen all the time either. But both of those gals work very hard and they make things run up there on the second floor and they will continue to do so.

And of course, I want to thank Karen for supporting me for all these years, particularly the last nine and a half years when I've been coming up here every week, and when I get home, I throw that sack in there and it gets washed, and on Sunday night or Monday morning, well, I grab it and come back up here, and of course, get a few good home-cooked meals when I'm there on weekends because we eat out too much when we're here during the week.

Last night I forgot to thank all the people that put everything together for that party last night, and they did a lot of work and I want to get that on the record. Like we like to do at this meeting, right, we like to get a lot of things on the record here, so sometimes we can go back and point to them.

MR. WILLIAMSON: That's right.

MR. BEHRENS: But again, thank you all. A lot of you have come to a lot of commission meetings, some of you are part of the industry, some of you are just citizens and local city and county officials. What I've seen over my career, those of you at the local level, whether it's city or county, the grassroots organizations, you're the ones that help us move transportation forward because you see the things that you need in your area and you're not bashful about letting us know what those needs are. You know, probably the hardest thing for us to do is to tell you no sometimes because we don't have the finances to get it done. We have a lot of new tools now that we can use and we hope that we can continue to use those tools and get some of them back on track here in a couple of years.

But you're the ones that make the difference and you keep talking to your elected officials, the people that come over here across the street and tell them the story about what we need to do in transportation in Texas, and I'll assure you, the folks here in this department, they'll get it done.

Thank you all very much.

(Applause and pause to take photographs.)

MR. WILLIAMSON: The first item on today's agenda is the approval of the minutes of the July 26 meeting. Members, the draft minutes are in your briefing materials. Is there a motion?

MR. HOLMES: So moved.

MR. UNDERWOOD: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

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

Mike, for the final time, I'm going to turn it over to you.

MR. BEHRENS: Thank you, Chairman. We're going to switch our order a little bit, we're going to agenda item number 3(a) first, and then directly after 3(a), we're going to go to agenda item number 2. So 3(a) will be a discussion item on the creation of committees to assist the department and advise the department on the development of the Trans-Texas Corridor, and Amadeo will lead that discussion.

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

And today we're following up on a discussion we started last month in Sugar Land concerning the creation of committees to assist us and advise us in the development of the Trans-Texas Corridor.

Currently, as you know, we have the Trans-Texas Corridor Advisory Committee. It's a statewide committee that you created in March of 2005. There are 23 members in that committee from across the state, they're an appointed committee, and they represent the various parts of the state. The current committee is tasked with providing advice and recommendations regarding facilities to be included in the development plan of the Trans-Texas Corridor and kind of look at the Trans-Texas Corridor and try to give us advice as to what it should look like and what are some of the issues that as we develop something like that come forward.

This discussion item has been intended to take that good work that's been done by that committee and kind of carry it to the next level as we start working on some of the corridors that are currently underway. In particular, we're already developing the 35-TTC, we're also developing the 69 corridor, and there's been some early looks at some of the corridors along Interstate 20 because of the issues dealing with the movement of wind power energy into the Metroplex. The I-20 corridor is kind of in the very early stages, we have not really initiated very much, we're just kind of looking at it internally.

So what we're trying to do now is to see how we can get more assistance in giving us advice and assistance and help as we develop those corridors and more at the corridor level. Staff is evaluating the possibility of creating two types of advisory committees. The first one is to have a statewide advisory committee for the entire corridor. For example, one statewide committee for 35-TTC, one state advisory committee for TTC-69, and as we develop some of the other corridors, we would have separate advisory committees. That way, these people can focus on the development and look at the big picture, the global picture of the development of that particular corridor.

The second set of committees that we want to set up is what we call corridor segment committees, and these committees would, in essence, would be helping us and advising us for the development of particular segments within the corridor itself. In this case, these committees would be more down in the grassroots stage helping us in identifying issues, concerns as we develop the environmental documents for those segments of the corridor. As we develop development plans and financial plans and pick routes and look at issues and concerns, these people there would help us and advise us as we move forward with those.

The corridor-wide advisory committee, these committees would be, as I mentioned, specific to the alignment of the corridor and they would be charged with evaluating the issues relating to the existing corridor as well. For example, 35-TTC corridor can look on issues on 35, can also look at issues on 281, anything north and south between the whole area. When we look at the segment people, then we would say as we develop the corridor portion between Austin and Dallas, we could have a segment committee that would help us really look down as we develop the specifics to that project to get that project from a corridor down to a route.

The committees that are looking at the corridor as a whole, the statewide committees, that committee would evaluate economic, political, societal, demographic population trends affecting transportation. They would create short term, mid term and long term solutions, utilizing models for the transportation and then communicate those findings to the commission, very similar to what the TTC Advisory Committee is doing right now but they would be specific to the corridor that they're working on.

When we look back at the segment committees, then that group would be specific to the particular segment and we could have three, four or five segment committees helping us and assisting us as we develop the planning documents and the environmental documents and the development documents for that.

For example, as I mentioned, on 35-TTC as we move into Tier 2 and we start looking at developing from Austin north to Dallas and then around Dallas, and then from Austin to San Antonio and looking at where the corridor is going to be, whether it's 130 or not 130, and then south from San Antonio to Laredo, we could have a segment corridor committee from Laredo to San Antonio because it has probably a different purpose and need and it's less congested and they would be looking at different issues, we could have a segment corridor committee from San Antonio into Austin and then we could have a committee from Austin north into the Dallas Metroplex, and then we would see what happens north of there with possibly a fourth committee.

What we're looking at forward is looking at membership, and membership for the statewide committee could be members that could be from anywhere along the corridor, and very similar to what we have on 35-TTC, as long as we would them to be familiar with the corridor, be in the area of the corridor. When we get to the membership of the segment committees, we want these segment committees to come from the counties that are affected by the segment so that hopefully every county could have a member in that segment committee. We also want to have a member from the metropolitan planning organizations that are within the segment that we're developing. That's so that we can ensure that we have coordination between the urbanized planning in that area to the rural connectivity in that area.

The role of the segment committee would be we want them to help us evaluate the need for the corridor, we want them to assist us in identifying issues, concerns, impediments, go out there an find out what is it that is causing grief about the development of the corridor, what are the things that would make the corridor better. Then at some point they could then bring that information to us as we develop the environmental process and also as we develop the development portion of the corridor. They would then recommend action to the commission prior to the execution of contracts and we could move forward that way. That's how we're trying to roll them out.

What we're looking at with respect to membership, we're looking for them to be in place on a county by county level, each county would name a person. Now, is that person named by the county judge, is that person named by the county commissioners court? We'll put all that in the rules as we develop that, and if you have some input or some insight and want to discuss some of that, we'll be happy to discuss that.

Their role, as I mentioned, is to help us and assist us in developing the individual corridor segments, to take those corridor segments from a corridor to a route and then to, in essence, sign off on that route as we move forward with the construction.

Really, that's pretty much what we've got. We are in the process of developing rules based on that structure. Once we have the corridor committees in place at the statewide corridor level, and possibly then the segment committees come in as we get into the environmental process, then the possibility would be　-- and it would be up to you all　-- to see if we need to continue to have the TTC Advisory Committee, the statewide committee, but that would be something that would be your choice.

We have met with your aides to discuss some of the items I've covered today and we will be beginning to put together rules over the next month to propose to you on the formation of these two committee groups. We think that this will allow us to include and have some local input and assistance and buy-in as we develop the different segments of the corridor so that it could allow us to do it more orderly, efficiently and effectively.

I'll be happy to answer any questions.

MS. ANDRADE: Amadeo, so for the segment committees, we're going to ask the local counties to appoint people, and for the statewide?

MR. SAENZ: The statewide committee, the commission could appoint, you could ask some of the members of the current advisory committee to be on it, you could ask the current TTC Advisory Committee to give you some recommendations. Those are all options that would be available to you all.

MS. ANDRADE: So we're going to be accepting applications?

MR. SAENZ: You could, or you could simply name, very similar to what we did before.

MS. ANDRADE: And the time line for this?

MR. SAENZ: The time line, we would like to propose rules to you probably at our next meeting in September, and then of course, go through the proposed rules to final rules, and then once we have them in place, get those committees in place.

MS. ANDRADE: Thank you.

MR. HOLMES: Just to make sure I heard that right, Amadeo, did you say that the counties would appoint members to the segment committees, or the counties would make recommendations?

MR. SAENZ: What we are proposing for the segment committees is we're proposing that we would like to have one member on the committee from every county that's along the segment. Our recommendation would be that that person be named by the county, I don't know if it's the county commissioners court or if it would be the county judge or a combination of both. But we would like them to name them because this person, we want them to come from the county because that way we do not get accused that we went and picked only people that were pro-corridor.

MR. WILLIAMSON: I don't want to put words in your mouth but I want to tell you a concern I have. If we go down this path, I have no interest in segment committees and corridor advisory committees that are limited to the Trans-Texas Corridor. I'm interested in seeking advice from people impacted by Interstate 35 as well as Trans-Texas Corridor 35.

MR. SAENZ: Yes, sir, and when we move forward with the environmental on Trans-Texas Corridor 35, we also have to look at existing 35, so this committee would be looking at both TTC-35 and 35.

MR. WILLIAMSON: In other words, what's going to happen in our state, I think, is the 35 corridor, whatever it's called, is going to end up being probably a multimodal transportation corridor north and south in the state, the 69 corridor is going to end up being a multimodal transportation corridor east-west and then north-south, and 20 east-west, and so on. It doesn't advance the cause of transportation infrastructure if we limit either the advisory group or the segment group to looking at only one piece of solving that puzzle.

