February 28 Transcript

Texas Department of Transportation Commission Meeting

STAFF:

MR. WILLIAMSON: It is 9:09 a.m., and I would like to call the February 2007 meeting of the Texas Transportation Commission to order. Good morning to each of you. It is a pleasure to have you here with us at our meeting.

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 1:40 p.m. on February 20, 2007.

Before we begin our meeting today, would you please join with the commission in taking your pager, cell phone, Dewberry, or other electronic device out of your pocket, purse, or coat jacket and put it on the silent mode.

(Pause.)

MR. WILLIAMSON: Thank you very much.

This is our first meeting in Austin with our two newly appointed members. On behalf of the commission, I would like to give an Austin welcome to Ned Holmes of Houston and Fred Underwood of Lubbock.

(Applause.)

MR. WILLIAMSON: Both attended their first meeting last month in Duncanville, and we're glad to see that they've come back. We're really glad.

As is our custom, we begin with comments from each of the members, and we always start with the member who is newest to the commission, and that would be Mr. Underwood, and then we'll proceed to Mr. Holmes, Mr. Houghton, Ms. Andrade, and myself.

Fred.

MR. UNDERWOOD: Thank you, Mr. Chairman. This has been a whirlwind last few weeks or what-not, and I can't say that really I've enjoyed it as much as it's been an education, and I look forward to working for the citizens of Texas.

MR. HOLMES: Thank you, Mr. Chairman. I echo what Fred said. The last few weeks have been exciting. My sense is that there are some really wonderful and interesting projects to work on, and I look forward to getting to know you better and helping to move this ball forward. Thank you.

MR. HOUGHTON: Thank you, Mr. Chairman. Instead of the last few weeks, it's been the last day. You know, we spent, what, five hours in House Appropriations yesterday, and that seemed like an eternity, but I think it turned out just like we wanted it; we have them where we want them.

Right, Mr. Chairman?

MR. WILLIAMSON: Well, somebody's got somebody where they want them.

(General laughter.)

MR. HOUGHTON: But I thank everyone for coming. I think we have some good information, good announcements here today. Thank you very much.

MS. ANDRADE: Good morning and welcome to our February commission meeting. I once again would like to welcome Commissioners Underwood and Holmes. I've been working with them over the past few weeks, and I'm glad to see they're still smiling. We're really looking forward to working with you and, like I said in Duncanville, we've been waiting for you.

Mr. Chairman, it's another historical day, and I'd also like to mention that yesterday I visited the 183-A project, and it's a proud moment. And I don't know if anyone's here from the CTRMA, but I certainly want to congratulate them on being the first; they've done a great job. Thank you.

MR. WILLIAMSON: Thank you, members.

Let me take a moment to remind everyone in the meeting today that if you wish to address the commission, we need for you to complete a speaker's card. If you're going to comment on an item that's on the posted agenda, we ask that you fill out the yellow card, similar to the card that I have in my right hand, and you can find that card in the lobby on a table to the left of myself, the right of you.

If you want to comment on anything that's on your mind in the open comment period, then I ask that you fill out a blue card, similar to the one in my left hand. Again, you can find this card in the lobby to your right, on the table.

Regardless of the color of the card, as best we can, we ask people to limit their comments to three minutes, to permit everyone to have their say and permit the commission to move on with its business.

That doesn't apply to elected members of the legislature who might be here today with us or who might show up. They may take as long as they wish and we will, of course, listen.

Additionally, you should have found another card in your chair this morning. It announces our second annual Texas Transportation Forum, which will be held in Austin on July 18 -- beginning July 18 and lasting through the 20th. There's also a website address listed where you can register, and as the day gets closer, you'll be able to get more information about the speakers and the program.

There are monumental challenges facing us in the transportation world in Texas, and we are convinced we can meet these challenges if we start working on viable solutions today. We invite you to come hear more about these challenges and our proposed solutions during our forum in July.

The first item on the agenda is the approval of the minutes of the January commission meeting.

Members, the draft minutes are in your briefing materials. Do I hear a motion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you.

Michael?

MR. BEHRENS: Thank you, Chairman. We'll go to agenda item number 2, which is Aviation. We'll have some recommendations for funding some airport improvement projects in the state.

Dave?

MR. FULTON: Thank you, Mike. For the record, my name's Dave Fulton, Director of the TxDOT Aviation Division. Item 2 is a minute order that contains a request for grant funding approval for five airport improvement projects. The total estimated costs of all requests as shown in Exhibit A is approximately $4.7 million: approximately $600,000 federal, $3.5 million in state funds, and approximately $500,000 in local funding.

A public hearing was held on January 18 of this year. No comments were received. We would recommend approval of the minute order and would be happy to attempt to address any questions you might have.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation. I am going to have one question for Dave, but I yield to each of you first if you have questions or comments at this time.

(No response.)

MR. WILLIAMSON: Dave, yesterday the regional transportation council in the North Texas area received and tentatively approved or suggested that we approve a proposal to move forward with State Highway 121.

Part of that proposal was a large and, for some, unexpected cash payment that I understand is being divided amongst the counties that make up the RTC, and I understand that Collin County is one of the principal beneficiaries of that distribution.

Now, according to the statute the legislature passed, concession payments and toll revenues, under the law, are not restricted to investment on the state highway system; they may be used for -- correct me if I'm wrong, Mr. Jackson -- any transportation purpose, and is there some air quality usage in there also?

MR. JACKSON: Yes.

MR. WILLIAMSON: I know for the past two years we've invested -- or we've helped the federal government invest a lot of money in the airport in McKinney, and I am aware that the leadership in Collin County is most interested in continuing to expand and improve that airport.

I wouldn't suggest, from the dais, what Collin County should do with their money; that's part of regionalism. But I want us to take some time in the next month and be in contact with County Judge Self, to see how they might -- how we might can help them releverage their leverage to get that airport where they want it to be.

It may well be that there are some federal grants that, if part of that fund can be used -- part of that payment can be used along with whatever help we can give them on roads, that might help them with their airport even faster than they have planned, and I would appreciate it if you would contact the judge and start a dialogue about how we can releverage that leverage money.

MR. FULTON: I will be happy to do that. I'm meeting with the city council of McKinney on the 22nd in a work session, to discuss some major improvements for the airport, and I'll -- it's kind of a misnomer. The airport belongs to the city, but the county has a vital interest, and it's called the Collin County Airport, which is really a little unusual; the city owns the airport.

But I will be happy to contact the county judge and discuss this with him, and I'll discuss it with the city on the 22nd as well.

MR. WILLIAMSON: I would appreciate it very much. We sold this concept to the legislature over the last six years, that as these private-sector contracts come forward, we will have the flexibility to do things in the state that we've never had before.

I think it's very important to demonstrate to the legislature that that flexibility exists, give them some context -- as they deliberate, give them some context about taxes versus concession versus tolls versus whatever else they might want to do, and this is a great example of that context.

We have the opportunity to leverage the concession payment on an airport to drive economic development and on down the road.

MR. FULTON: I personally very much appreciate your support of aviation, and the commission's, and we have not explored that. I was aware of that condition in the statute, and I'll educate myself more thoroughly and discuss that with them.

MR. WILLIAMSON: Anything else, members?

(No response.)

MR. WILLIAMSON: Do we have a motion?

MR. HOLMES: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you.

MR. FULTON: Thank you, Chairman.

MR. WILLIAMSON: Let the record reflect that we have with us the Honorable Eliot Shapleigh, a great transportation senator, and I presume that there's a reason that you want to be here?

Oh, I see.

MR. BEHRENS: Our next agenda item is agenda item number 3, and this is our public transportation minute orders; we'll be doing a, b, deferring c, and we'll be doing d.

So, Eric, will you lead us through that.

MR. GLEASON: Good morning. For the record, my name is Eric Gleason, TxDOT Director of Public Transportation.

The first minute order awards $18,250 in federal funds under the Rural Transit Assistance Program to El Paso County Transit District, in support of an intelligent transportation systems service integration project. It allows for an expanded project scope to include five additional counties as part of a project originally funded by the commission in October of 2005.

The service integration project is examining the feasibility of different vehicle identification, communication, and dispatching systems to promote coordination of services in the geographically challenging rural area of Texas. It enhances system safety and increases use of public transportation assets such as scarce operating and fleet resources while improving service quality for the customer.

We recommend your approval.

MR. WILLIAMSON: Eric -- well, first let me say, Members, you've heard the staff's explanation and recommendation on this item. Do you have questions or comments about this item?

(No response.)

MR. WILLIAMSON: I have one, and the senator's here to comment on this, and I'm trying to frame my question right, but the words don't come to me, so instead I'll say we have one witness, members, the Honorable Senator Eliot Shapleigh.

MR. HOUGHTON: I have one, Eric.

Is this one -- this looks like one vehicle -- right? -- that we're talking about.

MR. GLEASON: This is actually dollars to be used to support a feasibility study looking at software and hardware applications in the El Paso area to assist with vehicle identification, communication, and dispatch.

MR. HOUGHTON: Right. Okay.

MR. WILLIAMSON: And the question I was trying to form was, how do we help them -- would this study identify not only the tracking mechanism they wish but other uses of the software that would further benefit them? Maybe that was the way I was trying to form the question.

MR. GLEASON: Yes. It would --

MR. WILLIAMSON: I think this is a great idea, is what I'm saying. I'm trying to figure out how we can help them even more.

MR. GLEASON: Well, I think what we need to do is let them complete this first phase of their work. And actually, back in October of 2005, the commission awarded the county $145,000 to kick this study off. What these funds do is they expand the geographic scope of the study area to include five counties that actually then comprise the entire regional planning area in the El Paso -- which is the focus for the coordination effort.

And what I'm really hoping is that what we learn here in El Paso County we'll be able to apply to other parts of the state.

MR. WILLIAMSON: Okay. Members, we have Senator Shapleigh.

Senator, you're commenting on three different items. You're more than welcome to comment on all at once if your senatorial duties sort of limit your time with us. We do welcome you here.

SENATOR SHAPLEIGH: Mr. Chair, members of the commission, it's great to be here on this side of the podium. How quickly things change in this legislature.

I am in the middle of a Transportation Committee hearing, so I'd like to get back if I could. I appreciate you taking me out of order here. We do have Representative Pickett, who's also here from El Paso, Texas.

I wanted to comment, really on the substantive item on 7, the pass-through tolls in El Paso County. And those of you who have been out to El Paso County -- and, Mr. Chair, you've been there many times, and we appreciate that -- maybe are not aware of the scope of what's about to happen at Fort Bliss.

Fort Bliss dependents, indirect employees will total 67,000 people in the next four years. Units moving from around the world, but principally Germany, are coming to El Paso, Texas. It will be a DOD base that rivals Fort Hood, and the inner loop is the connection and principal way for troops to deploy out into the national highway system and to get tanks onto rail and some other things.

