May 15 Transcript

Texas Department of Transportation Commission Meeting

STAFF:

MR. WILLIAMSON: Good afternoon. It is 2:12 p.m., and I would like to call this special meeting of the Texas Transportation Commission to order. It's a pleasure to have you here this afternoon.

Please note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of Secretary of State at 11:23 a.m. yesterday, May 14, 2007.

Before we begin today's meeting, please join with me in placing your pager, cell phone and DewBerry on the silent or vibrate mode so that we will not be interrupted during our important and long deliberations.

Let me remind everyone that if you wish to address the commission during today's meeting, we ask that you complete a yellow speaker's card at the registration table in the lobby. You can find your yellow card to your right. We will limit each speaker's comments to three minutes, unless you're a sitting member of the legislature, in which case you may take as much time as you need.

Mike, I will turn this meeting over to you at this point to introduce the sole item on today's emergency agenda -- no, I won't. While I have the mike, let me remind you that between July 18 and July 20 of this year we will have our Second Annual Texas Transportation Forum. You will find out at the table to your right a card kind of introducing you to the forum. If you wish to participate with us, we encourage you to take a card, fill out the information, or register with us at our online site. We encourage you to attend what is rapidly becoming the most important transportation forum in the southwest United States.

Now, Mike, I turn the meeting over to you.

MR. BEHRENS: Thank you, Chairman.

We do have one item on our agenda today and that concerns an amendment or a waiver to the protocol that was established between the department and the North Texas Tollway Authority.

At this time, I'd like Amadeo Saenz to lay out this item before the commission.

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

This item today is a minute order we're presenting to the commission that will waive the inconsistent requirements in the TxDOT-NTTA regional protocol for the limited purpose of allowing the NTTA to submit a binding commitment for construction and operation of State Highway 121 in Collin and Denton counties to the Regional Transportation Council, or the RTC.

If you recall, this agenda item was before you last month and it was deferred. Since that time, on May 7 the NTTA board has approved the NTTA submission to RTC of the public sector proposal for 121, and also on the 14th of this month we received a letter from the RTC; the letter requested the commission to take action to waive any provisions in the protocol prohibiting NTTA from submitting a proposal on 121.

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

This minute order before you will waive those provisions of the protocol and allow NTTA to submit a proposal. Staff would like to answer any questions.

MR. WILLIAMSON: What's your recommendation?

MR. SAENZ: Our recommendation, sir, would be that if the minute order be approved that will waive the provisions on 121 that would allow NTTA to submit a binding commitment to RTC. It also would order the executive director to go ahead and authorize and direct a letter to NTTA that provides for the same purposes described in the above what I just talked about consistent with the agreement that we enter.

MR. WILLIAMSON: In the above what you just talked about -- I just want to know what you're recommending. Are you recommending that we pass this minute order?

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Very good.

Members, you've heard the staff's explanation and recommendation. I'm sure there's no reason to have any discussion.

Go ahead, Mr. Houghton.

MR. HOUGHTON: Well, let's revisit the protocol and talk about it a little bit and how this was born. Can you describe how this was born?

MR. SAENZ: I'm going to go back. The protocol came about as we were working on developing the 121 project with RTC. The project is a project in Denton County and Collin County. Part of the Denton County project was under construction, part of the Collin County was under construction, but the remainder of the project through Collin County was not scheduled to be constructed for a long, long time. In fact, it was not even in their long range plan.

Working with RTC, we identified to use the tool of CDAs to develop this project, and at that point the NTTA also became interested in the project and there were several meetings at the RTC where NTTA submitted proposals to the RTC that would be compared against a CDA comparator because we didn't have proposals yet. The proposal actually comes from the actual procurement.

So as we went through, the RTC decided that the CDA process would be the way to go but that they would give the opportunity to NTTA to submit a public sector comparator. We moved forward to that direction, but during the process, NTTA said that they could not meet all the requirements that were in the CDA procurement, so they chose that they would instead be the operator. And we guaranteed them that they would be the operator for five years, and that became some of the impetus that went to developing of the protocol of how we were going to develop projects in the region.

We identified the protocol to address not only the 121 project, but also several other projects that are being developed by the department, for example, the 161 project, a couple of projects in Tarrant County, the 820-183 project, the Funnel project, back in Dallas the LBJ project, and then also in that protocol we identified some projects that NTTA would be lead to develop those projects through their own process. That was the President George Bush Eastern Extension, as well as the Trinity Parkway -- Trinity Parkway was one that would be developed later -- but Lake Lewisville Bridge and the Southwest Parkway are in Tarrant County, which is an extension of 121.

