January 25 Transcript

Texas Department of Transportation Commission Meeting

STAFF:

MR. WILLIAMSON: Good morning.

AUDIENCE: Good morning.

MR. WILLIAMSON: Thank you. It is 9:23 a.m., and I would like to call the January 2007 meeting of the Texas Transportation Commission to order in Duncanville, Texas. We welcome all of you who are attending our meeting today.

This is the first time in the history of the Texas Transportation Commission our meeting has been held in Duncanville, Texas, and we are excited about being in the southern part of Dallas County, also known as the southwestern extension of Parker County.

(General laughter.)

MR. WILLIAMSON: This is also a very big day for the commission as we will welcome two new commissioners who are attending their first commission meeting with us here today. On my far right is Fred Underwood from Lubbock, Texas, to his left is Ned Holmes from Houston, Texas. We're very excited to welcome both of you to the commission and we look forward to your wisdom and leadership in helping us work with the communities across this state to solve the problems that confront the transportation world, both now and tomorrow and on the long horizon.

(Applause.)

MR. WILLIAMSON: It is our practice to take the commission meetings on the road three or four times a year. It gives us a chance to see firsthand how local communities and regional leaders are dealing with the transportation problems across the state. I would also hope that it provides some insight to local and regional leaders into how we conduct our business, how we make our decisions, and the difficulties that the state faces in solving some very serious problems.

Before we begin our meeting today, it is also our custom to ask you to join with us at the dais in removing your cell phone, your Blackberry, your pager, your electronic device -- gosh, there's so many of them now, I can't name them all -- and please just open them and put them on the silent mode or turn them off so that people delivering messages won't be interrupted by the annoying chirp. Thank you very much.

Please note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of the Secretary of State on January 17, 2007.

It is our custom to open these meetings with brief comments from each commissioner, and we tend to do that in the order of appointment, the most recent appointee beginning. Now, Mr. Underwood and Mr. Holmes were basically appointed at the same time, so we did a coin toss -- they didn't know about it -- and Mr. Underwood is the freshman now and he'll lead us off. Fred, whatever you have to say.

MR. UNDERWOOD: Just honored to be here, looking forward to hearing the testimony and whatnot, Mr. Chairman.

MR. WILLIAMSON: Thank you. Ned.

MR. HOLMES: Mr. Chairman, thank you. I'm delighted to be here. It's going to be a big learning curve, I think, for both Fred and myself. We look forward to working with each of you, and we appreciate getting to go out into various communities to see the issues that exist in those communities. Mr. Chairman, I think it's a good tradition for this commission. Thank you.

MR. WILLIAMSON: Thank you.

MR. HOUGHTON: Mr. Chairman, and to the fine folks and visitors here in Duncanville, thank you for your hospitality. I have had the opportunity to be down here a couple of times and visit the facilities at the intermodal and the expansion of the rail yard and the economic development opportunities, Senator West, and we've got Loop 9 going to be built through this part of the world, new rail facilities -- hopefully, we think, Trans-Texas Corridor rail line. It's going to open up this part of southern Dallas County and change it forever.

I again thank those here today and look forward to a very productive and interesting meeting. Thank you.

MS. ANDRADE: Good morning. I also would like to thank everyone for joining us at our first commission meeting for the year of 2007. Mayor Green, thank you so much for your hospitality. I felt very welcome from the minute that I arrived. Bill, thank you so much for giving us an opportunity to share a dinner with your staff. It always is very rewarding for us to be able to personally thank the staff for the great job that they do.

I guess to this community, I want to congratulate you and thank you for staying committed to preparing this region for the growth that Texas is experiencing. We certainly appreciate that.

And I look forward to taking care of business, Mr. Chairman, and I want to personally welcome Commissioner Underwood and Commissioner Holmes. We've been waiting for you and I look forward to working with you. Thank you, Mr. Chairman.

MR. WILLIAMSON: Thank you, Hope. I associate myself with all the remarks of my fellow commissioners, and I would like to repeat, Mayor Green, how much we appreciate your hospitality and how much we appreciate the warm hospitality from citizens and leaders from Cedar Hill, Lancaster, DeSoto and Grand Prairie. I've also met many of you in the last day and a half and we really appreciate the turnout and the attention you've paid to us.

For those of you who haven't seen our meetings, you wouldn't know this; for those of you who attend these meetings regularly, we're going to alter how we approach things a little bit today because we have a few special circumstances.

The first special circumstance is we are not only in Duncanville for the first time but we're in a great transportation senator's senatorial district for the first time. Even though he has pressing business in Austin, Texas, he does us great honor by taking time to journey back to his district and share a few words with us as we open our meeting here.

And I want to tell you, if you don't know us, we don't waste our energy complimenting people that we believe really aren't focused on transportation. We don't say negative things, there's not any reason to tell somebody they're great if they're not great. But in the case of Royce West, the transportation world in general, and the Transportation Commission specifically, has a great transportation leader, a man of vision, a man of courage, a man who understands that if you're going to get to the top of the mountain tomorrow, you've got to start with the first step today.

Senator, you're here with us. Would you like to come maybe chew on us a little bit?

(General laughter.)

SENATOR WEST: Mr. Chairman, members of the commission, my mayor, Mayor Green, other dignitaries that are here. New members of the commission, looking forward to sitting down and visiting with you as you go through the confirmation process.

When I think about this commission over the last 14 years that I've had the opportunity to serve as the senator for the 23rd Senatorial District, I was not aware until we spoke yesterday, Mr. Chairman, that the commission had not met in the great city of Duncanville, and really the southern sector, and it's history. I look forward to the commission meeting in sunny South Dallas at the Martin Luther King Center as you put together your schedule for 2008.

Transportation, one of the huge issues that we will be grappling with during the legislative session. Should there be tolls, should there be free roads, Trans-Texas Corridor, Loop 9, all of those issues fall on your watch and require, obviously, the things that you're doing: great discussion, great input from the citizenry from the state of Texas, and then decisions on your part.

As my part as a legislator, I know that we will be looking at policy issues that ultimately will fall in your venue, so to speak, and then you will promulgate rules and regulations to make certain that you carry out the intent of the legislation that comes out of the legislative body.

As we look at this particular area, Texas can no longer afford to try to build to Oklahoma in North Central Texas. We must, and I appreciate the focus that the commission has provided in the southern sector of Dallas County -- and you said the northeast sector of Parker County?

(General laughter.)

SENATOR WEST: But Loop 9 is very important, as you well know, and as we debate the Trans-Texas Corridor, that's very important in terms of the future of the state of Texas, because as we look at it, we're debating issues for the transportation needs for the state for the future. Mike, we're looking at energy needs for the future, the state of Texas. So there are a lot of issues that require the collective wisdom and expertise of the persons here that are not necessarily tied -- I shouldn't say are not necessarily -- are not tied to political affiliation, red jerseys or blue jerseys, but the growth of the state of Texas.

And as you deliberate on these issues and bring in the rich input that you have here, and as you award contracts to persons that will carry out the intent and help us build the future, let's make certain that we do it and that all Texans are involved in that process and that when future generations look, they will say: Job well done, commission, job well done, governor, and job well done, leadership of the state of Texas.

So welcome to the 23rd Senatorial District. I look forward to working with you in the future endeavors as we address transportation needs in the state of Texas. Thank you very much.

MR. WILLIAMSON: Thank you, Senator.

(Applause.)

MR. WILLIAMSON: We're going to continue altering our normal course of business, and it will become plain as to why we're going to do that in just a moment. However, in order for the next unusual thing to occur, we have to do a usual thing, so at this time I want to lay before you, members, the minutes from the last meeting and ask you if there are any additions, deletions, or if you're prepared to approve the minutes from the December 14 meeting.

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

We, in this world, rely upon visionary legislators, a visionary governor, 14,700 hardworking employees, and a few old sore heads to carry out state policy, but the reality is we can't be successful in our mission without the aggressive support of hundreds of thousands of volunteers across the state, volunteers to us in the sense of city council persons, county commissioners, regional mobility council members, community clubs, neighborhood associations, and on and on.

Years ago, the commission determined that we should have a medal of honor for those who rise way above the normal wonderful volunteer inputs that we receive across the state, and that we should recognize with that medal of honor those individuals at the appropriate time. Seldom do we go on a road meeting and make the award in the person's sort of backyard, but the person that we would like for you to help us recognize has such impact on the transportation policy of this state from a volunteer perspective that we all, collectively, months ago, almost a year ago decided that this would be the appropriate venue in which to make that award.

Now, normally I just announce it or we do it at a different meeting and the executive director takes over and he reads a few words, because we rely on the executive director to do most of the business of the commission. But in this case, the person who receives the award is someone very near and dear to me, and that person is near and dear to me because we began our relationship six years ago, yelling at each other about why I was wrong and this person was right, and about why this person was wrong and about why I was right, and about the different challenge the southern sector faces, versus the western sector, versus the northern sector, versus Houston or Lubbock or El Paso or San Antonio. And from that beginning, although we still disagree about a lot of things, from that beginning, a true friendship based on common interest developed, and that's a great thing when you're in public service to have that occur.

And I'm not the sole determinant of this, this is a recognition that's determined by senior staff and by the commissioners together, so it's not just me saying thanks to my friend.

And that's all I want to say. I want to turn the rest of it over to Michael.

MR. BEHRENS: Thank you, Chairman.

The award we're talking about is the Texas Road Hand Award. This award was started in 1973 by Luther Deberry, who also served as district engineer in the Dallas District back early in his career, and he created this award as a high tribute to public-spirited citizens who freely give their time to champion transportation in their area.

Since that time in 1973, the department has given out 208 Road Hand Awards. If you come down to the Greer Building where our offices are in Austin, you will see the plaque that has all the names of the Road Hand recipients.

I'm going to talk a little bit now about today's honoree. He is a true friend of transportation. He has led, supported, and dedicated himself to the growth and expansion of the Dallas area. He's a dynamic civic leader who has been a driven advocate for improvement of transportation-related issues in North Texas. He's given many long hours of personal time and is highly regarded as a resource for transportation matters in this area.

In 1989, the lack of representation for cities in southwest Dallas County came to his attention. To ensure equal representation on the Regional Transportation Council, he devised a plan whereby smaller cities would be given a voice. He is one of the original founding members of the Dallas Regional Mobility Coalition. He has worked with regional and community leaders to offer suggestions for transportation enhancements in Dallas County's southwestern region. He continued to represent transportation concerns of southwest Dallas County through lobbying to improve parts of US 287 and US 67, and worked hard to expedite enhancement funds for I-35 East and I-45.

On the state level, he has served as president of the nine counties that comprise the Texas Municipal League's Region 13. He served appointments on their Finance, Administration and Personnel committees, and was appointed to the National League of Cities Transportation Committee.