When you look at the sequencing of what's about to happen, it'll go from now till 2011. 9,600 school children alone are coming into El Paso County in a fairly defined geographic area in northeast, so this project is directly related to the military value of the base and the ability to deploy troops.

There have been some issues, environmental; there have been some infrastructure there; there's a pumping station that the PSB has. But I would ask you, in your wisdom, to expedite this, because it is directly related to the viability of these troop movements.

And to the extent that we can look at pass-through tolls to make this happen, I feel like your numbers will definitely justify what we need to do in El Paso, Texas, for Fort Bliss.

I want to close by saying I personally, as a transportation-interested senator, have appreciated each of the tools that we have generated in the legislature over the last three sessions, because I think it is vital to fund projects in the state of Texas, and whether that's tolls or concessions or traditional gas-tax funding or the 13 other funds that we use to fund transportation projects, as you have all so well indicated, we have got to increase the pie so that we can get mobility done in this state.

And I think you're going to see, as the discussion moves over on the other side of the street, at least some of us who are very strongly supportive of the things that are happening.

I want to finish by also bringing into this discussion rail. It is vital in Houston, vital in San Antonio, El Paso, Fort Worth, that we look at how to move mobility in rail and to make these inner urban areas work better that were designed back in the 1880s for one economy, and now we're three economies later, and in places like Houston it's just simply not working.

So I appreciate what you're doing here. Keep the vision, keep moving it, and I appreciate your consideration of this very important project in El Paso County.

MR. WILLIAMSON: Senator, we're always glad to have you here.

Members, any questions or comments or dialogues with the senator?

MR. HOUGHTON: I thank the senator for coming, my hometown senator, and we're very interested in the inner loop project. Would it be out of order, Mr. Chairman, to have Amadeo talk about that item right with the senator present, as to where we are in the process?

MR. WILLIAMSON: It certainly wouldn't be out of order to do anything the senator or the house member wishes to do. It sort of depends on their schedule. I think his committee's going on right now.

How do you want to --

SENATOR SHAPLEIGH: I would love to hear the sequencing of this, because, frankly, to honor DOD commitments and where we're going, we've got to look at a completed project 2011, 2012 time frame, so if maybe we could get some feedback --

MR. WILLIAMSON: I don't think it hurts anything, does it, Mr. Jackson?

Mr. Saenz?

MR. HOUGHTON: Amadeo's been on the forefront of the negotiations with the contractor.

MR. SAENZ: Good morning. For the record, I'm Amadeo Saenz, Assistant Executive Director for Engineering Operations. Item 7a that was -- 7b that was on your agenda, Commissioners, we were asking to defer that item. Normally I -- we make the decision whether to not put an item on the agenda a week before, because we have to post a week before.

We have been working diligently on this project, because we want to be able to bring it to fruition. This pass-through toll project for the inner loop in El Paso is the first project of its kind that is being done in the state of Texas. It is a pass-through financing proposal that came in from the private sector.

And that being said, it requires us to make sure that we set up a process, because we think that this is only the first of many that are to come. We have already another one that is in the mill, and we've had interest from several other parts of the state, from the Galveston County area, for some private pass-through toll proposals, as well as Brazoria County and Fort Bend County.

So we want to make sure that we've got a process so that we can move them forward.

MR. WILLIAMSON: Well, first differentiate for us -- I mean, we've been in the pass-through business three years now. Why is this different from what we already have done.

MR. SAENZ: This is different because, first of all, this is with the private sector, so we have to go through the process of doing it competitively and bring in -- allow other contractors to bring in projects and compete.

MR. WILLIAMSON: Private sector versus what?

MR. SAENZ: Versus public sector: city, county.

Now, the --

MR. WILLIAMSON: So previously cities and counties had brought in their pass-through deals.

MR. SAENZ: The agreement that we have with the cities and counties is an agreement for them to move forward with the planning, designing, building. They then have to go through and do all the studies and procure their engineers to do the job. So all of the procurement of the contract items are done by them after we have an agreement in place.

For a project that's submitted through the private sector we're in essence entering into a construction -- design-build -- design-construct contract with that develop team to develop the project. So in essence, while we execute an agreement with the city or county and then they have to go through their procurement process to bring on board their designers and contractors, we're in essence doing it all up front.

And when we execute this agreement, that contractor -- that developer group is going to be able to move forward on that project from that next day.

The project on --

MR. WILLIAMSON: So if I may -- because this is very important to us, the difference is -- if El Paso County had brought this forward and we approved it, then there would be a lengthy process of procurement, environmental, financial negotiations, and the project might start in two years.

MR. SAENZ: It could take that long.

MR. WILLIAMSON: A year.

MR. SAENZ: A year. It could take that long. But El Paso County or the city of El Paso would have had to go through all of those procurement mechanisms.

Now, as far as the environmental, the environmental was being done by TxDOT and is being completed by TxDOT.

MR. WILLIAMSON: In this case, the private sector brought this proposal directly to us.

MR. SAENZ: That's correct, sir.

MR. WILLIAMSON: So when we finish, the project starts.

MR. SAENZ: When we finish, the project starts.

MR. WILLIAMSON: As opposed to, had we been dealing with a unit of government, when we finished, the project would start --

MR. SAENZ: The unit of government --

MR. WILLIAMSON: -- a year later.

MR. SAENZ: Yes. Now, with respect to this project, and respect to the terms of this project, we have coordinated with the military. We understand the importance of this project to provide access to the fort, and we have coordinated and included in the proposal requirements that will break up the project to allow those access points to be open when the military needs them.

For example, we broke up the first part of the project to do some work on two city streets that will provide the direct connection to their main entrance. That's going to be done, and the military says they needed that by September of '08.

Our proposal, based on the contractor's starting -- and he cannot start until after we have environmental clearance, which is around July or August. His schedule is set up so that he completes that phase of the project by July of '08, two months ahead of schedule of the military.

The next phase is to then continue that project and extend the first part of the road over to Loop 375 to provide them that access, and that project is done in another 12 months after that.

The entire project will be completed in 39 months, based on the schedule that we have agreed upon and the scope that's been agreed upon with this contractor.

MR. WILLIAMSON: Where are we with regard to Federal Highway Administration approval?

MR. SAENZ: We are working with Federal Highway Administration. They -- we will be using federal dollars to reimburse, so Federal Highway is reviewing our contract document that we will enter into this project. This is a major project; this project has a cost of -- a total cost of somewhere between $325- and $350 million.

MR. WILLIAMSON: So it's the Federal Highway Administration review -- I mean, you know, it's not my habit to attack staff from here. I think it's very discourteous for people who control the microphone to belittle others, but I'm real interested in this project, Mr. Saenz.

MR. SAENZ: Yes, sir. And we are moving forward. There's several things -- the -- what we think -- the critical path is the environmental document. The environmental will not be completed -- we estimate the earliest is July of this year.

We have put in place some coordinations between ourselves, the U.S. Army Corps of Engineers, and Federal Highway Administration that all the reviews are being done concurrently. That's to be able to meet that schedule.

The original process that they follow is Federal Highway would have to approve the document, and once Federal Highway approved the document, then the Corps of Engineers says, then we start reviewing it; we need another 60 days, because with the importance to get environmental clearance by July of this year, we have got them to agree to do concurrent reviews of the document so we meet that schedule.

But the environmental document -- environmental process is what is the critical path on this project. Construction cannot start -- the easements cannot be transferred from Fort Bliss over to us and the contractor until the environmental has been cleared.

MR. WILLIAMSON: I'm sorry, Mr. Houghton. I interrupted you.

MR. HOUGHTON: No. I was going to ask the scope of the project: the size, the magnitude of the project.

MR. SAENZ: The project -- when you look at total cost of the project -- because it involves design work; it involves utility adjustments; it involves some right-of-way acquisition, some relocation and construction, as well as the management -- the cost of that project is somewhere between $325- and $350 million.

MR. HOUGHTON: It's a large project.

MR. SAENZ: It's a large project. We have already agreed upon the scope of the project. We have agreed upon the time line for the project. We have put in place the terms of the contract. Federal Highway has been involved in some of our meetings, and they want to see the document; we are sending the document to them.

Their review, because they've been part of the process, should take a few days. When we -- the only thing that is pending is -- because the developer cannot close or finance till after he has environmental clearance, that window between the time that he agrees on a negotiated price versus the time that he closes gives him a little bit of concern, because he's having to estimate what interest rates are going to do during that time frame.

The way the pass-through toll finance statute reads, it's -- we can only reimburse what it will cost the department. So he is concerned that the shorter that window is, the better chance he has to better estimate what the project is going to cost him.

So we feel that everything being done and being on schedule, we can come back next month and present this project to you all. That extra month between today and our next meeting will give him a little bit more I guess handle on the risk of how much he's going to have to put in his proposal.

But all in all, we're moving forward. Everything else is well underway. A lot of people have been working on this project; a lot of people have been spending a lot of time on this project. I've spent a lot of time on this project. And we want to make sure that the model that we're putting in place for this type of procurement will be something that can be followed for every other one that comes.

MR. WILLIAMSON: So if we finish this, when we finish it, you're saying, like our first traditional CDA, they have a template, so when the Galveston County deal comes through, when a Harris County deal I'm aware of comes through, when a Tarrant County deal comes through, it's just a matter of laying the template down and saying, This is the box we check.

MR. SAENZ: Yes, sir. The first project that's waiting in the wings is the project on 290 that we are right now requesting competing proposals.

MR. WILLIAMSON: Questions, members?

MR. HOUGHTON: Mr. Chairman, thank you. Amadeo, can you answer just a couple of questions for me? The senator and I visited about this project a couple of weeks ago, and so I have some familiarity. Can you kind of break down the funding in just a general way between the private developer pass-through component, whether there's any local funding, TxDOT funding, federal funding?

MR. SAENZ: Yes, sir. The way this project is structured or funded is that there are some federal discretionary or federal earmarked dollars that have been set aside for this project. There are some funds that the MPO have set aside for this project; also federal. And there is some money from the city, through the airport.

The city, through the airport, has provided $10 million to this project. This will cover the work that needs to be done on the off-system portions, plus the rest of it goes on to the inner loop.

The federal earmarks as well as the other federal money earmarked through the MPO is about $21 million, so there's about $31 million available in construction dollars at this time.

MR. HOUGHTON: Ten percent of the cost.

MR. SAENZ: About ten percent of the cost.

Under the pass-through toll financing proposal, the developer will go out there and construct that project. We are going to apply the $31 million to some of the early design work, based on an approved scope and the assurance that we get a product from that work that he does, and then to the early parts of the construction, and then once he runs out of the $31 million, he continues to build.

Now, before he starts construction, we have the close of financing where we know that he has gone out there and completed and gotten the financing for his project, so that's how we ensure that the project is completed.

Now, we've coordinated the project with the military installation with respect to the schedule so that we could have the entrances to the project built as they were needed, and that's how we were able to structure the project.

In fact, the first phase we included some acceleration; we allowed for some acceleration, to ensure that that timetable is met.