MR. SAENZ: No, sir, and I apologize for not presenting it, but it's that we look at the existing 35, the existing 69　-- 69 does not really exist but we would look at the existing corridors also at the same time we're looking at the proposed corridors, and the same group would be there to help and advise, and we'd have membership that would cover both.

MR. WILLIAMSON: Also, to make this work, I think, until the next legislative session, the public has to see and believe that, particularly the segment committees, their opinion of how we do our business carries great weight until we can ask the legislature to extend that.

Didn't we try to do that last session, Coby? Do you mind if I interrupt you, Amadeo?

MR. SAENZ: No, sir.

MR. WILLIAMSON: Coby, can you come up and refresh the members about our efforts on the last session? I've got something I want to ask you about anyway.

MR. CHASE: Good morning. For the record, my name is Coby Chase and I'm director of the Government and Public Affairs Division.

And correct me if I have the terminology wrong, but what we had proposed was rural RPOs, or RPOs that would serve a similar function to an MPO, because corridors that connect major metropolitan areas fall outside of MPO boundaries, and we have talked at great length and preached at great length local involvement, and this would have given local rural officials a say in the planning of these corridors and what's good for them and what isn't. So yes, we did propose that, yes, sir.

MR. WILLIAMSON: And the thing we proposed called a corridor planning organization and the thing we proposed called a rural planning organization, while they received attention from both the House and the Senate, because of all the other fun we were having, it didn't receive as much attention as we would have hoped.

MR. CHASE: Yes, sir. And the legislature was also coming into a much deeper understanding of what metropolitan planning organizations do and a deeper appreciation of those, and I think extending that anywhere else kind of got lost at that point, yes, sir.

MR. WILLIAMSON: Members, do you have anything you want Coby to clarify for you?

(No response.)

MR. WILLIAMSON: While I've got you up here, I need to ask you about something, and it's appropriate to this topic. Every month when we have our meetings, we have a range of material that's put out here for us to look at, some of it by our staff, some of it by well-intentioned members of the audience, and I'm reading from a widely printed publication called　-- I guess it's widely printed　-- The New American, and there's an article in The New American　-- I guess this is the summer edition　-- called A Paving Over Our Borders@ . And reading through the article, I see where you're quoted extensively about the NAFTA superhighway being built for the express purpose of bringing goods from China and India.

MR. CHASE: I am quoted as saying that, Coby Chase, Texas Department of Transportation? Okay.

MR. WILLIAMSON: I just wondered how these people found you. This is the One World Association.

MR. CHASE: Well, I'm available through a number of means. Sometimes picking up the phone helps, but I don't recall ever talking to these people or meeting with any of them.

MR. WILLIAMSON: Well, you're right here in black and white. I just wondered did you catch the helicopter to fly over and do this interview.

MR. CHASE: It's very hard to be part of a conspiracy when apparently I keep running my mouth off to the media.

(General laughter.)

MR. WILLIAMSON: I just thought I'd ask, I saw your name in here.

MR. CHASE: Thank you, I appreciate that.

MR. WILLIAMSON: It's just kind of a topic we're focused on right now.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: You have nothing else to offer about this?

MR. CHASE: Apparently I need to be quiet about it at this point. No, sir, I do not.

MR. HOUGHTON: Well, don't leave yet, Coby.

MR. WILLIAMSON: Good, I started something.

MR. HOUGHTON: Well, kind of. Coby and I are conspirators in the selling of Trans-Texas Corridor I-69. We embarked on a journey　-- or at least I did; he gets to stay in his penthouse on the 8th floor at the Greer Building　-- and I've had a great education over the last month running up and down the 69 corridor, visiting with county commissioners, county judges, mayors, et al., and I'm glad to see that we're embarking on setting up these segment committees.

I've heard　-- and I haven't seen your well published or circulated magazine　-- that the Trans-Texas Corridor, from county commissioners, county judges, that we're building this for illegal aliens and drug traffickers, we're not going to have exit ramps for 75 miles along this corridor. I mean, there are some interesting, interesting theories that are out there that we've tried to dispel, and I think we've had some success. These county judges and county commissioners are now engaging. We said you're going to have a voice, we didn't tell them how they were going to have a voice, but now obviously formally they will have a voice.

I will be in Wharton County again Monday before their county commissioners which should be a lot of fun, talking about rail running right through towns that haven't had rail run right through their town in 33 years, and they've got some angst over that and now they're looking to us to how we can help them.

So Chairman, I'm glad to see this occurring. I think this will be extremely beneficial to where they have a say in where that route goes, and when they start using their finger to say it should go here, you know they've come into camp and they're inside the tent and they want to find solutions. It's been a fun education.

MR. CHASE: And everybody has heard me say this many, many times, but it hasn't been since the '50s and '60s when Texans had to think about any sort of major change in transportation and that was the interstate system, and you really didn't have to engage the public then, you didn't, it simply occurred. And laws changed and the way you talk to your fellow citizens about what they want and don't want dramatically changed, and now we are embarking on, I would say, the world's largest public involvement process, and we've learned a whole lot, but it is very interesting.

I can promise you this is the first time almost any county commissioner in this state has been consulted deeply about what he or she thinks is the proper corridor routes, how it affects the communities. They have legitimate questions that sometimes sound silly, like there won't be any exit ramps. Well, it might be a toll road, you've got to have entrance and exit ramps. But it's very real concerns that they have never had to wrestle with before.

And I really do want to thank the commission. All of you have deeply engaged with local officials who ask legitimate questions that we kind of consider run of the mill. I mean, there's only five of you and we can only stretch you so thin, but thanks for getting in and getting engaged, it helps a whole lot.

MR. HOUGHTON: Well, I think it's beneficial from the standpoint that we have allowed this crowd, Mr. Chairman, to control the agenda.

MR. WILLIAMSON: It would be the crowd that Mr. Chase consorts with.

MR. HOUGHTON: They have controlled the agenda and they've had the microphone, and now we need to set the record straight. I've had the benefit of being the benefactor of a great education. It's interesting to see this state like no one else, or very few people get to see it, and I do believe we're going to be successful in our endeavors, I really do.

Again, I think it's a great idea. Let's move forward.

MR. WILLIAMSON: Ned?

MR. HOLMES: I agree, Mr. Chairman. I believe that involving the local officials all along the proposed routes is a key to being successful in it. My sense about major infrastructure is you always have a fringe group that sees the black helicopters, and they will always be there but they will become less relevant as you involve the local officials that really have an understanding and have input. And so I'm delighted to see this. I think it's a very positive step forward.

MR. CHASE: When you look back at the history of the interstate, it wasn't so much trying to merge the three nations, though that might have been part of it, but it was the Trilateral Commission that was behind the interstate system, so it's not new; it's just different now.

MR. WILLIAMSON: Thank you, Coby.

Amadeo, I've got a few more questions about this. Now, you've heard me say my concerns about I don't want it to be involved in anything that's focused just on TTC. I think it's time to formalize the planning process on the entire major corridors, 35, 69, ultimately 20, 45, 10, and maybe even someday 37 all the way up to Amarillo. I also think it's important, until the legislature meets again, that at every turn of the corner we at the commission level and you at the staff level make certain that the county judge in Shelby County understands that he or she is part of the ultimate outcome of this.

Because we've spent a lot of time, a lot of treasure and shed a lot of political blood to get in front of people that there are really three choices　-- I'll take 35 since that's my part of the world　-- we can either do nothing or expand the footprint of 35 or we can parallel 35; we can either focus on cars or trucks or both of them, or freight and passenger rail, or all four of them; or not. It's up to each leader in each affected county to help make that determination.

But the days of running from confronting the problem are over. If we want to do nothing, that's a choice we can make, and we just need to all be brave enough at every level of government, or courageous enough to say I don't want to do anything, I'm fine with the congestion that is on State Highway 59, I don't want to do that anymore, that's okay. We can't do that if people don't believe and don't see by our actions and words that's our intention.

I appreciate your clarifying the record, Coby, because we did ask the legislature to do this formally. We will ask the legislature to do this formally again in 2009. I live in an ex-urban part of the state, I think my county judge is just as concerned about congestion, air quality, safety, job opportunity, and the value of our assets as Judge Self from Collin County, and there's no reason why every county judge in the state of Texas shouldn't play the same role in the planning organization process as the urban judges play today, there's just not any reason not to do that anymore in Texas.

So as long as we keep moving down that path, I think this is a good idea. An advisory board takes a global approach, the corridor advisory board, the segment committees take the same approach to the segments as the MPOs take in the urban areas. That is a plan that makes sense for Texas.

MR. SAENZ: We can structure it like that in that they would be making recommendations to you all for you all to consider as we go through the different decision points on the project, including moving the project forward.

Now, as far as the potential could be that we could set up these segment corridor committees for other projects that we're developing that may not be part of the Trans-Texas Corridor, and we can, I believe, structure the rules that would allow us to have that flexibility that should we be developing a corridor somewhere between let's just call it the Ports to Plains Corridor, that we could set up a segment committee as we develop those corridors and expand those. As we develop some of the trunk system routes that we are developing across the state, we could set up the same type of structure to help us move forward in developing those. So that is the flexibility, and we can write that flexibility into the rules, if you would like.

MR. WILLIAMSON: I think that the commission would like maximum flexibility to do such.

MR. SAENZ: We will do that.

MR. WILLIAMSON: I recollect during the last legislative session, Senator Ogden and Senator Carona particularly were interested in matching up any major corridor investments on the existing trunk system, so I think they would receive that step as a favorable step.