Nationally, he has served on the Southwestern Regional Selection Panel for the Harry S. Truman Scholarship Foundation, and the Selection Panel for American Political Science Association Congressional Fellows.

He currently serves on the Trans-Texas Corridor Advisory Committee and on the National League of Cities Transportation Committee.

Without question, his greatest accomplishment is his contagious work ethic which serves as an example to all community leaders. For 18 years he has served as a Duncanville City Council person, has been mayor pro tem of Duncanville for six terms, is a member of the Regional Transportation Committee of the North Central Texas Council of Governments, and has been secretary of the Dallas Regional Mobility Coalition.

In his many years of elected office, he has had extensive experience in transportation and other issues facing local governments and has become known in transportation circles as a road warrior. He continues to promote a better understanding of transportation issues, mobility improvements and community needs, paving the way for a promising future. He is a solid and valuable transportation supporter and epitomizes the TxDOT mission. His dedication to improving the transportation system we have today will always be an inspiration to all of us.

It is with great honor that I announce the addition of Grady W. Smithey, Jr., to the prestigious roll of Texas Road Hands.

(Applause.)

MR. BEHRENS: Grady, let me read this Road Hand Award. It certifies that Grady W. Smithey, Jr., is a certified member of the Texas Road Gang, having proven ability and displayed the stamina to toil long, strenuous hours for Texas transportation. Be it known that in recognition and appreciation of proven labor, the Texas Department of Transportation shall post your name on the indelible roll of honored and distinguished Road Hands. Signed by the chairman and the commission and myself.

(Applause.)

MR. SMITHEY: Well, I'm humbled with this award. I'm from Hill County originally, Mertens, Texas, a town of less than 100 people a lot of the time. Mertens, Texas, we lived 2-1/2 miles south of town on a mud road when I was growing up in the '40s when my dad was in the service in World War II. When we wanted to go to town in the muddy time of the year, we had to roll up our overalls up over our knees and wade in the mud for 2-1/2 miles to get to town.

The best thing that ever happened to us was when the Jim Rankin legislation passed in the late '40s and they paved Farm Road 308 which goes from Milford at 35 on down to Elm Mott north of Waco. When that section was paved, we could get to town any time. We didn't have to roll up our overalls and wade through the mud, we didn't have to tie our Broughams -- which is what we called our shoes in those days -- over our shoulders. It was the greatest, greatest thing that ever happened, so I guess early in my life I began to understand the necessity of transportation improvements.

And I really do appreciate this recognition, I'm overwhelmed. I've tried to do what I can. I have been a polarizing influence, frankly, in many cases because I've pushed transportation so hard, but I tell you what, this is a great day, and I thank every one of you. Commissioners, I thank you so much, and Mike, I thank you so much for this award, and it will get the place of honor on my wall at home. Thank you again.

(Applause.)

MR. WILLIAMSON: If you're going to address the commission today, I need for you to do one of two things. If you're going to comment on an item that's on our posted agenda, I need for you to complete a yellow card which can be found in the lobby to your left. If you're going to comment on something not on the agenda at the end of our meeting in the general comment section, if you would, please, I would appreciate your completing a blue card, such as the one I have in my hand, and you can find it, again, to your left in the lobby.

In any event, out of respect for the audience and the participants, please try to keep your comments to around three minutes, unless you're a member of the legislature or John Wiley Price, who we ask to come and visit with us any time for as long as they want, because we always learn from our county commissioners, our county judges and our legislators. I do note for the record that Mr. Price is here, and Mr. Price is also a great friend of transportation in this state, has been a very active and visionary guy trying to solve problems in the southern sector in the northern part of our state.

The first item on the agenda, we've done that. The second item on the agenda is the federal legislative program --

MR. BEHRENS: Comments from our district engineer and local folks.

MR. WILLIAMSON: The second item on our agenda will be comments from our district engineer, Bill Hale, and I suspect Commissioner Price and our local employees in the Dallas area. So Bill, I apologize for cutting you off. The truth is I left my glasses in my truck and I'm sitting here trying to remember what that script said.

MS. ANDRADE: Do you want to borrow mine?

MR. WILLIAMSON: I'm fixing to go get mine. Mine are industrial grade.

(General laughter.)

MR. HALE: I appreciate it, Chairman, I appreciate it, commissioners and Mr. Behrens, and on behalf of the Dallas District, we welcome you to Duncanville for your commission meeting. I greatly appreciate that you've chosen to come to the Dallas District which you have done here in your process.

It's very appropriate that you chose Duncanville and Dallas County that have demonstrated and continue to demonstrate strong transportation leadership in this region, specifically with Loop 9, State Highway 161 -- which is a comprehensive development agreement we're in the middle of at this point -- Southern Gateway, a roadway facility including 67 and 35, the Gateway Horizon.

Because of the continued and steady leadership, this region is poised for strong and sustained development and growth. It significantly contributes to the southern Dallas County region. They stand together, they work together, and they have come together strongly in this area.

The leaders of the southern Dallas region are forward-thinking and strong-willed, they're not afraid to step forward and ask difficult questions and give plain-spoken feedback, they demand fairness, and they take a stance on what they really believe in, and they listen. Consequently, they have become and do remain key players in important transportation decisions throughout the region, key contributors to solving tough Metroplex transportation problems. They make me proud to be one of the two DFW district engineers.

I earned my stripes here in the Dallas area. I started out in Waxahachie, working in Hutchins, and then went to Abilene and then came back. I grew up in south Dallas so I feel proud; I was a Grove Rat from Pleasant Grove. Anybody who lives in Dallas knows what I'm talking about.

(General laughter.)

MR. HALE: I know this area, I know the leaders of this area, and I understand their problems and issues. I seek their counsel and consider it strongly. They are truly transportation partners.

To conclude, I don't want to speak a whole lot here, I'm not good at making big presentations, but I would like to show a presentation that we've put together in our district. Our district has put together a strong presentation for this area, and if you'll look over here, you'll see what we've got.

(Whereupon, the video presentation began.)

SPEAKER ON VIDEO: "Transportation, it is the force that guides the economic compass navigating today's business environment. Because of necessary transportation infrastructure, southern Dallas business is prospering today.

"TxDOT's early responsibility was getting the farmer out of the mud and to the market. Today's goals include: reducing congestion, enhancing safety, expanding economic opportunity, improving air quality, and increasing the value of transportation assets.

"Here in Duncanville in the southern Dallas region, we're doing just that with a new set of tools aimed at delivering a faster, better product, solutions to benefit local transportation leaders. TxDOT and the southern Dallas region are open for business. Economic expansion is underway and you're part of the solution."

SPEAKER ON VIDEO: "Open for business, that's a new and different term for TxDOT. In the past, TxDOT has had the resources to manage the entire state's transportation system. Our future needs will have to be met through a cooperative partnering with local communities.

"In 2003, dramatic transportation legislation sketched a new image of the future of transportation. It contained a variety of initiatives altering the highway planning processes and provided an opportunity for communities to select the projects that best meet their needs. In addition, it brought new tools to the table for transportation officials and community leaders to utilize in managing highway projects in their area. Among those new tools are: the regional mobility authority, toll roads, pass-through financing, the State Infrastructure Bank, and comprehensive development agreements.

"Two projects that are important to the development of the southern Dallas region are the Southern Gateway project and the Gateway Horizon project.

"The Southern Gateway project will develop long term improvements for the Interstate 35 and US 67 corridors. While the design year for this project will be 2025 and 2030, the overall goal of this effort is providing transportation solutions that will endure the next 50 years.

"The Gateway Horizon project is a long term transportation solution for the US 67 corridor between FM 1382 and the US 287 Bypass, involving the cities of Cedar Hill, Midlothian, DeSoto, Ovilla, and Grand Prairie, located within Dallas and Ellis counties.

"These two important projects are not yet funded but TxDOT is open for business to work with local transportation leaders to find funding solutions.

"TxDOT is also open for business to partner with local communities. One example is the Link Park project. The Link Park project is a cooperative partnership between TxDOT and the City of Grand Prairie. Resulting from ten acres of needed right of way for the construction of the State Highway 161 project, 62 acres of mitigated new parkland was created to bridge the Mike Lewis Park and the C.P. Waggoner Park. The 1.5 mile long linear park runs adjacent to the Trinity River and features interpretive signage, lighted trails, and overlooks to the Trinity River. The urban recreation area avoids environmentally sensitive areas while improving the quality of life for the citizens of Grand Prairie.

"Another project crucial to the development of southwest Dallas is the State Highway 161 project. Due to innovative funding solutions, including revenue tools made available through House Bill 3588, the construction schedule for SH 161 can be accelerated. Without tolling, the SH 161 main lanes would be scheduled to begin construction in sections from 2009 through 2014. Construction would not likely be complete for all sections until 2016. In addition, other projects in the corridor would go unfunded. With tolling, the construction of the SH 161 main lanes will begin much earlier and all sections will be open to traffic by 2010. As a result of tolling, gas tax funds previously obligated to the SH 161 project will now be used to build a number of Near-Neighbor projects in the area.

"The Loop 9 vision had its beginning in the 1950s. Thanks to proactive efforts of elected officials and local transportation leaders, Loop 9 has remained a southern Dallas County priority. Based on their efforts, the region can leverage past investments and take advantage of the new project delivery methods, including private-public partnerships, and make Loop 9 a reality.

"The Loop 9 corridor project is a critical transportation project to the continued development of southern Dallas County. TxDOT has joined Dallas County as a partner in completing the draft environmental impact statement by March of 2007. Due to the work already completed on the study, the region, and especially southern Dallas County cities, may be able to capitalize on an opportunity to get the project built faster as a potential connector to the Trans-Texas Corridor.

"TxDOT is open for business. These problem-solving approaches are a new way of doing business. You're in the driver's seat when it comes to deciding how to meet transportation needs in southern Dallas."

(Whereupon, the video presentation was concluded.)

MR. HALE: And that last part about the City of Champions. I don't know if you followed high school athletics, but Cedar Hill won state in football this year in Class 5-A.

(Applause.)

MR. HALE: And if you follow this whole area, the top ten teams in basketball are from this area, and then they've won state in a couple of areas besides that. Duncanville, a couple of years ago, won state in football.

I'd like to recognize at this time Scott Dorsett, Rhonda Schmid, and Brian Barth for this presentation they put together. They worked with me and my staff here, they did an excellent job.

(Applause.)

MR. HALE: That Barry White voice was Scott Dorsett speaking.

(General laughter.)

MR. HALE: Before I get to any other presenters, I'd first like to acknowledge the presence of another TxDOT district engineer here, and that's Larry Tegtmeyer from the Wichita Falls District.