MR. HOUGHTON: If I understood, $31 million comes from local and federal earmarks.

MR. SAENZ: Yes, sir.

MR. HOUGHTON: And is the balance the other --

MR. SAENZ: The balance will come from --

MR. HOUGHTON: -- $300 million?

MR. SAENZ: The other $300 million -- let's say it was $331 million; that's not --

MR. HOUGHTON: For round numbers.

MR. SAENZ: For round numbers. The $31 million comes from the earmarks and the local money; the other $300 million will be paid for out of commission strategic priority monies over time, based on the traffic that will be on that facility.

MR. HOUGHTON: But it's front-end financed by the developer.

MR. SAENZ: It's front-end financed by the developer.

MR. HOUGHTON: I can see why he wants to work his time line.

MR. SAENZ: He has to pay for the entire project, with the exception of the first $31 million.

MR. WILLIAMSON: And I think when we agreed -- and even though apparently staff prefers to defer, Senator, let me assure you we will build this road. This road's going to get built.

MR. SAENZ: Yes, sir.

SENATOR SHAPLEIGH: Mr. Chairman --

MR. WILLIAMSON: I think when we decided to do it -- Mr. Houghton, refresh my memory -- it qualified under the support military base provision of our strategic priority.

MR. HOUGHTON: That is correct; one of the governor's initiatives to attract the military to the state of Texas.

MR. WILLIAMSON: Fred and Ned, so you're brought up to speed a little bit, the strategic priority category of our revenue stream historically has been used to either correct the inequities of the formula system, back in the days before we started allocating revenue to districts, or it was used, frankly, to reward and punish whoever was in charge of the politics of the day.

And this commission chose, four years ago, to begin to walk away from that, and we've tended to use our SP money for support of the military infrastructure of the state or where there's a clear case that we can bring a Toyota or a Cintra to the state of Texas and hire Texans, or where there's a clear case of a safety matter that didn't otherwise qualify for district funds.

A good example of what you'll be facing soon is the probability of needing to invest a lot actually just south of your hometown, Ned, in anticipation of the carbon dioxide coal project that eventually is going to be built in far west Texas. We're going to have to build some roads and do some things out there that normally wouldn't be done under our traditional method of looking at stuff.

But because we know FutureGen -- if it doesn't end up in West Texas the first round, it most certainly will in the second round, simply because of all the depleted oil and gas wells out in that area.

This is how we've tried to use our strategic priority money in the past four years.

SENATOR SHAPLEIGH: With your comment regarding, We're going to build this, is there some assurance that we can give the Department of Defense immediately -- I understand there are some hearings going on today and tomorrow in the Appropriations -- to the Department of Defense that we will in fact build this?

MR. WILLIAMSON: Mr. Jackson, is it appropriate for all five commission members to sign a letter? Is that appropriate?

(Pause.)

MR. WILLIAMSON: I think we'll just send them a letter; we'll just say, We're going to do this.

MR. SAENZ: And I can assure you that our plan was to get here this month; I just ran out of time.

MS. ANDRADE: Mr. Chairman, I need clarification. So, Amadeo, what we're saying is although you've delayed bringing the project to the commission, the project is not being delayed, because you're still working on it.

MR. SAENZ: Yes. We are still working; we're finalizing all the items. As I mentioned, the environmental is what is going to -- driving the ship, and by going from February to March, I'm pretty certain that everything can be -- everything on the pass-through financing element will be completed in March.

We will still not be able to execute the construction portion of that project until after that environmental clearance has been attained.

MS. ANDRADE: Okay. But once that's done, they can move forward.

MR. SAENZ: Once that's done, correct. We have a developer on board, a contractor on board, and he will start -- after March will execute the agreement. The first notice to proceed that allows him to start doing some of the early design work and utility coordination that's based on an approved scope, and then once environmental clearance is attained, then he can actually start the construction of the project.

MS. ANDRADE: And we will be overseeing that project?

MR. SAENZ: Yes. We will be overseeing this project. The developer is responsible for providing all the quality control and quality assurance. We will have an independent engineer working for us that is auditing and overseeing the project to ensure that it meets the requirements that we have in the agreement, because then we'll use that same report to get reimbursed from Federal Highway as we pay for the pass-through finances.

MS. ANDRADE: Versus normally a city or county overseeing it because they've requested the pass-through.

MR. SAENZ: Yes, ma'am.

MS. ANDRADE: Okay. Thank you very much.

MR. HOUGHTON: Mr. Chairman, this is one of those successes we were referring to the House Appropriations yesterday.

MR. WILLIAMSON: Well, and I appreciate that, but the success isn't a success till we get a piece of paper, so I --

MR. HOUGHTON: Well, as far as  --

MR. WILLIAMSON:  -- don't want to emphasize that too much. I understand the problem; I understand the dilemma; probably better now, but this is real important.

Mr. Pickett, do you have words, sir? The Honorable Joe Pickett.

MR. PICKETT: I just make my mom say that.

A couple of comments: Thank you for getting this far, but I really would like to ask if you would allow Amadeo and maybe your general counsel to actually look at the agenda item and see if there isn't any proactive motion that could be made with some maybe contingency -- I understand the letter obviously could be signed for D.C. And it is very complex, and I don't know that a lot of people will understand that. Hopefully I will, and I'm the bad guy sometimes, and people ask me questions, and the fact that it could be postponed again, even for very good reasons, Mr. Chairman, might initiate some discussions that I wouldn't be a part of but would go forward.

Also, we, on our MPO that the senator sits on, have also been postponing a lot of other projects because we have decided and taken action and voted and it's in our record that this is the number-one priority for our region, so we may be reprioritizing and moving money around if this isn't approved.

And so we have put off that action again, one more month, based on this item being on the agenda today, because we may have to adjust our TIP, because we're trying to send a message to Fort Bliss that this is important.

And another comment about the dollars that were mentioned, the $31 million: It's not going to be an easy deal after this gets started, but we also had discussions at our MPO this month -- and they're on the record, in the minutes -- that we are going to continue to try and obtain additional dollars for this project, even after it gets underway.

We know that you're using strategic priority monies for this; we know that there's only so much of that available in the state. So if we can continue to keep our congressional delegation with possibly additional earmarks, we want to credit that back towards the strategic planning monies, in case we have other projects.

So I know it's not going to be a slam-dunk, because once you get it started, we want to go on to something else, but we have taken that affirmative action that we will not stop asking for dollars to go into this project.

And in a related project -- because we're doing some figures: This is 10 percent, the $31 million, possibly -- there is a situation that is ongoing right now, we are doing some major construction that the governor had come down and announced and using Fund 6 dollars for in El Paso.

And the project originally was $16 million, and the commission approved $16 million. But the project ballooned to $24 million, so we, at our MPO, had to reprioritize again, and we put $8 million additional towards that.

And I think, Mr. Chairman, you'd agree that if we came to you with a $24 million project and put up $8-, that's a good leverage, but we wound up doing that after the fact. We were originally told that this was all going to be strategic priority dollars, but we did put up 33 percent.

This project -- and, again, Mr. Chairman, I understand the way it's on the agenda and if it gets deferred, that's all that people are going to hear after the fact, and I would just ask maybe defer the deferment a little later in the agenda and maybe see if there isn't some affirmative motion, again, that could be made --

MR. WILLIAMSON: That's an excellent suggestion.

MR. PICKETT: -- that gives everybody an out but also gives us the ability to go home and say, They approved. And the contingencies are something else, as we were saying, but I think you're going to hear it's either approved or it was put off, and that's it.

MR. WILLIAMSON: I think that's a good idea. I think that's wise.

MR. PICKETT: And I appreciate your support. Thank you.

MR. WILLIAMSON: Dialogue with Mr. Pickett?

(No response.)

MR. WILLIAMSON: We thank you for your taking your time.

Senator, you want -- any closing remarks?

SENATOR SHAPLEIGH: I want to thank you for your time. I want to make three points: I think Joe makes a great, great suggestion. If there's a way we can get a preliminary contract as to the $31 million, that's a message to DOD and a message back to El Paso I think would be very helpful.

The last time I went to borrow $300 million, it went through a few contingencies, and what I'm a little worried about is you have a developer and the first-time-ever pass-through toll project goes out, gets on the market, I need $300 million. And all of a sudden you have some financial guys over there in New York saying, You know, we really didn't know about this piece of it, what tank treads were going to do to your concrete.

What I want to stress is there are going to be troops, people, needs in 2011, 2012, and DOD is counting on it in terms of troop deployment and what has to happen out there, so if we can keep that end date in mind and we can keep the pressure on the system to say, Guys, I want to get it done by this date, I think it will give us a lot of comfort. I just want to make that point.

MR. WILLIAMSON: I thank you. I thank both of you for taking your time to be over here during a busy time. And what we'll do is we'll take a break here in a little bit, and we'll confer with Mr. Saenz and Mr. Jackson on how we treat 7b, and I believe you'll be pleased.

SENATOR SHAPLEIGH: Thank you so much for your time.

MR. WILLIAMSON: Okay. Thank you very much.

Amadeo, there's no reason to come back up, but I want you to start kind of thinking about the suggestion of Mr. Pickett, and we'll take a break here in about 45 minutes, and we'll discuss it.

Eric, you need to close this item, please.

MR. GLEASON: I have no further comments on the items.

MR. WILLIAMSON: Okay. Members, you've heard the staff's explanation, recommendation; you've heard testimony of the witnesses. What's your pleasure.

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you.

MR. GLEASON: The next item on your agenda, this minute order awards $20,104,352 in federal funds under the FTA, Federal Transit Administration, nonurbanized program to rural transit districts for rural public transportation.

The formula for allocating these funds is established in Title 43, Texas Administrative Code, Section 31.36. The total fiscal year 2007 nonurbanized program apportionment to Texas is $29,710,596.

Rural transit districts use these funds for administrative, operating, and capital expenses. They use state funds for public transportation or other locally derived funds as match for these federal program funds.

In 2006 rural transit districts across the state operated 23 million miles of service, carrying over 4.6 million riders, with a fleet of 1,440 vehicles. In addition to funding critically needed basic mobility services for transit-dependent individuals in rural areas of the state, this award provides funds for investments in public transportation contributing directly to the goals of the department.

The balance of the fiscal year 2007 apportionment will be allocated to state administrative expenses, inner-city bus enhancements, and commission discretionary funds.

Subsequent minute orders will award funds for inner-city bus enhancements and for projects using commission discretionary funds.

We recommend your approval of this minute order.

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

(No response.)

MR. WILLIAMSON: I have a comment. I offer a comment at the risk of wearing out my welcome with you, but I can't tell you how pleasant it is to have someone who is so organized and so focused on the department's goals with regard to this part of our responsibility.

Having had six years to watch how it's been -- and without being negative in the past -- you are precisely what this department stands upon. I appreciate your contribution.

MR. GLEASON: I appreciate that. Thank you very much.

MR. WILLIAMSON: You're a pretty slick guy.

(General laughter.)