MR. SAENZ: And this lays the groundwork to begin having the rural planning organizations and possibly this could evolve to a corridor planning organization

MR. HOUGHTON: Let me jump ahead of you. I think there's a group in the state that's ahead of us a little bit. Tomorrow in the Brazos Valley, the COG plus, I think, one other county are meeting to come up with a recommendation on an alignment for TTC-69 which is Brazos, Grimes, Waller, Washington, Walker counties. Bryan Wood, are you here. Come on up here, Bryan. You didn't know this was going to happen.

MR. WOOD: You would have to pick on me on the day I left my jacket at the house. For the record, I'm Bryan Wood, district engineer.

MR. HOUGHTON: Can you talk about what's happening tomorrow? You're aware of what's going on.

MR. WOOD: Yes. We have some county commissioners and some county judges from several counties along that area that you talked about that really involves three districts, the Houston District, the Bryan District, and also Yoakum District, and we are going to meet with those folks tomorrow and talk about what they would like to see on TTC-69, is there under any circumstances which they could support the TTC-69, what is the vision, and just to look and see what the future is, and we're hoping to find some middle ground that they could support it. And so we're doing that tomorrow, looking forward to doing it.

MR. HOUGHTON: I just wanted to kind of give you a primer what is happening to exactly what we're establishing here at the commission.

MR. WILLIAMSON: Thank you.

Amadeo, we have a pretty good idea that the 35 corridor is premature, I think it would be pretty easy to figure out a segment committee structure that made economic, geographic and sociologic sense. It might be less so with 69. The Alliance for Interstate 69 has been remarkably supportive of transportation in our state for several years. I would think you would want to reach out to the alliance for their advice on the structure of the overall advisory board as well as the segments.

MR. SAENZ: Yes, sir, and I've initiated communications. Judge Thompson and I spoke a little last night and we're going to continue and try to get some feedback from them as to look at their structure, look at their purpose and see how we can look at the statewide committee for 69 and see how they interact with the coalition and the alliance, and then as we move into developing segments of TTC-69, then we would start setting up the segment committees. And again, there will be coordination between the segment committees and the statewide committees, you might even have some dual membership so that there is communication. And then, of course, in that case with the Alliance for I-69 and even on the 35 we have the NASCO people that are working on 35, there will probably be some communication between the advisory committee for 35 and NASCO.

MR. WILLIAMSON: Just be sure we don't limit it to TTC. It's just critically important for people to have to deal with the congestion on 35 at the same time they're dealing with what to do about it.

MR. SAENZ: That's part of the plan.

MR. WILLIAMSON: We believe the parallel, not only is it logical but we believe it's the only way we can finance congestion relief. That doesn't mean that other people share our opinion. There are a lot of people who live in Waco and Temple and Belton who say expand the footprint of 35 or build large loops around their communities. If we don't set up advisory and planning committees that have to deal with the financing of the entire solution of the problem, then we're not going to be making any headway.

MR. SAENZ: Yes, sir, we can do that, and that's why it's going to be important that the members come in for the county represent the entire county and not just segments of the county.

MR. WILLIAMSON: I found your comments about the Wharton area interesting, Ted, not only because I have some business associates that live in that area who have been decidedly anti-TTC and they call me and tell me about it on a regular basis, except one called me not long ago and said, You know, the rail traffic through this particular city is dangerous, what are you guys going to do about that? And I just kind of started laughing, and I said, Well, X public official　-- I don't want to say his name　-- what do you think we've been talking to you about for six years?

I mean, this is going to happen all across the triangle, the golden triangle of our state if we don't succeed in making people aware of it. In Weatherford, Texas, the trains now run twelve times a day, twelve times a day those suckers come screaming through the middle of town. People just kind of look around and say where did this come from. Well, this is becoming the economic center of the United States of America, that's where those trains come from. Somebody has got to do something about it.

Any other dialogue? This is the time when we can talk with each other and we can direct staff. We're going to proceed along the basis of the direction you receive from each of the commission members and we'll look forward to seeing what you come up with.

MR. SAENZ: We'll incorporate the rules and we will meet with the commissioners individually as we develop the proposed rules to make sure that we've covered the issues that you have brought up.

MR. WILLIAMSON: Very good. It's a good move.

MR. SAENZ: Thank you, sir.

MR. BEHRENS: Now we'll go back to agenda item number 2 and we'll get a report from Judy Hawley who is representing the Trans-Texas Corridor Advisory Committee.

MS. HAWLEY: Thank you. For the record, I'm Judy Hawley, representing the Trans-Texas Corridor Advisory Board. Commissioners, Mr. Chairman.

Mike, good ride, God bless, thank you for everything you've done for all of us in the state of Texas for so many years. You're very much appreciated.

Thank you for the opportunity to address the commission on behalf of the TTC Advisory Board. Having served as chairman for this past year, I wanted to provide you with a status report.

The TTC Advisory Board, as Amadeo shared with you, was formed by your commission in 2005. We just completed our 27th committee meeting. Our membership includes people from all over the state, I think the prototype to what you're talking about for the new committees as well. The only thing that probably holds us all together is that we are serious transportation advocates. We've devoted some thousand hours of volunteer time just in meetings to become knowledgeable enough to do what you ask of us which was to provide honest feedback to you, the commission.

Each of you participated in our meetings, as well as most of the people along the line over here, some of you many times. You have provided, through TxDOT, every single resource person we ask of you, every snippet of information we requested to assist us in our deliberations. We had representatives from the railroad industry, from the trucking industry, private sector partners, financial industry, the land commissioner, and hosts of others served as expert resources at each meeting. We were assisted in our tasks by Dr. Bill Stockton of the TTI and the excellent TxDOT staff briefed us anew every single month.

As you know, because you were there, my fellow board members took their task very, very seriously, they felt like they were partners in this process. We grappled with the nuts and bolts while trying to stay out of the political maelstrom of this last legislative session. Last year, during the comment period for the TTC-35 DIS, we did submit a committee white paper which reflected many of our recommendations. My report today reflects our final observations and recommendations to this commission.

Before I do that, I want to reiterate our great respect for this commission and especially for TxDOT, as exemplified by the following. By your wisdom, in clearly recognizing the challenges created by Texas's population growth, we cannot ignore that, the vision in conceiving something as bold as the Trans-Texas Corridor, your effort in devising a mechanism for identifying and developing the TTC-35 corridor, using a tiered environmental impact approach, your innovation in identifying the opportunity for public-private partnerships, and seeking ways to minimize costs and risks to the state, and finally, your tirelessness in telling Texans that doing nothing is not a viable option.

Chairman Williamson briefed our committee yesterday and then he freed us from bondage. We had one member of our committee, Charles Perry, who comes in from West Texas and it's a difficult trip for him, and he said, I think the only way I'll ever get off of this committee is to die. So we kind of laughed about that, and said, Well, Chairman Williamson gave you a better option today.

As the chairman laid out the way ahead, we recognized that most of our recommendations were being incorporated, rolled into the evolution of this process. By boldly delegating to the local stakeholders the responsibility for planning and development of their respective segments, the commission is now empowering local entities to use the tools provided by the legislature, to adapt the governor's vision　-- adapt the governor's vision to their region's specific transportation needs, and then　-- and this is the big one　-- select the most viable funding strategy from the very, very short list of options. We think this is exactly what's needed. We were overwhelmed with the simplicity and the rightness of this proposal.

The TTC committee, after you left, kind of revised what we wanted to talk about today, and we came up with just a series of several recommendations that we would like to get on the record for the way ahead.

Please continue to address, you commissioners and TxDOT, the urgency of the needs and the long range consequences of doing nothing. The 1,200 new Texans a day, the tsunami of trade that Commissioner Holmes and I both know is coming, has started to come, and its interstate and intrastate implications clearly define the roles as we go into this, Amadeo, the roles and the relationship between the advisory boards, the planning committees, the relationships with each other, with the commission, and especially the relationships with TxDOT.

Make provision for diversity of representation, don't just have elected officials on the planning committees at the grassroots, to ensure that you've got the broadest level of grassroots communication so we can de-politicize this process as much as possible.

There are several models that are out there. The MPO has a wonderful selection process where various agencies appoint certain people so it gives you a little de-politicized. The regional planning water development authority groups are another model that might be used for your planning groups.

Engage your legislators in the local process as much as possible. We feel that that was where one of our biggest communication gaps occurred was that they weren't there close enough to what was happening in their own respective areas.

Continue to explore innovative funding strategies for the Texas transportation system. I was glad to hear you articulate again the importance of the whole system concept, especially to address filling those rural segment gaps between the urban centers.

And please invest in the new planning committees and the new advisory boards, just as you did with the TTC Advisory Board. Provide them access to the same tremendous intellectual capital of TxDOT's staff and the resources that you provided us so that they are the best informed that they can possibly be. They're going to be motivated. There's nothing stronger than motivated, informed people out there as partners as we move forward with developing this transportation system.

We applaud this new direction, the refinement of this process in the corridor development. Thank you again to this commission and to the commissioners who preceded you for equipping us with the knowledge, trusting our recommendations over and over and over again. We actually feel like this evolution is part of what we shared with you during the courses of our deliberation. And thank you to the TxDOT staff and especially to TTI's Bill Stockton for the tremendous support.

And commissioners, that's my final report from the TTC Advisory Board as we fold up our tents and ride away, but thank you again for the privilege of being able to serve in this capacity.

MR. WILLIAMSON: Well, Judy, we thank you. Members, dialogue?

MR. HOLMES: Judy, I don't think you're going to get to ride totally away, because I've already promised to work with you on a connection to Corpus.

MS. HAWLEY: Absolutely.

MR. HOLMES: And I look forward to that, and I thank you for all of your efforts.