(Applause.)

MR. HALE: At this time I'd like to introduce Mayor Green from the City of Duncanville. It is my pleasure to begin presentations by local leaders by introducing the mayor. Mayor Green and the City of Duncanville Council have been instrumental in shaping transportation solutions for the southern Dallas County region and the Metroplex generally. Mayor Green and the City of Duncanville have played a key role in the State Highway 161 CDA and associated Near-Neighbor/Near-Time projects, and Loop 9.

(Applause.)

MAYOR GREEN: Good morning, Commissioner Williamson and members of the commission. We truly appreciate you being in Duncanville today. We bring you greetings not only from Duncanville but all of the best southwest cities and the cities located in southern Dallas County. We're here today to tell you -- you stated earlier that you're delighted about being in Duncanville -- we're doubly delighted that you're here. We want to tell you that we truly are open for business. Transportation will totally reshape our area.

We trust that yesterday on the tour of South Loop 9 that you saw the potential of what's going to happen out here with the intermodal facilities, the business establishments that will be coming in because of all of the transportation activities related with it.

So again we say to you thank you for being here, and if there's anything we can do to make your stay more pleasant, please let us know.

MR. WILLIAMSON: Thank you, Mayor.

(Applause.)

MR. HALE: And that singer was John Cougar Mellencamp.

MR. WILLIAMSON: We thought it was you.

MR. HALE: Could have been.

(General laughter.)

MR. HALE: Our next speaker is another key transportation leader in this area, Dallas County Commissioner John Wiley Price. Commissioner Price is representing the Dallas County Judge Jim Foster today in speaking before the commission. Commissioner Price is a six-term Dallas County commissioner, having served since January 1, 1985. He has served on many, many boards in his role as a Dallas County commissioner, including the membership of Loop 9 Policy Advisory Group, and very instrumental in getting Loop 9 moving.

(Applause.)

MR. PRICE: Mr. Chairman, members of the commission, thank you very much for not only the opportunity but for being in what we consider to be the best county in Texas. I auditioned for singing that with the "American Idol" but I just didn't make the cut.

(General laughter.)

MR. PRICE: But I want to say just real quickly, and want to thank Mayor Green for this hosting, but I would like to ask the other elected officials -- I see a number of individuals, our partners who are here with us this morning, members of councils, mayors, and I'd now ask them to stand at this particular time. From both Duncanville and City of DeSoto, I see mayors and council members, Lancaster -- they're all here this morning. I'll ask them to stand. Thank you.

MR. WILLIAMSON: Thank you very much.

(Applause.)

MR. PRICE: I'm asking them to stand, Mr. Chairman and members, primarily because without them not only Loop 9 but south Dallas County would not be open for business.

In 1991, the Dallas County Commissioners Court in a bond program took on this effort, and let me thank you for recognizing our friend, Grady, today. Grady is -- there are a lot of things you can say about Grady, but one thing you've got to say is he's committed to transportation. So I thank you for your recognition of him.

But in 1991, Dallas County realized that there needed to be someone to talk about navigating this process, and all of our cities have signed on.

But let me just tell you about your staff real quickly. Bill Hale did not say enough about it. Let me just say that this particular district in TxDOT has been exemplary in being the kind of partner that has made us go to this next level. And I just want to say thank you to he and his staff.

But in that '91 vision, this intermodal and economic engine was all Dallas needed, and for those of you who took the tour yesterday on 40 miles of what we consider to be the most limited access virgin roads in this country, we know that Loop 9 is well on its way.

So on behalf of Judge Foster and my colleague, and in his absence this morning -- the truth of the matter is I really have him tied up in a closet -- this is his district, Commissioner Ken Mayfield, but I decided I needed to really substitute for him today.

(General laughter.)

MR. PRICE: Let me just say thank you very much for being here, thank you for being a real partner with us. We're on the right track, TxDOT is with us, and the citizens of Dallas County are going to be better off. History will be the vindicator of all of our deeds today. And we just want to say thank you very much for being here with us.

MR. WILLIAMSON: Thank you, Commissioner.

(Applause.)

MR. HALE: Now, no local presentation would be complete and balanced if you didn't have the next man come up here, so I won't introduce him, you probably know who he is. Michael Morris will come up here and talk. He's a leader for the entire region, including Fort Worth and our area.

(Applause.)

MR. MORRIS: Mr. Hale, thank you very much. Mr. Chairman, members of the commission, Mr. Underwood and Mr. Holmes, welcome. I think you'll see from our region it isn't just about Dallas and Fort Worth coming first or south Dallas coming first, it's Texas coming first, and I think you'll see a willingness on the part of this region to assist you anywhere in the state in the best interests of the state.

Mr. Behrens, hello again. I hope you would extend to Commissioner Johnson our region's very sincere appreciation for his years of service on the commission. As chairman and as a commissioner, he was very supportive of everything innovative and stood firm as we made some of these changes.

My name is Michael Morris. I'm the director of transportation at the North Central Texas Council of Governments. We are the MPO, the metropolitan planning organization for the Duncanville-Dallas-Fort Worth region. We have 40 policy members on our particular council. Almost all of them are elected officials except for the transportation providers that sit there, including your two districts, the Dallas and Fort Worth districts.

There are seven points that I'd like to make, and I don't have a long presentation for you. You were recently in Denton and we're coming back to see you in March. Amadeo Saenz, Mr. Behrens and I were in Washington, D.C. earlier this week. I think Amadeo had three presentations to give at the Transportation Research Board; I had three. Everybody in the country is anxious to hear what is Texas doing and what's going on in Dallas and Fort Worth. You should be very proud of all the hard work that got to this particular point. The rest of the nation literally is watching what is going on in Texas and in Dallas-Fort Worth as a model for how transportation can be built in the rest of the country, and the key to that, as already alluded to, is a partnership.

You should throw your name badge away. Yes, I work for a metropolitan planning organization but we're working for the customers in the region, and this region operates as one team. Yes, you have TxDOT employees and transit authority employees and toll road employees and MPO employees and city employees and county employees, but you have all these employees with common purpose implementing services for the customer.

The second thing I want to flag is the new mobility plan that the Regional Transportation Council approved last week. We obviously don't have time to go through the whole plan. What I'm focusing on here is the increased revenue from the new tools that the legislature has given us and all the new policies and initiatives that this commission has. It's a hard number to see, and the bottom of it is we anticipate $16.8 billion worth of enhanced revenue stream from these particular initiatives.

I won't go through them all, just from a large perspective. The green lines on that map are existing tolled facilities within the region. The blue lines are the new toll roads we're partnering with you and the North Texas Tollway Authority through the protocol to build. You see the outline of the regional loop, the big circle -- or donut, as the chairman indicates -- as a tolled facility as part of that particular initiative. And then the red lines are when we reconstruct our existing freeways, we will put a managed, tolled HOV facility in the center of that corridor as a way to get guaranteed levels of service for the customers within the region. In most corridors that priority is given to the commuter, in some corridors that priority is given to the truck, depending on what the right tool for the right job is.

The third point I want to make -- and I want to shift a little bit to land use -- you guys at the state you often don't have an ability to have land use as a part of the tools in your toolbox and you often have to leave the transportation investments. At the regional level, working with our commissioners and our cities, especially cities who have land use control, the region is using land use as part of the initiative in solving the mobility, safety and air quality problems.

The Regional Transportation Council has focused on south Dallas County for some time. They very much are interested in increasing development in this part of the region because if south Dallas grows and we can put 50,000 or 100,000 more persons here, it reduces the pressure of the suburban ruralization heading towards Oklahoma, of which we do not have the revenues to sustain that huge mass of suburban and rural development within the region. It's not in the best interest of the rural elements of the state and it's not in the best interest of the urban elements.

Passenger rail system, light rail system has been built. Cockrell Hill Interchange introduced 6,000 new jobs south of Interstate 30 which is a partnership between the county and the Regional Transportation Council. On Interstate 20 we have reliable transportation by creating frontage roads where if an incident or an accident or construction, we then use the frontage roads as part of that. The benefit of that, and one of your five goals, is economic opportunity. By building that particular frontage road system which is under construction creates increased access which creates job opportunity along the corridor.

The Regional Transportation Council has funded specific sustainable development projects which are either high density developments around passenger rail stations or mixed-use developments increasing the ability of walkable communities and other initiatives. The new intermodal facility, with a partnership between the RTC and Commissioner Price in building transportation, to gain access to that new intermodal facility.

So even though it's not a tool in your toolbox, I want you to realize that you'll never solve the transportation problems without putting land use and land use policy development as part of that particular tool.

I want to focus on five specific projects, they're all listed here. Dan Kessler, if you'd go over and point to 161. I just want to touch on five projects. 161 is a project that is under construction from funds by the Regional Transportation Council. That initiative is a toll road; that toll road will go through your comprehensive development agreement process. That facility is on schedule to move forward after our 121 procurement goes through which has a deadline any day now.

Loop 9, you've already heard about. That's the first leg of our regional loop system. We have a partnership between the districts and the Regional Transportation Council to environmentally clear the rest of that particular corridor, using assets and capabilities that are in your toll road division, again, an example of a true partnership.

The Trinity project which is a bypass around downtown Dallas is a tolled facility. If that facility is not constructed, we cannot bring radial improvements into the downtown area because we need more downtown capacity there. The senator that you heard from led the study on the gateway for Interstate 35 coming to the south.

And then the 67 corridor, Bill and I are working hard, probably through the Trinity and/or the 161 concession fee initiative to start making improvements to the Interstate 35-E corridor down at least three or four or five miles to get rid of a dangerous curve that's existing in that particular corridor. It's the most congested part of the corridor and it's obviously a high accident location, so you should hear soon initiatives to build that particular corridor from the north to the south as part of that particular initiative.

And then, of course, we have 67 further to the south as part of that particular mix.

So projects are proceeding, leveraging is occurring, I think it's all very positive. You've heard status reports on that in the past.

The fifth item is with regard to the Super Bowl initiative in North Texas, probably more through administrative work of Mr. Behrens than any policy change you had to make. As you know, Mr. Holmes, you held the Super Bowl in your particular region, it was a terrific success. Dallas-Fort Worth is now going to compete with cities across the country to hold a Super Bowl in Dallas-Fort Worth. It is part of your economic opportunity; $3- to $4 million of new revenue is brought to the state to host a Super Bowl. We look at it as an excuse to build the transportation facilities that we're building anyway as part of that.

There's four things that are going to be needed, and again, I don't think it's by policy, we'll be working with Mr. Behrens. Attorneys have drafted up a resolution -- I'm not convinced we need a resolution to do it.