MR. GLEASON: Well, wait a minute.

(Laughter.)

MR. WILLIAMSON: You remember, Ted and Hope, how we used to always be confused about the public transit component --

MR. HOUGHTON: Yes.

MR. WILLIAMSON: -- and where they were going and where their goals were, and how we knew. And we want to help. We do believe public transportation is very integral to solving the state's transportation problems. And now there's no confusion, and it's always focused on the department's goals.

MS. ANDRADE: Mr. Chairman, I can't agree with you more; I tell him that every time I see him.

Thank you.

MR. GLEASON: Well, I thank you. It's a pleasure working with the commission. I know that you are committed to the development of public transportation systems in Texas. I have a great staff, and we have a lot of folks out in the field that really do know what they're doing. And we have a lot of work to do. We're not done yet; that's for sure.

MR. WILLIAMSON: Not done yet.

Members, what's your pleasure.

MS. ANDRADE: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you.

MR. GLEASON: We're going to go to item 3d. 3c will be deferred.

This minute order awards $22,500 to the East Texas Center for Independent Living and $27,500 to Webb County Community Action Agency for local transportation coordination projects.

The Federal Transit Administration United We Ride grant to TxDOT of $75,000 will fund the projects. The projects were selected as part of a competitive call for projects issued by the department. An independent stakeholder group was used throughout the entire process, including project selection.

Both projects will address constraints identified in the regional planning process that this commission heard about at its November meeting.

The East Texas Center for Independent Living, serving the East Texas Council of Governments area, will develop uniform qualifications for drivers, including training and transporting persons with disabilities.

The Webb County project will focus on improving preventive maintenance programs for their fleet. The balance of the grant will be used to provide technical assistance and to perform evaluations of both projects, again keeping in mind we want to take what we learn from these small pilot programs and apply them to the rest of the state.

We recommend your approval of this minute order.

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

(No response.)

MR. WILLIAMSON: Do I have a motion?

MS. ANDRADE: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: The motion carries.

Thank you, Eric.

MS. ANDRADE: Thank you.

MR. GLEASON: Thank you.

MR. BEHRENS: Agenda item number 4 will be recommendations that will be coming to the commission that they will consider to see if they want to adopt and move those forward to Congress so we can use those recommendations to accelerate our transportation project delivery.

Coby Chase.

MR. CHASE: For the record, my name is Coby Chase, and I am the director of TxDOT's Government and Business Enterprises Division.

Today is my fourth and what I believe to be final appearance before the commission to discuss the formulation of your legislative priorities for the first session of the 110th United States Congress.

Our intent in having this extended discussion is to make sure that all of you have time to review the issues we have raised and ask us any questions you may have before you decide whether to adopt the draft agenda.

Our extended timetable for adopting the 2007 federal program allowed us to continue receiving public comment on our federal priorities. Through our website we received roughly 100 comments on these priorities.

Today I will provide a final overview of the agenda in its redrafted state and highlight some of the changes we've made to reflect your ideas and comments from the public.

The l10th Congress was convened with new majorities in both houses. The new leaders in the House and Senate have to face the difficult challenge of dealing with the impending -- or possible, I should say -- bankruptcy of the Highway Trust Fund. Actual predictions vary from fiscal year 2008 to fiscal year 2010.

MR. WILLIAMSON: May I stop you for a moment, please?

MR. CHASE: Yes, sir.

MR. WILLIAMSON: I think it's important, members, for us to talk to Mr. Chase about that matter, simply because one of the things that I think Ned and Fred learned in their confirmation process and one of the things Ted and Hope and I have relearned during committee hearings the last month is that House and Senate members have -- some House and Senate members have sharp criticism on our approach to our state and federal agenda and some of the positions that are contained therein.

I think part of the criticism is just purely philosophical. Anytime you have a vibrant democracy, that's going to happen; you're going to have people saying things. I think some of it probably is rooted in either not having the opportunity to learn at a level we do or actually just not believing what is sometimes said to be the future.

But when Mr. Chase says the pending or perhaps bankruptcy of the Federal Highway Trust Fund, that means something to everyone in the department, to the three of us who have been listening to this for two years, and to most of the 14,000 employees we have and most of the 10,000 volunteer participants like Judge Thompson scattered across the state.

What we mean when we use the term "pending bankruptcy" is that we believe that the cash inflow to the trust fund will fall below the congressionally authorized cash outflow to the states.

So if the apportionment bill says to Texas, We're going to make $6 billion available to you over the next six years and we plan and our regional partners plan and then it turns out to be only $5 billion, our view is that's bankruptcy, when your cash inflows fall below your cash outflows for a sustained period of time.

So many of our recommendations are based upon, are predicated upon our belief that that cash flow's going to reverse, and we believe in being proactive and saying to Congress, This is what would help Texas -- because we think we're not going to have as much federal reimbursement as was either promised us or discussed.

So if there's a different term that would be more applicable, we're happy to use that term, but right now that's the term that we've chosen to work with.

MR. CHASE: Bankruptcy may not be the precisely correct technical term, but it is running out of money, and having done this -- and when the chairman says -- if I might add a little bit to that, we believe -- it's not just we; I've been, as you hear me say over and over again, with the agency 13 years -- as of March, 13 years, and we've been through this drill a couple of times before, and it never panned out. You could understand why it wouldn't pan out; you could see the factors that would come to solve it.

In this case there is nothing that appears on the horizon unless Congress takes rather dramatic action to put more money into the Highway Trust Fund, and this is compounded -- and I mention it later in here -- by the fact that they're asking for money back from the states to help balance other parts of the budget and pay for other priorities.

So I've reached the stage that this is actually a very real threat this time; this is not something that I think Congress can patch up a little bit around the edges and take care of, as they have over the years.

What they approved -- the faucet that they turned on for all the states to use the money -- there's not enough water in there; it's going to have to be turned off or slowed down quite a bit in the future. That is, again, not just our opinion; it's actually the opinion of quite a few organizations that are deeply involved in this.

Our concern now is that the new Congress might express a preference or rely too heavily on the gas tax. Our job is to educate the new Congress on the benefits we've already seen from new programs such as design-build contracting and environmental streamlining. More importantly, we must move quickly to defend SAFETEA-LU's new programs that are starting to show promise, such as private activity bonds and transportation development credits.

As you consider adopting this 2007 federal report, you will note that all the items reflect our commitment to achieving the department's five goals of reducing congestion, enhancing safety, expanding economic opportunity, improving air quality and increasing the value of transportation assets.

On that note, I will once again restate our call for a national transportation system with real, defined goals. This underpins the actions we intend to take on the federal level this year.

When we talk to our federal partners about the future of funding Texas' transportation infrastructure, the watchword will continue to be flexibility. We are continuing our work with the National Surface Transportation Policy and Revenue Study Commission and the National Surface Transportation Infrastructure Financing Commission -- those are two commissions -- by reiterating our message that we must upend traditional thinking and embrace innovation to achieve a more results-driven funding process with clearly stated goals and objectives.

One of the most valuable issues we can raise in Washington is the need for additional sources of capital for meeting our mobility needs. SAFETEA-LU expanded our ability to issue debt, and the variety of associated restrictions allowed for greater private-sector involvement.

Now we are committed to moving a step further to allow for expanded means of private investment, including working with Congress to utilize equity capital for transportation investment and amending the tax code to exempt partnership distributions or corporate dividends related to investment and toll roads from income taxation.

MR. WILLIAMSON: Stop right there.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: I recently read an article or two where our position in this matter must be in support of the profits of big corporations. What is our intention here?

MR. CHASE: Infrastructure is a -- there's a large public purpose with infrastructure. And the United States Congress -- the federal government has over time if private corporations -- if the retail investor, you know, anybody who buys the stock for whatever --

MR. WILLIAMSON: Who would that be? Are you a retail investor?

MR. CHASE: I would be a retail investor in that respect.

MR. WILLIAMSON: Would the president of the Sierra Club be a retail investor?

MR. CHASE: Yes. Any regular walking normal mammal with a few extra dollars is a potential retail investor. Yes, sir. The --

MR. WILLIAMSON: Like 401(k)s --

MR. CHASE: Yes.

MR. WILLIAMSON:  -- and pension plans and things that people make investments in in order to prepare for their retirement?

MR. CHASE: Plan for their future, yes. And toll road investments kind of -- in spite of some things that might have been said recently, road investments are really one of the most stable places you can invest money by and large. They're not -- they don't focus on huge short-term gains that I guess a lot of us in America focus on. Every quarter, we need a giant gain to reflect the health of our stock portfolios. But these are patient investments that tend to pay out regularly over time.

And then to make that more attractive to these types of retail investors and pension funds and others to invest in, some restructuring of the Tax Code is in order to do that, especially in terms of not taxing the dividends that are paid when you're investing in public infrastructure. And then Congress has done that before. That's not a new concept.

MR. WILLIAMSON: So our intention here in our federal legislative priorities is to ask congress to give individual stockholders tax relief as an incentive for him or her to purchase those shares of stock?

MR. CHASE: Yes, sir.

MR. WILLIAMSON: In infrastructure organizations?

MR. CHASE: Yes, sir.

MR. WILLIAMSON: We don't really care about big corporations on this one, do we?

MR. CHASE: No, sir. That's not the intent.

MR. WILLIAMSON: I just wanted to be sure our new Commission members knew where we were heading with this one.

MR. CHASE: Okay.

MR. WILLIAMSON: We want Judge Eckels, when he retires, to take all of his county retirement money and go buy stock in one of the toll projects in Texas so he can say that he owns that toll road -- not some company from Russia.

MR. CHASE: Music to my ears. Yes, sir.

It's worth reminding everyone that engaging the creativity and innovation of the private sector to help us develop and manage our transportation assets does not change some simple facts: The state's roads will be built by Texans, used by Texans and owned by the state of Texas. That will not change, not now, not ever.

The expanded use of private activity bonds we achieved in SAFETEA-LU was an important success. PABs, as they're called, reduce financing costs, due to their exemptions from federal taxes, and are used to attract private investment for projects that have a public benefit. And, as of yesterday's announcement in Arlington and here in Austin on State Highway 121, we are looking forward to being the first state to put PABs to work, with 1.8 billion in bonds available for State Highway 121 in Denton and Collin counties.

And I would like to take one more opportunity to thank Congressman Sam Johnson, Congresswoman Eddie Bernice Johnson and Congressman Michael Burgess, all from that region and all who were leaders in the private activity bond fight in congress.

And they led that long, difficult fight, but they stuck with it -- and particularly Congressman Johnson. He got the ball rolling by introducing the first PABs legislation, and it worked. And it's going to pay off, I believe, mightily in that part of Texas. So we owe a great deal of gratitude to them for their work on that.

However, to make sure we can maximize the use of PABs, we want to improve both the legislative and regulatory environments and encourage transportation investments. We are working with the departments of treasury and transportation to adapt regulations to accommodate for the unique needs of highway, rail and intermodal projects under the PAB program. That will include addressing an obscure provision in the U.S. Tax Code which may inadvertently curtail our use of PABs by invoking arbitrage limitations on project revenues.

