May 24 Transcript

Texas Department of Transportation Commission Meeting

STAFF:

MR. WILLIAMSON: It's 9:04 a.m., and I would like to call the May 2007 meeting of the Texas Transportation Commission to order.

It's a pleasure to have you two here this morning. Please note for the record that public notice of this meeting containing all items on the agenda was filed with the Office of the Secretary of State at 12:03 p.m. on May 16, 2007.

Before we begin today's meeting, please join with me in removing your cell phone, e-berry, pager, and what other electronic device you might have, and place it on either the silent, vibrate, or off mode.

(Pause.)

MR. WILLIAMSON: Thank you very much. It's our custom to open with comments from each of the members. We traditionally begin with the member to your left. Mr. Underwood, and then Mr. Holmes, Mr. Houghton, and Ms. Andrade.

Fred?

MR. UNDERWOOD: Good morning, everybody. And a special good morning to Dave Fulton. Good to see you this morning, sir.

VOICE: Good morning there, Dave.

MR. WILLIAMSON: Four more Daves.

MR. HOLMES: Yes, good morning, Dave. How you doing today, Dave.

I welcome everyone. Like we said, there are four more Daves to, what, the special session. When's the special start, Ric?

Well, good morning. Glad to have you here.

MS. ANDRADE: Good morning to all. Welcome to our May commission meeting. Look forward to taking care of business for the State of Texas, and I want to wish you all a safe holiday weekend. I want to remind everyone to please buckle up. And remember click it or ticket. Thank you.

MR. WILLIAMSON: Thank you, members. I associate myself with the remarks today. We're glad you're here. And good morning to everyone else. Thank you for participating in our meeting today.

Let me remind you, if you wish to address the commission during today's meeting, we ask that you complete a speaker's card at the registration table to your right.

If you're going to comment on an agenda item, I need for you to fill out the yellow card, such as the one that's in my right hand. If you're going to comment during the open comment period, I need for you to fill out the blue card, such as in my right hand.

If you are a non-member of the legislature, we ask that you limit your remarks to three minutes. If you're a member of the legislature, you may take as much time as you wish.

Additionally, you will have found another card in your chair this morning, and that would be the card which continues to announce our second annual Transportation Forum. The Texas Transportation Forum will be held in Austin on July 18, 19 and 20.

There's a website address listed on the card where you can register, and you can get more information about the speakers and program on that same website. The program is filling in fast, and encompasses a wide ranging variety of topics important to today's transportation leaders.

We have speakers from all segments of the transportation industry on the program, and we hope you'll decide to be a part of this event, and help us as we seek -- help us seek solutions to the challenges that face all of us in the transportation industry.

Members, the first items on today's agenda is the approval of the minutes of the April 26 meeting, and the special emergency called meeting on May 15. You've had a draft of these minutes with you for quite some time, and had the opportunity to brief them.

Is there a motion to approve these minutes?

MR. UNDERWOOD: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

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

Michael?

MR. BEHRENS: Thank you, Chairman. Agenda item number 2 is our aviation item for the month of May, and Dave will present some recommendations for airport improvement projects.

MR. FULTON: Thank you.

MR. BEHRENS: Good morning, Dave.

MR. FULTON: Good morning. First of all, thank you for that welcome. I've been coming to these meetings for 15 years and I always look forward to it. I hope you weren't trying to tell me something.

But anyway, for the record my name is Dave Fulton. I'm the Director of the TxDOT Aviation Division. Item 2 is a minute order that contains a request for grant funding approval for six airport improvement projects.

The total estimated cost of all requests, as shown in Exhibit A is approximately $1.4 million. Approximately 1.1 million federal, 72,000 in state funding, and approximately 200,000 in local funding.

A public hearing was held on April 16. No comments were received. We would recommend approval of this minute order.

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

(Pause.)

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

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

MR. FULTON: Thank you, sir.

MR. BEHRENS: Agenda item number 3 is under public transportation. We have two minute orders. One for recommending the allocation of federal and state funds, and the second minute order would be talking about transportation development credits.

Eric?

MR. GLEASON: Good morning. I'm Eric Gleason, TxDOT Director of Public Transportation. Item 3(a), this minute order awards $198,296 in federal funds to San Antonio via Metropolitan Transit Authority, and $38,000 in state funds to Colorado Valley Transit for job access and reverse commute public transportation services.

In both cases, this award allows completion of projects using fiscal year 2000 federal discretionary JARC funds originally awarded as a result of a national competitive selection process. The Federal Transit Administration had informed us that they would recoup the fund balance if the department was unable to reprogram the funds.

These projects increase access to key employment locations, and contribute to reduced auto travel and improvements in air quality around the state. They also represent new partnerships in solving transportation problems.

In Colorado Valley these funds, in conjunction with over $100,000 in local funds from a variety of local partners, will be used to provide daily commuter bus service and non-traditional deviated route service for early mornings, late evenings, and weekend access in Austin County to a dozen key employment locations.

In San Antonio, VIA will use these funds in conjunction with local tax revenues to provide van pools to the new Toyota truck plant. The project anticipates having 36 van pools running when fully implemented.

We recommend your approval of this minute order.

MR. WILLIAMSON: Members, I'm going to have a question of staff. Would you have questions also? Yes, sir, Mr. Holmes?

MR. HOLMES: Eric, it looks like an excellent proposal. Did you have many proposals competing for these funds, and how did you work through them?

MR. GLEASON: Well, this actually -- we're actually reprogramming funds which were awarded back in 2000 and 2001. At that time they were part of a national competitive selection process.

We currently are reviewing over 19 -- well, I guess we've receive 19 proposals for a current competitive process which we have out, and we'll be coming to you shortly either at your next meeting, or in July with a recommendation for those.

MR. HOLMES: Thank you.

MR. WILLIAMSON: Other questions, members? Mr. Chase -- excuse me just a moment, Mr. Gleason -- please refresh my memory. Was this part of the program that the senior Senator Hutchinson was so active in several years ago?

I think my recollection is that Senator Hutchinson was very active in promoting this program several years ago, and was a bit concerned that we were dragging our feet.

MR. CHASE: For the record, Coby Chase, Director of the Government and Business Enterprises Division.

I would have to check, but, yes, that seems to be correct.

MR. WILLIAMSON: I think it would be appropriate first for us to send her a letter, and if you would prepare one for the commission, I would appreciate it, thanking her for her patience and thanking her for promoting this program.

This is an excellent program. It was a good idea when she came up with it, it's still a good idea, and now that we're moving forward with it, I think she needs to know that we did it, and we appreciate all her help.

MR. CHASE: Absolutely.

MR. WILLIAMSON: Unless I have an objection?

(No response.)

MR. WILLIAMSON: Yes, let's do that. I think the commission needs to say thank you.

MR. CHASE: All right. We'll do that today, sir.

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

MS. ANDRADE: So move.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, members. Thank you, Eric.

MR. GLEASON: Okay. Item 3(b), this minute order awards $1,307,801 in transportation development credits to rural and urban public transportation agencies to be used as a local match for fleet replacement.

Federal earmarks for these projects are scheduled to lapse on September 30, 2007. The use of transportation development credits for this purpose is consistent with minute order 110771 which expressed the commission's intent to award transportation development credits for capital projects that promote public transportation including fleet replacement.

The condition of our rural and small urban fleets was identified as a key constraint to coordination in the recently completed public transportation coordination plans, as reported to the commission in November of 2006.

Projects listed improve the reliability of transit options thereby increasing levels of ridership and reducing automobile travel, allow for increase in the level of service access to jobs, reduce the potential for breakdowns, especially in system environments and types of services where passenger safety is critical, such as dialysis transport, reduce emissions with engine related technological advances in the bus industry, and facilitate coordination efforts aimed at getting the most out of our scarce and valuable transportation assets.

A total of 34 vehicles will be replaced with this award. We recommend your approval of this minute order.

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

MR. HOUGHTON: Eric, where is the senior center resources?

MR. GLEASON: That is formally Hunt County.

MR. HOUGHTON: Hunt County?

MR. GLEASON: Yes. Yes, sir.

MR. HOUGHTON: The other two is self-explanatory. Okay. So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, members. Thank you, Eric.

MR. GLEASON: Thank you.

MR. BEHRENS: Commissioners, before we go to agenda item number 4, I'd like Steve to come to the podium and introduce some special guests we have with us this morning.

MR. SIMMONS: Chairman, Commissioners, for the record, Steve Simmons, Deputy Executive Director of TxDOT.

I had the pleasure this morning of meeting with Dr. Benavides from the University of North Texas, and his students. They're working on degrees in public administration, and I'd like to recognize them here today.

They're in the back of the room, so if you all would stand up?

MR. WILLIAMSON: Welcome.

MR. BEHRENS: Thank you, Steve.

Agenda item number 4 will be a discussion item and this will be a discussion concerning pavement conditions that we're now having throughout the state, and those impacts that that will have on our present, and our future resources, and our funding.

Amadeo?

MR. SAENZ: Good morning, Mr. Chairman, Commissioners, Mr. Behrens, Roger. For the record, I'm Amadeo Saenz, Assistant Executive Director for Engineering Operations.

The purpose of this presentation is to discuss with you our maintenance needs, conditions of our pavements, and what we have found in a real quick analysis that we've been doing to identify where we're at with respect to our pavement conditions across the state, and then what our needs are to make sure that we meet the goals that we have set in the past of having 90 percent of our roads to be in good or better condition by 2012.

We discuss mobility issues many times a year. We also -- we often discuss operational issues associated with safety and intelligent transportation systems. Today I want to focus on what we discussed, that basically what are we doing to preserve what we have, what are we doing to preserve the asset that we have.

Mobility, operations, and maintenance are related in that each must compete for funding. We know mobility is huge with a well documented issue -- it's a well documented issue, it costs Texans and Americans in general productivity and wasted fuel because we have a lot of congestion.

We know without a doubt that with great -- and with great certainty that our mobility problems are great, and to fix them will require tens of millions of dollars in rural, urban, and also in the metro areas.

With all the discussion about mobility, it seems the importance of preserving our system, and the cost of preserving our system, occasionally get overlooked, and maintenance is kind of taken for granted, or sometimes we might say even taking a back seat as we move forward.

Our system is huge. We have 79,000 center line miles of highway, nearly 200,000 travel lanes, and almost 50,000 bridges that we are responsible for. Each year we evaluate the conditions of our pavements, we evaluate the conditions of our bridges.

We base this -- and in 2001 former Commissioner Johnson, when he was chair, set up a task force that put together a report, Texas Roads -- put together a report called Transportation Partnership, and gave -- in that report -- and the group came up with the goal that we wanted 90 percent of our roads to be in good or better condition by 2012, over a 10 year period.

That report was adopted by the commission at the end of 2001, and we have been going by that since then to try to keep our pavements in the condition and meet that goal.