The first is if the league brings vehicles down 30 or 60 days before that they don't want to be charged excess vehicle registration fees through your Department of Motor Vehicles -- it's a standard agreement in order to get it.

Second, the RTC and TxDOT are building the Dallas Traffic Control Center and we've already funded the Fort Worth Traffic Control Center. We want those traffic control centers up and operating on that week that the Super Bowl is here, and of course, why would we build them if we weren't going to operate them.

The league has written to us and wants special attention that it could be an icy situation. Again, why would we de-ice all the roadways every day, and then when the Super Bowl comes, we would forget to do so. We need some commitment in case of an ice situation.

And I'm going to talk about transit in a moment. We will have dedicated lanes for bus vehicles, so we're going to buy some concrete, New Jersey Barrier, probably by the Regional Transportation Council, and at least on Super Bowl day, maybe during that whole week, have at least one lane dedicated to transit vehicles to get to and from their destination so they're not mixed in the congestion so they can cycle back and make another trip.

So these are four very standard operational elements, you supported them in Houston, and we'll work with Bill Hale and Mr. Behrens to find out what's the best mechanism to make sure our application doesn't get rejected, and attorneys can review either the resolution or an administrative letter to do that.

The sixth point is I want to again reiterate that our region stands ready, especially during this legislative process, to talk about the financial crisis on transportation in the state and the success early implementation has made. There are some forces coming back to either criticize the protocol, or maybe toll roads aren't good, or some other situation, and I think those are all very legitimate policy matters.

As a technical person, the only concern I have is if they translate the facts or the data, since I was your person who led the Texas Metropolitan Mobility Plan for the eight largest metropolitan regions, I want to make sure that those facts are not manipulated in that particular debate, and stand ready to either testify or work with your staff in making sure those facts from the eight largest regions -- including Lubbock and Houston and San Antonio and El Paso, your regions -- are fairly and accurately represented in that communication to the legislature.

And then the last point I want to make, and I've made it before, I think it's very important to talk about transportation improvements for people who already have transportation, but we have a lot of people in this state who don't have transportation. You have put in the lead Commissioner Andrade to lead the whole transportation operation seamless investment in the state, it's a legislative mandate. She has asked me to help her and we have completed those plans and you heard that report in December.

January starts the first month of the implementation of the new seamless policies and programs for integrating transit operations in every inch of this great state. And just the same emotion that this commission has led to the financial crisis on roadways, I know you will support Commissioner Andrade as she leads the same type of emotion and leadership necessary to deliver a seamless transit system for all users of this state, especially those that don't have the ability of driving or taking that particular automobile. You heard some of those presentations in December when we presented it to you, but I wanted you to know we're now past the planning phase and we're now moving into the implementation phase.

So things will get a little ticklish as we tell transit operators who are not sharing vehicles, or maintenance of vehicles that aren't being held to the correct standard, or taxicab policies that aren't modern enough to create seamless ability for people to go to their health or cancer treatment or something else.

So this region is moving forward, you've got 24 other regions moving forward. This is our first month of implementing new strategies. You'll hear from different parts of the state some old-fashioned, we like it the way it used to be, and hopefully give us a chance to tell you why new ways and new systems will deliver more seamless transit for all Texans.

With that, Mr. Chairman, we'll be happy to take any questions over all of the region or our focus on this part of our particular region today.

MR. WILLIAMSON: Michael, as always, we appreciate so much you spending your time with us anywhere we are. We'll start at the end, Fred, is there anything you wish to ask?

MR. HOUGHTON: Michael, tremendous job, as usual. At the Denton meeting -- and I don't know if you have it on your computer -- you showed the effects of a concession on 121, what it would do for the region. You don't happen to have that slide with you?

MR. MORRIS: No.

MR. HOUGHTON: Sorry you don't have that.

MR. MORRIS: I didn't think I'd be invited back to south Dallas County if I brought the Denton County map.

(General laughter.)

MR. HOUGHTON: Well, it will illustrate a point. You know what the point is.

MR. MORRIS: Yes.

MR. HOUGHTON: And let me just finish the point. There has been legislation introduced by a senator that would reduce concessions from 50 years to a maximum of 30 years, and what kind of effect do you believe that could have or would have on that concession payment?

MR. MORRIS: Well, the Regional Transportation Council debated it, and they liked 50 years and they passed on a policy that they'd like you not to go past 50. They very much know that if you start handcuffing that process that it has huge implications on the revenue side. We think by you permitting the government side to regulate it by setting the tolls and the policies and the business terms that I think the concession duration is less critical.

Now, the concession duration would be very critical -- and this is not well understood after coming from Washington -- if the private sector had full authority to do whatever they wished in the corridor, then I would think the concession period would be a very significant policy question. But in your particular case, the way you're implementing this, as you have asked the local policy officials, the government officials to set those particular business terms -- from what the existing rates are, are you interested in time-of-day pricing, and what the inflation is over time, and methods of interest -- it's a regulated commodity.

So the RTC felt 50 years was very comfortable, they're more nervous on shorter terms, and I think the private sector would be too, by the way. The other problem you have with 30 years is the private sector could easily get into a transportation facility and it still be in its existing design life -- you know, pavements last 40 years. So you could have a private sector vendor basically milk all the capital asset inventory value out of a particular project, turn it back over to you at 30 years, and it has still a 10-year design life.

I like the beauty of the 50 years is because in your procurement procedures that pavement quality is being monitored and that private sector vendor has a responsibility of turning over a new asset, and I think that new asset should be closer to its design life which is 50 years than it is 30 years. This way you're not inheriting back to the gas tax side the reconstruction or rehabilitation of a lot of these particular pavements.

MR. HOUGHTON: Well, and to follow that up, just to illustrate the point on the concession -- on the back of a napkin obviously you have anticipated a certain amount of dollars coming out of 121 -- what are the new investment in free roads that you will be making in the region?

MR. MORRIS: Well, I'm going to ask Dan to go up there.

MR. HOUGHTON: I mean, the cumulative number.

MR. MORRIS: Well, if you go to 121 -- just so the new commissioners can see where it is -- the blue line 121 in Collin and Denton counties, that project is due any day. I probably don't want to say publicly because we're so close to it, but we, staff, anticipate -- and I'm not revealing any documents -- a several billion number, just a big number. They're in the audience and I don't want to influence their decision.

But you see that red corridor? That's the Interstate 35 NAFTA corridor. Right now we have no money to make that particular improvement. So we went to those communities and said, If you permit 121 to be tolled, we're going to come in and make improvements to Interstate 35 all the way from Dallas to Denton, we're going to come in and help on the gridded thoroughfare system in Collin County just like you have it gridded there for a system in Dallas County.

Dan, look at southwest Dallas County and show them the grayed-in thoroughfare street system. You see that gridded system there? This part of the region, and why we want to infuse so much development here, already has a very good thoroughfare street system, it doesn't have a very good freeway system. Notice when you go to Collin County -- which is one of the fastest growing counties in the region -- you don't have that thoroughfare street system, you don't have the backbone as part of that.

So you're correct, Commissioner, you toll facilities in order to build infrastructure in that particular community. Now, also, for example, we're building passenger rail. DART is building passenger rail from downtown Dallas to Carrollton. Dan, if you'd show them up the 35 corridor. And then the Denton County tollway authority is going to go from there all the way to Denton.

So one of the items which is kind of innovative -- and you've certainly been nudging us in this direction -- is to flex some of that money that you're going to get from the toll road side to help fund the passenger rail side of that particular investment. We have Tower 55 which is now being declared as the largest bottleneck on the rail system of this country in downtown Fort Worth. Horribly difficult to flex money on the goods movement side; you have that same issue in Houston. By tolling these particular facilities, we're potentially flexing funds to partner, not exclusively, to make those particular investments.

MR. HOUGHTON: So we're getting dollars out of the dirt, dead capital out of the dirt and putting it to use into economic opportunities, reducing congestion.

MR. MORRIS: In my remarks in Washington -- and we take it for granted here -- what's critical is this state permits us to use transportation investments to grow transportation systems. In other parts of this country, they're using transportation assets to solve non-transportation problems. And we can't permit our transportation values to now start solving other financial issues that the state has. We take it for granted, but there's lots of discussion in other parts of the country of solving retirement funds and other things on the back of your transportation wealth.

MR. HOUGHTON: Thank you, Michael, for a great job.

MR. WILLIAMSON: Let me just tag on -- I don't mean to jump ahead, Hope, but Michael said something that triggered in my mind -- it seems like we almost always end up using you for a lesson.

MR. MORRIS: My wife does too.

(General laughter.)

MR. WILLIAMSON: But we have in the audience today two new commissioners and we have at least three faces that are sort of new to this discussion that have the opportunity to listen to some facts unfiltered through others. And one of these persons made a point to me in the recent past that perhaps the biggest concern is that the concession -- and perhaps the biggest criticism -- is that the concession model implies a toll rate very high in the future in order to pay for the tax roads or the Near-Neighbor/Near-Time-Frame assets that will be built, and is it really fair to make our children pay a higher toll rate than they would otherwise pay if it were a government-owned toll road and that weren't the case.

And I've kind of wrestled with a businesslike way to answer that criticism. My instinct is that there is a businesslike way, and the only thing I can come up with is there's got to be a value associated with the reduced congestion on those Near-Neighbor/Near-Time-Frame assets, there's got to be a value associated with the cleaner air that comes with reduced congestion, there's got to be a value associated with the safety element and the economic development element. I just don't know how to quantify that beyond what we're doing at the department to try to quantify it.

But is it not the case that we've done studies on all of these concessions and we have a pretty good idea of the residents of a percentage of the users. For example, we kind of feel comfortable that between 50 and 60 percent of the users of 121, as we know it today, live in Collin County, and that if we invest 50 to 60 percent of the concession in Collin County, can't it be fairly said that the people paying that toll are getting benefits?

MR. MORRIS: Well, I think three things jump out, Mr. Chairman. First look at gasoline tax -- and you've said this, too, and I just remind people of this. Whenever people don't like a particular option, their words should always be: Okay, then what is your recommendation? And then you quickly hear "gas tax." Okay, a gas tax is: a) horribly regressive because it is very difficult for the lower income person to pay it even though the higher income person is buying approximately the same amount of fuel consumption; the other problem is it has a horrible equity problem.

There's a good chance in this state you could pay lots of gas tax -- say there's a nickel increase, so for the next ten years you pay a nickel increase, it's possible, because of the cost of these particular projects, you wouldn't see any capacity improvements as a result of you paying. You might see some maintenance improvement, but large particular projects with gas tax money are very limited. So you could pay gas tax in Parker County but if you didn't travel on Interstate 30 widening, you wouldn't have seen any of those particular benefits.