There are also issues with regard to the sale of bonds and its application to total right of way purchase and the use of PAB funding for reimbursement for existing project development. This year, we will work with our financial partners and others to ensure Texas has the most attractive environment possible for the investments we need to meet our mobility needs.

Refining the rules for PABs and other financing issues is not solely to the benefit of TxDOT; other states across the country will benefit from these reforms, as well. We will continue to advocate for the reduction of restrictions on tolling nationwide as a follow-up to our gains in SAFETEA-LU.

Specifically, we will work to reduce restrictions on tolling programs and remove their pilot project status, as well as work to allow toll revenues from toll-financed facilities to be used for other critical system needs. We will also advocate allowing states to buy back or reimburse the federal government for its share of investment in interstate segments.

We certainly know that tolling is not a popular option for paying for our roads. There are no popular options for paying for our roads, frankly.

A great many people wrote to us to complain that our tolling programs would not be necessary if the gas tax had been adjusted to reflect rising expenses and had not been used to pay for other state priorities. It bears repeating that TxDOT is prohibited -- the state is prohibited by state law from descending on a region, so to speak, and imposing tolls on existing roadways without local voter approval.

If the feds were to say tomorrow you can buy back the entire interstate system and put tolls on it, state law does not allow us to do that by fiat at this level; it has to be approved by the affected county commissioners court and by a vote of the local voters. So it would definitely be something that a region would determine that it wanted to do. It wouldn't be done simply because we wanted it done.

TxDOT will also work to protect an important SAFETEA-LU provision that allows for the use of design-build contracting, again thanks to Congressman Michael Burgess. TxDOT has worked closely with its partners in Texas and across the country to cause a positive outcome on the next set of rules from the Federal Highway Administration to ensure that they do not contain cumbersome restrictions that would further delay our projects. We anticipate that they will be released by the Federal Highway Administration early this year.

We also want to raise the possibility of purchasing unused federal contracting dollars from other states that risk those funds lapsing due to the lack of sufficient non-federal funds to match these dollars. Our proposal would amend federal law to provide a state authorization to purchase another state DOT's unused federal contract authority prior to its lapse state.

MS. ANDRADE: Coby, can I interrupt?

MR. CHASE: Yes, ma'am.

MS. ANDRADE: Can you just give me a brief example of that?

MR. CHASE: And it hasn't occurred recently, but we're sensing that it might occur again. A number of years ago, about six years ago, it started to become a problem. Some states didn't have enough state funds to draw down their federal money.

MS. ANDRADE: Right. I understand that.

MR. CHASE: And so what -- we are proposing a concept at this point, not so much specifics. It could either be a directed buyout -- if you were Delaware, for instance, and you didn't have enough money, another state could come in and offer to pay you -- I'm making up a figure -- 50 cents on the dollar. And if -- you will receive more federal funding that way at 50 cents on the dollar. The state could turn around and use that 50 cents for whatever they need to balance their budget in the state.

One idea that was floated was an auction system, buying it through an auction-type system. There will be necessarily a lot of things that would need to be ironed out in that type of a situation.

Right now, what happens, to oversimplify it to the point where I can understand it, is that if a state is in that situation and they're not using their money, it is brought back to the feds and then redistributed proportionally, which -- and Texas always benefits a little bit from this. It's not that much money, but -- we're talking about making large buys. And I think congress would be concerned if all of a sudden a state was in such dire straits that they were giving up a lot of their federal money.

MS. ANDRADE: So the money that that state gets would not be as restricted as the money that we buy?

MR. CHASE: Yes.

MS. ANDRADE: Okay.

MR. CHASE: That's a very good way to put that.

MR. WILLIAMSON: The theory is if you buy into the notion that because all states have to be treated equally more or less in the passage of the large authorization bills such as the transportation bill, all states get imprinted then with restrictions that some individual states would really rather not be imprinted with, but they don't have any way to get themselves excepted from the bill.

So our proposal to congress is: There's an easy way to imprint all the states like you want to, but permit individual states to get out of your imprinting, and that's to set up a marketing system where Delaware -- and I'll pick on the enhancement funds because that was the topic of confirmation and that was -- we heard a little bit about that from the committees this week.

It may be the case that Delaware really doesn't want to spend its money on enhancements, but it can't do anything else, and suddenly our legislature decides that they want to spend more money on enhancements. We might be able to in a marketing system go to Delaware and offer them 50 cents on the federal reimbursement dollar for their share of enhancement funds. They could take the 50 cents if they wanted to accept it and do an air quality project in Baltimore or where ever -- not Baltimore.

MALE VOICE: Dover?

MR. WILLIAMSON: Dover. Excuse me.

And we could take that federal reimbursement in an older program, our enhancement program, at the direction of the legislature. And that's a very real example of how it could work.

MR. CHASE: Or a region like San Antonio, whose -- I don't know if it's its primary industry, but it's -- certainly one of its largest if not the largest is tourism, might find that very interesting, to be able to bring enhancement dollars to that region, because they, you know, have -- kind of a clear and compelling kind of reason to like enhancement dollars, because of the way they embrace tourism, is to go buy it from somewhere else.

MS. ANDRADE: Thank you.

MR. CHASE: We're going to keep talking to the federal government about the federal transportation enhancement program. This program forces -- speaking of the enhancement program, this program forces DOTs around the nation to use 10 percent of their surface transportation funds on projects like bike paths and historic preservation. Although we feel that this is a very valuable program, we feel it can be improved, and we will continue to ask the federal government for more flexibility within the program than has been given in the past.

On the matter of how we respond to congressional discretionary projects that come our way, we want to ensure that these earmarks help us more than they hurt us. While many authorization earmarks do more harm than good, other requests, those that reflect a region's needs and priorities, through the appropriations process have the potential to be helpful actually.

And today's discussion regarding the inner loop would be an example of something that would work right. It's truly new money and actually doesn't even come from a transportation pot if it's done correctly. And the region and the Department is not going to stop other projects to draw down that money and spend it. That would be a perfect example of a good demonstration project through the appropriations process.

So we have in front of us the opportunity -- and Congress does -- to do something right if they continue to earmark, if that is truly going to continue to happen.

MR. HOUGHTON: What is our sense on earmarking? What are we hearing and seeing, the same old issues?

MR. CHASE: They've -- and I will reserve the right to correct this at some point. Earmarking has for the time being stopped. I -- my cynical side says it'll be back. Don't worry. It will come back. They stopped it for one cycle. They're trying to figure out what to do with it, with the funds that they earmarked at this point.

I believe they're actually going to let the United States Department of Transportation exercise its discretion with its own discretionary program. So we'll probably be fighting for some of those dollars, and that's fine. We'll fight that fight.

But I would suspect that earmarking will come back and it will come back in large degrees over time. That's the cynic in me, Commissioner.

MR. HOUGHTON: Now, my understanding I had in talking to Amadeo is there are some earmarks that have outlived -- physically outlived congress people.

MR. CHASE: Yes. And I think you've heard me say this before, and I'm sure I'll say this again a little bit later on, that when we have to turn back federal funds, they don't let you turn back congressional demonstration projects, especially the ones you never asked for in the first place. So it's kind of -- they kind of have a double-whammy there, a bad clam.

Earmarks can be terribly corrosive, and some criteria need to be met before TxDOT will release any funding to discretionary projects in an effort to focus our resources on meeting our goals. So we will encourage the Texas congressional delegation to limit earmarks that reflect mobility needs identified by statewide and regional planning processes.

Or, put another way, if the Department and MPO or the regional body that makes these decisions isn't prepared to pay the entire cost of the project, we don't believe we should be building them or asking for them by any stretch of the imagination. Beyond that, we will work with congress and the Federal Highway Administration to amend federal law to allow unused earmarks to be directed toward meeting a state's rescission obligations.

So we will try to -- and it will be an interesting discussion, nonetheless, but we will try to encourage congress to allow us to turn back earmark projects, especially the ones that weren't on anybody's plans, the next time there's a rescission.

MR. HOUGHTON: Coby, let me ask you about the earmarks again relative, related to that.

MR. CHASE: Yes, sir.

MR. HOUGHTON: Have we come up with a policy or proposed policy that if in fact the region went and did get that earmark, that earmark would count -- we would reduce that allocation to that region based upon that earmark -- under the authorization bill? Have we talked about that? We have talked about that, I know.

MR. CHASE: We have talked --

MR. BEHRENS: Yes. We have been discussing that, Commissioner. We're looking at --

MR. HOUGHTON: Because it penalizes the entire state.

MR. BEHRENS: Well -- and I think something that Amadeo and Steve and I have been talking about, you know -- and then Coby alluded to it earlier this morning. There are some earmarks that come down that go to specific projects that are ready to be built, which -- in some cases, that helps that project.

I think as we look at the discussion about Fort Bliss and the inner loop, you know, I think there's some discussion about, Can there be some help from congress. Here's a project that's ready to go almost, where we could do it.

But if you have an earmark that comes in for a project that is not on our radar screen and, say, it's a $10 million project and we get a million-dollar earmark, to the locals that get the earmark, they see that as, Ah, our project's going to get built. And then they come to us and say, When are you going to build it. And we say, When we find the other $9 million.

So somewhere in between, we have to look at is there a penalty on --

MR. CHASE: Funding.

MR. BEHRENS:  -- funding if we get those types of earmarks.

MR. CHASE: Right.

MS. ANDRADE: Well, my other thought, Coby, is that couldn't we -- if they're not going to go away, couldn't we put or -- couldn't we recommend that there be put some or -- place some contingency on that the community has so much time to raise the rest of the money for the project --

MR. CHASE: Well, that might be --

MS. ANDRADE:  -- or it goes back, you know, to the Department? I mean if it's not going to go away, then let's work on a Plan B that still benefits the state.

MR. CHASE: Well, I agree with you. But let me --

MS. ANDRADE: It's not that easy?

MR. CHASE: Yes, ma'am, it's not that easy. When they earmark something, it never goes away. Think about that for a second. It never ever goes away. And if I were doing cold -- if we were truly run like a business -- and think about this math for a second, and I'm going to be a little -- I'm going to round.

In SAFETEA-LU, authorization bill projects tend to be more of a problem than appropriations projects. Authorization -- in SAFETEA, something on the order of 650- to $700 million of money that was already coming to the state -- this is not new money; I can't say this enough -- was earmarked. That's funds that we were already guaranteed to get.

And about two -- and in order to build all those $650 million worth of projects, we have to come up with an additional $7 billion. That -- we'd have to do four State Highway -- three State Highway 121s to do that -- two-and-a-half. And of those 600-and-some-odd million, 200-and-some-odd million no one had ever seen before.

And the problem is: If Houston has -- Houston members all of a sudden get all of these earmarks -- they come out of El Paso -- the funding does. They come out of Lubbock, they come out of San Antonio, Dallas/Fort Worth and everywhere around the state in order to pay it.