For those projects, they were going to develop them using their model; for the project that I mentioned earlier, they would follow the CDA process, and in that case, NTTA would not submit a proposal but would be the operator, mandatory for five years, and then they could negotiate with the successful developer.

That's how we went through the process. Of course, we continued the 121 to that point and then after we had received bids is when NTTA was requested to submit a proposal.

MR. HOUGHTON: Wait a minute. Let me go back a little bit. At one point in time did NTTA propose on the 121 and said it would need toll equity in a certain amount of dollars?

MR. WILLIAMSON: Be careful. He used a word that's important. He said, did they "propose," so be careful about your answer.

MR. HOUGHTON: Yes.

MR. SAENZ: They had come to the RTC and they had been asked to look at the 121 project in 2000, 2001, and at that point I believe that they were saying that project required some additional equity from TxDOT for the RTC -- but from TxDOT because that was the model that was being used back then -- to construct some of the structures. At that time there also was an issue of whether 121 would be developed as a toll project or not as a toll project. The local support at that time was to develop 121 as a non-toll project, so at that point the project needed some money.

After we received an unsolicited proposal for 121 --

MR. WILLIAMSON: Amadeo, I'm not trying to be difficult with you or Ted, but this might be the first time that we have a quorum of the staffs of the Senate Transportation Committee in our presence, and we need to be very careful about the words we use because what we say here means something to those people who will then report back to those senators.

Now, Ted said "did propose." "Propose" means something legally to us, and the answer is they didn't make a proposal.

MR. SAENZ: No, they didn't make a proposal.

MR. WILLIAMSON: And when you said local support was for a non-toll project, what I think you meant to say was those who supported building it at all wanted it built as a non-toll, but there wasn't local support for it as a non-toll project, otherwise, it would have been in their plan. I don't want to confuse anybody who is watching our actions today.

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

MR. WILLIAMSON: What little local support there was, was for a non-toll project.

MR. SAENZ: That's correct.

MR. HOUGHTON: Those protocol items, how many of those protocol items would need equity from TxDOT? We took no action last week on the extension of -- what is the action we took last week regarding a toll road in North Texas?

MR. SAENZ: The action we took last week on the toll road for the President George Bush was we took it off the state highway system.

MR. WILLIAMSON: Three weeks ago.

MR. SAENZ: Three weeks ago at the last commission meeting, our regular April commission meeting.

We have a request from NTTA to process a toll equity grant for the amount of $160 million which would cover right of way acquisition for that project. In that application, they also show that a portion of that project, the connections with Interstate 30 and the President George Bush, as well as a bridge immediately, I'm going to say, to the north of Interstate 30 would also be constructed by TxDOT. The RTC has identified that project and that project is funded through the RTC allocation. So that, in essence, would also be toll equity but it was a project that was going to be built by TxDOT through the normal process.

MR. HOUGHTON: So to make some of these projects work, it takes equity from TxDOT with the RTC and gas tax dollars to make it work.

MR. SAENZ: Yes.

MR. HOUGHTON: I consider that a subsidy.

MR. SAENZ: The President George Bush project required a toll equity.

MR. HOUGHTON: That's a subsidy.

MR. SAENZ: Yes, sir.

MR. HOUGHTON: How much money do we have in the President George Bush Tollway?

MR. SAENZ: If you base it off of the application, it was $160 million -- well, what part of the President George Bush Tollway?

MR. HOUGHTON: The one that's completed, open and running.

MR. SAENZ: The one that is open, I believe that we have somewhere about $800 million that we put into the one that's open right now.

MR. HOUGHTON: Is that roughly half, I understand?

MR. SAENZ: It's close to that number, yes.

MR. HOUGHTON: So we subsidized the tolls up there in North Texas with half in equity. Correct?

MR. SAENZ: Correct.

MR. HOUGHTON: Okay. My point is on the protocol items, when I looked at the list, it took equity to make a lot of those items work. Is that correct?

MR. SAENZ: Right. Now, the protocol items, they identified some projects specifically, like the 161, the Southwest Parkway also required some toll equity -- I don't recall exactly how much equity was required for that project -- but that required equity also that the RTC had identified with respect to projects that would be constructed either through the Fort Worth District or any future toll equity requests that would come in for the construction of those segments.