In the case of the toll roads -- which I think is a better business argument -- is you don't have to get on the toll road. Our elected officials like toll roads because it gives people choices: if they want to stay on the gas tax system which is being maintained by gas taxes -- because as you know, your gas tax now can't buy any more capacity; Mr. Bass did a nice job of showing that to you in December -- that if you wish to just travel without paying, then you don't pay.

So here you've given a choice to the constituents of a region: we're not going to increase your tax; if you wish to increase your tax yourself, that's okay, but you don't have to pay more for transportation if you don't wish.

Now, most of our region will opt in favor of paying that user fee because they have a responsibility, either of putting in hot water heaters or goods movement getting to just in time delivery or people trying to get to work. They're opting in of their own choice, so they get the benefit of the transportation facility

And by the way, moving 60,000 or 100,000 people to a new toll road, the person who has opted not to pay the higher tax also is benefitted. That person is also benefitted because you then flex the funds in what we coined this Near-Neighbor/Near-Time-Frame period building other transportation projects for those particular constituents, and often those are on what we normally call gas tax roadways. So they may get a passenger rail system out of it, or partnership towards it, or they get their thoroughfare streets developed -- that I think we have to do in Collin and Denton counties -- and they didn't even necessarily travel on the toll road but they're going to get benefits from that particular item.

The third thing that comes to mind is I don't think tolls are regressive. One of the presentations I gave at the Transportation Research Board is look at what the individual homeowner is facing in their daily life: if they're five minutes late picking up their kids from daycare, it's $15 every ten minutes, or whatever it is; if they're in a blue collar job and they're late twelve times for work, they end up losing their job. So in a household's perspective, it's the opportunity costs that tell me why I want to get on a toll road. It isn't just about catching the airplane, it's getting to daycare on time so I don't have to pay that cost, or getting to work on time so I don't have to lose my job.

And if toll roads are so horrible, why in regions like ours and Houston are so many people using them? It is because on the days you need it, you get on it, and on the days you don't need it, you can travel on the rest of the system, and it really is an individual responsibility decision, in my mind. You're avoiding the regressive gas tax on the person and you're giving them a choice to decide if they wish to travel or not on that particular facility.

And our elected officials, I think, have gone through, starting back in '91 when we started pushing toll roads, all the way from this is double taxation -- I haven't heard the words "double taxation" in our region in two or three years, except in Collin County.

(General laughter.)

MR. MORRIS: But it takes a long time to walk you through these business elements. And I heard an earful, other states elected to borrow money, they didn't want to increase their gas taxes, so they borrowed to the hilt. Trust Fund is going to go negative in 2009, meaning the revenues going into the Trust Fund -- you're already seeing the rescissions that are before you.

MR. WILLIAMSON: You speak of the Federal Highway Trust Fund?

MR. MORRIS: Yes. These states are sweating bullets now because they borrowed money on an anticipated revenue stream that Washington cannot keep up with, where this state elected not to borrow the money and go ahead with a very modern partnership with both locals to get support and then the private sector to bring financing. And I tell you, the rest of the country is extremely jealous that we now can go ahead and build $16 billion worth of more projects in Dallas-Fort Worth and other states are sweating bullets thinking they may go bankrupt in 2009 if their rescissions go any further than what they're experiencing right now.

MR. WILLIAMSON: So if you were a business leader in north Dallas or Collin County and you were really concerned about the state's seemingly aggressive drive towards public-private partnerships and CDAs, and your only concern was I'm concerned that because the private sector has got to make a profit and because you guys want all this cash up front that the tolls are going to be too high for the next 30 years, the answer to that is the cash that's taken in the concession is immediately invested in transportation assets directly related to the area that most of the toll payers live in to reduce congestion, improve air quality, and enhance safety in the areas.

MR. MORRIS: Build more projects and build them faster, 15-20 years in time.

MR. WILLIAMSON: And it is not a minor matter as the Federal Highway Trust Fund goes less and less positive, as it turns out, to shift the risk of transportation construction to someone else.

MR. MORRIS: And Mr. Chairman, don't underestimate the safety benefits. We could show you Farm to Market Road 423 that's a two-lane roadway in Collin County that's going to have 40,000 cars a day on it, it is a death trap. And I can't imagine that existing for 10 or 12 or 15 more years, where as part of the 121 project we're going to go ahead and update to a six-lane, divided thoroughfare that people can travel on for free.

MR. WILLIAMSON: Well, I'm sorry that I jumped you, Hope. I never miss a chance for a teaching moment.

MS. ANDRADE: That's okay. Michael, as always, I just want to thank you for what you do for this region, and on behalf of public transportation, for the role that you play on this public transportation effort, thank you so much. You've brought us here, and these are exciting times, because, you're right, now we're implementing them. But there's a lot more to do.

MR. MORRIS: Yes.

MS. ANDRADE: You know, public transportation sometimes is not just the choice but it's the only way to get some of our citizens in Texas around. So thank you very much.

MR. MORRIS: Thank you.

MR. HOUGHTON: We'll have a party up here when we find out what that concession fee is.

MR. MORRIS: Maybe one or two.

MR. WILLIAMSON: Well, we hope we have a party. Now I'm back to my regular order, we will, by the way, take your admonition to heart and we will be as aggressive and emotional about the transit side as we've been about the road side.

MR. MORRIS: One thing I would encourage you to do, as people come before you -- and you're not getting delegations anymore to ask for more because that's all held in the regions now; you're going to have status reports from different regions, I think we're starting in March -- I would litmus test each one of them with not just what are you doing on innovative finance, what leadership are you playing in your own region -- it's not as sexy, it's not as exciting, people don't wear $600 suits in the transit operations business -- but what are you doing to deliver seamless transportation for all citizens of Texas.

MR. WILLIAMSON: That's a good suggestion.

MR. MORRIS: If you could help do that as they come forward, that will help us, as staff, try to press central purchasing of equipment or common purchasing, or maintenance agreements, or a whole host of upgraded scheduling software. There's dozens and dozens of things that are going to be implemented. And you don't have to tell them what the right answer is, you've just got to keep pressure on that they've got to make improvements that make sense for their part of the state.

Thank you.

MR. WILLIAMSON: Thank you, Michael. We appreciate it.

(Applause.)

MR. HALE: Finally, I'd like to ask your indulgence for a moment. I've got a group of TxDOT employees here that came up here, and I want to recognize them, if I could. They're from Navarro County, and this group was awarded the Texas Public Employees Association Unsung Heroes Award. When the governor authorized county judges and mayors to order mandatory evacuations during Hurricane Rita, this group was part of the group that was in line along 45 to take care of that.

With a massive flow from the Gulf region northward in this area, and we were required to have contra-flow through the 45 area coming up I-45 through Navarro County, we had a unique challenge there, we had no frontage roads in some of the areas right there and we had it under construction with two lanes of traffic in one direction in the opposite that it should have been, and we had one lane in the other direction, and we had to get it to where we had two lanes in each direction at a curve.

MR. WILLIAMSON: Where was this?

MR. HALE: This was down in Navarro County on Richland Creek, we were under construction around Corsicana.

MR. WILLIAMSON: Interstate 45?

MR. HALE: Interstate 45.

MR. WILLIAMSON: Did you say there weren't any frontage roads?

MR. HALE: Weren't any frontage roads in the area.

MR. WILLIAMSON: I thought you told me Interstate 20 through Duncanville was the only place there weren't any frontage roads.

(General laughter.)

MR. HALE: Which caused a problem because it had to go way out of the way for a detour. We had the construction. I talked to the area engineer down there, Darwin Myers. We had it under construction so we had to move traffic under bridges and on the opposite side of the roadway to come out to where we had two lanes of traffic coming out of town, and we had to turn around and do the same thing going back, flipping traffic to make sure we had two lanes of traffic. So we had a balanced lane maneuver on contra-flow coming out of the Gulf region, and then we turned around four days later sending them back down to that area.

And this group went out there and took care of that. They worked the construction zone, moved a single southbound lane to northbound traffic side. While converting the traffic to try to keep it flowing, they provided water and gasoline to stranded motorists, giving direction and travel information, serving a displaced and sometimes irritable public -- a lot of irritable public, and 14-hour days for seven consecutive days.

The result was the public was served by outstanding public servants. They were recognized and thanked by county, DPS, cities and citizens and the media, and they received the Unsung Hero Award which was richly deserved. It is my honor to ask this group from TxDOT from Navarro County Maintenance Section, led by Darwin Myers, to stand up and be recognized.

(Applause.)

MR. WILLIAMSON: The next agenda item is our federal legislation, Coby Chase. Coby Chase is our director of legislative affairs, and I believe, Coby, we have a discussion of our federal legislative priorities.

MR. CHASE: We do. Good morning. For the record, my name is Coby Chase, and I'm the director of the Government and Business Enterprises Division at the Texas Department of Transportation.

Today is my third appearance before the commission to discuss the formulation of your legislative priorities for the first session of the 110th United States Congress. Initially, this was to be my final discussion of your 2007 federal agenda, but in deference to the two new commissioners, I've requested to extend our conversation another month. My intent 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.

A new timetable for adopting the 2007 federal program also allows us to continue receiving public comment on our priorities. The draft agenda will remain available for public feedback on our website, www.txdot.gov, until the close of business Friday, February 2, a week from tomorrow.

Today I will provide an overview of the agenda in its current state and report to you on some of the reaction we've received so far, the public comments we've received so far. Next month the agenda will be brought to you for final adoption.

Since we last met, the 110th Congress has convened with new majorities in both chambers. Congressional transportation committees have a long history of bipartisan cooperation with conflicts arising out of regional- or population-related factors more than partisan. However, with the Highway Trust Fund likely to bankrupt near the end of this decade -- actual predictions vary from 2008 to 2010 --

MR. WILLIAMSON: May we hone in on that for a moment?

MR. CHASE: Yes, sir.

MR. WILLIAMSON: Michael Morris alluded to this. Some of the people I hoped would hear this are perhaps not here anymore, but when we say the Federal Highway Trust Fund will bankrupt, and what Mr. Morris meant that was negative, is receipts from the federal gas tax will fall below distribution as required by the states.

MR. CHASE: Yes. What it means is when they passed SAFETEA-LU, what they had promised to distribute to the states, there will not be enough gas tax receipts to fulfill that promise.

MR. WILLIAMSON: Those receipts will not be enough to supply that amount of money.

MR. CHASE: Right now in the United States Senate, Senator Johnson is circulating a letter and convincing his colleagues to put pressure on Appropriations to honor those levels, and our Senator Hutchison has signed on to that effort to do that.

MR. WILLIAMSON: Senator Hutchison signed on the letter?

MR. CHASE: Yes, she signed on to the letter.