And as you've heard me kind of lecture before, we are -- we have been creatures of the federal program for many, many years. Whatever the feds do, we do it. And if they've set aside money, we go try to spend it no matter what the effect on everything else.

So I agree with you. But as Mr. Behrens and Mr. Saenz and Mr. Simmons are trying to steer us in a place to how we can actually manage demos if they do pop up or draw a line in the sand and say, "They don't meet these certain criteria," we're just not going to ask for the money. We're -- you can just leave it up there and send it to Delaware, to use Delaware again.

So it's -- and I believe our MPOs would agree with that. I really do.

MS. ANDRADE: I just wish we'd give it some time frame and say, you know, You've got two years to find the money, and if you don't, it goes back to the Department. I mean if it's not going to go --

MR. CHASE: Well, it wouldn't come back to us. It would -- we just would never spend it, because we can't pick it up and go spend it in another part of the state. You can't -- they don't allow us to do it. That's what makes these so frustrating.

MS. ANDRADE: But it would take that restriction away.

MR. CHASE: Sure. That would be great.

MS. ANDRADE: You know, that's -- what I'm saying is, If it's not going to go away, then let's work on what can help us.

MR. CHASE: Sure.

MS. ANDRADE: Okay.

MR. HOUGHTON: But I think -- out of the 600 million in earmarks, how much will get projects that that earmark was dedicated to go under construction in ten years?

MR. CHASE: That I do not know off the top of my head.

MR. HOUGHTON: In that ten-year plan, in our transportation plan?

MR. CHASE: I do not know the answer to that. At least then there's this window of opportunity -- and I don't know if the window's shutting or remaining open -- for real demonstration project reform in congress. I just don't -- and honestly, I don't mean this in any sort of flip way. I really don't believe most members understand what happens.

They get bombarded by their local communities for earmarks, and I don't think local communities understand what that -- they do believe in their heart of hearts that they're bringing more money to the state. And it's kind of -- you know, it's clobbering through our resources at a rather alarming rate.

And if -- to be completely draconian, you could just say, We'll fund no more earmarks, and you'd save $7 billion -- well, minus 600 million. So I mean it's tough. It's a tough thing.

SAFETEA-LU represented a significant victory for donor states like Texas that contribute more money to the highway trust fund than they receive in federal appropriations. At least, it would appear that way.

MR. WILLIAMSON: Stop. I want to have a discussion at this point about enhancements and earmarks together before we go to SAFETEA-LU.

MR. CHASE: Okay.

MR. WILLIAMSON: Mr. Saenz -- Simmons?

MR. CHASE: Surprise, surprise.

MR. WILLIAMSON: I overheard a conversation in the last two days concerning a pending rescission of federal funds. Is that -- was that conversation accurate?

MR. SIMMONS: Yes, sir.

MR. WILLIAMSON: So the federal government --

MR. SIMMONS: For the record, my name is Steve Simmons, deputy executive director of the Texas Department of Transportation.

MR. WILLIAMSON: So the federal government has given us oral warning that, in writing, soon we will be asked to reduce our plans for federal funds for the third time this year, or fourth time?

MR. SIMMONS: Second time in a year, third time in or -- fourth time in about two years.

MR. WILLIAMSON: Okay. And what might be the magnitude of this fourth reduction in federal funds?

MR. SIMMONS: We're hearing different numbers, but about 270 million plus or minus.

MR. WILLIAMSON: Okay. Don't get too far off.

Ned and Fred, I think I understood your hearing process or -- I understood that when you were going through your interviews with the senators, this matter of enhancement funding came up -- and the decision I made to take the last rescission out of future enhancements and not move forward with the program. I understand both of you were -- maybe just Fred.

(Pause.)

MR. WILLIAMSON: And, Mr. Houghton and Ms. Andrade, I understand you all have also heard about it.

MS. ANDRADE: [inaudible].

MR. WILLIAMSON: And I have heard about it. This is an example of one of the hard decisions we face. And because of the criticism and outrage expressed by local communities across the state and some house and senate members, I would like to solicit your thoughts, and let's have just a dialogue about how you think we should handle this rescission and whether or not we should seek guidance from the legislature or whether we should just apply it where we think best, or equally across our spending pattern.

Or just what do you think we should do, Fred?

(Pause.)

MR. WILLIAMSON: Ned?

MR. HOLMES: I'd like to understand a little bit better about the relationship between earmarks, enhancements and rescissions.

MR. WILLIAMSON: Who wants to take that?

(Pause.)

MR. WILLIAMSON: Oh, they were anxious to talk about that one.

MR. HOLMES: Do -- and the question, Coby, would be, Do we have the ability to respond to the rescission through addressing earmarks, or is that not within our capacity to do?

MR. CHASE: Certain programs are off the table, can't be cut -- certain safety programs, et cetera. And one of them is congressional earmarks, demonstration projects.

MR. HOLMES: What other ones are off the table?

MR. SAENZ: I'll give you a complete list from -- well, okay. For the record, I'm Amadeo Saenz. I don't have it in my -- but earmarks were one of them. They were specific. There were some safety monies that we could not earmark, and then there were also some --

MR. WILLIAMSON: Earmark?

MR. SAENZ: I mean that we could not rescind.

MR. WILLIAMSON: Reduce?

MR. SAENZ: Reduce.

MR. CHASE: Rescind.

MR. SAENZ: Rescind.

MR. CHASE: Right.

MR. SAENZ: And then there are other programs that in and of themselves, they -- we cannot -- we usually get the instructions from the federal highway administration that says, Okay, your amount to be rescinded is X. If this one comes and we think it's what it is -- it's somewhere between 250- to 270 million. And you can rescind it from any of your programs but -- with the exception of these. And I don't have them on the top of my head right now.

MR. HOLMES: Mr. Chairman, the obvious intent of the question was to figure out what's off the table and what is remaining. It obviously comes off the portions that you actually have the flexibility for. And it seems to me that there needs to be some balance between districts and some balance between those items that have the least impact on the transportation needs.

And I think really what that means is that you'd look at the items that are not transportation and mobility oriented. And they rise higher on the list. I'm not -- to be honest with you, I haven't fully addressed this issue, but I'm not confined that it shouldn't be spread to some extent across districts.

And the districts that have achieved the highest number of earmarks might come for greater scrutiny.

MR. WILLIAMSON: Ooh. What an elegant suggestion. I like that.

Fred?

MR. UNDERWOOD: I'm still at a loss. So basically, it's almost 300 million? Is that right -- or this 280-? Is that right? That's going to be deducted, and they're expecting us to sit there and what, now build 95 percent of a road instead of 100 percent? Do I understand that correctly as what it boils down to?

MR. WILLIAMSON: Well, I think the federal government -- I mean actually, they treat us pretty fairly in the reduction. They say, Other than congress' earmarks and safety. I think those are the two major categories. Other than those two, you can take this reduction anywhere you want to take it.

So if you want to keep building roads and you don't want to renovate a transportation museum, then you take your reduction and enhancements and you preserve -- you don't reduce in your construction budget.

MR. UNDERWOOD: There's --

MR. WILLIAMSON: But I know that you and Ned have got --

MR. UNDERWOOD: But our main purpose is to build roads and to provide safe transportation for the citizens. That's our top goal, to me. Am I wrong, Mr. Chairman?

MR. WILLIAMSON: That has been our position through the first three rescissions, yes, sir. But having heard what we've heard, I think it would be -- we would be wise to have this discussion and then decide on a joint approach and go talk to our -- talk to the house and senate members.

MR. UNDERWOOD: Yes.

MR. CHASE: And one other program that's exempt is --

MR. WILLIAMSON: And the historical commission. We'll probably need to talk to them, as well.

MR. CHASE: The CMAQ program, the clean air program, is exempt.

MR. HOLMES: I'm sorry, Coby. I could barely hear you. You said that --

MR. CHASE: The -- it's called CMAQ, Congestion Mitigation and Air Quality. That funding is -- it cannot be part of the rescission.

MR. HOLMES: It is not subject to the rescission?

MR. CHASE: Yes, sir. Correct.

MR. HOLMES: Probably appropriate.

MR. HOUGHTON: Yes. It does raise a lot of questions.

MR. UNDERWOOD: Well, I've -- as you well know, I've been on this earmark jihad for awhile, since I was exposed to it up in Washington, D. C., with the former chair of transportation. I like Ned's approach to the issue as looking at those who had the majority of the earmarks, because they don't go away. And unfortunately, if we apply it pro rata across the system, those that do not have the earmarks get hurt the worst in the process.

MR. WILLIAMSON: Maybe one approach, Steve, is to contact our MPOs and make them aware of the rescission and tell them it's the Commission's sense that we're going to do it in relation to earmarks on a district basis and we would like the MPOs' recommendations about where to take those reductions.

MR. CHASE: That might not be a bad approach.

MR. UNDERWOOD: Mr. Chairman, also, part of the thing is putting it back on the districts or a lot of the other regions. Let them decide where they want that cut to come from. Let them decide if it's going to be enhancements or if it's going to be the roads or it's going to be the access, or whatever.

MR. WILLIAMSON: Hope, you had a thought?

MS. ANDRADE: Well, you know, Coby, I think one of the things that happened out of all of this was that it was a surprise to everyone. And all of a sudden, the people that were depending on that they were going to get funded for the courthouses or their special projects -- you know, all of a sudden, they get a letter from us saying it's not going to happen.

So I think it was a surprise. I don't think that we communicated it as well, giving them time. And, you know, when I think about it, we've got a mobility plan, and we've got projects in that plan. And so they would have been just as surprised if all of a sudden they got a letter from us saying, you know, because of us having to send funds back, your project that you were counting on is not going to get built now.

So either way, it would have affected their community. I just don't think that they had enough time to give it some thought as to, Is this fair, or unfair. So --

MR. WILLIAMSON: Well, Hope --

How much time do they give us, Steve, Amadeo?

MR. CHASE: We haven't been notified yet officially.

MR. WILLIAMSON: Well -- but from the time we are notified officially?

MR. SIMMONS: I've requested staff to bring the letter from the last rescission down so we can tell you exactly what the -- categories of funds are restricted and, also, what the time frame is. So as soon as I get that letter, I'll be back up.

MR. WILLIAMSON: My recollection was that we didn't have much time.

MS. ANDRADE: Yeah. And that's why I think they reacted that way. We just didn't -- I mean I don't think -- I'm not blaming us for doing it, but I'm just saying the communities were not expecting it and, therefore, they were --

MR. CHASE: Right. And  --

MS. ANDRADE:  -- disappointed.

MR. CHASE: In the last rounds of rescissions, Amadeo was saying it was -- we had two to three weeks, maybe a month at the longest, to figure those things out.

MS. ANDRADE: You know, we have a responsibility. And our mission statement says, you know, our responsibility is the movement of goods and people. And we have to --

MR. CHASE: Well, that's interesting. We argued that they need to devolve power to the state so we can in turn devolve power to the regions. Well, they did devolve this decision to us.