MS. HAWLEY: You're certainly welcome, and we look forward to welcoming all of you on your visits to Corpus, and thank you very much for that.

MR. HOUGHTON: Well, that's a mutual admiration. You've done a tremendous job with the committee, but it's now morphing into something a little bit more specific, and I think that is the key. We look at the 30,000 foot approach, now we're going to get down to start drawing lines on maps and the locals have the input where these lines need to go.

MS. HAWLEY: Thank you, and we think that's a tremendous move forward, absolutely. Thank you for your wisdom on that.

MS. ANDRADE: Judy, thank you so much for your leadership. It's been just great to work with you in the Coastal Bend area, and I hope that you won't ride away.

MS. HAWLEY: Just this committee is folding up.

MS. ANDRADE: I encourage you and I hope that you'll volunteer throughout this. Thank you so much. I look forward to working with you.

MS. HAWLEY: Thank you, Commissioner. I might add that a number of the members　-- and Mr. Chairman, you were there yesterday　-- expressed interest in continuing to serve because you have invested a tremendous amount of capital in just developing their brain power, their knowledge about transportation issues, so I know that they're going to give their names to, I think, Mr. Stockton if they want to continue to serve in some capacity in this new structuring which we all highly, highly applaud.

So thank you very much for that opportunity and consideration.

MR. WILLIAMSON: Three things. To you and to all the members, our deepest appreciation for the time that you invested. I'm fond of saying God gives you two things when you're born, grace and time, and time is the most valuable thing that you can control past grace.

Second, I'm glad you recognize how much we did listen　-- I want to say this exactly right　-- I'm glad that we were able to act in a way that you saw that we acted on your thoughts. The advisory board was tremendously effective in influencing the direction we took, as Ted said, at the 30,000 foot level, starting to come down to the 5,000 foot level.

And third, you're exactly right, a whole lot of our decision last year to recommend corridor planning organizations and rural planning organizations to the legislature found its roots in the TTC Advisory Board and the never-ending admonition every month you've got to find a way to partner rural and urban Texas in solving this problem. And so you were tremendously effective in that regard.

We thank you for your participation and we thank you for your report.

MS. HAWLEY: Absolutely, thank you.

MR. WILLIAMSON: Amadeo, she raised an issue I want to talk to you about. As you're developing your next recommendations for the commission, I know we're limited　-- is it 24, Mr. Jackson, committees are limited to 24?

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Every county government has got to have a voice in this, but I guess if they're appointing someone and it's not themselves, that addresses her concern about having too many elected officials there it gets politicized. In structuring the relationship between the segment committees and the advisory board, you may well want to suggest to us some automatic membership participation between the two. In other words, if you've got a segment committee that's going to work on　-- if your recommendation is Austin to Dallas, if you've got a segment committee that you're going to set up for that segment, it might be an automatic that two of those members are on the advisory board so that there's a constant discussion going on.

Because the problem isn't just Dallas and Austin　-- it's the most immediate problem right now　-- but the problem is actually the Red River to the Rio Grande, the problem we started out to solve six years ago. And so you've got to have people talking not only about their segment but about the statewide vision and its impact on the rest of the state as well.

MR. SAENZ: We can set that up, as I mentioned earlier, to make sure that there will be communication between the two groups and coordination.

MR. HOUGHTON: Even in the rural, there's some COGs out there that are very active. Like you've seen the one in Brazos Valley that will meet tomorrow and start their own process which can, again, morph into this group. Not all of those are elected officials, there are economic development people involved. What's the partnership, Coby, in Bryan, Research Valley Partnership? Is that right, Bryan? Yes, Research Valley Partnership which is their big economic development driver.

So I think a combination, Judy, of those types, not just elected officials, but a good cross-section.

MR. SAENZ: We will include that.

MR. WILLIAMSON: Okay. Thank you, Amadeo. We'll look forward to your report.

And Mike, I don't see any reason to change the schedule, let's continue on our administrative stuff.

MR. BEHRENS: Okay. Then we'll continue on going back to agenda item number 3(b), and this will be another discussion item, continuing discussion from what we started last month in Sugar Land talking about the financing impacts to the department because of recent state and federal legislation. Coby.

MR. CHASE: Again for the record, my name is Coby Chase. I'm the director of TxDOT's Government and Public Affairs Division. Today I will continue to discuss the financial effects resulting from recent and expected state and federal actions.

Mr. Behrens should probably consider this the best retirement gift of all, he won't have to sit through another one of my presentations ever again if he doesn't want to. But there is always the worldwide web, Mike, you can listen in.

I'm going to start with discussing our appropriation for the 2008-2009 biennium, a simple comparison between the current appropriations bill and the one that was just enacted is not as simple as you might think, but I'm going to try to walk you through the differences and without the benefit of visual aides. And keep in mind that what we will be looking at are decisions that legislators made based on the information that was available to them at the time those decisions were being made.

If you look at the total method of financing for the 2006-2007 biennium　-- and that's the one that closes out a week from this Friday　-- we received $15.1 billion. For 2008-2009 we are appropriated $16.6 billion. To the casual observer, it looks as though we were provided an increase of $1.5 billion.

Let me start by talking about Proposition 14 bonds. While we did not receive an appropriation of Prop 14 bonds for the 2006-2007 biennium, we expended $1.2 billion worth of them, so when you adjust the '06-07 appropriations for Prop 14 bonds, it leaves us with an increase of just over $300 million for this upcoming biennium. That is the 2 percent increase we have noted earlier.

Your next question may be where does the 2 percent increase come from. It didn't come from the State Highway Fund. The 2008-2009 bill actually appropriates less from the State Highway Fund than last session. More on this in a moment.

It didn't come from the federal government. The bill appropriates half a billion dollars less than last time. It's simply because the estimate was too high for the previous biennium.

That leaves the Mobility Fund. Last session we were appropriated $1.9 billion in proceeds from the Texas Mobility Fund. This session we were appropriated $2.4 billion. That $500 million added amount covers some of the loss.

So the bottom line is the increases in bond proceeds veiled the decreases in state and federal funding so that we came out about 2 percent ahead at the end of the day. Of course, decisions about our bond programs were made by prior legislatures, not the 80th. Considering the effects of inflation on the highway construction business, this 2 percent increase represents a step backwards in terms of our funding.

As I mentioned, we were appropriated less money from the State Highway Fund than last time. This is in spite of the fact that the State Highway Fund pie stayed about the same size. Remember we are not the only agency who is served slices of that pie. To put it simply, the size of the pie stayed the same but our slice got smaller. How is that possible? The legislature transferred about $1.5 billion from the State Highway Fund to non-transportation programs. These transfers are up 15 percent from the last biennium.

Another direct hit to our bottom line is the continued federal rescissions. Over the last year and a half, Congress has enacted four rescissions totaling $666 million. To be clear, this is $666 million that TxDOT, and more importantly it's local partners, regional partners, will no longer be able to count on in meeting our goals to reduce congestion, enhance safety, improve air quality, provide economic opportunities, and preserve the value and strength of our system.

But wait, there's more. Keep your hands on your wallets and your pocketbooks for a second. The U.S. House of Representatives approved the Transportation Appropriations Bill last month which contains another $3 billion in nationwide rescissions. Texas's share is estimated to be about $259 million. The full Senate Appropriations Committee reported its bill with a rescission of slightly less than $3 billion, so the best case scenario at this point is more than likely $259 million, maybe $258 million.

Included in the House proposal is language restricting the flexibility of states to work with their local leaders in deciding the distribution of the rescission. That's an important thing to note. In the past the Congress and the Federal Highway Administration would say: States, you can apply it in these categories of funding as you see fit. What the House did, at any rate, is prescribe how those cuts are made pro rata across certain categories. So if any category back here in Texas thinks it's protected, it is no longer protected, everybody will take a hit of some magnitude.

Congressman John Mica of Florida tried to change that and came very close on the House floor to doing that, letting states and regions decide where these cuts should be made, but alas, he failed. He was a very close vote, 207 to 217.

A bigger federal hammer falls in 2009 when the administration and the Congressional Budget Office project that the Highway Trust Fund will become insolvent. The White House projects the shortfall to be about $4 billion and that would probably be in the neighborhood of another $320 million cut to Texas if they follow the same path. This matter poses a substantial challenge for Congress. You can be sure that your staff will involve itself in the discussions on how to address this shortfall and do everything we can to combat it.

None of this is news to us, we expect rescissions. Unfortunately, it's become part of the business. It just goes to show you that transportation is relied upon to do everything beyond transportation. We know the state legislature has a tendency to transfer our highway dollars to other programs; we know of Congress's wariness of public-private partnerships, at least a subset of members in the House; we're aware of the precarious state of the Federal Highway Trust Fund; and we know inflation is still eating our lunch. Notwithstanding these challenges, we devised a plan to continue to meet our goals for building infrastructure in this state, and then came along Senate Bill 792.

Before the session, one of the most potent tools available to us to combat congestion was CDAs and concessions. Senate Bill 792 prohibits most concession CDAs except for a few projects that can move forward as planned. The authority to enter into concession CDAs expires in 2009 and the authority to enter into design-build CDAs and the CDAs exempted from the two-year moratorium expires in 2011. For any given toll project, 792 requires that a market valuation be conducted and entitles local tolling authorities to take the first shot at building a project based on that valuation. If the authority passes on the project, the state can build it but we won't be able to use a CDA.

Because we simply do not have enough equity to put into traditional toll projects without diverting resources from other critical non-tolled and rural projects, it is conceivable that fewer projects will be built under 792. We won't know the precise impact of 792 until the market valuations are conducted and tolling authorities decide whether they want to build them or not. What we can say is that unless the legislature takes positive action to renew the CDA program in 2009, then the cumulative effects of the challenges we've discussed would be quite difficult.