MR. WILLIAMSON: Well, our hat's off to her.

MR. CHASE: Yes.

MR. WILLIAMSON: Let's send her a letter and tell her that: Our hat's off to her.

MR. CHASE: Yes, sir, we will, absolutely.

And as I've been around the Federal Highway Trust Fund a number of years, in the past it's gotten close and I think a lot of people would hit the alarm button, but this time it really does seem that there is a problem, there truly is a problem.

MR. WILLIAMSON: So it's like a Chapter 11 bankruptcy: you just can't meet your debts. It's not a Chapter, what is it 5, where you liquidate?

MR. CHASE: Correct, yes, sir.

Our concern is that the new Congress might express a preference to rely heavily on the gas tax. We must educate both sides of the new Congress on the benefits we have 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 -- two things that we worked long and hard on with a number of people in D.C. to accomplish in SAFETEA-LU.

As you review the 2007 draft report, you will note that all of 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 restate our call for a national transportation system with real defined goals; those goals do not exist currently. This underpins the actions we intend to take on the federal level this year.

Under highway funding priorities, improved funding flexibility. When we talk to our federal partners about the future of funding Texas's transportation infrastructure, the watch word will continue to be flexibility. We are continuing our work with the National Surface Transportation Policy and Revenue Study Commission -- or as it's called, the 1909 Commission -- 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.

As many of you know, our own Steve Simmons, our deputy executive director, was named to the 1909 Commission's Blue Ribbon Panel of Experts. This technical advisory panel will hold its first meeting in Washington on February 6, and I'm sure we couldn't have a better representative than Steve -- of course we can't, he's my boss.

(General laughter.)

MR. CHASE: Transportation infrastructure investment. It's not news to anyone in the room today that transportation is in need of additional sources of capital. SAFETEA-LU expanded our ability to issue debt and eased a variety of associated restrictions allowing 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 in toll roads from income taxation.

While we are committed to engaging the creativity and innovation of the private sector to help us develop and manage our transportation assets, including inviting foreign investors to spend their money in Texas, the state's roads will be built by Texans, used by Texans, and owned by the State of Texas in every single circumstance. I want to repeat that because there is continued concern that Texans may sell its roads to the private sector or even a foreign country. We own our roads; that will not change, not now, not ever.

MR. HOUGHTON: Coby, I hate to interrupt you, but I think three of us are not working with any of your notes, so we're not following along.

MR. WILLIAMSON: Give us a moment and we'll get caught up. As always, you're just too fast for us.

MR. HOUGHTON: Well, we don't have your notes.

MR. CHASE: Well, you know, a blessing and a curse. I am on page 6.

MR. WILLIAMSON: Note: Speaker may deviate from prepared text. Now I understand.

MR. CHASE: That would explain everything.

MR. WILLIAMSON: Does this mean you're a deviant?

MR. CHASE: No. It doesn't say the speaker is a deviant, it just says the speaker may deviate from prepared text.

MR. WILLIAMSON: Mr. Holmes and Mr. Underwood are probably wondering right about now.

MR. CHASE: Yes. Welcome to the commission.

(General laughter.)

MR. CHASE: At the bottom of page 6 under Private Activity Bond Refinement, that's where I'll pick back up again. One of the keys to our successes with the tools we were given in SAFETEA-LU is the expanded use of private activity bonds. PABs, as we call them, reduce financing costs due to the exemption from federal taxes and are used to attract private investment for projects that have a public benefit.

Late last year the U.S. Department of Transportation informed us that Texas can move forward with plans to raise more than $1.8 billion for work on State Highway 121 outside of Dallas, so once again, Texas is leading the way, and once again, the Metroplex is leading the way for the nation in applying these new innovative tools.

MR. HOUGHTON: Can I ask you a question on private activity bonds?

MR. CHASE: Yes, sir.

MR. HOUGHTON: Was it flawless when we made that application to the Federal Highway Department of Transportation on 121?

MR. CHASE: Was it what?

MR. HOUGHTON: Flawless. Did we have to jump through certain hoops to meet certain requirements for the use of those bonds?

MR. CHASE: I believe so, yes. I would defer to James Bass on that.

MR. HOUGHTON: Bass is giving me a thumbs up in the back of the room.

MR. CHASE: It was flawless, or there were a lot of hoops.

MR. HOUGHTON: There were a lot of hoops.

MR. CHASE: It was flawless.

MS. ANDRADE: Coby, I have a question.

MR. CHASE: Yes, ma'am.

MS. ANDRADE: So when we draw down these private activity bonds, it's for a specific project.

MR. CHASE: Yes, ma'am.

MS. ANDRADE: Thank you.

MR. CHASE: To make sure we can maximize the use of PABs, we want to improve both the legislative and regulatory environments to encourage transportation investments. Actually, they're very healthy tools but they can be fine-tuned or upgraded. We are working to address an obscure provision in the U.S. Tax Code that may inadvertently curtail our use of PABs just a little bit. It doesn't prevent their use but it does appear that it limits their full potential. The provision would invoke arbitrage limitations on project revenue, such as concession agreements. There are also issues with regard to the sale of bonds and its application to toll a right of purchase and the use of PAB funding for reimbursement for existing project development.

So we will continue to work with our financial partners and others to make sure that when we say TxDOT is open for business, we will have the most attractive environment possible for the investments we need to meet our mobility needs.

I should note that our work on PABs and other financing issues will not solely benefit Texas. The rising tide of investment in transportation will lift the boats of state DOTs across the country. And we will be working with other states on refining these PAB issues, it's not something Texas will do alone, but it will require a lot of work with other states and spread our resources thin.

Tolling authority expansion and public comment. SAFETEA-LU also expanded the ability of state DOTs to utilize tolls and we will continue to advocate for the reduction of restrictions on tolling nationwide. I doubt it will surprise you to learn that the issue of tolling drew a number of comments from the public. The discussion of tolling is valuable because it shines light on people's broader concerns about mobility in our communities.

We received several comments from Texans who said broad-based tolling would not be necessary if the state's highway fund had not been raided -- I'm using their words; it was an often repeated term -- had been raided to pay for other government priorities. Respondents also lamented that we are in our current state of affairs because the gas tax has remained unchanged for years.

We are still confronted by the argument that tolling state highways constitutes a double tax on the state's drivers. I think the ball is in our court, as an agency, to continue to explain to the public the integrated role of multiple funding sources from taxes to user fees in paying for transportation, whether it's activating a TxTag or putting a quarter in the fare box on a DART bus.

One concern that I had with some of the replies was the repeated myth that TxDOT could swoop down on a city and impose tolls on their existing roadways. Please allow me to repeat, Texas state law prohibits the tolling of an existing lane of road without local vote or approval.

We wrote back to several citizens who told us they opposed efforts by state or local agencies to buy back portions of federally funded interstates so that they could be tolled in order to fund local mobility projects. The Houston-Galveston Area Council took the time to note their support for allowing buy-backs, while restating their belief that existing lanes should not be tolled.

We asked people who wrote us whether they thought it would be an acceptable policy option if the purchase was first approved by the county's voters, or the conversion to a toll road. The most common reply to that proposal was a flat rejection of tolls of any kind. Knowing that it would require voter approval anyway -- that's what state law requires -- they just rejected the entire notion of a toll, so it was just rejection of tolls more than it was anything else.

On the other hand, one commentator criticized us for not being assertive enough in calling on the Congress to allow tolling -- which is kind of alarming telling that to a Texan, or at least TxDOT. The alternative, it was written, was that public officials would have to answer to voters as being part of the problem of inadequate roads and congestion. That was kind of an interesting comment.

Design-build contracting. TxDOT worked hard during SAFETEA-LU to allow for the use of design-build contracting. Although the currently proposed rules from the Federal Highway Administration actually impose cumbersome restrictions that would further delay critical projects, TxDOT has worked closely with its partners in Texas and across the country to effect a positive outcome on the next set of rules. We expect them to be released by FHWA early this year.

Authority to purchase federal contracting dollars. We are also interested in 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. We would propose amending federal law to provide a state authorization to purchase another state DOT's unused federal contract authority prior to its lapse date.

Last month Chairman Williamson asked whether any states risked having their federal funds returned to the FHWA. Currently there are no states in that position. There were a number of years ago when we first proposed this, but right now there aren't. The states have found themselves in this bind in the past.

Next topic, reform enhancement funding. One financing challenge we are confronting has received a considerable degree of discussion. The Federal Transportation Enhancement Program forces TxDOT to use 10 percent of our surface transportation program funds on projects like bike paths and historic preservation. Obviously, several groups around the state were disappointed with TxDOT's recent decision not to move forward with funding for enhancement projects. As you've all said, we did not make that decision lightly, it reflects the funding challenges we face as a state. 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 Demonstration projects that come our way, we've asked for public input and your guidance. We have received very little public comment on this matter, but what we did receive was supportive of our position that demonstration projects should comport with local planning processes. The Midland-Odessa Transportation Alliance accurately noted that while many authorization earmarks do more harm than good, other requests -- those that reflect a region's needs and priorities -- through the appropriations process can be helpful. The reality is that these projects can be corrosive.

I know you've said that you're taking a long hard look at whether or not some criteria need to be met before you will release any funding to demonstration projects in an effort to focus our resources on meeting our goals. We are still looking for the commission's guidance on this matter.

And now I'd like to take a moment to review some of our intermodal priorities.

Federal aviation reauthorization. This year Congress will begin its work on an aviation reauthorization bill. Our priorities will stress the need for a more stable source of funding for our general aviation airports and oppose the diversion of funds from the Airport Improvement Program to other initiatives that should not be financed out of the pockets of general aviation facilities.

Water Resources Development Act. Congress will take another stab at reauthorizing the Water Resources Development Act in 2007. Congresswoman Eddie Bernice Johnson -- whose district we are in at the moment -- of Dallas now chairs the Water Resources Environment Subcommittee in the House and we are hopeful that this will be the year WRDA -- as it's called -- passes. TxDOT has a list of priority projects for Texas, but more importantly, we want to ensure adequate funding for the continued operations and maintenance of the Gulf Intracoastal Waterway.

On transit issues, we are working closely with our state's public transportation operators to make sure that they have the resources they need, including possibly creating regional maintenance facilities that would relieve local providers of many of their training and maintenance costs. I would also note that several people who took the time to comment on our federal agenda strongly endorse supporting more public transit to relieve congestion across our state, and we certainly agree.

Also, we will raise the issue of funding for rail relocation with Congress. SAFETEA-LU included a modest rail relocation program but the federal government has yet to provide funds for it. We will continue to push to fund the program as well as receive federal support to meet our rail needs in any way possible.