As with mobility, maintenance is not just a Texas issue, it's also a national issue. Reports compiled from federal highway data show that the nation's urban centers have experienced large increases in traffic, especially truck traffic. Our forecast is even that more traffic, and even more truck traffic, will be on our systems in the future.

Increasing traffic, compounded with our aging system means that the nation is facing a multi-billion dollar shortfall in what it will take to stay up at current maintenance levels. And an even greater unmet need exists to improve those maintenance levels to something that is bearable.

We know that more federal funding is not likely to happen, or come in soon. Not maintaining our roads has an impact on drivers, cars deteriorate faster, and more lane closures are needed to repair imminent failures causing delays and increase in fuel consumption.

Preventative maintenance and timely rehabilitation ultimately save money. The Federal Highway Administration publishes that a timely dollar spent on pavement preservation can save $6 in future expenditures. An adequately funded maintenance program is the foundation for our state's system, and it makes sense financially for our users.

Our construction division does an evaluation of our highway system every year. We evaluate between 95 and 100 percent of our roads every year. And we measure some factors, we take evaluations on smoothness, which we call ride quality, we also take an evaluation of the stress indicators, such as ruts, pot holes, cracks, et cetera, the condition of our pavement.

We then combine those two factors into what we call a condition score for our pavement. And then, of course, our goal was that the condition score for our highways, we wanted 90 percent of those to be in good or better condition by 2012. And a good or better condition is that they have a condition score of at least 70.

Most of the funding for preventative maintenance in our Category One goes to funding seal coats and overlays, we call that preventative maintenance. We also will go out there and widen our existing roads by adding shoulders.

We do full repair of our existing roads we call rehabilitation. We also add turn lanes, and, of course, we include bridge maintenance. And this is how we fund our Category One -- this is the type of work that is done with our Category One funding.

When we look at our pavement scores over the last few years, we have been making some good headway. We started with our goal in 2002 and we looked at our pavement scores in 2002, and they were at 84 percent of our roads were at good or better condition.

In 2003, '04, and '05, we made some good headway. We went to 85.3, to 87, and into 87.5. In 2006, as I mentioned last month in a brief discussion, we began to lose ground. And when looking at the early numbers of our evaluation done for -- in 2007, that'll go into the 2007 report, it looks like we are staying even.

When we look at comparing what -- how much money we've spent on preventative maintenance and rehabilitation of our highways through the years, and comparing them to our scores, by year in 2002 we spent $2.1 billion. Now that -- I mean, $1.1 billion.

In 2003 we spent 1.2, the same thing in 2004, in 2005 we increased our funding and spent $1.4 billion, and in 2006 we spent $1.8 billion in Category One pavement preservation and rehabilitation.

Something that's key is when we program and give our districts their allocations, we give them their allocation based on a four-year program. So in essence when we gave their allocation for 2007, in a 2007 UTP, we gave them an allocation for 2007, '08, '09, and '10.

When we look at how much we had actually programmed, based on the projections of cash flow and apportionments that we were getting, both from the state funds and federal funds, this chart here depicts -- the light blue depicts what our programming levels were in each of the years.

We only had a little bit less than a billion dollars in 2002, right at a billion dollars in 2003, same thing for 2004 and 2005, 2006, and in 2007 we had about 1.1.

When we look at what was actually spent by our districts, because since they get a four-year allocation they're able to advance projects, they spent a little bit more than what was originally allocated, 1.1 versus 1, 1.2 versus 1, 1.2 versus 1. Somehow my bar chart got a little bit shorter there, I guess maybe inflation took part of that.

And then 1.4 versus the 1. And then in 2006, because the people were seeing that we were having a lot of problems, and our pavement conditions out in the field were looking bad, they actually advanced and put in $1.8 billion during that year, when originally all we had programmed was 1 billion.

What that does, in essence I have advanced, or I have used future money to address pavement preservation and rehabilitation needs that we need today. It tells me that our pavements are deteriorating, and we're having to spend more money to be able to make up and address those maintenance needs that are happening.

MR. HOUGHTON: Amadeo, let me ask you a question. Where is the advance coming from?

MR. SAENZ: The advance, sir, as we prepare our unified transportation program, our UTP, the preservation we in essence plan in four year cycles. So for 2005 we do '05, '06, '07, and '08; 2006 we drop '05 and add '09; 2007 we drop '06 and add '10. So we always have four years of allocation available to us to plan and program projects.

The reason we do that is because some of these projects and rehab may take more than one year to develop, so we want to give our districts the opportunity to have time to identify that project, prepare the environmental studies, prepare the planning studies, prepare the design plans, and actually go to construction.

What the districts have done is recognizing that our needs out there and our pavements are not in the best condition, they've gone out there and advanced and let a lot more projects that normally would not have been let till 2008 and '09.

That 1.7 billion, if we look at the programming levels that we had, in essence we're a year and a half ahead of schedule in the amount of work that we've done versus what we should have done.

MR. HOUGHTON: Well, you cannot -- if you advance too much, and obviously we wouldn't do that, you could dry up those dollars and those funds.

MR. SAENZ: That's correct. You do two things. You affect your cash flow --

MR. HOUGHTON: That's correct.

MR. SAENZ:  -- in the current time period that we're at, and we have to work very closely with James, because as you let more projects, we have to see what our cash flow is doing to see -- make sure that we can cover our pavements. If not, I have to ask James to go issue some debt, some short term borrowing.

But it also impacts how much money I have in the future to address some of the needs that are still out there. And we're going to have to address that by being -- we'll have to address that by programming additional dollars to make up for the difference.

MR. HOUGHTON: Mr. Chairman, you want to go through this, or do you want us to ask questions as we go through it?

MR. WILLIAMSON: Well, thank you, Mr. Houghton, for asking, but as always the members control the flow. So we talk when we want to --

MR. SAENZ: Well, I think going back and forth and having a discussion would be great.

MR. WILLIAMSON: I don't want to put words in Amadeo's mouth by saying I think the answer he gave you was we had to spend more today than we planned on, and we're going to have less tomorrow to spend.

And it might get so bad that we might not have anything left tomorrow for maintenance, and we're going to have to take the money from someplace else.

MR. HOUGHTON: Okay.

MR. WILLIAMSON: And the reason we have to do that is because if you let your pavement conditions fall below a certain level, it ceases to be a maintenance project and becomes a construction project because the pavement is literally deteriorating.

MR. HOUGHTON: Well, let me ask another question, Amadeo. How do rescissions affect?

MR. SAENZ: Rescissions affect in the total amount of dollars that we will have over that time period. So the $300 million rescission that we have had to give up in the last year and a half, we'll in essence we have $300 million less available for us to program projects.

You do get it back, but you've got to wait till future years, because you do get some money. But in other words, we were counting on having $300 million more between '04 and '09, we lost $300 million, that means that between that time frame we don't have $300 million. We'll have to wait till '10 to get some of that money.

MR. HOUGHTON: That's cash flow.

MR. SAENZ: It's cash flow.

MR. WILLIAMSON: Or take it from another category.

MR. SAENZ: Or take it from another category. It depends on what categories you rescinded and to --

MR. HOUGHTON: We're expected other -- more rescissions?

MR. SAENZ: Yes, sir. I think in one of our prior slides I think -- and then also in the safety new bill itself, it said that it was over-programmed by $600 million, and that there could be a rescission that was built into the program itself based on those allocations.

So we probably expect to have at least one, maybe more, rescissions between now and 2009.

MR. HOLMES: Amadeo, just the rough math, we've had nearly 600 million of rescissions so far --

MR. SAENZ: So far --

MR. HOLMES:  -- 288 and 305, or something --

MR. SAENZ: Yes.

MR. HOLMES:  -- like -- and we borrowed ahead a year and a half, a billion five.

MR. SAENZ: Yes, sir.

MR. HOLMES: Is that right?

MR. SAENZ: Yes.

MR. HOLMES: And so in those two categories we've spent over $2 billion, so $2 billion is -- will be unavailable to spend in the future.

MR. SAENZ: That's correct, sir.

MR. HOLMES: Which is two full years of the maintenance program.

MR. SAENZ: Two full years of our regular program, maintenance program.

MR. HOUGHTON: May I ask another question, maybe to Coby or -- well, yes, Amadeo, you're very well versed in it -- are there any new dollars proposed by the legislature coming in to the system?

MR. SAENZ: Coby, that --

MR. HOUGHTON: Or Steve? Whoever wants to take that one?

MR. SIMMONS: Again, for the record, Steve Simmons, Deputy Executive Director of TxDOT.

There is one bill that would bring in $5 billion of general obligation bonds, general revenue bonds forward, but right now there's no enabling legislation. It's a constitutional amendment, they would have to approve it, that is moving forward right now, but there's no enabling legislation.

MR. HOUGHTON: So as of right now there is no new dollars coming into this system?

MR. SIMMONS: As of today, yes.

MR. WILLIAMSON: Well, actually, not to be combative, maybe what you meant to ask was, are there any new tax revenues coming to us, because we define private sector as new dollars.

MR. HOUGHTON: I mean, across the street, new dollars, yes.

MR. WILLIAMSON: So is the answer no?

MR. SAENZ: No.

MR. WILLIAMSON: No new tax revenue?

MR. SAENZ: There's no new tax revenues.

MR. WILLIAMSON: And, of course, the reason I tried to clarify that is because I believe Amadeo is going to tell us at some point, when we mapped out our longer term cash flow, we knew this problem was coming.

We assumed into that cash flow, Mr. Holmes, and Mr. Underwood, a certain level of private sector investment in the new construction of our system relieving us of the pressure -- permitting us to advance dollars for maintenance.

We took the position that leaders in Dallas, principally Dallas, Houston, San Antonio, and Austin, given the access to that private money, would themselves agree with the notion of moving money out of their traditional tax roll categories into maintenance, because it's in their own self interest to have their roads maintained.

That, I think, was why the Governor was so insistent that private sector financing -- the door not be closed to private sector financing as he is aware of the cash flows the department faces.

MR. SAENZ: And that's one of the things that we will have to continue in this evaluation to determine the impacts of legislation that is right now still moving through, and as it passes, we'll have to determine the impact of that legislation into the numbers that I'm showing you today with respect to our future forecast that we have.

Today I'm focusing more on identifying the needs that we have to, one, preserve our system and keep it at several levels that I'll go over in a few seconds.

Another thing that -- major challenges it has is the inflation that has hit us over the last few years. From 2000 and -- from 1993 -- or 1997 to 2002, inflation was running at about 3 percent per year. We measure inflation using the highway cost index for TxDOT.

In the highway cost index we saw a steady increase of about 3 percent per year, and we could program -- we would program our projects and we'd put a 3 percent inflation factor into the cost of our projects so that we could program those projects accordingly.