Before I conclude, I'd like to mention one very important action that the Texas Legislature took that could possibly lead to an increase in our financial resources. SJR 64 puts on the November ballot a constitutional amendment providing for the issuance of general obligation bonds by the Texas Transportation Commission, in an amount not to exceed $5 billion, to provide funding for highway improvement projects. If approved, the legislature could come back next session and authorize us to issue debt. We won't know until then how much they will authorize and what strings might be attached to that.

And with that setup, I'll turn it over to James Bass next to go through some of the projections on our cash flow. Following James, Amadeo Saenz will talk about some of the operational impacts of the decisions we've been discussing.

MR. WILLIAMSON: Members, do you want to question Coby now or do you want to wait. Let's wait? Okay.

MR. BASS: Good morning. For the record, I'm James Bass, chief financial officer for TxDOT.

And to build upon Coby's discussion of what happened this last legislative session to our budget and other agencies' budgets that utilize the State Highway Fund, we took that and applied it to a longer range forecast. Everyone is quite familiar with the $86 billion funding gap. Well, that looked out from today to the year 2030, looked at the needs and the revenues that were going to be available to TxDOT.

As you heard Coby say, the transfers or utilization of Fund 6 by other state agencies increased in 2008 and 2009. Obviously, that money is no longer available to TxDOT. What we did is we took that reduction in funding available to TxDOT in that earlier forecast we said were going to be available, we took that and then to stretch it out, we didn't increase it, just kept that same number between now and 2030, and that told us we would have $2.8 billion less than what we thought just a couple of years ago. That all happened within the confines of the budget in 2008 and 2009.

One item I forgot to tell you about last month was in addition to that there was a bill, Senate Bill 12, that dealt with the air quality and the TERP Program within the state of Texas and how to fund that going forward. In previous law there was a transfer from the State Highway Fund to TERP of $100 million per year, roughly, in 2009 and in 2010. The 80th Legislature extended that through the year 2015. So that is another $500- to $540 million of State Highway Fund dollars in the previous forecast we thought would be available to TxDOT to address the needs that is now going for another use within state government. So just looking at the State Highway Fund, there is roughly $3.3 billion less available to TxDOT than what had been in that previous forecast.

Another key component in our revenues available to address the mobility needs, of course, are the federal funds. What you heard Coby say we already know to date between when we did the original forecast and today, the federal government has already come in and taken back $666 million. There's current discussion right now of another rescission in the neighborhood of $259-, $260 million.

If you start reading the forecast from the General Accountability Office, the Office of Management and Budget, AASHTO, ARTBA, different groups looking at the forecast of what's going to happen to the Federal Highway Trust Fund, they show the balance of that federal fund going to zero in 2009 or 2010, meaning the current programs cannot be sustained. So there's likely additional rescissions that are going to happen in 2008 and 2009. With no further action on Congress, that will carry forward into the future through 2030.

In one of the management audits you heard a report on here in the last couple of months, they looked at that, updated it, looked at the current situation, compared it to that earlier forecast that resulted in the $86 billion shortfall, and they said TxDOT, in our professional opinion, you're going to have $7 billion less than what you included in that long range forecast from the federal government. So if we couple the $7 billion less in federal funds and the $3.3 billion less of State Highway funds, we've now taken a $10 billion step backwards.

But we had a plan at TxDOT to address that $86 billion funding gap, utilizing the tools that had been made available to TxDOT through the legislature, primarily entering into partnerships with the private sector and utilizing private financing to help fill that gap.

Senate Bill 792 altered that landscape and we've had a number of discussions over the past couple of months, what can we do, what can't we do, and I thought we could do this and transfer that risk, and unfortunately, the answer to that question depends upon where we are in that time line. We can utilize private financing, whether it's through a concession that's exempt from the moratorium or enter into it and enter into an availability payment with that private sector partner for the next 24 months.

On August 31, 2009, the ability to have any private financing on our deals sunsets under current law, so all the toll projects, part of that plan over the next 23 years that we're going to do to help fund that gap would need to be squeezed out in the next 24 months. Do not think that that's possible with all the steps that we have to go through in that process.

So the big question is how much opportunity is lost because of that, because of only having 24 months to continue to enter into those type of agreements. And with any forecast, there's uncertainty, however, with that one there's more than dealing with the state and federal side. So we've taken a very conservative approach and continued to look at that or will continue to look at that going forward.

But to follow on the conservative side, we think that that, at a minimum, is another $2-1/2 billion less in just the near term, not going all the way out to 2030 but just in the next four or five years, that will be less available to TxDOT and the state that we would have likely received in up-front payments by entering into those public-private partnerships that now we will not have the opportunity to do, and therefore, we will end up delaying development and delivery of those projects as we go forward.

MR. WILLIAMSON: That's $2.3- that would have been collected on probably toll projects that we probably would have then placed onto tax projects.

MR. BASS: Correct. We would have been able to utilize however that region best saw fit, however they thought that additional up-front payment could have best addressed the mobility in their region.

MR. WILLIAMSON: So for example, when 281 was put under the moratorium, if there had been an available concession fee of say $500 million that would have been reinvested on the open or tax roads in San Antonio, that $500 million has now been removed from the revenue side of our cash forecast, thus increasing the gap.

MR. BASS: Yes, sir. It wouldn't necessarily increase the gap because the original $86 billion gap did not include the payments from concessions but the up-front payments from concessions was how we were going to address the gap. So the gap has grown because of less state funds and less federal funds and our ability to address that gap has been severely impaired because one of the major tools that we were planning on utilizing over the next 23 years is now available to us for the next 24 months.

MR. WILLIAMSON: I see.

MR. BASS: That is my comments. I'd be happy to answer any questions now or at the end, and I'll turn it over to Amadeo.

MR. HOUGHTON: James, Coby said you were going to talk about cash flow. I guess you gave that 30,000 foot view of cash flow.

MR. BASS: Thirty thousand foot view and carrying it out to 2030. And because of what happened in the budget in 2008 and 2009 in that TxDOT received less in State Highway funds, we continue that forward in 2030. And the reason we did that in the estimate, if we had gone through the original estimate that resulted in the $86 billion shortfall, if we had gone through the revenue estimate and said well, we're going to forecast that the legislature is going to continue to address other priorities in the state by utilizing State Highway Fund dollars at a higher rate than they have in the past, well, then obviously people are going to say you're playing with the numbers, you're estimating that in order to lower the amount of revenue available to you in order to increase the gap.

We tried to take a very conservative approach and what we had done in that original one was just flat-line that transfer number.

MR. WILLIAMSON: Flat-line is a good description.

MR. BASS: Well, now in 2008 and 2009 that flat-line has been bumped up, so again, we've just changed the baseline, we have not continued to grow it or assume that it will grow in the future, we just said the baseline has shifted and if we now carry that out to 2030 from results in the budget is $2.8 billion less, and then because of the extension of the transfer to TERP for another five years, that's another $500 million less of State Highway Fund than what we would have thought before the 80th Session convened.

MR. HOUGHTON: Well, we all point to the Trust Fund going insolvent in 2009, if the U.S. Chamber of Commerce were to come in here and say where do we go the other way, where do we have not enough money to meet our obligations, what would they say?

MR. BASS: If I'm understanding your question, most of the forecasts show the Federal Highway Trust Fund hitting a zero balance in 2009-2010. Obviously, that will negatively impact the allocations to the states. And over time, the Federal Highway Trust Fund had built up a balance in it that I believe Congress used in order to appear to balance the budget. It was over here, we weren't going to spend it, but that allowed us to go into debt to fund other programs, but overall, the budget was balanced but we were still borrowing money.

Now what they did through SAFETEA-LU is said we're going to not only distribute the incoming revenue but we're going to distribute that accumulated balance. I know it's very simple but you can only distribute the balance one time, and so the amount of money, the balance plus incoming revenue, once the balance is gone you have to revert back to only incoming revenue, and that tipping point is going to happen here in the next two to three years. And that's why in 2009 a lot of forecasts show additional rescissions probably equal to or greater than the ones we've seen to date, just in 2009, and then carrying forward, without any action on Congress's part, further reductions from what we had planned or thought was going to happen going into the future.

MR. HOUGHTON: Well, we're issuing debt based on future tax revenue on Prop 14, and we have the authorization to go to $6 billion, I think is the aggregate, based upon that future revenue that you were talking about that is going to diminish.

MR. BASS: And within that program for the State Highway Fund or Prop 14 bonds, we're required to have ten times coverage, so we need to have ten times the amount of revenue of whatever the debt service is.

Our latest forecast, if we were to do the full at $3 billion, we would have 28 times coverage, and if the federal program went away completely, we would be at 14 times. And so depending upon what happens to the federal money and how far it is reduced, we may not really have full ability to reach that full $6 billion capacity because of the other constraint of the ten times coverage. And so it's very key, not just to the day-to-day operations today but the plans as we go forward on our bonding programs and elsewhere throughout the department.

MR. HOLMES: James, you characterize as conservative flat-lining the diversion. Some might characterize that as optimistic.

MR. BASS: Yes, and it's always a fine balance and there's always going to be discussion when anyone comes up with a forecast for anything, and we always try to be very conservative because if we showed that growing at 3 percent and maybe history has been it's grown at 5 percent every biennium and so we built in a 3 percent growth, a lot of times people use that as an opportunity to just dismiss the subject matter that oh, well, you created that number because you grew it at 3 percent and if I grew it at 1 percent, I'd have a different number.

Yes, obviously you would, and that tends to distract from the main subject, and so we're trying to keep the focus on the subject matter that at the end of the day we have less money available to address the mobility needs of the state.

