Author: Terri Hall

TxDOT lied: private toll operators guaranteed profit on taxpayers' dime

Posted on by

We heard explicitly in testimony at yesterday’s Joint Public Hearing of the House and Senate Transportation Committees that with regards to private toll road contracts, TxDOT stated that the private operator was taking all the risk, not the taxpayers. Well, the Bond Buyer reports differently (below). How is this a transfer of risk when Cintra is guaranteed profits if toll traffic dips below a certain minimum?

The article states:

“The developer is guaranteed a set reimbursement, creating an element of risk for TxDOT if use of a tollway falls below projections.”

Also, how is their access to capital better than the public’s when they’re using federally-backed TIFIA loans and PABs that are tax-exempt just like public sector toll projects?

“They (Cintra) will borrow about $500 million from private lenders and seek an equal amount in government-backed loans from the Federal Highway Administration.”

We now know the answer to these questions. See why the public doesn’t trust a word out of the mouths of TxDOT?

Texas Officials Seek a New Path To Private Transportation Funding
Tuesday, February 2, 2010
By Richard Williamson
The Bond Buyer
DALLAS — With a statewide moratorium on new private toll projects still in place after more than two years, the Texas Transportation Commission is planning a bypass around that financial barrier to leverage existing funds.

While the financial constraints exist statewide, the Dallas-Fort Worth Metroplex serves as the incubator in terms of innovative public-private finance, say Texas ­Department of Transportation officials.

“This is, in my view, the premier national laboratory for transportation projects,” said TxDOT spokesman Chris Lippincott. “There’s a lot of interesting stuff going on.”

The latest scheme — one that will require rule changes and exhaustive risk analysis from department staff — would allow a private developer to design, finance and rebuild a 28-mile section of Interstate 35-East from Dallas northward to Denton in exchange for reimbursement from TxDOT.

The finance method, known as pass-through tolling, is relatively new but well established with local governments, particularly counties. The system has never been used with a private developer, according to TxDOT. Nevertheless, current law allows the use of pass-through tolling by private companies.

Read the rest of the story here.

Obama wants to yank Hutchison ban on tolling existing roads

Posted on by

Link to article here. So much for the pro-toll policies of Bush being set aside by a new Administration…doesn’t matter who holds office, the BIG MONEY is in charge and they want you to pay dearly to get to work, even to use freeways already built and paid for.

Texas toll roads: Obama sides against Hutchison in spat with Perry
Mon, Feb 01, 2010 | By Todd J. Gillman
Dallas Morning News
President Barack Obama isn’t exactly a player in Texas’ Republican primary for governor. But today, he seemed to weigh in on one of the more contentious issues: toll roads in Texas.

The 2011 budget Obama unveiled today calls for repeal of a federal moratorium on the tolling of existing roads in Texas. That puts the president at odds with Sen. Kay Bailey Hutchison — though not necessarily on the side of Gov. Rick Perry.

“The Administration would prefer that federal toll policy be addressed nationally as part of the multi-year surface transportation reauthorization legislation,” the Federal Highway Administration said in a statement, when asked to explain the budget language.

Hutchison inserted temporary moratoriums into highway appropriations bills in 2007, 2008 and last fall. The latest expires with the current fiscal year, at the end of September. Her point is that is just wouldn’t be fair to charge drivers to use a road that was already paid for through taxes or tolls — the implication being that, left to his own devices, that’s what Perry would do.

It’s a potent, populist issue for Hutchison — and a straw man, given that Perry vehemently denies any intention to slap tolls on existing freeway lanes.

“The department has made it clear that we have no interest in tolling existing lanes,” Texas Department of Transportation spokesman Chris Lippincott said this afternoon, when told of the Obama budget provision. “Whether we are prohibited from doing so in federal law is irrelevant,” he said.

And it wouldn’t be easy, even if the state’s Transportation Commission didn’t have a policy in place that effectively abides by the moratorium. To turn a freeway (or even a single lane of existing roadway) into a toll road, TEXDOT would need a waiver from the Federal Highway Administration. These are granted only rarely. Then, state law requires approval from the county commissioners and then from a county’s voters.

“There are significant barriers,” Lippincott said.