From 2003 till 2006 that highway cost index increased considerably. When you look at it on an average as whole, between 1993 and 2006, we can do less than 70 percent of the work with the money that we are getting from the gasoline tax because of inflation, because of what we've lost from inflation.

In other words, when I was -- in 2006 we let $5 billion worth of work. That was the equivalent -- over $5 billion worth of work -- that was the equivalent of 2002 of about $3 billion that we let. So we didn't let any more work, it just cost us that much more.

MR. HOUGHTON: And work, you mean in actual lane miles?

MR. SAENZ: Actual lane miles, actual construction, actual -- we paid contractors five billion, but we constructed the same lane miles that we had constructed in 2002 because of this inflation factor.

(Pause.)

MR. SAENZ: Yes, sir. That has -- and, of course, that can be attributed to we had a very high rise in steel prices, cement prices, and then, of course, the fuel, the diesel. And so those costs have attributed, and our highway index has jumped considerably.

Just look at the picture between 2002 and 2006. As I mentioned, prior to 2002 and 2003, we were at about 3 percent. In fact, in 2003 we had a decrease of 3 percent, so something good happened to us. At least we made a little bit of money during that year.

But after that, the annual increases were -- percent increases were 9 percent between '03 and '04, 20 percent between '04 and '05, 25 percent between '05 and '06. So when you look at the total percentage change, the numbers there on the right show that in 2006 it was almost 60 percent increase over the base line year of 2002. So we were going pretty flat, then we had a tremendous change.

MR. HOUGHTON: Amadeo, my talks around the state, and my speeches, I've homed in on something that interests me, is vehicle-lane miles that we're putting on the ground versus the vehicle miles traveled.

Like Houston, they've added 48 percent of vehicle miles traveled, but lane miles it's 12 percent --

MR. SAENZ: Somewhere about --

MR. HOUGHTON:  -- 11-12 percent, 48 percent in vehicle miles, an increase over a 10 year period. Statewide. Now we pat ourselves on the back with dollars we've let, but, in fact, we're just -- we're running in place, we're treading water.

MR. SAENZ: Right. And, of course, that's looking at the mobility side, and that even on the mobility side we're not able to add the number of lane miles that we need based on the growth of the state with respect to vehicle miles traveled, with respect to population increased. We're only --

MR. HOUGHTON: What is it, what --

MR. SAENZ:  -- on a statewide basis about between 6 and 8 percent is what we've been able to do.

MR. HOUGHTON: Of lanes miles.

MR. SAENZ: Of lane miles.

MR. HOUGHTON: And growth in the state --

MR. SAENZ: The growth is about -- for vehicle miles traveled, if I remember correctly, the number was somewhere in the 48 to 50 percent.

MR. HOUGHTON: It tracks to the metro areas pretty much the same.

MR. SAENZ: Yes, the metro areas, because they have -- get additional money, they were able to do more mobility, able to build more lane miles with respect to the size of their system.

MR. HOUGHTON: About 12 percent, about -- well, I think in Houston that's correct.

MR. SAENZ: But if you look at the state as a whole, we're down to about between 6 and 8 percent. And that, of course, based on the programming levels and the funding levels that you all have set through the years.

Today we're talking on the maintenance side and looking at the amount of money that we have programmed, to be able to keep up, our districts have had to advance the program to make sure that their pavement conditions keep up to the level of service, that at least we were trying to meet our goal, so we're spending future money.

So in essence we need to do something because if we don't, we're going to run out of that money and our system condition is going to go completely down. It'll make that slope on the highway cost index look -- then our pavement condition will look pretty much like that.

When we look at the -- at pavement conditions and we look at actually how much money we spent -- and then what I did on the right side is I adjusted it for inflation, and, of course, in 2002, which is when we started tracking our goal, our pavement conditions were about 84 percent of our lane miles were in good or better condition.

And we had programmed $1.1 billion -- and I use that as my base year, because that's when we started -- so I use that as my base year so we in essence -- the adjusted inflation amount would be 1.1. I kept them both the same.

In 2003 -- and we spent 1.1 in 2002, and that resulted, when we checked our scores in 2003, of an increase. So we made some headway. We made some headway for a couple of reasons. One is we put the goal in place and asked our districts to take a good focus, to continue to focus on preservation and rehabilitation of our pavements.

And so they were doing that, and so they were starting to look at that, and we were measuring how good they were doing. In 2003 we spent $1.2 billion. Inflation at that time was still around the 3 percent. In fact, if I recall, there was even a decrease of 3 percent. So we -- the two -- the 1.2 was equivalent to about 1.2.

And our pavement scores, the next year, went up to 87. Well, we put another tool in place to help our districts identify where their worst areas in pavement conditions were, and gave them that information and asked them to put together a five year plan where they identified goals per year how they were going to accomplish and meet those goals.

So there was a stronger focus. And you see that the next year, because they focus, they spend the 1.2, they spend it in the right places, pavement scores went up.

As we keep on going, in 2004 we also spent $1.2 billion, adjusted for inflation it drops to 1.1. Our pavement scores went up, but not as much. And not as much because you're getting to higher percentages, you've got more roads, we also have more traffic, we have more truck traffic, more pavement is deteriorating faster, it's getting older, so we are making some headway, but we're not making as much headway.

2005 we -- the districts identified and advanced the $1 billion program to a $1.4 billion program. When I applied the inflation factors back to it, it brings it back down to a $1.1 billion program. We're beginning to lose ground to inflation.

And you look across, in 2006, sure enough, our pavement scores went down. We were not able to put enough money out there to preserve the level of maintenance that we were the year before.

When I look at 2006, and we spent $1.8 billion, that's actually what was let out to contract, and is being constructed, some of it even as we speak today, but when I apply that 58 percent factor, I'm back down to 1.1.

So I project, in looking at our pavement scores for -- that we've looked at based on -- we usually collect our pavement score and do our evaluations in the fall of the year, so we already know some of the preliminary numbers.

We're going to wind up being pretty much at the same level as we were last year. But yet we've spent $1.8 billion, but inflation ate it up, and we're not making headway. So we've kind of reached a stand still.

This year, in 2007, all we have programmed is 1.2 -- Commissioner Underwood, I put that asterisk in there so that I would remember why -- and part of it has to do because since we've been advancing projects in the prior years, it begins to affect my cash flow in the present time.

We've spent a lot more money in prior years, and that's cash that's going out of the department. So I'm having to now balance cash flow. And because of having to balance cash flow, I cannot let the districts let that much money in, in preservation, because I've got also the mobility commitments that have been made through the regions and stuff like that.

So all we have planned in 2007 is $1.2 billion. But $1.2 billion, based on the highway cost index adjustment, is going -- is really the equivalent of about $700 million. So I project that our pavement scores for next year are going to probably be somewhere in the 85 percent.

Yes, sir?

MR. UNDERWOOD: -- the audience understands -- this much -- pavement scores. And it gets a little confusing, which is allowed, but if you look diagonally or whatnot you'll see these pavement scores are basically about the same, yet we spent $400 million more to get the same score.

And wouldn't that same score -- how much of your -- how many new miles have we put on there, because your pavement score is based off of new highways rather than rehabilitating old ones --

MR. SAENZ: Well, we add new miles with out mobility money, and, of course, they'll be -- they were part of the evaluation. And they will help bring the score -- new miles bring the score up. So sometimes, depending on how much mobility you did, or how much mobility you completed in that year, it will affect your pavement score.

MR. UNDERWOOD: Our percentage will look better because we have new miles, but we actually have older roads that are going to need more maintenance, that'll cost us even more is my point.

MR. SAENZ: Yes, sir. Yes, sir.

MR. UNDERWOOD: Thank you, sir.

MR. HOUGHTON: We're not adding that many new miles, so --

MR. SAENZ: No.

MR. UNDERWOOD: But they all add up to make the scoring -- look better.

MR. HOLMES: They come in --

MR. HOUGHTON: That's right.

MR. UNDERWOOD: That's right. So that brings that -- it'll make your 87 look good when you really may not be that high.

MR. HOUGHTON: Break those out --

MR. UNDERWOOD: To balance it.

MR. SAENZ: I didn't do it for part of this presentation, but we can, and we can give it to you.

MR. HOUGHTON: But you have a true number as to --

MR. SAENZ: Yes.

MR. HOUGHTON:  -- your pavement scores --

MR. SAENZ: Yes.

MR. HOUGHTON:  -- to older roads.

MR. WILLIAMSON: Well, I mean, he's given us a true number, because it's an average number. Our goals are set on averages.

MR. HOUGHTON: But he doesn't reflect the real issue.

MR. WILLIAMSON: Yes, maybe what we need is, at some point in the future -- let me take a moment to remind myself, and ourselves, why we have discussion items, why we adopted this approach about six -- four years ago.

This is staff's ability to give us early warning, and our legal ability to kind of discuss what we think the issues are in a public forum, early warning on problems that we can all expect they're going to keep bringing back to us until it culminates in this is what you guys need to do.

So this is the opportunity to raise precisely the question you just raised, Ted, and for us to say to staff, next time through, why don't you give us kind of an aging of our asset base.

I think it would be useful information for us to know what percentage of our system is 20 years old, what percentage is 30 years old, what percentage is 40 years old, and give us some relationship on how fast the 30 year old road in San Antonio is going to deteriorate, a different set of environmental conditions versus the 20 year old road in North Dallas.

MR. SAENZ: Yes, sir, we can do that.

MR. WILLIAMSON: Because I think where this is headed -- I looked at the report, I think where this is headed is, you know, not only is it bad statewide, but the reality is, there are about 50 corridors in the state, primarily in Houston and Dallas, that have taken an absolute pounding, and we're going to have to do something.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: I think that is where this is headed.

MR. SAENZ: When we look at -- I'm looking right now at statewide scores. But when you look at the individual district scores, the metro districts are the ones that have the lower numbers, and that's where we need to focus and address some of those maintenance needs.

Some of those facilities we can't get to. We can't go out there and do some work on 610 in Houston. We can't get to it, we can't do it, and some of those will say, okay, those are going to have to stay there till I have to reconstruct it.

But there's other facilities --

MR. WILLIAMSON: What do you mean you can't get to it? You can't get to it financially --

MR. SAENZ: It's --

MR. WILLIAMSON:  -- or physically --

MR. SAENZ:  -- physically --

MR. WILLIAMSON:  -- you can't shut the traffic down?

MR. SAENZ: Traffic-wise. We would have to work only at night and very limited, and even then, the amount of traffic on those facilities would make that work so expensive that it would be cost prohibitive.

MR. WILLIAMSON: Well, we could do it if Ned said it was okay to do it.

MR. SAENZ: Of course.

MR. WILLIAMSON: We could do it if he was the one that announced it.

MR. HOUGHTON: He gave his home phone number for those who would like to --

(Pause.)