MS. ANDRADE: Thank you.

MR. HOLMES: Mr. Chairman, just a couple of other thoughts. It seems to me that if we believe that there is another rescission coming, we need to communicate that across the street, to the MPOs, to our districts so that people are aware that we are going to be charged with the responsibility of allocating those rescissions across the state.

Secondly, having some input as to how that decision -- the criteria by which you make that decision is probably a useful thing. I believe there should be a balance between the earmark issue and the non-mobility issue and that we don't necessarily cut every single enhancement project out, but that the greatest weight is applied to projects that do not add to mobility and projects in areas that have received the largest number of earmarks that the local group is not willing to fund.

MR. WILLIAMSON: I think that's good criteria, and that's also a good suggestion. Well -- but unless I hear differently, this will be our approach. We need to prepare a letter, and I think we can go ahead and prepare it now.

The Federal Highway Administration is a remarkably dependable partner. If they've communicated to us that a rescission is coming, then it probably is coming. The letter --

Coby, I don't think it's overkill to send it to every house and senate member, because every one of them was bombarded with this.

MR. CHASE: Every house, senate and congressional member, I would think?

MR. WILLIAMSON: Congressional member. A letter to the historical commission -- they were concerned about this during the recent house appropriations hearings -- and, I think, to all of our MPOs, district engineers.

Let's give an estimate of what we think the problem is, what the range of solutions are, and invite them to hit the website or e-mail us and give us their ideas. In the case of house and senate members and congressional leaders, we would prefer a letter expressing their opinion on what we should do.

MS. ANDRADE: Coby, can I -- you know, it's not that we don't care about these projects that are covered under the enhancements. We do care. We just have to make some difficult decisions.

MR. CHASE: Oh, absolutely.

MS. ANDRADE: As we continue to do -- I mean we're committed. And I know as I travel throughout the state that there are projects that are very important and normally I would have supported. But I think at the end of the day, we have to make difficult decisions for this state -- and the right decisions. And so -- but it certainly does not mean that we do not care.

MR. WILLIAMSON: Right.

MR. CHASE: Absolutely. And the -- as far as enhancements, don't forget that was a -- it wasn't that something didn't get funded. It was that the opportunity to seek funding for some of these things did not exist, but it wasn't that we --

MR. WILLIAMSON: It was a future program --

MR. CHASE:  -- stopped projects. Right.

MR. WILLIAMSON: A future program which we elected not to move forward with.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: And, Mr. Simmons?

MR. SIMMONS: For the record, Steve Simmons, again. I have the December 28, 2005 notice of rescissions of federal appropriations.

They gave us 30 days to respond to the notice. And it says the State must identify the amounts to be rescinded from funds apportioned under Chapter 1 of Title 23 U.S.C., excluding Title 23 U.S.C. Section 130(f), Railway/highway crossings, surface transportation safety set-aside, STP at sub-allocation areas, highway safety improvement programs, safety incentives to prevent operation of motor vehicles by intoxicated persons and acts in effect through the prior enactment and based on the amounts tabled in previous tables.

But there are -- it gives us categories: Interstate maintenance, national highway system, surface transportation --

MR. WILLIAMSON: This is what we can reduce?

MR. SIMMONS: This is what we can.  -- CMAQ, bridge, recreational trails, minimum guarantee, minimum allocation, interstate construction, interstate substitution, consolidated primary rural and secondary and urban systems. Those are the areas that we can do.

MS. ANDRADE: So we can reduce those?

MR. SIMMONS: Yes.

MR. BEHRENS: Safety-rating stuff it sounds like we can't reduce.

MR. CHASE: Well, I stand corrected. I apologize. CMAQ can be included in those in that mix.

MR. WILLIAMSON: Although Ned's instincts are right. It probably shouldn't be.

MR. CHASE: Yeah. Well, it ties directly into one of the Agency's most important goals, cleaning the air.

MR. BEHRENS: That's what I was just thinking.

MR. WILLIAMSON: Okay. I think we have a consensus on how to proceed. So now pop on to improved equity funding, which gets more inequitable as the rescissions hit. Correct?

MR. CHASE: Yes. The story just keeps going.

The improved minimum guaranteed rate of return on federal highway formula programs and high-priority project allocations. The Act increases this minimum rate of return on some programs -- let me be perfectly clear -- not on every dollar that is sent to Washington through your gas taxes. Now known as an equity bonus, it went from 90.5 percent under TEA-21 to 90.5 percent by 2007. And then in 2008 and 2009, it ramps up to 92 percent.

By itself on paper, this improved equity bonus will bring an additional $300 million to Texas each year. When combined with the overall increased funding provided under the Act, SAFETEA-LU'S formulas bring Texas an additional 5 billion in federal highway programs over the life of the bill, compared to TEA-21. However, we tend to be shoving it back quite quickly with rescissions.

We will continue to fight to ensure that Texas receives at a minimum its designated rate of return through the life of SAFETEA-LU. So what I think I'm pointing out here is or -- what I am pointing out here is that even though it is written in law at one point, there are many, many things that conspire against you actually receiving the money that you're promised by the feds. And it happens all the time, and it never ends. And it's unpredictable in many cases.

I'd like to take a moment to review some of our intermodal priorities and wrap up.

Federal Aviation Administration reauthorization. This year, congress is working on the aviation reauthorization bill. We will stress the need for a more stable source of funding for our general aviation airports and oppose the division of funds from the airports improvement program to other initiatives that should not be financed out of the pockets of general aviation facilities.

We will also work with congress and the FAA to ease discretionary funding restrictions placed on block grant states receiving airport improvement program discretionary projects without disrupting the current formula funding distributions.

And a small editorial note: In a perfect world, our highway program would work like the airport program does. It comes in a block grant. The state, working with its regions, determines which airports get funded, and it works well. And Texas is one of just a handful of states that actually are allowed to do that, and it works superbly. That level of flexibility is not available to anybody on the highway side.

Water Resources Development Act. Congress will make another attempt at reauthorizing the Water Resources Development Act this year. We are working with our delegation and specifically Congresswoman Eddie Bernice Johnson of Dallas, the chair of the water resources and environment subcommittee in the house, to ensure adequate funding for the continued operation and maintenance of the Gulf Intracoastal Waterway.

And let me say we stand hand in hand, arm in arm with our courts. That is very different than highway earmarking. It's a whole different ball game. And that's exactly how those projects are funded. It doesn't create the kind of problems highway earmarking does. So if one of our ports wants it, we want it, as well, too, in that bill.

But they've had -- and I would think Commissioner Holmes can appreciate this. This bill has dragged on way too long. It never -- it makes us look efficient on the highway bill side.

On transit issues, we will continue working closely with our state's public transportation operators to make sure that they have the resources they need, including pursuing a statewide transit earmark -- again, this operates differently than highway earmarks -- during annual appropriations processes, and possibly creating regional maintenance facilities to relieve them of many of their training and maintenance costs.

We will also continue to monitor the Federal Transit Administration's post-SAFETEA-LU rulemaking to ensure TxDOT's policy positions are taken into consideration in these processes. Furthermore, we will raise the issue of funding for rail relocation in the congress. We will continue to push for appropriations through SAFETEA-LU's modest rail relocation program and will pursue other federal support to help meet our rail needs in any way possible.

MS. ANDRADE: Coby, I have a question on public transit earmarks.

MR. CHASE: Yes, ma'am.

MS. ANDRADE: So it's okay for public transit agencies to seek earmarks for the public transit operations?

MR. CHASE: Yes. Again, it doesn't operate like a highway earmark. And as long as the -- and it tends to be local governments that are asking for those, and they tend to have the money to do that.

The issue is where TxDOT has -- I'm not going to say we are the transit provider, but outside of the major regions, we are -- the money comes through us and goes back out. We want to make sure that actually the money can be spent.

MS. ANDRADE: So when we hear that, we can -- we'll support it?

MR. CHASE: Right.

MS. ANDRADE: Okay. Thank you.

MR. CHASE: Yes, absolutely.

Along our border with Mexico, we will continue to expand and improve our infrastructure for the security and efficient movement of people and goods. We are working with our partners at the state and federal levels to ensure that traffic moves through our ports smoothly while still doing our part to ensure that our borders are safe.

This concludes my review of the Commission's federal agenda. As we have said, this is an ambitious agenda for what many in Washington might call an off-year for transportation. We will be out talking about these issues in a different environment than the one we've had over the past several years. That's for certain.

I will say again that what has not and will not change is our commitment to working with congress and our federal partners to achieve the Commission's goals for our state's transportation system. Priority One will be to protect the gains we have made and build on those gains, and there's plenty of work to go around.

These are my proposed remarks for today, and, as always, I'll be more than happy to answer any questions you may have, if we haven't already.

MR. WILLIAMSON: Members, we have one witness. Do you have other dialogue?

MR. HOUGHTON: I have one. Coby glossed over improved funding equity very quickly.

MR. CHASE: With all due respect, Commissioner, I thought we had a rather healthy discussion of that, but okay.

MR. HOUGHTON: Well, it just harkens to what the governor in his comments yesterday on the two -- on the 121 project -- he made a comment, and I want to make sure I get or -- in spirit I get it right: That we rank 50 out of 50 states in monies coming back.

MR. CHASE: Yeah. Usually we can turn around and point to Mississippi. We can't do that this time. We are --

MR. HOUGHTON: We rank at the dead bottom --

MR. CHASE: Yeah.

MR. HOUGHTON:  -- of the heap?

MR. CHASE: On rate of return, yes, sir.

MR. HOUGHTON: In rate of return?

MR. CHASE: You've captured it exactly.

MR. HOUGHTON: So --

MR. WILLIAMSON: Is that right?

MR. HOUGHTON: Yes, sir. The governor said that yesterday, and I picked that up in his comments.

MR. CHASE: I hope this doesn't reflect on my performance.

(General laughter.)

MR. HOUGHTON: So improve -- is that the operative word in your --

MR. CHASE: Improve is, yes. That's the least we could do, I would say.

MR. HOUGHTON: Fifty out of 50?

MR. CHASE: Uh-huh.

MR. WILLIAMSON: I didn't know that.

MR. HOUGHTON: Okay. We've established that.

MR. WILLIAMSON: Well, you know, we try to be a results-oriented department. And I'm kind of thinking that --

MR. HOUGHTON: Well, let me dovetail on top of that, though. On top of that --

MR. WILLIAMSON: Coby, what have you been doing?

MR. CHASE: Yeah. Clearly --

MR. HOUGHTON: We last year -- in fiscal year '06, what did we let? Where's -- they're back there.

What did we let last year, Mike, 5.2 billion?

MR. BEHRENS: 5.3.

MR. HOUGHTON: And we rank where in the country in letting?

MR. BEHRENS: Number One.

MR. HOUGHTON: Number One? So we're -- the projects and the programs that we have put or the governor has stated in his vision are working?