MR. HOLMES: But the simple fact is it has grown.

MR. BASS: Yes.

MR. HOLMES: To suggest that it won't grow in the future is pretty optimistic.

MR. BASS: Is very optimistic, yes.

MR. WILLIAMSON: Thank you, James.

MR. BASS: Thank you.

MR. SAENZ: Good morning again, commissioners. For the record, Amadeo Saenz.

Just to kind of follow up and continue on the good news that Coby and James have been passing to you, last month we talked about pretty much the same presentation and they were high tech and they had slides and I didn't have any slides, so this time I decided to get high tech and they decided to go low tech, so I guess we may not be talking to each other.

But just as they presented that we have diversions that are affecting our state dollars, rescissions that are affecting our federal dollars, the end result is that there's less money that is available to us. Couple that with the changes that the legislature put in place with 792 and the taking away of some of the tools that we had compounds the problem in that we have much, much less available to us to solve the problems.

What I've got is really a continuation of what we talked about last month and what we've talked about in the last few months is that we also have a need for more preservation of our system, and even though we have less money as a whole, we still need to make sure that we address the system that we have to preserve it to make sure that it does not cost us more in the future.

You may recall this map here. This map here kind of showed what our pavement condition scores were across the state, and if you look at the yellow and the orange are areas across the state where we have the lower pavement condition scores. And of course, if you look at that, they're, in essence, in our metro areas and along our coastal areas where we're not meeting the goal that we had set to have 90 percent of our roads in good or better condition by 2012.

If you look at our pavement scores in West Texas and the rural areas, we're doing much better. Kind of looking at this a little bit different, looking at our metro areas where we spend an average of almost $12,000 per lane mile, our scores are right at 81.62 percent. Statewide we spend $7,000 per lane mile and we're at 87 percent, much closer to the 90 percent goal.

We need to look at how we address these deteriorating pavement conditions in the metro areas, and we've come up with some recommendations that are going to affect what we will be doing in the next few years.

One of the things that we're looking at between 2008 and 2010, because we have some pending mobility projects that are well underway, we do not want to go out there and remove some of the mobility money and move it into preservation at this time　-- we will be able to take some but we have some commitments for air quality requirements and such that we will have to move those projects to ensure that the non-attainment areas stay in conformity, and we also address some of the short term mobility needs that are there　-- so what we would be looking at is the possibility of reallocating our maintenance and rehab dollars to address the pavement needs in the targeted areas.

Some of the districts that have good pavements, we will go back and look at how much money is available in their preservation areas and then take some of that money and put it in targeted areas.

As we look into 2011 and 2012, we now have an opportunity to find out what is the total impact we have, and then what we would like to do is, in essence, move money from the mobility categories to address the pavement needs in those areas. The only money that we would not touch, of course, we cannot use mobility funds for preservation. There is some district discretionary money that is set aside and directed as district discretionary, though the district engineers can use that for preservation and that, but it's totally out of their discretion, and then, of course, the strategic priority money that you all have we'll have some left to address some of the projects that we're already committed to but we will be moving most of that money into the preservation area.

As I mentioned, what we would like to do is, in essence, split the funding in Category 1, our maintenance and preservation, into two parts. Part one which is continue to distribute the funds statewide at levels that will keep our system almost at parity, and that would be about $1.1 billion a year for the next five years, for $5.5 billion. What we do is any money above the $1.1- that we have in the districts in '08 and '09 and '10, any money that we have in the districts above the $1.1- that have good pavement scores, we would then take that and use that to target it in areas of the state where we don't have the good pavement scores. So we would move about $1.8 billion to target those areas across the state. So in essence, we're doing that.

The $1.8 billion for '11 and '12, it is taking and moving mobility money into the preservation area. If you notice the slide here, we would keep the base allocation at $1.1 billion across the state, the districts would then get that distributed based on the current formulas. We would have the supplemental that would move any surplus money that we have in '08, '09 and '10 from the districts that have high pavement scores and then distribute those to the districts that have the low pavement scores. And then of course, in '11 and '12 we would supplement those numbers with some additional money to increase our funding to $600 million in 2011 and over $735 million in 2012 to address our pavement scores. So that's what gives us the $1.8 billion in preservation to target those bad areas.

This would result in reductions in the amount of money available for mobility in '11 and '12. It keeps what we currently have in '08, '09 and '10 but it does reduce the amount available in '11 and '12. And that's why I think, hopefully if we get the constitutional amendment passed in the next session, the legislature passes legislation that allows for the issuance of the bonds to cover that additional transportation projects, we can come back and backfill and do some of the projects.

That's why one of the things we will be asking the districts to do is to continue developing those projects and have those projects ready even though I know I don't have the available cash to let the projects, we will have the projects ready so that they can go to construction should we get any additional money. If we stop the ship, you might say, it's hard to get it started again, so we need to be able to reach a balance and then have enough projects there sitting around on the shelf that can, in essence, be implemented in a quick fashion.

When we do go to this supplemental allocations to the districts, as I mentioned before, we will work closely with the district engineers and ask them to put together a plan so that we can make sure that we target the roads that need to be targeted and we address the conditions that need to be addressed so that we can make sure that we come up with a good result in improving the preservation and improving our system.

As I mentioned, basically what this does, we're going to have to reduce mobility funds in the out years, we're going to put them in maintenance and rehabilitation, target those bad areas, and then, of course, we're not going to make headway with our pavement scores, we're, in essence, just trying to make sure that we do not lose more ground than what we're already losing. We want to hopefully stay at the level that we're at.

The other thing that I wanted to mention and talk about is an extension of what we talked about last month, because of the tools that we lost as a result of 792, and specifically not being able to do public-private concession type models, I wanted to kind of have a couple of examples that would show you the impact on two projects if we don't get that particular tool back.

The first one I wanted to talk about is the State Highway 130 project. For State Highway 130 we have a segment that's under construction here in the Austin area, Segments 1 through 4. That was TxDOT's first design-build project, it was funded through the public bond model. We were able to go out there and issue debt for that project as well as a couple of other roads in the Austin area on State Highway 45 and Loop 1, but we had to go out there from the common pool and use $700 million in toll equity to make that project whole. In addition, we received about $400 million from the local entities to cover some of the additional costs of the project. So that project had about $1.1 billion in toll equity to make that project whole.

When we let the 130 project, we included Segments 5 and 6, and Segments 5 and 6 start just from the south of Austin and go all the way down to Seguin or Interstate 10. We did not have the funding for that project. We did get estimates or bids from the contractor, but we were not able to fund that project. If we look at 130, of course, 130, 5 and 6, we have now entered into our first public-private partnership with Cintra-Zachry, but when we were looking at 130 and trying to fund it using our other means, we either had to come up with the cost of the project　-- the project itself costs $1.3 billion　-- operation and maintenance costs, and the next present value is about $380 million, and then the debt was 40 years.

First of all, if we would just use our pay-as-you-go method, we'd have to, in essence, wait till we had $1.3 billion available to us to let that project.

MR. WILLIAMSON: When would that have been?

MR. SAENZ: Somewhere after 2060, I would imagine. We did not have any of that money available to us all the way till our 2030 plan, so it would be post 2030, but if you really look at it, I still would have needs in 2030, so that's why I say it's 30, 40, 50 years down the road before we could have gotten to that project.

MR. WILLIAMSON: So somewhat similar to another project we're going to talk about today, State Highway 121.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: The decision to move forward on 130, Segments 5 and 6, was as much based on the fact that we weren't going to build it anyway.

MR. SAENZ: Yes, sir. The option was to build it the traditional way, we needed $1.3 billion, we didn't have the $1.3 billion.

MR. WILLIAMSON: And to have accumulated the $1.3 billion, we would have had to have raided the common pool to the detriment of Lubbock, San Antonio, Houston, Fort Worth, Dallas, Amarillo and El Paso in order to build that.

MR. SAENZ: And we would have had to have taken that from the common pool which every other part of the state would have been impacted.

MR. WILLIAMSON: And did I understand you to say the common pool is already spoken for through 2030?

MR. SAENZ: Yes, sir, we have long range plans that go up to 2025, 2030, so we have projects identified. We have projects in our ten-year unified transportation program from '07 to '17 where we have, in essence, set the financing. Now, those projects and that plan are going to have to be adjusted based on what we heard from Coby and James. Based on the reduction of resources that we have, reductions of money coming in from both the state side and at the federal side, we're going to have to make adjustments to those plans.

Because when we were projecting money coming in from the federal government at a certain level, now because of the rescissions, we will have less, and because of the rescissions as well as the shortfall, or in essence, the trust fund going into negative in 2009, not just reaching zero, there will be less federal reimbursements available, less federal resources, the continued taking money from the state gasoline tax fund will result in less state gasoline tax money to do those projects.

So in essence, our ten-year plan right now is based on projections that we made a year and a half, two years ago. Because of these changes, we now have an over-programmed plan because we know now that there will be less money than what we projected. We're trying to quantify those numbers so that we can put in place and begin to communicate with our partners, the MPOs, and the district, with the county elected officials to tell them that even though we had forecast this amount of money, as we see now, that money is not going to come in in the time that we had forecasted it, so therefore, we cannot let the projects where we have them planned today.

MR. HOUGHTON: So we're pushing projects outside a ten-year window.

MR. SAENZ: Yes, sir. In essence, you push projects outside of the ten-year window, you push projects outside of the 30-year plan.

MR. HOUGHTON: And the equity that was required　-- because I was involved in 130, 5 and 6, was about $700 million; we didn't have that kind of equity to put into that.