MR. BEHRENS: -- the order to shut it down.

MS. ANDRADE: Amadeo, since each district is different, each one has their own needs, do we have anything that we could -- in communities we could talk about the state of the local road system.

MR. SAENZ: We can. The report that construction does --

MS. ANDRADE: Because I don't hear that, you know, for each community. I mean, we don't know where Houston rates, I don't know where San Antonio rates, and so --

MR. SAENZ: We have them, and, of course, I'm covering right now at a statewide level --

MS. ANDRADE: Right.

MR. SAENZ:  -- but that same report -- and that report goes to our districts, the district engineers have the report that will give them the information for where they are in respect to, well, their district, and the, of course, they also get to see everybody else's.

MS. ANDRADE: And then we need to be the bearer of continued bad news is --

MR. SAENZ: Right.

MR. HOUGHTON: Yes, is there any good news out of this deal? Let me ask --

MR. SAENZ: Mobility is cool, preservation is not that cool.

MS. ANDRADE: Well, but we need to talk about it because I think it's something we take --

MR. SAENZ: And that's the focus of today is we need to address -- because if we do no address our preservation needs, those preservation needs are going to be so great that we won't be able to build anything because we can't -- it's going to be a total reconstruction --

MS. ANDRADE: Well, it's our state's assets, but it's also our local communities' assets.

MR. SAENZ: Yes.

MS. ANDRADE: And so they need to know about it. And if we don't tell them where we stand, they're going to say, well, no one ever told me.

MR. SAENZ: Right.

MR. HOUGHTON: We could transfer the road system in those metros to the city.

MR. WILLIAMSON: Oh, let's don't go there.

MS. ANDRADE: Let's keep the --

MR. HOUGHTON: Let me ask you a question, Amadeo.

MR. WILLIAMSON: We're all trying to heal over that.

MR. HOUGHTON: The state gas tax dollars net that come to us, what are the state gas tax dollars coming to us net?

MR. SAENZ: Net state gas tax dollars that come to us is about $2.3-2.4 billion per year. Let's see if John would know --

MR. MUNOZ: Yes.

MR. SAENZ: Is that right, John?

MR. MUNOZ: Yes, that's right.

MR. SAENZ: Okay.

MR. HOLMES: Amadeo, one of the slides that caught my attention was kind of early on where you're looking at vehicle traffic increase. And it seemed to be disproportionate between passenger vehicles and trucks, large trucks.

MR. SAENZ: Yes, sir.

MR. HOLMES: I think it was 38 percent increase in vehicle traffic --

MR. SAENZ: That was the --

MR. HOLMES:  -- but 51 percent in large truck.

MR. SAENZ: And, of course, one truck, in essence, does the equivalent of about 9600 cars in damage.

MR. HOLMES: Ninety-six hundred --

MR. SAENZ: Ninety-six --

MR. HOLMES:  -- cars --

MR. SAENZ:  -- hundred cars in damage.

MR. HOLMES: Now is there a disproportionate amount of truck traffic in the metropolitan areas versus the balance of the system, or is that kind of equally spread?

MR. SAENZ: I will have to check. I would probably say that there is -- because of the amount of -- as a percentage, there would be more percentage of total in the rural areas in a statewide kind of activity because you have less traffic.

And in the metro areas, because you do have a lot of traffic, it may be less, but I think that the better number would be to look at how many trucks, and not a percentage of the whole, because that will give us a measure of -- yes, in Houston we're dealing with X trucks, not a percentage --

MR. WILLIAMSON: There's probably a higher percentage of trucks between Victoria and Houston on US 59, but there's not nearly the number of trucks as it would be --

MR. SAENZ: In Houston.

MR. WILLIAMSON:  -- going the Loop around Houston.

MR. SAENZ: Yes.

MR. BEHRENS: You know, Commissioner Holmes, when you look at Interstate 40 that cuts across the Panhandle, the percentage of trucks compared to total vehicular traffic is about 50 percent. It's probably the highest volume percentage of truck traffic on our system.

Probably, Chairman, what you're talking about, Victoria and Houston, we probably have 30 percent of trucks --

MR. WILLIAMSON: Last time I looked it was in the high 20s.

MR. BEHRENS: So that's about right, and it just -- you know, here in Austin, oh, this probably goes back to about '98 or '99, we were doing some truck percentages, or the increase of trucks, and taking some counts up there in Round Rock, and they were increasing at about 15 percent a year.

This already tracks pretty close to the figure that Amadeo gave you, that 51 percent increase over that time period. So we are, statewide, experiencing a lot more trucks than we've ever seen.

And I might add, since we're talking about pavements, you know, one thing that we have encountered over the years, and I'll talk about our farm road system, you know, it's 50 years old. Most of it built in the late 40s, 50s, and 60s.

And a lot of those roads were built, or designed for, not 18 wheelers, they were designed for that six wheeler. And I've said this many times to groups coming into the session, and that six wheeler is basically a pick up truck pulling a two wheeled trailer.

But now most all of our farm road system has 18 wheelers, you know, whether it's hauling the agricultural products, or aggregates, hauling gas, equipment, and things like that, and the logging industry in East Texas, just pick, you know, wherever it is.

And when we have to rebuild them, we can't rebuild them with six inches of base, we've got to be thinking in terms of 12 inches of base. So that's where some of these costs come in also, to get better pavement structure out there to handle the loads.

MR. HOLMES: For the weights.

MR. BEHRENS: You're rebuilding a different road. And, of course, some of those farm roads, when we talk about mobility, we're talking about widening -- from roads that were built 22 to 24 foot wide when they were first built have become arterials in our metropolitan areas.

You know --

MR. HOLMES: Right.

MR. BEHRENS: -- 1093, Westheimer at one time wasn't -- didn't look like it does today, so --

MR. HOUGHTON: But we love trucks in the State of Texas. It relates to commerce.

MR. HOLMES: Well, that was the point I was going to follow on. There's no reason to expect that the increase in truck traffic will abate, because you have major ports at Laredo and Houston that will continue to generate that, plus just the overall internal traffic.

MR. SAENZ: Continuing, if you look at, going back to our base year, of about $1.1 billion, $1.1 billion in the early years was gaining some ground, but then that $1.1 billion that -- what I call the adjusted $1.1 billion, is -- pretty much keeps us on track and holds our payments to conditions today.

So one of the things that we looked at is, okay, if we wanted to keep that $1.1 billion in 2002 dollars, but apply the inflation for the future, what would our maintenance dollars need to be to keep our pavement scores at least at current levels and not let them deteriorate?

They may deteriorate some, but let's look at that scenario. Well, when you do that, in 2008 we would have to increase our pavement -- our funding to 1.9 billion over the 1.1 that we have. In 2010 we'd have to go to two, '11 -- I mean, 2009 we'd go to two, 2010 we'd go to 2.1, 2011 at 2.2, and 2012 to 2.3.

This is basically what I identified. This would mean that, based on what -- from what we have right now programmed, and it even -- and has programmed right now are preliminary numbers for '11 and '12, and have about 1.6 billion in them, and that impacts some of our mobility numbers.

But we would have to program an additional -- this would give us $10.5 billion is what we would need over this four year period. We've programmed 7.1, so we would need $3.4 billion in addition to what we already have in our preliminary program.

MR. HOUGHTON: Say that again, 3.4 --

MR. SAENZ: $3.4 billion more would have to move from other funding categories into, to address and keep our maintenance dollars at just where they were in 2002, but adjusted to inflation.

MR. HOUGHTON: Oh, John just said that we have about $2.4 billion for the state gas taxes.

MR. SAENZ: Yes. We're in essence spending the entire state gas tax on preservation and rehab.

MR. HOUGHTON: We are then.

MR. SAENZ: We would have to -- it's not what I have programmed right now, but we would have to, to stay --

MR. WILLIAMSON: Now, Amadeo, for the benefit of our two more recent members and whoever else might be watching today, this doesn't catch us by surprise, we knew this was coming four years ago --

MR. SAENZ: Yes, sir.

MR. WILLIAMSON:  -- when we began to ask the legislature to change laws to permit us to attract private financing to the construction side. It was always -- our view was, the legislature and the Congress have many financial pressures right now from funding public education at the state level to funding the war at the federal level.

And it probably was not going to be the case that a significant amount of tax revenue was going to flow additionally to us. But with the changes in the law in '03 and '05, we projected that we would substitute construction taxes -- the tax revenue for construction with concession for construction, and use the tax revenue to fill in our maintenance need.

So we wouldn't want the members to think that we weren't thinking about this. I mean, we knew this was coming.

MR. SAENZ: Right there, for that now, if you noticed the chart earlier, you know, we're real high, and we're coming back. All I did for this for the future, I assumed a 5 percent inflation. I figure we'd come over the top and I'm going to assume a 5 percent inflation.

If inflation is higher than that, then my numbers are higher. But I used a number -- based on this I used a 5 percent inflation, keeping my 2002 base year of 1.1, inflating it up to where it is in 2006 at 1.8, and then applying 5 percent there forward, we would need $10.5 billion in this category.

We currently only have 7.1, so we need $3.4 billion. And that, we project, will keep our pavement scores pretty much where they're at today.

If we wanted to look at moving forward and trying to still meet our goal of 90 percent good or better by 2012, staff has identified that we would need at least $450 million more per year added, and then adjust that to inflation also to keep us going.

So my 1.9 goes to 2.4, and in 2012 my 2.3 goes to 2.9, and you fill in, in between, that would require us to have $13.4 billion in Category One. We only have 7.1, so that means that we need an additional $6.3 billion.

That will be our gap to be able to stay within what we wanted to and follow and try to get to our goal by 2012.

MR. HOUGHTON: Over five years.

MR. SAENZ: Over the last five -- these next five years, yes, sir. So I guess the question is, where does -- where do we get the money? Well, we can only -- there's a couple of things that are happening right now is our current federal bill expires in 2009.

The federal -- in 2009 [indiscernible] has said that the trust fund probably will be in a deficit of about $2.3 billion. I read that in the paper earlier this week. So it means that for 2010 and beyond in the next federal bill, they can't count on money in the trust fund to keep funding levels at that level.

So we don't know what the future funding levels are on the federal side. We knew that was happening and we had been keeping our programming at lower than the 2009 funding levels as we moved forward. But now with even a deficit in '09, we don't know if those numbers are correct.

So we just can't arbitrarily go out there and say, we'll I'm going to increase my projected funding levels and put more money in maintenance because if we do, we're just in essence over-programming our program and not in essence presenting a realistic picture of when those projects could actually be built.

But so what we need to do is we need to say, okay, we'll keep the numbers, the total number that we have, and we're going to have to shift from some of the mobility categories to the maintenance categories.

And, of course, some of the mobility categories we cannot take money from. For example, we can't take CMAQ money and use it for preservation, we cannot take enhancement money and use it for preservation.