On the border we will continue to expand and improve our infrastructure to facilitate the secure and efficient movement of people and goods. We are committed to working with our partners at the state and federal levels to ensure that traffic moves through our ports briskly while doing our part to ensure that our borders are safe.

This concludes my report on the commission's draft legislative agenda. This is an ambitious agenda for what many in Washington might call an off year for transportation. We'll be out talking about these issues in a different environment than the one we've had over the past several years.

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've made and build on those gains, and there's plenty of work to go around.

We look forward to input from all of you and additional comments from the public before we return next month to finally adopt the report.

Those are my prepared remarks for today. As always, I'll be happy to answer any questions you may have.

MR. WILLIAMSON: Members, before we pose questions or have dialogue with Coby and with each other, no doubt, Coby, because of some recent press inquiries I've had, and the new commissioners might be asked about our federal lobbying effort, it probably would be appropriate to speak just a moment about the commission's commitment over the past years to employing people to represent us in Washington, D.C.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: Anything you wish to share with us?

MR. CHASE: We have a multi-billion dollar portfolio in Washington, D.C., we're one of the biggest of the big, and that attracts a lot of attention and it requires a lot of full-time support. We work with other states, we work very well with our Congressional delegation, we work with the United States Department of Transportation, but we have limited staff and limited time and limited personality sources to do that, so we have engaged the services of different firms to help us with our message in Washington, D.C., and the successes have been very, very good. We're very pleased with the amount of money we pay versus the things we see in return for the state.

MR. WILLIAMSON: Do we engage only Democrats?

MR. CHASE: No.

MR. WILLIAMSON: Do we engage only Republicans?

MR. CHASE: No, sir.

MR. WILLIAMSON: Do we engage only Liberals?

MR. CHASE: No, sir.

MR. WILLIAMSON: Do we engage only Conservatives?

MR. CHASE: No, sir.

MR. WILLIAMSON: We engage the full range of people who represent our interests?

MR. CHASE: Yes, sir.

MR. WILLIAMSON: And we've always been public about that.

MR. CHASE: Yes. It has been addressed a number of times in public settings.

MR. WILLIAMSON: And in the last authorization bill, what's your estimate of the net gain to the State of Texas as a result of that effort, dollar-wise? Don't you hate it when I ask questions you don't know are coming?

MR. CHASE: Hate is such a strong word.

MR. WILLIAMSON: I can't win, Jackson.

(General laughter.)

MR. CHASE: It would be in the billions of dollars, but it's kind of funny, people who are casual observers of what happens in Congress make the mistake of measuring success by the number of pork barrel earmark projects that happen to appear without taking the time to understand what that actually does.

We measure success by: the fact can we build our projects faster; can we bring private activity bonds here to the Metroplex region to get that infrastructure moving along quicker; do we have more flexibility in how we spend our money. And they're things you never read about in the press that occur. Why did donor states get a better rate of return this year? Nobody asks me that question. And it's because of the people we employ and Texans who don't take credit for some of the work that they do.

Transportation development credits -- which is something you'll learn more about as time goes on -- used to be called toll credits. The more tolling that occurs in a state, it frees up some flexibility to do things, and I personally feel it's going to be very important to transit providers in the states. Design-build rules, this sounds abstract and kind of odd, but if the federal government would just recognize that states have a process that keeps us all out of jail and keeps everything legal and above board, we can do this a lot faster.

It's those kind of things. It's not just the partial investment in a project that's going to cause us to have to spend many, many millions of more dollars, it's the tools that we're using today that makes Texas the model that we are. It's keeping a congressman from Minnesota from clobbering through all the tolling programs in the last congress to make sure the states couldn't do anything. So it's lots of things.

It's hard to give an exact dollar amount but you could easily estimate it over many billion.

MR. WILLIAMSON: Some of it might be used to counter -- I like the word you used "corrosive" -- to counter the corrosive effects -- and I know it's going to be a shock to you, new members, that this happens -- of people who come to Texas, collect money from cities and counties to go to Washington, D.C. and purposely try to route money away from our apportionment to their special projects without even telling us what they're doing.

MR. CHASE: Absolutely.

MR. HOUGHTON: Speaking to that, though, have we come up with a policy yet that that will count against the allocation to those regions?

MR. CHASE: I'm not aware that that has occurred.

MR. HOUGHTON: I know we've been talking about it but we have not yet.

MR. WILLIAMSON: Amadeo, are you here? Have we begun to talk to our MPO partners about that?

MR. SAENZ: (Not at a microphone.) No, sir. We're waiting to kind of get some direction from Coby and the commission.

MR. HOUGHTON: Well, they can go to Congress all they want to and do these things, but I think that should have an effect back home.

MR. CHASE: There's a misconception/misperception -- whatever the word is -- that they're bringing money home to Texas. They're not. They're pre-dividing money that was already coming to Texas that would be spread out through the system that everybody would benefit from.

And if I may editorialize for just one moment about this lobbyist discussion. It seems to be capped in terms of the effectiveness of the Texas delegation. We're the most effective delegation in Congress, no two ways about it, but they represent only about 6 percent of everyone up there in Congress. They are maybe not outgunned but certainly outnumbered. It isn't like the Texas Legislature where every single member of that body wakes up every day thinking what he or she can do to better Texas, only 6 percent of Congress thinks that way every morning. And so we have lots of places where we have to continually fight the battle on behalf of Texas, and bringing in some very good talent to do that has been a tremendous asset to the state in advancing our priorities there.

MR. WILLIAMSON: And Amadeo, I wouldn't want to mislead you, we don't want to be arbitrary about that, we want to engage our MPOs in that discussion. I think they're all familiar with the problem we face, but we don't want to just unilaterally apply that standard, we want to engage them in a dialogue about it.

MR. CHASE: And let me say something on behalf of MPOs -- unless one in the room wants to correct me -- all my conversations with almost every MPO in the state at different times, I don't think that they would disagree with the demonstration projects, I think they feel exactly the same way we do.

MR. WILLIAMSON: Do you need to say something, sir?

MR. SAENZ: Yes, sir. For the record, Amadeo Saenz. Our approach is to approach it very similar to what we did when we put the working groups together: bring the MPOs in and then sit down and discuss the problem and have them come up with some potential recommendations for us, as well as some recommendations that maybe we can suggest and then put together a package for you all to consider.

MR. WILLIAMSON: Are we not bringing the MPOs and the RMAs together shortly?

MR. SAENZ: We have a meeting with the RMAs and the MPOs, I believe, on February 12. We had it on earlier but we were kind of iced out.

MR. WILLIAMSON: Well, that might be a good time to bring it up and start the dialogue.

MR. SAENZ: Yes, sir, we can do it then.

MR. WILLIAMSON: For the benefit, then, of our two new members, this is now your opportunity to ask questions or to speak what you think you believe in about these matters in -- I think our general counsel would say -- a legal and above-board and open meetings type way. We can't make a decision on a discussion item but we can dialogue, and in particular we can dialogue with staff. So whichever one of you wants to go first, if any, please have at it.

MR. HOLMES: I think there's a general impression in some parts of the state that the special earmarks for demonstration projects are additive to the Texas share, and have we begun to inform those various groups that that is not the case, and we have good documentation that they can understand and believe that?

MR. CHASE: Yes, sir.

MR. HOLMES: That would seem important.

MR. WILLIAMSON: You know, I feel very uncomfortable saying much to you about how we operate because you've been on one of the larger agencies already, both of you are independent business people, you don't need me telling you how to do things, but we're generally on a first-name basis and we generally interrupt each other and kind of talk like this. So I'll just interrupt, Ned, and say our experience, this is really a bizarre situation.

You would think that every congressperson and the two United States senators would know instinctively when someone is employed by -- I'll just use your hometown -- the City of Houston and they're paid $50,000 to go to Washington, D.C. and get a demo project for $4 million for a bridge, you would think that whoever they are talking to would know, well, the $4 million is coming out of the common pot. But it's almost like we tell them and we tell them and we tell them, and they don't know it, and then the $4 million gets cut out of the common pot for a $50 million project and then that congressman or senator calls and says, When are you going to start the bridge? Well, first you cut the pot $4 million -- in other words, you took money away from Duncanville for Houston -- and then you want us to put $46 million more with it to finish your project; why didn't you call Ned and ask him about it? Well, you know, Joe came down and told me it's what the City of Houston wanted.

It's just bizarre. I don't know any other way to describe it.

MR. HOLMES: I think there's a general misunderstanding. I certainly shared in that misunderstanding until we talked about it a couple of days ago.

MR. CHASE: If I may, in your previous life as the chair of the Port of Houston Authority, and I talked a little bit about the Water Resources Development Act, and whatever the port's priorities are in Washington are our priorities, but we fall behind them on that, and that bill is called WRDA, and in WRDA, that's how they fund projects but it's a very different dynamic. They're entirely funded through WRDA, it isn't like you've got to come back and match it '90 percent, or go take it away from the Port of Corpus Christi to finish yours, it's a very different dynamic.

The Surface Transportation bill operates on a very -- it's not a zero sum game, it's a constant sum game. We're not taking from California or New York or Minnesota, we're taking from other people in Texas to build things. And that was Commissioner Houghton's question: How does this impact the money that the MPOs got together and guaranteed to distribute to each other? Well, it's got to come from somewhere. If Houston, for instance, had all the demonstration projects in SAFETEA-LU -- I'm exaggerating, for anybody listening behind me -- it has to be paid for by somebody else in Texas, and that's kind of the problem we have.

I just want to leave with the impression we will be fighting for those earmarks in WRDA because it's a very different system.

MR. HOUGHTON: I did note that the president mentioned earmarks in his speech on the State of the Union.

MR. CHASE: Didn't he also mention cars that don't use any gasoline too?

MR. HOUGHTON: Yes.

MR. CHASE: There you go. There was a little bit of something for all us in that one.

(General laughter.)

MR. WILLIAMSON: You know, it's kind of funny, we started four years ago from the dais, Fred, about our belief that the collections from the gas tax receipts were going to go down, inevitably go down, and we've recently had our figures about the future challenged by a report done by someone on the outside with some help from some inside experts, and we got to looking into their report and we realized that it was based upon an assumption that the gas receipts would continue to go up and that miles per gallon would not get any better -- which caused us some pause. And as we worked through that particular report and tried to explain it to our partners across the street, the president gives the State of the Union and informs us that not only are miles per gallon going to get better but 20 percent, or whatever, of our fuel is going to suddenly come from something that is not taxed like gasoline is taxed.

So anyone that's in the transportation world that has any doubts about the shift away from a fuels-based revenue system to a user-based revenue system probably ought not to have doubts much longer.