MR. CHASE: Right. And some of the things that we've changed on the federal level are helping to produce those results.

MR. HOUGHTON: They're helping that, but we still are at the bottom of the heap in --

MR. CHASE: Just sheer rate of return.

MR. HOUGHTON:  -- just rate of return?

MR. CHASE: That's why we advocate, Don't over-rely on the federal system or -- just free us up to do our jobs, and we will make you proud.

MR. HOUGHTON: Hmm.

MR. WILLIAMSON: Anything else?

(Pause.)

MR. WILLIAMSON: Mr. Eckels?

It is always a pleasure to have a former member --

MR. HOLMES: Are you here to announce something this morning?

JUDGE ECKELS: I'm here as the final time I will be here as the County Judge of Harris County. The chairman of the MPO for the Houston/Galveston region then is the formal hat that I wear today for the Interstate 69 Alliance. And I am, for the record, Robert Eckels, County Judge of Harris County.

I'd like the I-69 folks that are with me here today to stand, because I am here with this group, Mr. Thompson and the crew that is here with me.

And it has been interesting listening to the discussion. As we move forward, I may interject a few comments beyond the I-69 discussion here, but I am here, again, to remind you that the I-69 Alliance became first a partner with TxDOT to work toward building the Interstate 69 corridor.

And while we're primarily concerned with upgrading the highway from Laredo and McAllen and Brownsville up through the Rio Grande Valley to Houston and on up to Texarkana, we are supportive of TxDOT's efforts to do that in any method possible. We were an organization that five years ago, in 2002, became the first organization in Texas to endorse the Trans-Texas Corridor concept primarily for its innovative methods of finance to get that project moving forward.

In 2003 and 2005, we supported House Bill 3588 and House Bill 2702 to provide the authority and flexibility at the state level needed to build the system. In 2005, we stood with TxDOT in Washington, D. C., and helped you defeat the Kennedy Amendment, which would have prohibited tolling of new toll or -- new interstate roads in the United States.

And on January 31 of this year, on behalf of the Alliance, I did send a letter to the chairman to reiterate our continued support for the flexibility measures at the federal level and to endorse specific measures in your proposed federal agenda, which you heard from Coby on today. Among those were the Private Activity Bond refinements, the tolling authority expansion, design-build contracting, the authority to purchase the federal contracting dollars, rail relocation and improvement and international trade and the list of those items.

Finally, I wanted to point out that we do agree with the Commission's position on the practice of earmarking. I'm here wearing multiple hats and will testify to that, not necessarily on behalf of all of those organizations, but as someone who is intimately involved with those various organizations.

We do see those earmarking demonstration projects as not an effective way to plan and develop the integrated transportation system, and we do not encourage the local governments to seek those projects. However, those [inaudible] secure with their annual appropriations or the US DOT discretionary programs should be sought as long as they are comporting with the statewide transportation plans.

We have been working with TxDOT staff to identify some of those. And we'll be in Washington, D. C., next week asking the Texas delegation to work for those provisions.

On a personal note, I would add as I close out here that, again, this is my last time to appear as a judge of Harris County. I want to particularly thank Mike Behrens and the Houston district engineer, Gary Trietsch, of course, Amadeo, Coby and the entire staff here that you have at TxDOT for the courtesy which you have shown to me over the last 12 years at least as a county judge and 12 years before that as a member of the legislature -- also, the chairman and members of the Commission, those of you who are here now and those who came before you.

Historically, this has been a great organization to work with, and I appreciate your dedication to the Department and the support that you give to the staff here to do their jobs in the community that we both serve to look for mobility solutions for all Texans.

The Harris County Commissioners Court and the Harris County Toll Road Authority are both anxious to complete our negotiations with TxDOT to get moving on our toll and mobility projects in the eastern region. Harris County is again looking forward to working with Ned Holmes, your new Commissioner.

We're excited to have you there as a partner again.

And all of the staff -- Ric, I particularly like going and, you know, sitting out on the porch and eating barbecue and talking about the transportation problems of the state.

He really does that at home, folks. He lives these things.

We are all anxious to get moving again. And I do want to particularly thank you.

I'll note on the rescission issues that come up -- again -- and it was brought out in the comments -- that not all earmarks are equal -- the transportation earmarks particularly in the transit area. Sometimes as you're looking to spread those around, an agency like metro may come in with a big federal earmark local match. So I would ask that that not be counted against us as you start going through and looking at systems.

But I would encourage you to look at the MPOs, because it's -- different cuts have different impacts on the systems in different parts of the state. And as my hat is as a chair of the MPO for the Houston/Galveston area, I've looked at the historic funding levels to the regions and then to the impacts the specific cuts would have. And those MPOs work closely with your TxDOT engineers and can usually come back with a pretty good plan if you give them a couple of weeks to do so.

Again, I thank you again. Rose Hernandez back here in our Harris County Rides program, as the second-largest transit operator in Harris County, is in my office. I tell my folks that we are policy and support, and not operations. But we have one big operation at least. And we do appreciate your continued support for that program, as well.

MR. WILLIAMSON: Don't leave.

JUDGE ECKELS: Thank you, Mr. Chairman.

MR. WILLIAMSON: Who has dialogue with our witness, Mr. Eckels?

MR. HOLMES: Well, being a constituent in Judge Eckels --

JUDGE ECKELS: I can still do mental health commitments for another week or two, Ned.

(General laughter.)

MR. HOLMES: Judge, I appreciate all you've done for Harris County and the state. I've always enjoyed working with you. You've been very effective not only for Harris County, but really for the state. And I appreciate all you've done. And you've worked, as I understand it, very well with TxDOT over the years, and I think that's to the benefit of TxDOT and to Harris County. I thank you for that.

JUDGE ECKELS: Thank you.

MR. WILLIAMSON: Anybody else?

MR. HOUGHTON: Yeah. I was going to say I was going to miss you. But I know you're not going too far. So I know that you'll be involved in our transportation issues not only in Harris County, but in the state of Texas. And I look forward to a newer and a different relationship with you, Judge. I think it's very refreshing to have your kind of leadership.

JUDGE ECKELS: Well, I'm not leaving the state. I'll still be a citizen here --

MR. HOUGHTON: Well, I understand that.

JUDGE ECKELS:  -- and will be working closely, I'm sure --

MR. HOUGHTON: And I'm looking forward to it.

JUDGE ECKELS:  -- on behalf of you and the state.

MR. HOUGHTON: Thank you.

MS. ANDRADE: Judge, I also want to thank you. And thank you for being such a champion in transportation. I've enjoyed working with you.

JUDGE ECKELS: Thank you.

MR. WILLIAMSON: I want to give you the opportunity to go ahead and announce your next office.

JUDGE ECKELS: Well, the office I am seeking is on the 47th floor of the Fulbright Tower, Mr. Williamson. And I'm looking forward to that.

MR. WILLIAMSON: Well, I'm talking about the one after that, Robert.

JUDGE ECKELS: I'll just look at one at a time, and I'm happy to live with that and look forward to continuing to support my colleagues that are back here. And I do want to thank you. You've got a whole crew of elected officials back here. Judge Thompson, I think, will be taking over as chair of the alliance for Polk County. And of course, we have folks from -- I have to get my glasses out to see who all is back there.

But no. I've got a lot of officials I'm looking forward to working with. And again, I'll be at the office in Houston and ready to serve, Mr. Chairman.

MR. WILLIAMSON: When we were members together, I was a freshman when Robert was a sophomore, I believe. And I sat next to a guy who was in his class who's a good friend of both of us. And he was trying to educate me about every member -- you know: This guy's this way; this gal's this way; this guy's this way.

We had a local calendar come up, which was my first local calendar, and I was amazed at how fast things moved. And this mutual friend leans over and says, See this guy walking up to the podium named Eckels? This is the best mumbler in the state of Texas.

(General laughter.)

MR. WILLIAMSON: He said, Watch this guy. So the clerk says, you know, "Yadda yadda," because that's how -- the local calendar goes real fast. She didn't have nothing on him. He had that bill explained and off there in a vote that fast. He's a great mumbler.

JUDGE ECKELS: There's a time to be articulate, and there's a time to mumble, Mr. Chairman (mumbling).

(General laughter.)

MR. WILLIAMSON: Well, the state has been enriched by your public service, Robert Eckels. We appreciate you coming.

MR. HOUGHTON: Wait a minute.

JUDGE ECKELS: As with you.

MR. HOUGHTON: He was a sophomore when you were a freshman?

MR. WILLIAMSON: I think he came in '83.

Didn't you?

JUDGE ECKELS: Yes, sir.

MR. HOUGHTON: He looks ten years younger than you do.

MR. WILLIAMSON: He absolutely does look younger than me.

JUDGE ECKELS: I haven't been chairman of the highway commission for the last few years. I've just had county commissioners to deal with.

(General laughter.)

JUDGE ECKELS: Thank you, Mr. Chairman.

MR. WILLIAMSON: Thank you.

MR. WILLIAMSON: Do you have any other witnesses, Mike?

MR. BEHRENS: No.

MR. WILLIAMSON: I don't think you need any instructions other than to just move forward with the comments that you've heard from the dais today.

MR. CHASE: I need a motion and approval.

MR. WILLIAMSON: No, you don't.

MR. BEHRENS: Yeah, you do.

MR. WILLIAMSON: Okay.

Members, what we're going to be approving is the federal agenda, amended as we discussed with Mr. Chase. Do I hear a motion?

MR. HOUGHTON: So move.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

MR. CHASE: Thank you so much.

MR. BEHRENS: Okay. We'll move to Agenda Item Number 5. This will be our rules for this month.

Agenda Item Number 5.a. is a rule for proposed adoption, and this deals with motor vehicle certificates of title.

Rebecca?

MS. DAVIO: Good morning. My name is Rebecca Davio. I'm the Director of the Vehicle Titles and Registration Division.

MR. WILLIAMSON: Here, Rebecca.

MS. DAVIO: Thank you.

I bring before you today for your consideration an amendment to the rules concerning motor vehicle certificate of title. With this rule change, we are requesting to eliminate the $5 fee when the person who sells a vehicle notifies the Department of that sale.

We are requesting this change for a number of reasons. One, it's a real customer service initiative. Many times we have to send the materials back to the customer because they neglected to include their $5 check. That creates frustration and delay. It also makes us operate inefficiently, and it doesn't allow us to maintain the integrity of our database.

The motor vehicle database is very valuable to law enforcement and for other purposes. There are procedures in place to notify us. All we're asking to do is eliminate the fee.

There is a fiscal note associated with this rule. There is some cost for us to actually record this. That's an out-of-pocket cost. There will also be a loss of revenue to the Department. We feel like that -- for the customer service improvement, for the efficiency and for the improvement of our database, it's worth this cost.

There are some offsetting benefits that -- we didn't enumerate the costs, because they're very difficult to estimate. But we do request your approval of this rule.

MR. WILLIAMSON: How refreshing. How refreshing.

Any witnesses on this?

MR