The bridge category addresses our bridge needs, and I'm not covering too much on bridges today, but our bridge program is moving well and keeping in pace with the goal that we had for bridge that 80 percent of our bridges would be good or better, and good or better means that they're not structurally deficient, so --

MR. HOUGHTON: Amadeo, the bridge program is not in this?

MR. SAENZ: No, sir. We do have some bridge preventative maintenance, or bridge routine maintenance, but the bridge replacement program is a program funded separately with its own funding category.

And you should be receiving a report that we put together every two years that gives us the condition of our bridges, and it shows that our bridge program is tracking right in line with our goal of trying to get to that 80 percent.

MR. HOUGHTON: But what is the cost of the bridge replacement program today?

MR. SAENZ: I think we're spending in bridge replacement about $250 million -- I have those figures somewhere -- a year, yes.

MR. HOUGHTON: A year?

MR. SAENZ: But so I didn't pull money from that. So really the only categories that I have are my mobility categories, categories two, three, and four, I have our district discretionary category that includes a minimum amount that is required by the state legislature, plus some additional money that we have put in through our programming, and then, of course, your Category 12 Commission Strategic Priority.

What we need to do is, if you look at the scenarios I mentioned earlier, if we wanted to try to keep our pavement scores where they're at, we would need $3.4 billion to move from mobility over to preservation. If we wanted to continue with our goal, we need that additional $450 million a year inflated, or $6.3 billion to move over.

What it does, it in essence takes the mobility money -- well, let me -- I'll present the -- let me present a little bit at a time. I don't want to shock you all. So we've got to move 3.4 or 6.3 to keep us going in the right direction, to keep us at the same level, or to keep us going in the direction.

When we look at what we have projected for 2008 and 2012, and this is using the allocations that we currently already have out in the field and the 2007 UTP, and also some adjustments that we had made for '11 and '12 to move forward, we have about $5.1 billion in those mobility categories. Okay. We'll remember that number. We have $5.1 million -- billion dollars. Also, as I mentioned earlier --

MR. WILLIAMSON: Let's be clear, that's tax revenue.

MR. SAENZ: This is tax revenue, this is all --

MR. WILLIAMSON: It's not --

MR. SAENZ:  -- tax revenues, state gasoline tax, federal reimbursements --

MR. WILLIAMSON:  -- not what CTRA might invest in a state system; it's not what NTTA might invest in a state system; it's not what Alamo RMA might invest in a state system; it's not what Cintra might invest in a state system.

MR. SAENZ: Right.

MR. WILLIAMSON: That's just tax revenue.

MR. SAENZ: This is tax revenue. Now there could be some of this tax revenue that would be used for those mobility projects. So a portion of it could go to those projects.

But this is tax revenue that comes from gasoline tax, vehicle registration, federal reimbursements, and a few others. So we have $5.1 billion available in these categories.

When we look at trying to -- the $3.4 billion was 66 percent of that money would be transferred over to do that, and, of course, the $6.3 billion would take more than 100 percent.

So in essence we would have to move -- if we wanted to continue -- if we keep forward and try to meet our goal of 90 by 2012, we would in essence have to eliminate the mobility program in those categories altogether, and we're still short.

MR. HOUGHTON: By what year?

MR. SAENZ: By 2012.

MR. HOUGHTON: Gone?

MR. SAENZ: It's gone -- well, it would be gone before because we're --

MR. HOUGHTON: That's what --

MR. SAENZ:  -- having to move money into -- we're having to put money into preservation in '08, '09, '10, '11 and '12. So it would be gone in essence prior to that. We may have some mobility money this year, maybe a little bit next year, but from '10, '11 and '12, in essence the mobility money would not be available.

MR. HOUGHTON: That's a profound statement. The money is gone.

MR. SAENZ: Yes.

MR. HOUGHTON: Does the MPOs know?

MR. SAENZ: We met with the MPO through a video teleconference because they are, at this time, putting together what they call their statewide improvement program, their T.I.P. It's their transportation improvement program, their T.I.P., that covers the time period of '08 through '12 --

MR. HOUGHTON: With plugging in this --

MR. SAENZ:  -- '08 through '11, I'm sorry.

MR. HOUGHTON:  -- plugging in this type of scenario?

MR. SAENZ: No, they're using the numbers that they had from 2007.

MR. HOUGHTON: Okay. So --

MR. SAENZ: What we told them is we're running into this problem, we're going to have to probably adjust your numbers, so be prepared that you're going to have to make some changes to what you have in your --

MR. HOUGHTON: But they -- not to this level they don't understand --

MR. SAENZ: No, sir, not yet. No yet.

MR. HOUGHTON: That'd be a coronary, wouldn't it?

MR. SAENZ: Yes.

MR. WILLIAMSON: Hey, hey, hey.

MR. HOUGHTON: Sorry about that, Ric.

MR. WILLIAMSON: It's all right.

MR. HOUGHTON: Okay.

MR. WILLIAMSON: We try not to talk about those things.

MR. SAENZ: I didn't hear what he said. Okay. Looking at this kind of just in summary, if we stay at the current maintenance and mobility levels, pavement conditions are going to worsen. And that's the 7.1 and the 5.1.

We'll not be able to keep up with the impact. In fact, we will lose ground pretty quickly because we're not even keeping -- we're not keeping up with even the inflation. If we adjust the stay at the 2002 level of 1.1, and adjust for inflation, we will in essence hopefully be able to keep our pavements at about the same level that they are in 2006.

If we put a little bit more money, that $3.4 billion, that -- but we still would lose some ground because all we're doing is keeping it at whatever that number was and not inflating it any further under that scenario. That's scenario number two.

Scenario number three is I take that 1.8 and I adjust it for inflation, but based on 5 percent I move more money into there. That leaves me only $1.7 billion in mobility between '08 and '12. It increases my preservation to 10.5, and at that point I keep my payment scores about the same.

And, of course, if we wanted to continue and meet our goal, we would be short $1.2 billion in mobility. We would take it all, take all 5.1, and still be short. We'll have to see where we can find that other 1.2, and move it into preservation. And that would allow us to keep our pavement scores and meet our goal of 90 or better by --

MR. WILLIAMSON: But not to beat the dead horse too many more times, but that's really not an accurate statement on the last column, is it, Amadeo, because if you moved all your mobility money to preservation of existing system, you would, in effect, not be building --

MR. SAENZ: That wouldn't be building new roads.

MR. WILLIAMSON:  -- new lane miles, but with 12 to 1500 people, thus 800 to 1000 vehicles a day coming to the state, the deterioration of the pavement would accelerate --

MR. SAENZ: Yes.

MR. WILLIAMSON:  -- would it not?

MR. SAENZ: Yes, sir, you're correct. If I can't build any more capacity, people will drive on the existing old roads, they will -- they're aging as days go on, deterioration is much faster, so in essence my pavement scores -- so I'm really fighting a never ending battle.

So I've got to reach some kind of balance between mobility and preservation so that we can kind of reach a balance where we build enough so that we take care and address the oldest pavements at the capacity as needed, that will in essence help us carry more traffic on those pavements, less traffic on the existing pavements, and those will deteriorate a little bit slower.

MR. WILLIAMSON: Now I notice you didn't break down your report to the district level.

MR. SAENZ: Right. That was going to be chapter two after -- I wanted -- what I wanted to do was look at it at a state level. I want to now look into, and take into account what is going to happen based on legislation that will finish next week, and make those accounts, and then carry them over to the district level where we get to now to the point of how do we address the problems that we have, say, in the metro districts like Houston, and Dallas, and El Paso.

MR. WILLIAMSON: Well, before I asked that question, I should have let you finish up.

MR. SAENZ: Right. I think pretty much -- and it's really my slide that says we can't afford to ignore maintenance. Not funding maintenance has cost us more over time, not preserving our investment is poor public stewardship. I came up as a district maintenance engineer, so this is close to my heart.

Poor maintenance reduces safety. The next time we take a step back on pavement conditions we lose millions of dollars. So we need to see how we can address and protect that asset that we have. Because if we lose it, we will never be able to get it back.

We've got to make some tough decisions to make, you know, and we know that it's really important to the state, but we also need to make sure that preservation, and our investment in preservation is also key.

They're both important, we cannot afford to -- if we can't afford to meet our pavement goals, we need to somehow figure out what you need to do to keep our pavements in a condition that will reduce our spending in mobility. Just we're going to have to reconstruct that much faster also.

As I mentioned, what we want to do now is take into account to see what comes out of this legislative session. And apply the factors as to what it did with respect to our cash flow and programming capabilities, the monies that we have for the future.

Also, one of the concerns that we heard when we met with the MPO was the nonattainment areas have to have conformity plans, and those conformity plans are based on certain mobility projects that are scheduled to be done by certain times.

We're going to see what impact this would have if you move money from mobility and you take money, that they can't make those conformity -- they get into conformity lapse, what issues will that bring up, so that we can kind of come up with a program to make a recommendation to you all as to how much we can move into the preservation category, and then what will result in that. We hope to be able to do that in the next month to month and a half.

And that will put us right in line to addressing the 2008 unified transportation program. Now, Mr. Chairman, with respect to what you mentioned dealing with the specific districts, my recommendation will be, as we identify this additional money, then we will target this additional money to certain parts of the state that need the money the worst.

So that we can target it -- if the metro areas need the preservation money to address those key needs, those would be targeted and then they would be provided to the district with the requirement for a plan so that we know that this is going to get done and the results will help us overall improve our system as a whole, but addressing the needs where they're needed instead of just allocating.

I'd also probably would recommend that it's time to bring back the work groups that developed the original allocation formulas for the different funding categories so that we can look at some of the things that are happening today and make some adjustments so that the money can be sent to the proper location, or to the best location, the location that really needs it is what I'm trying to get at.

MR. WILLIAMSON: So what you're saying is, there's actually -- what we will face in the next few months is actually two decisions, whether or not to transfer money from mobility to preservation --

MR. SAENZ: Yes.

MR. WILLIAMSON:  -- and in the process of doing that, whether or not to transfer from low population and low growth districts to high population --

MR. SAENZ: Right.

MR. WILLIAMSON:  -- high growth districts.

MR. SAENZ: Right. I think it's going to be how much to -- whether or not to transfer it, and then how much to transfer from mobility to preservation, and then where -- how to allocate it within -- now that you've got in preservation, to address the needs, and is it in the rural areas, is it in East Texas where we've had a lot of drought conditions, is it in South Texas where we have additional border problems and NAFTA.

And so those things will come with some recommendations so that as we put together the next UTP, we'll have a preservation program that I would perceive to be a regular program with certain funding limits, and then we'll have a special preservation program that addresses our statewide needs as a whole and targets areas that we want to address.