MR. CHASE: The world is changing. It used to be very easy, you'd just go back there and look at CAFÉ standards and they never moved but they never looked ahead either, and what industry looks at are figures that will really show you how fuel efficiency is going to be, and we have to pay attention to that because still the bulk of our money right now under the current gas tax system comes from rewarding the consumption of gasoline not for how much congestion you cause or using a system, using the road system, it's how much gasoline you can consume. So my Expedition pays more to be on the road than your Yugo does -- if they even make Yugos any more -- and causes the same amount of congestion, probably more because I can carry more people.

So that's kind of the big picture problem we struggle with, but most recognized experts in the industry, at any rate, are looking at vastly different miles per gallon than what is kind of a lagging indicator CAFÉ standards.

MR. HOLMES: Mr. Chairman, you mentioned a study where industry looked at the increasing efficiency of the national fleet, as it were. I would enjoy looking at that -- or maybe I wouldn't enjoy it but I would like to look at it, anyway.

MR. WILLIAMSON: Well, the problem is any report that relies upon a projection of the CAFÉ standards as a basis for concluding that gas tax receipts are going to go up because mileage is not going to improve completely ignores the impact on Michael Morris's household budget when gasoline went from a buck fifty to three bucks. I mean, I am -- as is probably well advertised -- a big believer in market forces, and I just think it doesn't matter what the CAFÉ standards are projected to be. When Lawrence Olson is paying three bucks a gallon for gasoline, he's going to drive fewer miles and he is ultimately going to buy a more fuel efficient vehicle. That's just how people react, you know.

MR. CHASE: And in the last four or five years this became reality, it's still something that is still fairly new by all of these standards, but it's a very different reality than it was five years ago and not everybody has kept up with it.

MR. HOUGHTON: I have one question -- and this probably includes James Bass -- regarding PABs. And James, you may want to come up here and answer this since you have been involved in most recent procurement of the use of PABs as to their positive effect on that procurement to the proposers, if you can say anything.

MR. BASS: For the record, James Bass, chief financial officer at TxDOT.

I think we shall soon find out what that benefit is and be able to quantify it, but generally, what it allows the private sector to do is to invest in public infrastructure, public works projects at tax exempt rates, their debt is tax exempt, rather than having to do it at taxable. What that does is lower their cost to do the project which increases the value of that project in the investment and the value coming back to the state, to the region to build other infrastructure.

MR. HOUGHTON: Now, the concerning news was tax law, potential tax law problem.

MR. BASS: Correct.

MR. HOUGHTON: Do we know any more about that issue?

MR. BASS: We have a Plan B and a Plan C to get around that. Plan A is for Congress to do a technical correction to the bill, however, we're not sure of the timing of that technical correction, so we're moving and working on a Plan B and a Plan C if the timing doesn't work out that we'll still be able to move forward and not diminish the value of the project.

MR. WILLIAMSON: Would you like to share with us what Plan B and Plan C are at the executive level?

MR. BASS: Yes. The issue comes into the arbitrage, as Coby talked about earlier, on private activity bonds because, if you think about it, the Treasury did not want this tax exempt benefit going to people and then they just sit idly on the cash and then invest the money in taxable securities and make money off the deal. What wasn't really thought about is concession projects for transportation projects, and if the commission or a commission-created entity served as the conduit issuer and then received a payment for that project, what they would look at -- and these are completely made up numbers, not assignable to any project -- without PABs the up-front payment might be $600 million and with PABs, private activity bonds, it might be $900 million. The IRS would take that $300 million and assign it as an investment to the commission or commission-created entity and put us over this arbitrage limit, and so we're trying to get that corrected.

Now, if we have a local government corporation made up of the counties that are in that area where the project is, they can be the conduit issuer, the state receives the money which flows back to the region and there's no such limit on that. However, long term for the program going forward, it seems more efficient to manage it as a one central statewide conduit issuer for the entire state rather than having to have different entities created throughout.

MR. HOLMES: Do I understand, in reading this, that the total PAB block for the entire U.S. is $15 billion?

MR. BASS: Yes, sir. We received 12 percent of the national allocation for our first project.

MR. HOUGHTON: Were we the first?

MR. BASS: We were the first, yes.

MR. HOLMES: Is there an opportunity for Texas to receive an additional allocation?

MR. BASS: Yes. We have visited with the staff at US DOT on private activity bonds, and they are anxious and excited to show successes of the program, so Congress will continue the program, if not expand the program. So they are anxious to see projects that are near-term, ready to go that can use this and show the benefit to Congress to hopefully expand the program. So we told them we would be happy to work with them and to get them plenty of applications.

MR. HOLMES: Are there any other states that are close behind Texas in having a project approved?

MR. BASS: I'm not sure about approval. I've heard of a couple others that have been working on applications. Some others that are working strongly in public-private partnerships are Virginia, Florida, Georgia, as well, and then on the West Coast there's California and Oregon and Washington as well. I'm not sure that anybody is pending an approval, but to date we've been the only one.

MR. WILLIAMSON: I think it's safe to say, Ned, based on our various -- we all have lines of communication, and you'll develop them too, across the country, but I think it's safe to say that we're of the opinion that there's no state even close. I mean, we're way out ahead of the pack.

MR. BASS: And I would echo what Michael Morris said earlier, at the Transportation Research Board meetings or conference earlier this week in Washington, D.C. there was a lot of discussion and a lot of focus on what is going on in Texas and a lot of people wanting to pull you over to the side to get more details and to learn what the commission has done in the state.

MR. WILLIAMSON: And the legislature and the governor.

MR. BASS: Yes, sir, and the governor.

MR. WILLIAMSON: The floor is still open to members.

MS. ANDRADE: Coby, I have a question. As I travel throughout the state, I think people have gotten the message about how we feel about federal earmarks, but I think there's still a question on the enhancement funding. It's not that we're anti-historic preservation, it's just that we don't want it out of our TxDOT dollars because they're limited. Are we doing a better job of communicating that message or educating?

MR. CHASE: Well, I'm glad you brought that up. I didn't really go into it in much detail, but we made some headlines and got a few phone calls recently --

MS. ANDRADE: So have I.

MR. CHASE: Yes -- when the decision was made not to have an enhancement program, and the reason for that is -- and I didn't really touch on that enough here -- as the Congress struggles to pay for things like wars in Iraq, wars on terrorism, hurricane relief, whatever the case may be -- with no judgment on whatever it is -- they don't have enough to pay for all of those, and so they ask different programs to send back money or rescissions. And over the last year -- I would say now it's the last year and couple of months, Texas' transportation share of that from the money that we commit out to the regions was $305 million, and it's proportional, it wasn't that percentage-wise we got hit any worse than say North Dakota, or whatever the case may be, but it's a lot of money. And if I had to guess -- and there's not much guessing -- they're going to be asking for more money back so they can pay for their priorities in the budget.

And the decision was made by the administration that instead of either slowing down projects under construction or compromising safety or maintenance, or whatever the case may be, states were given the latitude to choose where the money came from with the exception of a couple of categories of funding. And the internal debate was which programs have the least connection to our five goals, and it was the enhancement program. The enhancement program was created in 1991 in ISTEA, and what it does is it takes 10 percent of all your surface transportation funding money, and if you don't spend it, you lose it, but you can't spend it on congestion relief, you spend it on tourism-related projects, hike and bike trails -- no comments on that, those are very important to some communities. But it does have the least connection to our current set of goals, so it was decided that would be our rescission.

Now, we have spent a lot of time on the phone, a lot of conversations back and forth with members of Congress about why that occurred, and I think they understand it was not pleasant, but nothing was going to be pleasant, and it certainly focused attention on the funding crisis we have around the country

MS. ANDRADE: Thank you.

MR. WILLIAMSON: But you know, Hope, I think it would probably be instructive for Ned and Fred because I'm sure they're going to get hit about this. You can take the same set of information and you can interpret it many different ways, however you wish to, and I think maybe sometimes people with evil in their heart try to interpret it as something it's not in order to make someone look bad.

The reality is the enhancement program didn't exist until the national highway system had basically been built across the country and states woke up in 1990 and realized that to keep their proportionate share of the reauthorization every six years, they were going to have to invent ways to convert transportation taxes to something else, and so one of the ways they invented to do that was the enhancement program.

Now, there's some people in the audience, I'm sure, that are in the bicycle world, there may be some people in the audience that are in the museum preservation world, there may be some people in the audience that are in the roadside park world, and they'll say, No, Congress, they cut that money aside because they intended it to be spent on parks. Well, no, they cut the money aside in 1991 because the only way a recipient state that's not growing, that has its transportation system fully built out could figure out how to defend continuing to take 4 percent of the funds instead of 3 was to invent other places to spend that money, to build a coalition to hold the votes together to keep the apportionment like it is. That's the reality.

So when the federal government comes along, they apportion it back to us. What's the true apportionment to transportation, Coby, after the transit reduction.

MR. CHASE: For every dollar we spend in gas tax, the state is guaranteed -- barring rescissions, guaranteed 70 cents of that to put back into the road system.

MR. WILLIAMSON: Back into surface transportation other than transit. So right off the bat we send a dollar, we're guaranteed 70 cents back, but then they take 7 cents of that and set it aside for enhancements because that's what other states wish their apportionment to be treated, forgetting the fact that the problems we face -- while all of those things are nice and a lot of them I actually like, the problem we face is congestion.

So when we have the opportunity, when we're fixing to lose $300 million out of our total pie and the federal government says you choose where you want to take the loss, we chose to take it in the area that had the least impact on foul air in Houston and job development in Amarillo, and for that we have been complimented many times.

(General laughter.)

MR. CHASE: Thank you so much. And since I do want to wrap myself in the Grady glow, when I first took this job almost 13 years ago, he was the very first local official I met and he hasn't stopped talking since.

(General laughter.)

MR. WILLIAMSON: Is that all, members, for Coby? Thank you, Coby. Please be sure all the members are fully advised before we have to take a vote next month.

Michael.

MR. BEHRENS: All right. Thank you. We're going to move into the rest of our agenda, starting with agenda item number 3 and this will be a rule for proposed adoption. It happens to be on private activity bonds, and James is going to lay that out.

MR. BASS: For the record again, I'm James Bass, chief financial officer at TxDOT.

This minute order proposes a new chapter in the Texas Administrative Code concerning private activity bonds. The rules will establish the process and procedures governing the submission and evaluation of applications for allocations of private activity bonds. This primarily deals with third parties such as RMAs or other entities within the state who want to receive an allocation from the US DOT. The legislature saw fit for the commission to kind of oversee that process so we don't have multiple projects in the state competing for limited allocation. These rules would lay out the process and the criteria upon which those applications would be reviewed.

If you approve, the proposed new chapter would be published in the Texas Register in order to receive public comments, and staff recommends your approval.