Hutchison spokesman Jeff Sadosky reiterated the senator’s stance, including the insinuation about Perry’s intentions: “Taxpayers have already paid for these roads. It is wrong to toll them, taxing Texans a second time. Kay Bailey Hutchison will continue to fight attempts to toll roads already paid for with taxpayer dollars, no matter where those efforts are coming from,” he said.

Toll roads front and center in gubernatorial debate

Posted on by

Vote for who YOU think won the debate in our online poll here (on bottom right side of home page).

The debate over toll roads took a front row seat in last night’s final Republican gubernatorial debate. The lead question to start the debate, posed by reporter Wayne Slater, asked candidates Kay Bailey Hutchison, Debra Medina, and Rick Perry what they feel is the best way to fund roads: more debt, raise the gas tax, or more toll roads.

While no candidate came out and said they’d raise the gas tax, both Hutchison and Medina said an audit and total house cleaning at TxDOT was in order before any new money would be considered. Both challengers rejected Perry’s version of reliance on strictly toll roads to build infrastructure. Hutchison emphasized no tolls on existing freeways (touting her amendment to two appropriations bills that forbids tolling existing interstates, though it has a loophole for “managed” toll lanes added to the middle of existing paid-for right of way), and no gas tax increases without a public election (which seems to indicate support for the local option gas tax being pushed by officials in urban areas).

Medina stated the need for greater transparency at TxDOT to identify the waste, and she emphasized state sovereignty, saying no gas tax should leave the state to get pilfered in Washington. Perry stubbornly clung to his failed policy of privatized, foreign-owned toll roads using sweetheart deals that grant monopolies to the private operators (which result in toll rates of 75 cents PER MILE to access public roads).

Perry’s “YOU LIE!” moment

Perry’s greatest fib of the day was his insistence that the Texas legislature passed a bill in 2005 prohibiting the conversion of free lanes to toll lanes. However, the truth is, the bill, HB 2702, tells precisely how TxDOT can LEGALLY convert existing highway lanes into toll lanes by simply downgrading the free lanes to access roads. The bill also contains other gaping loopholes that allow the Transportation Commission (all appointed by Perry) to override the “prohibition” if it determines the toll lanes “improve mobility in the region” as well as grandfather clause that exempts virtually all the toll projects currently on the table. Perry’s elitist “you can eat cake” attitude is: if you can’t afford the toll lanes, you can sit in congestion on the stop-light ridden access roads. The fight to stop the conversion of all existing FREEway lanes on US 281 (and 16 miles of Loop 1604) into a tollway has languished precisely because of the loopholes in HB 2702.

Challengers: Perry’s sweetheart deals must go

Later, Hutchison emphasized Perry’s approach to building roads grants sweetheart deals designed to protect the interests of the private operators, not of the traveling public, by limiting the potential “competition” of surrounding free roads. In her closing, Hutchison decried Perry’s cronyism relating to the toll deals, where lobbyists, not Texans, get their interests represented. Medina closed by lumping Hutchison into the mix saying “both want to sell Texas to the highest bidder” (an illusion to Hutchison’s support of private toll roads, though Hutchison stops short of foreign ownership and wants certain public protections in the contracts).

It’s interesting to note, only Medina actually asked for Texans’ vote on March 2. She also noted the career politicians tout big name endorsements, but Medina emphasized, as she looked right into the camera at the millions of viewers, “the only endorsement I care about is yours.”

Local toll agency to use State's credit to back $8 billion in toll roads

Posted on by

NEW UPDATE:

Texas DOT Gets $3 Billion Nod,Gears Up for Market
Financial Times
January 29, 2010; Updated: February 5th, 2010

In separate meetings yesterday, the Texas Transportation Commission and the State Bond Review Board authorized TxDOT to develop a preliminary official statement and take other steps needed to issue the debt.

TxDOT has not hired underwriters for the deal, which is expected to come in March or April, according to spokeswoman Kelli Petras.

Known as Proposition 12 bonds for the proposal authorized by Texas voters in 2007, the debt is designed to help the state catch up with its growing transportation infrastructure needs.

TxDOT executive director Amadeo Saenz said the TTC has already estimated that the state will need $332 billion more than is envisioned over the next 20 years to keep up with transportation needs.