That way, at the end of that year, we'll be able to see that we did make a good stride in improvement.

MR. HOUGHTON: Well, it seems like what you're doing with what you just said, Amadeo, taking from one to another; it's robbing from Peter to pay Paul kind of a theory. And if you look at category three, four, 11 and 12 -- well, not -- well, even 12, if you took 100 percent of all those dollars, you're still not going to get where you need to go.

MR. SAENZ: No, we're not going to get where we need to go, and that's because there's not enough money to go all the way around. That's why not enough tax money to go all the way --

MR. HOUGHTON: That what it -- that's what's --

MR. SAENZ:  -- around.

MR. HOUGHTON:  -- in these categories.

MR. SAENZ: That's why it was important about having --

MR. HOUGHTON: Right.

MR. SAENZ:  -- the private sector and bringing in private money, because as you bring in private money, those projects that were developed with that private money, one, the maintenance for those projects were covered so we're not adding additional burden to the preservation program.

MR. HOUGHTON: And the hornet's nest that you're going to start rattling in category two, take it from the -- you've got eight major -- you've got eight metros in category two, or nine?

MR. SAENZ: Eight.

MR. HOUGHTON: Metros.

MR. SAENZ: Maybe nine.

MR. HOUGHTON: Eight?

MR. SAENZ: Yes.

MR. HOUGHTON: Okay. To -- I'll pick on El Paso -- El Paso, we're going to reduce category two to put it in Houston, or Dallas.

MR. SAENZ: We're going to reduce category two and if -- it'll probably go to preservation in Houston.

MR. HOUGHTON: That's my point.

MR. SAENZ: Yes.

MR. HOUGHTON: The hornet's nest that'll stir up statewide.

MR. WILLIAMSON: No offense to San Antonio, you're blessed with one of the best state systems of the urban environment in the state. But that also could be observed about Austin, San Antonio, Fort Worth, could it not?

MR. SAENZ: Yes, sir. The same thing. We could -- my worst pavement conditions, as I remember the report, and I came down here too fast and I forgot it, was Dallas and Houston were the two metro districts that had the worst pavement scores.

San Antonio -- El Paso was somewhere in the middle; San Antonio was somewhere about where the statewide is, around 86.

MR. WILLIAMSON: You know --

MR. SAENZ: But if you look at San Antonio --

MR. WILLIAMSON:  -- [indiscernible] these in a row. Raymond Stotzer, God rest his soul, and Bob Kelly. I mean, what can I say?

MR. HOLMES: Amadeo, do we have a handle on the funding requirements that deal specifically with non-attainment issues?

MR. SAENZ: Yes, sir. Of course, CMAQ money comes directly to us and we have allocated it to the non-attainment areas. And we've been depending on those areas to set up the program to insure that they can use that money to help with meeting their conformity plan.

MR. HOLMES: And if we wanted to move some of that money into maintenance, is that possible?

MR. SAENZ: We couldn't do that. Now we could look at -- you could do some signal improvements that would improve the timing and would improve the flow, and you could use some of the money for that.

And that, improving the timing and flow through intersections, will lessen the amount of maintenance, but we always have to tie back to an air quality improvement.

MR. HOUGHTON: It sounds like, Amadeo, that we've outlived, Mr. Chairman, the categories, and you may, to go to super-metros instead of lumping everybody into the metro -- in the category two, the major metros, because your supers are Houston, Dallas metroplex, and, of course, it's just my thinking.

MR. SAENZ: Right. And if they have a super-metro category, a metro --

MR. HOUGHTON: Category, if it's deteriorating that badly in those areas, you can't catch up, and they're a huge economic engine.

MR. SAENZ: Yes, sir.

MR. HOUGHTON: Now that's not going to sit well with a lot of folks, but the reality is --

MS. ANDRADE: And my concern, Amadeo, is that if we don't address maintenance, we're affecting negatively each one of our five goals that we've been living on.

MR. SAENZ: Yes, ma'am.

MS. ANDRADE: And if we're going to change anything, we need to start talking about it. You know, the situation that we're in and make sure that each community understands that, because, you know, any time we change things, you know how it affects the rest of the communities.

MR. SAENZ: And we need to do it, and we need to do it now because, as I mentioned, our plans are, on the preservation side, are always take four years into -- look four years into the future. On our mobility side, those mobility categories, we're looking at 10 years into the future.

And if we're going to have to change funding amounts, we need to be able to let the regions know as soon as possible so that they can plan accordingly.

MR. HOUGHTON: Mr. Chairman, is it appropriate enough to get this information out to these MPOs and have them start thinking about what we're thinking about and the issues that we're facing?

MR. WILLIAMSON: Well, I think that we've established some communication with the metros --

MR. SAENZ: Yes, we had one meeting. We will pass --

MR. HOUGHTON: Yes, but they don't have this kind of information.

MR. SAENZ: Not yet. This is -- you're -- this is the first presentation. We will then -- we'll say we will follow up with them as we move forward with developing the next unified transportation program.

MR. HOUGHTON: I'd sure entertain the thought of the super-metro system based upon different criteria, but that's to your working groups you're going to have to put together.

MR. WILLIAMSON: Well, I appreciate your observation about that. You know, I think we've got five more days that we need to pay attention to what the legislature either does in law, or says, and in using their words tells us what they want.

But, you know, my sense is, we probably ought to be thinking about some organizational change, and super-districts might not be out of the question.

MR. SAENZ: We'll look into that.

MR. HOUGHTON: Yes, the super-metro systems that are growing -- what's Houston and Dallas area growing by a day?

MR. WILLIAMSON: And if you said Austin and San Antonio were one metro, then you would also be --

MR. HOUGHTON: Well, that's a good point. I mean, between here and San Antonio, that's one city, pretty much.

MR. WILLIAMSON: And it's certainly a more economic --

MR. HOUGHTON: Area center.

MR. WILLIAMSON:  -- yes, area.

MR. HOUGHTON: I wouldn't at all be opposed to a look at a super-metro system.

MR. WILLIAMSON: Well, I suspect, based on the information we're receiving, and, again, it's modulated by what the legislature does and what they say, but I suspect we should all kind of get ready for some changes in the structure of the system.

MR. HOLMES: Eight metro areas, do we count Dallas and Fort Worth separately?

MR. SAENZ: No, we count them together.

MR. HOLMES: We count them together.

MR. SAENZ: Yes, sir. We count Dallas and Fort Worth together in one because --

MR. HOUGHTON: But we count San Antonio and Austin separately.

MR. SAENZ: Yes, sir. All the other ones are separate, with the exception of Dallas and Fort Worth. When we work on category two, we work on them as a whole, because both of them are under one MPO, which is --

MR. WILLIAMSON: This may be the first time Fort Worth wants to be considered a part of Dallas.

MR. HOLMES: May be to their advantage.

MR. SAENZ: We will continue to work on this thing, and probably next month we'll have a follow-up discussion item to brief you as to where we're at and what -- some of the early recommendations we would like to make with respect to --

MR. WILLIAMSON: What I think I'm looking for in June -- we're out of town in July. Is that --

MR. SAENZ: Yes, sir.

MR. WILLIAMSON:  -- correct -- what I'm looking for in June is a pretty meaty follow-up on this. I think I've already expressed to Mr. Jackson a fairly robust review of the changes in the law.

And I think I expressed to you, Mr. Simmons, some input from our auditor, our outside audit group that's observing what's going on and giving us recommendations. So we would want to minimize other business in June to be able to spend some time on those three areas. Those are the three most important areas the commission faces right now, I believe.

Okay. Well, I thank you, Amadeo. I thank you, Mike.

MR. SAENZ: Thank you.

MR. SIMMONS: I didn't want to leave you with wrong information, but before I sat down, my Blackberry was going off to correct me on the information I gave you on the enabling legislation for the $5 billion GR bonds.

The enabling legislation was added to a bill last night, so --

MR. WILLIAMSON: So the constitutional amendment passes in November.

MR. SIMMONS: Then we can immediately go to work on -- with those bonds, because the enabling legislation. That doesn't mean it's passed, but at least it's back on track to not having to wait a session to go forward.

(Pause.)

MR. SIMMONS: Yes, sir.

MR. WILLIAMSON: So that would be -- we're going to have two sources -- as we understand things right now, two sources of debt, general revenue back debt, and then the general obligation.

MR. HOUGHTON: Well, the new dollars --

MR. WILLIAMSON:  -- from the highway fund.

MR. SIMMONS: From the highway fund, yes, sir.

MR. HOUGHTON: The 514 bonds aren't new dollars.

MR. SIMMONS: That's correct.

MR. HOUGHTON: So I'm looking at new dollars into the system.

MR. SIMMONS: That's correct.

MR. HOUGHTON: Okay, Amadeo, well, Commissioner Holmes and I are stumped over here, we're missing a major metro. Can you list them off real quickly?

MR. SIMMONS: I'll be happy to list them for you.

MR. HOUGHTON: Steve?

MR. SIMMONS: It's the Dallas/Fort Worth --

MR. WILLIAMSON: You ought to make your commissioners answer that question.

MR. HOUGHTON: I know one.

MR. SIMMONS: Dallas/Fort Worth, Houston, Austin, San Antonio, Lubbock, El Paso, the Valley, and Corpus Christi.

MR. HOUGHTON: Corpus Christi. We were missing Corpus. My apologies to Corpus.

MR. SAENZ: The City by the Sea.

MR. HOUGHTON: Are we -- is there any thought of more fees this session going into the mobility fund? Is there anything working that way? Where's James?

MR. SIMMONS: No, sir.

MR. WILLIAMSON: I don't believe there's any -- there's nothing new, and a lot more going out.

MR. HOUGHTON: When I just had come on to the commission, our mobility funds were targeted at 3 billion, the TxDOT mobility fund, now they're at what level, James?

MR. SAENZ: About 6.2 billion.

MR. HOUGHTON: Six point two? So it doubled?

MR. SAENZ: They started off about four.

MR. HOUGHTON: Was it at four they were projecting, and we're at 6.2. Any other future projections, James, the Comptroller's looking at?

MR. BASS: They're awaiting their certification as to --

MR. WILLIAMSON: I'm getting the evil eye from Mr. Jackson. We've got too much testimony going on away from the mike and unidentified. Amadeo Saenz was the person who volunteered the question a few minutes ago for the record with the answer on the mobility fund.

James, why don't you come up here and answer Mr. Houghton's questions please?

MR. BEHRENS: He's next on the agenda.

MR. WILLIAMSON: So he can just keep right on going?

MR. BEHRENS: He can just keep right on going.

MR. WILLIAMSON: For the record --

MR. BASS: For the record --

MR. WILLIAMSON:  -- please identify yourself and tell us how much weight you've lost.

MR. BASS: James Bass, Chief Financial Officer at TxDOT, 42 pounds.