MR. SAENZ: We didn't have the $1.3 billion when we went to the next method of developing the project which was to use the public finance model and issue debt, we were still going to have to put in for this same project almost $700 million in equity to be able to build that project.

MR. HOUGHTON: Amadeo, have we communicated with all the MPOs across the state of guess what?

MR. SAENZ: We have had some preliminary conversations through video-teleconferencing about our forecasting and how much money will be available to them. We are now internally determining what that number is so that we can go back to them. We have sent a letter to the district engineers for them to start working with their MPOs with our next year's letting schedule in 2008.

MR. HOUGHTON: What kind of reduction in letting, roughly?

MR. SAENZ: Well, in 2008, based on what we had projected two years ago, and last year we were projecting to have over $5 billion worth of letting in 2008. Because of inflation and because of some of the rescissions and some of the loss of money, our forecast is somewhere between $3.6- and $4.1 billion.

MR. HOUGHTON: I guess the dollar volume is one issue, but how many lane miles are we building as compared to three, four, five years ago? We're building less lane miles because of inflation, it costs more for steel and the commodities. I guess that's a better measure than the dollars.

MR. SAENZ: Let me get that number run for you.

MR. HOUGHTON: It would be interesting to know.

MR. SAENZ: We'll get you a number.

MR. WILLIAMSON: I think even more interesting, if you can quantify it　-- I know we're having to work hard to get here　-- it might be even more interesting to know how much more congestion will result. Lane miles is easy to explain and it's a simple thing, and I appreciate that, but I think most important is how much more congestion is going to result from less lane miles.

MR. HOUGHTON: I mean, we pat our selves on the back and AGC and all the contractors say, gosh, we had a lot of lettings, but in reality, we're building less road today than we were three, four or five years ago.

MR. SAENZ: We can get you that.

MR. HOUGHTON: That would be interesting to know.

MR. SAENZ: If you all recall, I think two or three months ago when we showed the impact of the highway cost index on our letting, from 2002 to 2006, there was a 73 or 77 percent increase. What we were spending in 2006 at $5 billion was equivalent to about $3 billion in 2002.

MR. HOUGHTON: Well, I can ask you and Coby can chime in or James, we had a 2 percent increase in the budget? If you apply the HCI or some index, what was the effect?

MR. SAENZ: Probably if we look at HCI, say ten.

MR. HOUGHTON: So we had a negative impact to this agency.

MR. SAENZ: Negative eight.

MR. HOLMES: Well, it's really a collision of multiple factors, right, rescissions, more diversions, higher cost of lane miles, and greater population. And so you have all three of those converging.

MR. WILLIAMSON: And restricted access to private capital.

MR. HOLMES: And less cash available.

MR. SAENZ: Everything is against us.

Just looking at the example, so we would need to come up with almost $700 million of toll equity to be able to develop that project. We were not able to do that, so when we had the ability to enter into the 35-TTC CDA, and then, of course, Cintra-Zachry brought forth the first facility agreement, the construction of State Highway 130, we were able to get that project developed and we now have it ongoing. In fact, they're actively moving forward with the right-of-way acquisition as we speak.

They were able to provide not only the $1.3 billion to build the project, they will also be responsible for the maintenance of that project for the next 50 years. That covers a net present value of about $400 million in maintenance costs. They will have a 50-year lease, and then they provided us an up-front payment of $25 million that then we can use on other projects. And then, of course, the way we structured the concession where we have a revenue-sharing mechanism based on the amount of traffic that uses that facility, we will also realize about an equivalent of net present value of about $245- to $250 million of additional revenue through the life of that concession.

So in essence, when you look at it, we wound up with needing to put in $1.3 billion to fund it the traditional way, needing to put in $700 million and then still having to possibly maintain that facility for its entirety, to being able to get that facility built through the public-private partnership concession model and having the maintenance paid and getting an additional $270 million in net present value to do more projects. More importantly is we could not build that project before 2030 under the first two scenarios. We were able to get this project under construction and it will be open to traffic in 2012, using the public-private partnership model.

This is one of the tools that we lost and it would be very important that we be able to get that back so that we have the ability to access that private capital and allow us to build the transportation infrastructure. By being able to build this project here, we now have the ability that this will allow us to use some of the money that could have gone here to put in other areas to address other needs.

The second example that I kind of talked about because I think this was one of the questions that came up, is the 281 project that we were developing as a public-private partnership under the CDA model just north of San Antonio from 1604 north to the county line. That project, of course, if you look at our conventional financing for that project, the project cost about $477 million in construction. When we add the design costs, utilities, right-of-way engineering, et cetera, it goes up to about $600 million. The net present value for the maintenance of that project is about $140 million, and when we look at that, we need about $739 million to build that project.

The MPO, through their planning process, has identified $54 million available to them, and because they were not leveraging a project at that time, they did not have access to the Mobility Fund, so they would require $685 million more beyond what the MPO had identified to be able to get that project built. The result is the project could not be built and it was going to be built sometime after 2030.

The other option that the MPO had was to delay other projects within their area, other priorities, and raid their own common pool, you might say, to build this project, but they had chosen not to.

MR. WILLIAMSON: In other words, shift planned expenditures from south San Antonio to north San Antonio.

MR. SAENZ: Yes, sir.

The second option, of course, is the same option I talked about for 130 which is the public debt finance model, traditional design-build process. In that case the project still costs the same, everything is the same on that project. We used the toll rates that we have been working with with the RMA to get these numbers generated, and of course, the MPO still had the $54 million identified but because now they were looking at this project as a toll project, they now had an additional $100 million of the Texas Mobility Fund to be able to apply to this project as a leveraged project. That resulted in them needing only $148 million to be able to build this project, but they would still wind up being short, so they still had to take money from other projects or come to the commission and ask for statewide pool of money to be able to get that project built.

I'll jump over to the private concession model because we had received a proposal and were moving forward with a private concession and we don't have the numbers because the project never proceeded that far, but we have our financial advisors that have run some numbers on this project to see what the private concession model could have brought the region.

The project still costs the same, the same toll rates, the same toll escalation rate, and looking at some of the numbers because we look at ranges, we felt that this project on 281 could bring in anywhere from $5 million to $200 million in concessions above and beyond the cost of the project. So the market value for that project was the total cost plus we think somewhere between $5- and $200 million in addition to the cost of the project.

MR. HOUGHTON: Let me stop there real quickly if you don't mind, Amadeo. I'll go to the upside. $200 million would have come back into the MPO. Correct?

MR. SAENZ: Yes, sir.

MR. HOUGHTON: So you look at the net revenue that not only they access $54 million of the Mobility Fund, they got $200 million in a concession payment. Now we impose 792 on this process and 792 says we go to market valuation, and the RMA down there says okay, we tell the RMA it's $200 million that you have to pay to the MPO. That's a cost that they have to go out and finance.

MR. SAENZ: That would be a commitment that the RMA would have to make should they choose to take that project forward in cash into the special sub-account, or committing to build additional projects to that amount, or committing surplus revenues from that toll project to do that.

MR. HOUGHTON: And what happened in the session is we went 180 degrees, we took $200 million away immediately to the MPO and now we've imposed that kind of stress on top of the RMA to go finance that or to go commit to that and they've got those obligations instead of an infusion of cash into the system.

MR. SAENZ: That's correct, sir.

MR. HOUGHTON: Okay.

MR. SAENZ: And I think, just like you said, what it does if we take the high side, the project would have brought in a $200 million concession, the MPO already had $54 million, they also had $102 million from the Mobility Fund, so in essence, they wind up with $300 million more to put on other projects by utilizing the private sector. If you take the low side, it's $107 million.

Under that plan that project could have been built and under construction. We did run into some issues on the environmental side but those have been resolved or are being resolved now, but that project could have been on the ground by 2015.

792, in essence, does not let us use that model. Of course, 792 will allow us, and we've talked about the availability payment model for developing projects, and under the availability payment model, the project is the same. As we've talked about, there's mechanisms where we can set the project up so that we get the developer to finance this project, and then, of course, we will pay them over time and we can either structure this procurement as one where we keep the risk at the local level, at the public level, or you can assign some of the traffic risk and incorporate that so that the developer has to bid only so much based on the traffic that uses it, very similar to what we do on our pass-through tolling. That risk would have a price and we would have to look at both of those to determine what the final cost of the project is.

MR. HOUGHTON: But you never get to truly a real pure concession.

MR. SAENZ: No, sir, you don't.

I wanted to present these two scenarios and examples just, in essence, to show that we need many more dollars and we have to wait longer to be able to do these projects, we're keeping all of the risk, and of course, you can do these projects but you force other projects to wait, or these projects wait for other projects and for money.

On the concession side, in essence, you're able to take and shift the risk to the private sector, you get the projects completed much sooner, there's less or no tax dollars required, you have those tax dollars will be available for other projects, and those other projects can be constructed with those freed-up dollars or any concession money that comes in.

I guess the point that I want to make, it's important that we see what we can work on and we look forward to be able to present to the study commission that's set up to be able to try to really show the merits of this model so that we have the ability to move forward and develop projects in the future.

MR. HOLMES: Amadeo, before we get too far away from your comments about availability payments, we really haven't gone through a full process to determine how the availability payments will work.

MR. SAENZ: No. I've got our financial folks working on that, in particular wanting to make sure that we look at the scenario that we mentioned last month about trying to see how we can tie the traffic to the availability payment model.

MR. HOLMES: I would encourage us to continue down that road as it might be an available financing technique.

MR. SAENZ: Yes, sir. And Brad Watson is here, so I know that he's going to jump on it some more.

MS. ANDRADE: Amadeo, I have a question. It's interesting that both projects that we're using for comparison are in my area, but on the public debt finance project 281, it says the anticipated date that we're going to deliver this to the public is 2025, and my understanding is that the RMA is moving forward on this and I had no idea that it was going to take this long.