As those needs grow, fuel tax revenues are falling and are currently 2% below projections made in 2009. Despite the need for more revenue, neither Gov. Rick Perry nor his Republican primary challenger Sen. Kay Bailey Hutchison are likely to call for a tax increase in an election year.

Without additional tax revenue, the state’s transportation planners have turned increasingly to toll roads, particularly in the North Texas area, where at least four major projects are underway or in the planning stages.

The North Texas Tollway Authority is preparing to take over construction and management of State Highway 161 in western Dallas County if it can do so without endangering its credit ratings of A-minus from Standard & Poor’s and A2 from Moody’s Investors Service.

At yesterday’s TTC meeting, commissioners voted to continue negotiating a deal with the NTTA over plans to guarantee its debt for the $1 billion tollway, which is already nearly three-fourths complete. To acquire the project, the toll authority would pay the Regional Transportation Council of North Texas $458 million for the completed sections, while investing $610 million for the completion of Phase 4. The NTTA would then operate the tollway and apply revenues to its bond debt.

To avoid straining revenues on its existing toll system, the authority would finance SH 161 separately.

Under the proposed plan, TxDOT would guarantee debt service on the SH 161 bonds so that if revenues fell short, the state would step in to make the debt payments.

With yesterday’s agreement to continue negotiations, the NTTA gains more time to work out a deal that would reduce its risks.

Link to original source, Bond Buyer, here. __________________________________________________________________
Link to article here.

Link to Toll Party Founder Terri Hall’s article about this risky gas tax heist here.

Southwest Parkway and Texas 161 toll road projects clear big hurdle

Posted Thursday, Jan. 28, 2010

By GORDON DICKSON
Ft. Worth Star Telegram

AUSTIN — A deal approved Thursday all but assures that the proposed Southwest Parkway toll road in Fort Worth will be under construction later this year.

The Texas Transportation Commission agreed to use the state’s gas taxes as collateral on two projects being developed jointly — Southwest Parkway and Texas 161 in Grand Prairie — even though those projects are toll roads.

The move, approved Thursday morning by a voice vote, could tie up highway funds normally used on nontoll projects for years. Nonetheless, it strongly improves the chances that the first eight miles of Southwest Parkway, from Interstate 30 near downtown Fort Worth to Dirks Road on the city’s southwest side, will be under construction by the end of the year and open by mid-2013.

Officials from the Texas Department of Transportation and the North Texas Tollway Authority agreed that the two roads would be developed together and would share revenue until each was paid for.

“I believe there is less risk doing the projects together than doing the projects separately,” said state Rep. Rob Orr, R-Burleson, who spoke to the commission along with state Sen. Wendy Davis, D-Fort Worth.

Still, Thursday’s action was a preliminary step. Over the next 30 days, both sides must hammer out specific legal language to make the agreement stick.

Key question

A crucial question is whether the agreement can be structured to pass muster with bondholders, who may not approve of combining finances for the two projects and may insist that their investments be restricted to one road or the other.

The Transportation Department also wants an assurance in the contract that the tollway authority will release the state’s gas tax fund — Fund 6 — as collateral as early as possible.

Commissioner Ned Holmes of Houston expressed doubt that the two sides could agree on language that satisfies that concern by Feb. 28, the tollway authority’s deadline for deciding once and for all whether to take over the Texas 161 project.

Texas 161 runs parallel to Texas 360 in Arlington and is expected to be a main path to Cowboys Stadium, especially for fans coming from north Dallas.

“I don’t know how you’ll be able to do that in the next 30 days,” Holmes said. “It’s been going on for some time now.”

Still, with the state’s highway fund as a backstop, the North Texas Tollway Authority expects to get a much higher credit rating on the bond market. As a result, it will enjoy a better interest rate — and will raise about $400 million more for the project through bond sales than would have otherwise been possible.

Despite that infusion of $400 million, there is still a $300 million funding gap between the estimated cost of the projects and the amount of revenue the tollway authority can raise.

Funding gap

The long-term risk for Texas taxpayers is that if either toll road project struggles financially at any time during the next four decades, the state may have to dip into its gas tax reserves to help the tollway authority pay its debts.

The arrangement — a toll equity loan — could tie up millions of dollars a year in highway funds that otherwise would be spent on nontoll projects.