MS. ANDRADE: Wow.

MR. WILLIAMSON: You get a hand for that, sir.

MR. BASS: Yes, I heard you over and over, over the years, you kept asking me the question and now I can actually answer it in the affirmative, so, thank you.

We actually have an agenda item later today dealing with the mobility fund and our next debt issuance, but on the last revenue certification we received from the Comptroller's office back in September of '06, looking at those projected revenues and current interest rates in the market, we felt the mobility fund would support about 6.2 billion in debt issuance.

And what we've seen as we've progressed through time, those revenue estimates from the Comptroller's office, every time we've received one, it's slightly increased because when they're getting more actuals from these particular fees, they've exceeded their prior estimates and so they're adjusting as we move along.

MR. HOUGHTON: So where do we think we're going to be?

MR. BASS: I would hate to guesstimate what we'll receive from the --

MR. HOUGHTON: All right. Just --

MR. BASS:  -- Comptroller's office, but in looking at the biennial revenue estimate and some fiscal notes for bills that were debated during the session, I would expect it would go up -- the revenues would go up slightly. How much capacity that will bring us, I don't think it's going to be anything huge. We may approach the 6-1/2 billion level.

MR. HOUGHTON: So we have a 50 percent increase in what we had anticipated when we first --

MR. BASS: Correct. Market rates, as you know --

MR. HOUGHTON: Right.

MR. BASS:  -- have been, and continue to be at historically low levels, and that's really helped increase the leverage of those revenues coming into the mobility fund.

MR. HOUGHTON: Are we restricted, James, as to the issuance of debt in any given year on those mobility funds?

MR. BASS: Not on the mobility fund. There's, I guess, two hurdles in addition to the approval from the commission. We have to have approval to issue by the Bond Review Board, and if you recall, a couple of years ago we got a programmatic approval, if you will, for $4 billion.

Subject to your approval on agenda item 8 later today, we will issue in June the four billionth dollar out of the mobility fund. So that --

MR. HOUGHTON: That billion?

MR. BASS: Correct. That will require us to go back to the Bond Review Board to seek their approval for additional issuance, and before we make any issuance out of the mobility fund, we must receive a certification estimate from the Comptroller's office that in any year debt is going to be outstanding, they forecast revenues to be at least 110 percent of the debt service in those years.

MR. HOUGHTON: So we think we have another billion to issue, we've got 2.2 outstanding that is unused at this time?

MR. BASS: But I wouldn't say unused. What a key is --

MR. HOUGHTON: There's a reason I said that.

MR. BASS: Thank you. The -- within our accounting system, and the active projects that are going on throughout the state right now, there's 5.9-$6 billion of work that is to be funded by the mobility fund.

So as we saw these revenue estimates increase, and the capacity increase, word got out to the districts there's more resources available, start pushing more projects through the pipeline.

So there's $6 billion worth of work that is currently active to be funded by the mobility fund, and all we're simply doing is issuing the bonds on a cash flow basis, on an as needed basis.

And what it's worked out to be is about every eight to nine months the cash flow needs of those projects have required us to go out and issue another billion dollars. We spend that over eight or nine months, we go issue another billion dollars.

MR. HOUGHTON: But there's a criteria to the use of mobility funds. Correct?

MR. BASS: There's a criteria to access --

MR. HOUGHTON: The mobility funds --

MR. BASS:  -- of the funds in the mobility fund, that within their plan -- let me take a step back.

The strategic plan adopted by the commission for use of the Texas Mobility Fund took some money off the top, if you will, I'm sorry if that sounds bad, but to fund the engineering, environmental design, and right-of-way acquisition for projects.

Of the remainder, two thirds of it was distributed by a formula agreed upon by the eight metro areas, and one third was left for connectivity in the remainder of the state.

Now in order to gain access to that money, the two thirds money to the eight metro areas, within their regional transportation plan they had to have an identified leveraged project.

MR. HOUGHTON: What is the definition of leveraged?

MR. BASS: It's bringing either -- the one that most people think of off the top of their head is a toll project, and so it was often misinterpreted that the commission's strategic plan required a toll project.

What it required was a leveraged project, that another revenue source was coming in to help fund that project, and hopefully was going to develop and create a funding mechanism for that region to continue to fund transportation into the future.

So it wasn't trying to create something other than a one and done type approach in funding. But as long as they had a leveraged project in their plan, which might have been, as an example, a transit project partially funded by fare box revenue. That would be an example of a leveraged project, other than a toll road.

If they had one of those projects in their plan, they then gained access to their portion of that two thirds of the mobility fund that they could then use on projects in their region.

MR. HOUGHTON: How many metros have met that criteria?

MR. BASS: To my knowledge, I think all eight have met that --

MR. SAENZ: Seven.

MR. BASS:  -- seven. I'm sorry. Corrected from the --

MR. HOUGHTON: From the back bench?

MR. BASS: Yes.

MR. HOLMES: Which one is that?

MR. BASS: There's still ongoing discussions in Commissioner Houghton's home town of El Paso is my understanding.

MR. HOLMES: I wouldn't have asked the question --

MR. HOUGHTON: I was hoping somebody else would besides me ask that question.

MR. WILLIAMSON: Are you ready for 5(a), James?

MR. BASS: Yes, sir.

Agenda item 5(a) would adopt the rules for the process and procedures governing the submission and evaluation of applications for allocations of private activity bonds from the U.S. Department of Transportation. Proposed rules were previously published in the Texas Register in order to receive public comments. Comments were received by -- from the Texas Bond Review Board, and a description of those comments, as well as the department's response to those comments, are listed in Exhibit A.

Staff recommends your approval of these rules, and I'd be happy to go into any further detail if you would like.

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

(No response.)

MR. HOUGHTON: So moved.

MR. UNDERWOOD: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, members. Thank you, James.

MR. BASS: Thank you.

MR. BEHRENS: Agenda item 5(b), which is also a rule for final adoption is a rule concerning the motor vehicle title and registration certificates.

Rebecca?

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

MR. WILLIAMSON: Good morning, Rebecca.

MS. DAVIO:  -- you today the rule to delete the $5 fee when a person notifies the department that they have sold a vehicle. We are asking to eliminate this fee because it's the right thing to do. We need to encourage people to notify us so that we can provide better service to the customers and to law enforcement.

We've received no comments on this rule, and we're requesting your approval.

MR. WILLIAMSON: The government cuts taxes.

Members, you've heard the staff's explanation and recommendation. Do you have questions or comments?

(Pause.)

MR. HOLMES: So moved.

MR. UNDERWOOD: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MS. DAVIO: Thank you.

MR. WILLIAMSON: The motion carries. Thank you, members. Thank you, Rebecca.

MR. BEHRENS: I'm pausing for a moment because I lost Amadeo.

(Pause.)

MS. ANDRADE: While we're pausing, can I ask Rebecca a question?

I'd be curious just to see if sometime in the future you can give us a follow-up if it did work.

MS. DAVIO: Yes, ma'am, I'd be happy to do that. And we're going to start a campaign to alert the motoring public. Until I started this job, I had no idea that there was any need to report the sale of the vehicle, and I've become very aware of a lot of problems that can happen for everyone by not notifying.

So we're going to start a campaign, and this request to remove the $5 fee fits very nicely with the piece of the legislation that's passed that requires us to put that on the internet, to make that capability to notify us available on the internet, and I'll be happy to come back and bring you a report.

MS. ANDRADE: Any time we do something like this I'm just curious to see does it work.

MS. DAVIO: Okay.

MS. ANDRADE: Okay. Great.

MS. DAVIO: Thank you.

MS. ANDRADE: Thank you, Mr. Chairman.

MR. BEHRENS: Agenda item number 6 concerns toll projects, and this recommendation will designate a toll project on U.S. 281 in Brooks County.

Amadeo?

MR. SAENZ: Good morning, again, Commissioners. For the record Amadeo Saenz. Agenda item number 6 is a minute order before you, it authorizes the designation of U.S. 281 from nine tenths of a mile south of FM 3066 north of the Brooks/Jim Wells County line in Brooks County.

Really, it's a project being developed through the City of Falfurrias. The project is being developed as a controlled access facility for development, and maintenance, and operation.

The project is currently planned as a four lane divided highway beyond the state highway system. The proposed section will consist of a controlled access facility with two toll mainlanes and two toll -- two lane non-toll one way frontage roads in each direction.

Development of this project will facilitate the flow of traffic and promote the public safety and welfare. The project can be completed sooner than -- through the innovative financing such as using the toll lanes.

The staff would recommend your approval of this minute order to make this controlled access facility, and also designate it as a toll road.

MR. HOUGHTON: There's no corresponding map in here.

MR. SAENZ: I don't believe we've got one. As I said --

MR. HOUGHTON: It's quite interesting, Jeremiah and I were looking at this last night, we were talking Brooks County, a toll road, they're willing to toll this to meet their transportation needs.

MR. SAENZ: Yes, sir.

MR. HOUGHTON: I applaud that county.

MR. WILLIAMSON: Well, it's probably because it's going to be somebody other than citizens of Brooks County paying most of those tolls.

MR. HOUGHTON: Great. The foresight.

MS. ANDRADE: It is, and I have to tell you, Commissioner Houghton, that I was in Laredo recently. I think a lot of it is attributed to the leadership of Mario Medina.

MR. SAENZ: This is Mario Jorge.

MS. ANDRADE: I'm sorry. Mario Jorge.

MR. SAENZ: Yes.

MS. ANDRADE: I'm in the wrong county then.

MR. SAENZ: That's another -- yes.

MS. ANDRADE: Okay. All right. I'm in the wrong county. But I was in the Valley also, and Mario and I talked about this, and he was very proud. I asked him the same question as how he got it done. And, yes, so I think he needs to be congratulated, and the community needs to be congratulated.

MR. SAENZ: We've been working on this project for many, many, many years. We took advantage working with the county and the city when we built the current portions that are built through Falfurrias where we bought railroad right of way, and then had the foresight to buy not only the right of way that we needed but we bought the entire right of way that was available. This allowed this project not to be expanded.

The issue still is -- there is still some right of way that needs to be purchased. By the project being developed as a toll road, it saved the local community the right-of-way dollars, they appreciated that. And the way they see it, I think as Chairman Williamson said, the people that will be using the toll road will be the people that are going through Falfurrias and not really the locals. But --

MR. WILLIAMSON: And I meant that as a compliment to them. They understood, unlike other parts of the state that we've been trying to encourage, they understood that. They're getting rid of the traffic and somebody else is paying for it. I mean, what could be wrong with that. That's smart.

MS. ANDRADE: But that's a region that has been creative lately. The Hidalgo County judge has also taken some leadership, and so, yes, I think we need to congratulate this region because they are -- but it is right, a true statement is that the locals are not the ones that are using it --

MR. HOUGHTON: Do you know what school he graduated from, that Hidalgo County judge? You know that, Mike, do you know what school he graduated -- the new Hidalgo County judge? Forward-thinking Aggie.