The other projects that were part of the projects that were being developed by NTTA, the Lake Lewisville Bridge did not have any toll equity. And then of course, the protocol also put in place a process of how future projects would be identified and evaluated, and then the determination would be made whether they would be developed through NTTA or through a CDA-type procurement.

Now, the projects that were being developed through the CDA process, some of those projects also required toll equity.

MR. HOUGHTON: Correct.

MR. SAENZ: For example, the LBJ project, 635, requires toll equity.

MR. HOUGHTON: Where was that equity coming from?

MR. SAENZ: That equity is coming from the RTC. Now, some of the toll equity backstop was also going to come from the CDA procurement of 121, about $200 million worth. So those projects also required some sort of toll equity.

The 820-183 project has some toll equity from the RTC to help fund part of the 820 project. The Funnel project, the project there just north of the DFW Airport that connects 114 and 121, that project is a design-build project and being funded through the RTC and TxDOT but was going to be let as a design-build comprehensive development agreement.

MR. HOUGHTON: Fair to say -- and it's a leading question -- that we've supported the actions of North Texas leadership and the RTC to build tollway projects in that region with equity contributions, whether it's connectors. In other words, if you fully loaded these projects from end to end and the tollway authority was responsible for it, do you think the toll rate would have to increase? That's a loaded question, I know.

MR. SAENZ: It would have to increase because the toll rates are set based on how much money you borrow or how much money you have to go out and bond.

MR. HOUGHTON: Right. I asked legal counsel earlier today, I have the protocol here and it talks about NTTA and TxDOT commitment to support the CDA delivery by TxDOT of SH 121.

MR. SAENZ: Yes, sir.

MR. HOUGHTON: I'm not going to ask whether you believe they've lived up to that commitment. Mr. Chairman, it's my opinion they haven't. I don't think in the spirit or the letter of this agreement they've lived up to it. But with that said, because our partner, the RTC, has asked us to do this, I'll go along with it, but I wanted to go on record because I have the language here.

And I led you through that long labyrinth to let people understand how much money has been put into equity into those projects to make them work, to keep the toll rates reduced and not fully load them.

With that, I don't have any other questions.

MR. WILLIAMSON: Mr. Underwood, I'm sure you have something to add to this?

MR. UNDERWOOD: No, not at all, thank you. I think this horse has been beat enough.

MR. WILLIAMSON: I am a little bit sensitive about what we say. I don't think in answering Mr. Houghton -- you didn't mean to declare that you have intimate knowledge of how NTTA sets its toll rates.

MR. SAENZ: No, sir.

MR. WILLIAMSON: I think what you meant to say was generally speaking, if people have to borrow 50 percent of the cost of their projects, the toll rates will be at a certain level; if you have to borrow 100 percent, the toll rates will probably be higher than that.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: But we can't put ourselves inside the minds of the NTTA board and how they set their toll rates, like they couldn't put themselves inside our minds on State Highway 130.

MR. SAENZ: That's correct. The toll rates are set and vary based on the amount of traffic that uses the facility.

MR. WILLIAMSON: But Mr. Houghton's points about equity are well made, the more the state can invest gasoline tax dollars which are rounded up from everyone into specific toll roads, the less pressure there is on NTTA or CTRMA or Alamo RMA or Harris County Toll Road Authority to raise tolls beyond a locally acceptable level. I mean, that's a logical conclusion one could reach.

MR. SAENZ: That's correct.

MR. WILLIAMSON: And I think Mr. Houghton's point that his position is that the protocol hasn't been honored by the other party but because we're honorable men and we keep our word, we will do what we say we will do.

And I appreciate that very much, Ted. Of course, I knew that would be your position because I know you to be an honorable man who would not lie, cheat, steal or break his word.

MR. HOUGHTON: Thank you.

MR. WILLIAMSON: And I think that's the way it is with you, Mr. Underwood. I'll know better in a few years.

Do I have a motion?

MR. UNDERWOOD: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

Any further business?

MR. BEHRENS: No, sir.

MR. WILLIAMSON: This meeting is adjourned at 2:30 p.m. Thank you.

(Whereupon, at 2:30 p.m., the meeting was concluded.)

MEETING OF: Texas Transportation Commission Emergency Meeting
LOCATION: Austin, Texas
DATE: May 15, 2007

I do hereby certify that the foregoing pages, numbers 1 through 18 inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Stacey Harris before the Texas Department of Transportation.

 5/17/2007
(Transcriber) (Date)

On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731

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