MR. SAENZ: Well, I think if you look at the project, the project is going to be developed in phases and I think I'm talking about the entire project, I think 2025 will probably be that final phase or somewhere in the 2020s.

MS. ANDRADE: So from 1604 to Comal County?

MR. SAENZ: Yes.

MS. ANDRADE: Terry is here from RMA. Can she comment, Mr. Chairman?

MR. WILLIAMSON: Oh, sure.

MS. BRECHTEL: Terry Brechtel, executive director of the Alamo Regional Mobility Authority.

We've been working with the district on a build-out model, Commissioner, as part of our market valuation analysis. The first phase is from 1604 to Stone Oak or perhaps even Marshall, that's a goal that we have, and we feel like we can move forward with that in the next twelve months. The second part is further out and it's based on the traffic and revenue analysis that's being done, and that's to get all the way to the Bexar County line, and so the dates for the market valuation that we're looking at are further out. But there's other parts of 1604 that are express lanes, the western extension of 1604 is very viable as well, as well as the interchange, so there's other segments. The segment that Amadeo used was just the express lane portion all the way to the county line. We're going to do it in two phases.

MS. ANDRADE: But it's not going to take us 20 years.

MS. BRECHTEL: No.

MS. ANDRADE: So you're projecting that we'll have it done before.

MS. BRECHTEL: All the way to the county line?

MS. ANDRADE: The 281.

MS. BRECHTEL: The 281. We'll probably look at the western extension or the interchange before we get ultimately to the county line. I think there's some higher priority needs in our area. The interchange at 281 and 1604 is a higher priority than getting to the county line.

MS. ANDRADE: Thank you. And I have another, Amadeo.

MR. SAENZ: Yes, ma'am.

MS. ANDRADE: You know, I understand that we could have had $200 million up front and that we may not get it up front, but are we not expecting that throughout the life of the project, even though the RMA is doing it?

MR. SAENZ: Yes, ma'am. And of course, it's just a matter of risk. The amount of money that will come into a project will depend on the users. With the public-private concession model, you've transferred that risk to the developer; if we do the public model, the risk is retained by us. Very similar with 130, 1 through 4, and 45 and Loop 1, we have retained all of that risk. We, as the department, are the backstop for the maintenance costs should there not be enough money to cover what we need for operation and maintenance. We're not responsible for the debt service that's based on traffic, but we've retained that risk. So if the traffic is higher, if you do get the high traffic, then there will be more money and you will get more surplus, you get to retain all of that. The private sector, it just depends how much risk you want to transfer and the value of that risk.

MS. ANDRADE: I understand. And you know, it's unfortunate this project was not excluded from the moratorium, but I'm proud that the RMA moved quickly on it and is starting to move forward on this project, and I think that the local leadership understands what happened, but this is what they've accepted and we have to respect that.

MR. SAENZ: And we understand and we're working with them. I just wanted to use it as an example because we have the numbers for this project so I wanted to use it as an example of the different procurement mechanisms.

MS. ANDRADE: Trust me, we've discussed this in San Antonio.

MR. SAENZ: I understand, I've been there.

MR. WILLIAMSON: The end game, members, to this now third month will be next month, after all the legislation has been adopted and we have a clearer picture of the impact on public-private partnerships. Where this is all leading is Mr. Saenz will soon make concrete　-- pardon the pun　-- recommendations on transfers we're going to have to approve two ways. We're going to have to approve transfers from construction to maintenance and rehabilitation, and we're going to have to approve transfers from districts which have pavement scores acceptable to districts which don't.

And there are economic and political implications to those two decisions that both Chairman Krusee and Chairman Carona have asked us to thoroughly air out and explain in the public dialogue before we make our decisions just so no one is caught off guard or surprised by the impacts　-- and they're going to be significant, I think. I don't think it's going to be a fun time in the next couple of months.

MR. SAENZ: And I guess the third impact is the impact on our program based on the rescissions and based on the diversions, and we have right now a program that we cannot build within the time frame that we had identified it because of the changes that have happened in rescissions and in diversions, and that will have also a big impact on what we do.

MR. WILLIAMSON: Now, members, it's my intention to take up the 121 matter immediately following this, but we have a scheduling problem with Dave Fulton that we're going to go ahead and address right quick, if you don't mind, and then we'll go to 121 immediately.

MR. BEHRENS: We'll go to agenda item number 4, Aviation, and we have three minute orders that need to be addressed. The first one will be our airport funding projects for the month of August, agenda item number 4(a). Dave.

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

Item 4(a) is a minute order that contains a request for grant funding approval for 26 airport improvement projects. The total estimate cost of all requests, as shown in Exhibit A, is approximately $12.6 million: approximately $8.9 million federal, $1.4 million state, and $2.3 million in local funds.

Public hearings were held on July 19 and July 26 of this year. No comments were received. We would recommend approval of this minute order.

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

MR. UNDERWOOD: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

MR. FULTON: Item 4(b) is a minute order for the purpose of requesting continuation of the Routine Airport Maintenance Program for fiscal year 2007. The program allows the department to match local funds for airport maintenance and small capital improvement work items on a 50 percent state, 50 percent local basis, up to a maximum of $50,000 in state funds per airport per year. No changes are recommended from the program that was in place last year.

A public hearing was held on July 19. No comments were received. We would recommend approval of this minute order.

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

MR. UNDERWOOD: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

MR. FULTON: The final minute order, 4(c), is a minute order to appoint one new member, Mr. Robert Bruce of Boerne, Texas, and reappoint one current member, Mr. Pete Huff of McKinney, Texas, to three-year terms on the Texas Aviation Advisory Committee. Both Mr. Bruce and Mr. Huff meet the statutory requirements for service on the committee. We recommend approval of this minute order. Both Mr. Huff and Mr. Bruce are in attendance today.

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

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. And I understand Mr. Bruce and Mr. Huff are prepared to answer questions or say what they need to say if they need to say something or if we want to ask them questions.

MR. HUFF: I'm Peter Huff, Mr. Chairman. Good to see you again. Fellow commissioners. I've served three years on this committee, I do a lot of flying around the country, and I'd just like to say that the Texas funding in the general aviation system is the best model that I've seen anywhere. I've tried to contribute to this effort and I appreciate this reappointment and look forward to serving our good state three more years.

MR. WILLIAMSON: That's kind of you. Anything, members? We appreciate it, we're trying to be multimodal.

MR. HUFF: Thank you very much.

MR. BRUCE: I thank the commission for its consideration. It's an honor to be able to serve in this capacity. I hope that my life's work and experience can be useful to you and my peers in keeping us, and echoing what Mr. Huff just said, we've got a great system here and I hope to keep it that way.

MR. WILLIAMSON: Well, Mr. Bruce and Mr. Huff, the great business of taking Texas towards a more civilized state every day can't be done without volunteers such as yourself, and we deeply appreciate your willingness to serve, it's very important to us.

Anything further, members?

MR. HOUGHTON: Yes, I have a question to ask Dave. I keep reading in periodicals, Wall Street, USA Today, about the rift between the commercials and the privates and landing fees and FAA and financing. Is that going to have an impact on Texas airports?

MR. FULTON: I don't think so. It's about who should pay the tax, not really how much money will be allocated. I think our funding will continue. The airlines feel they pay more than their fair share; some of us in general aviation probably wouldn't agree with that position. He's very competent to speak on this subject.

MR. HOUGHTON: So in other words, Fred Underwood is going to have to pay more landing fees to finance the FAA?

MR. UNDERWOOD: It's not landing fees, it's use of the airspace.

MR. HOUGHTON: Airspace. I'm sorry.

MR. FULTON: It's a major change in the way the tax would be collected and I think TxDOT would be well served to continue the old system　-- that's my opinion, anyway.

MR. HOUGHTON: I was just curious.

MR. FULTON: Any detail you would like, I could meet with you and discuss it, seriously.

MR. HOUGHTON: So the federal government owns the airspace, they say? I thought we did in the state of Texas.

MR. FULTON: Not really. They have total control of the airspace, the federal government.

MR. HOUGHTON: I thought that's our sovereign right, wasn't it?

MR. FULTON: I don't know about that. It's debatable, I guess.

(General laughter.)

MR. WILLIAMSON: Thank you, gentlemen.

Mike, let's tackle the biggy.

MR. BEHRENS: We'll go to agenda item number 8 which is Toll Projects. 8(a) deals with the cancellation of the procurement that we had on the 121 project, and 8(b) deals with finalizing an agreement with the NTTA on that same project. Amadeo.

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

Agenda item 8(a), as Mr. Behrens said, the minute order cancels the procurement for the comprehensive development agreement for the State Highway 121 project from Business 121 to US 75 in Collin, Dallas and Denton counties. We have received a letter from the Federal Highway Administration and the letter from the Federal Highway Administration has said that the procurement, as we were proceeding following the requirements, is in violation of the federal procurement procedures in two areas.

One, that it violated federal law that requires fair and open competitive processes. This is because, in essence, Senate Bill 792 required us to allow the NTTA to submit a proposal after the bids for the original CDA were approved, so that is a violation in that the NTTA already knew the answer before having to submit.

And the second violation is a violation of another federal regulation, 23 CFR 635.112(e) where a public entity is prohibited from bidding directly against a private entity.

These two violations, Federal Highway Administration said that if we do not correct these violations, then we would have some compliance measures that we would be passed down upon us. In essence, the 15 waivers that were approved for TxDOT for the development of the 121 project, as well as the two other projects that were all bundled together, were suspended, and also, all prior approvals