MR. WILLIAMSON: No. No way.

MR. HOUGHTON: Yes.

MR. HOLMES: Amadeo --

MR. SAENZ: Yes, sir.

MR. HOLMES:  -- how long is this section?

MR. SAENZ: This section is about three and a half to four miles long, I believe, sir.

MR. HOUGHTON: It's outstanding.

MR. SAENZ: It's a mile south to about three miles north of Falfurrias, about four miles long.

MR. HOUGHTON: A little recognition --

VOICE: Very good.

MR. HOUGHTON: Those folks need some recognition.

MR. SAENZ: It's going to replace -- currently we have a four lane non-divided continuous left turn urbanized type section, rural sections. This will build a full controlled-access toll way.

MS. ANDRADE: There's a lot of great things --

MR. SAENZ: Express lanes and toll lanes.

MS. ANDRADE:  -- happening, and make sure that you tell Mario Jorge that I confused him with --

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

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you members, and Amadeo.

MR. BEHRENS: Agenda item number 7 concerns right of way. Recent legislation requires us to have a utility relocation advisory committee.

And, Amadeo, if you'll present that --

MR. SAENZ: Yes, sir.

MR. BEHRENS:  -- present the members for membership?

MR. SAENZ: Again, Commission, for the record, Amadeo Saenz, Assistant Executive Director for Engineering Operations.

Agenda item number 7 minute order authorizes the creation of a committee to advise the department and the commission on the development of rules for establishing a new pre-payment agreement funding program to reimburse utility companies for eligible relocation expenses.

It also appoints six members to this committee and directs the Executive Director to designate an office to provide the administrative support for this committee to work on.

As Mr. Behrens said, this legislative session where we have a change to the Transportation Code that allows for the establishment of this voluntary, what we call pre-payment program, and this pre-payment program is a program where the utilities will be able to voluntarily enter into a six year pilot program.

They will -- this will only cover utilities that are non-compensable. These are utility costs that they have to bear themselves -- they've had to bear themselves in the past.

A lot of the problems that we run into is that they say, well, I wasn't aware that the project was moving this fast, I didn't put it in my budget, therefore I need time to plan, order materials, do my design, and that would in essence delay our projects.

Under the pre-paid program, the utilities will put in a set amount of money every year based on 75 percent of their previous year's expenditure for the last -- for three years, and then they will pay that up front, and then the utilities that are adjusted, that were their responsibility, will become 100 percent reimbursable utilities.

The department will wind up paying 25 percent of that utility cost, really 25 percent at least. But the savings that we'll get and realize by not having to then worry about them not budgeting and not being able to do the work, will far save us money with respect to accelerating the construction of projects.

This committee, this advisory committee will help us put together the rules for the program, and then it'll continue to work with us as we go through and coordinate utility issues in the future. Staff would recommend approval of this minute order.

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

(No response.)

MR. WILLIAMSON: Amadeo, I want to express my personal appreciation to staff for working so hard on this. I know this was a difficult one to work out, but I do think this is the wave of the future. Time is valuable. If we can save time, we're creating value.

MR. SAENZ: Thank you. We had quite a few people from the department that were instrumental in getting this done. Mr. Jackson and Patrick Marotta and John Campbell that helped me put this thing together, and we were able to make this thing work.

MR. WILLIAMSON: Do all of these fine people know that they're going to participate in this --

MR. SAENZ: Yes, sir, they -- what we did, we sent a letter to the utility companies we covered, the major utility companies, and we included governmental utility companies.

We did have one request that was not answered from the City of Austin, but we do have all the major utility companies, they've all accepted and have submitted their nominees that were submitted by them. And we will be ready to get -- work with them as soon as you all adopt this minute order.

MR. WILLIAMSON: Do we have a motion?

MR. UNDERWOOD: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, members. Thank you, Amadeo.

MR. BEHRENS: Agenda item number 8 is another finance minute order, and this is, as James stated earlier, will be for another issuance of the Texas Mobility Fund bonds.

MR. BASS: Good morning. Again, for the record I'm James Bass, Chief Financial Officer at TxDOT.

Through this minute order the commission directs the department to execute any necessary documents and to issue 1.05 billion Texas Mobility Fund bonds.

The commission would also approve the documents in the exhibit which are associated with the bonds, and authorize the department representative to approve any necessary revisions to those documents. Staff recommends your approval.

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

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, staff.

MR. BEHRENS: Agenda number 9 is our State Infrastructure Bank. This is final approval of -- this was previously brought to you concerning Williamson County and wanting to borrow 16 million for a crossing over I-35.

MR. BASS: Item 9 seeks final approval of a loan to the Round Rock Transportation System Development Corporation in the amount of $16 million to pay for improvements to Hester's Crossing interchange at Interstate 35.

Interest will accrue from the date funds are transferred from the SIB at a rate of 4.2 percent with payments being made over a period of no more than 15 years. Staff recommends your approval.

MR. HOUGHTON: What is the unencumbered balance of the infrastructure bank?

MR. BASS: We have currently $57 million in the SIB, the current cash balance.

MR. HOUGHTON: How much issued debt?

MR. BASS: There's no debt. We have the ability, the commission has the ability to leverage the loans that we have outstanding to different entities, and increase the revenue and the loan capability of the State Infrastructure Bank through bond issuance. So --

MR. HOUGHTON: Okay. So how much is owed us.

MR. BASS: I'm sorry. We've loaned out a total of 295 million, and we've had about 35 of that paid back, so about 260 is owed back to us.

MR. HOUGHTON: And have 57 million unencumbered.

MR. BASS: Correct. It's currently unencumbered, but if you approve this item today, 16 million of that 57 --

MR. HOUGHTON: Fifty-seven.

MR. BASS:  -- would be --

MR. HOUGHTON: Forty-one.

MR. BASS: -- yes, and we have roughly $65 million in applications, including the 16 million, in process right now.

MR. HOUGHTON: Whoops.

MR. BASS: So that's been fairly consistent over the past couple of years that the dollar amount of application pending has been equal to the current cash balance, but each month --

MR. HOUGHTON: Right.

MR. BASS:  -- we're receiving payments on the outstanding loans to help increase. We do have some concern over the next 12 to 18 months we could get into a cash flow, but it's really dependent upon applications that we receive through the local entities.

MR. HOUGHTON: Nice rate of 4.2 percent.

MR. BASS: I hope we get that when we go --

MR. HOUGHTON: You're very generous.

MR. BASS:  -- next month for the --

MR. HOUGHTON: You're very generous, James.

MR. BASS:  -- mobility fund.

MR. HOUGHTON: You're a very popular guy.

So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, members. Thank you --

MR. BASS: Thank you.

MR. WILLIAMSON:  -- James.

MR. BEHRENS: Agenda item number 10 is our contracts for the month of May, both our highway maintenance and building contracts and our large highway construction contracts.

Thomas?

MR. BOHUSLAV: Good morning, Commissioners. My name is Thomas Bohuslav. I'm the Director of the Construction Division.

And, Commissioner Underwood, I know who parked in your parking spot the other day. The thing about it is he's responsible for all the parking for the department anyway, so.

Item 10(a)(1) is for consideration of the award or rejection of highway maintenance and department building construction contracts for May 8 and 9. [indiscernible] the estimated cost is $300,000 or more.

We had 22 projects and an average of 2.8 bids per project. We recommend the award of all the projects. Any questions?

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

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, members. Thank you, Thomas.

MR. BOHUSLAV: Item 10(a)(2) is for consideration of award or rejection of highway and transportation enhancement building construction contracts on May 8 and 9, 2007. We had 55 projects, an average of 2.6 bids per -- excuse me -- 4.6 bids per project.

We have two projects we would recommend for rejection. The first one is in Bexar County, project number 3014. We had two bidders on it, it's 30 percent over, the low bid is 1.3 million. This is an enhancement project with the City of Selma for the restoration of a stagecoach stop.

The contract presented, they failed to include a million dollars in their bid, and we reviewed the criteria established by rule and recommend rejection due to the bid error.

The second project recommended for rejection is in Webb County. It's project number 3201. Two bidders, 4 percent over; low bid is $23.7 million. This is for construction of a border inspection station in the vicinity of a GSA facility there.

There were some significant errors in the plans, in bid item descriptions, and units, and time requirements for the project. It created an unbalanced issue in regard to determining who the low bidder was, so we would like to reject it due to the plan error, and then go back and fix those errors and relet the project.

So we recommend the two rejections and award of all other projects. Any questions?

MR. WILLIAMSON: Hang on just a second before we make a motion. I'm looking at these --

(Pause.)

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

MR. HOUGHTON: So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, members. Thank you, Thomas.

MR. BEHRENS: Agenda item number 11 is our routine minute orders. They've all been duly posted as we are required to do so. I'd be happy to answer any questions that you might have of any of these routine items, but if not, I'd recommend approval of the routine minute orders.

MR. WILLIAMSON: First of all, members, you've heard staff's explanation and recommendation. Do any of you have a conflict on any of these items that you know of for which you wish to be shown present not voting?

Michael, do we have -- did staff detect in its very limited way as it might conflict the commissioners that we're aware of?

MR. BEHRENS: No, sir. I went through all of them, and in my opinion, I don't see any conflicts that we would have with any of the commissioners.

MR. WILLIAMSON: And as always, we don't hold you to that, we just ask you to do that for us a favor.

MR. HOLMES: Unless Mr. Underwood is in the roofing business.

MR. UNDERWOOD: No, sir. No, I did check with the bank to make sure though.

MR. HOUGHTON: I just replaced my roof. So moved.

MR. HOLMES: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, members. Thank you, Michael.

Mr. Jackson, is there any reason for us to meet in executive session?

MR. JACKSON: No.

MR. WILLIAMSON: Do we have any open comment cards?

MR. BEHRENS: We have none.

MR. WILLIAMSON: Members, the most privileged motion in this -- on this record breaking day is in order.

MR. HOUGHTON: Wait a minute, Wait -- whoa, whoa. I haven't heard from Coby much today.

Coby, got anything to say? I really haven't had any time to --

(Pause.)

MR. HOUGHTON: So moved. Move to adjourn.

MR. UNDERWOOD: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: The motion carries. Thank you, members. We stand adjourned at 10:51 a.m., and that beats the record by 45 minutes.

(Whereupon, at 10:51 a.m., the meeting was concluded.)

MEETING OF: Texas Transportation Commission Emergency Meeting
LOCATION: Austin, Texas
DATE: May 24, 2007

I do hereby certify that the foregoing pages, numbers 1 through 103 inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Leslie Berridge before the Texas Department of Transportation.

 5/29/2007
(Transcriber) (Date)

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

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