Transportation commissioners originally opposed taking that risk but ultimately decided to go along with it. The alternative, they noted, was to not build Southwest Parkway.

In recent years, lawmakers have severely restricted the Transportation Department’s ability to build its own toll projects — especially if private developers were involved. In Dallas-Fort Worth, the tollway authority, which is a public agency, has first dibs on any project, according to state law.

“The tools that have been taken away from this agency need to be returned so we can be creative in our delivery,” said Deirdre Delisi of Austin, the Transportation Commission chairwoman. “There’s only so much capacity we have. It ties our hands for future projects.”

Meanwhile, the North Central Texas Council of Governments, the Dallas-Fort Worth area’s official planning body, is searching for other funding sources to close the $300 million gap, transportation director Michael Morris said.

One option is securing a federal transportation infrastructure loan, although that’s considered a long shot. Another could be a state infrastructural bank loan, although that source likely wouldn’t be available until September at the earliest.

“We’ve got 30 days to close a $300 million gap,” Morris said.

_____________________________________________________________________
Link to article here.

Highway chiefs poised to give NTTA line of credit to ease financing of SH 161, Southwest Parkway
By Michael Lindenbarger
Dallas Morning News
Thu, Jan 28, 2010
It looks likely that the North Texas Tollway Authority will get the credit help it has asked for.

The Texas Transportation Commission will decide this morning whether to give NTTA a line of credit that the toll authority would be able to use in the unlikely event that toll revenues fail to provide enough revenue to cover the billions of dollars in debt it will have to take on to build both SH 161 in Dallas County and Southwest Parkway in Tarrant County.

The line of credit, even if never used by NTTA, will save it hundreds of millions of dollars in financing costs over time, both sides agreed.

In return for extending the credit, TxDOT wil be relieved of obligations to build about $500 million in interchanges and other work related to the Southwest Parkway/Chisholm Trail project.

It’s not a done deal yet, but yesterday even the commissions’ most hard-core proponent of toll road privatization said he was satisfied that the loan deal is a calculated risk that will bring sufficient value to Texas.

Reached last night in Austin, NTTA board chairman praised TxDOT for what looks like its willingness to move forward with the loans, which he said NTTA is unlikely to ever have to use.

Some commissioners seemed uneasy with the loan arrangement, given that if NTTA should face a disastrous downturn in revenue, the extent of the liability Texas could face is enormous — however unlikely it might be. The total cost of the two roads will be more than $8 billion.

Michael Morris, transportation director of North Central Texas Council of Governments, which helped negotiate the agreement, said before Texas would be asked to make payments to cover NTTA’s loans, the authority would first raise its rates. It could, he and NTTA’s executive director said, likely double its rates without losing significant number of customers.

NTTA’s board of directors will vote Feb. 26 on whether to finally commit itself to SH 161, triggering an obligation to pay back the state $258 million in construction costs, plus make a $200 million concession payment.

That money will be used on Dallas County projects, Morris has said.

I-35 in Denton to be tolled

Posted on by

Link to article here.

The arrogant condescension of elitist politicians is on display with these comments by Denton County Judge Mary Horn:

“The traveling public will have a choice. For the anti-toll road people, if they feel that strongly about it, well bless their little hearts, there will be free lanes right beside the tolled lanes and they certainly won’t have to use the toll lanes.”

Yeah, Horn, like Rick Perry, thinks it’s perfectly fine for those who cannot afford the toll taxes to be relegated to second class citizens stuck on congested, stop-light ridden access roads.

Also, the story below reveals how TxDOT continues to defy the Legislature and the people of Texas who soundly rejected private toll contracts, called public private partnerships (PPPs or CDAs), in Texas. The Legislature did not not authorize such contracts to continue past August 31, 2009, yet TxDOT is resurrecting such deals using backdoor PPPs called pass through toll agreements. This is an agency run amok! TxDOT must be stopped!

I-35E expansion to be completed in stages

12:00 AM CST on Thursday, January 28, 2010

By MICHAEL A. LINDENBERGER / The Dallas Morning News
 Rebuilding Interstate 35E from Dallas to Denton will have to be done in stages, even if Texas contracts with a private toll firm to build and finance most of the work, state transportation officials said Wednesday.

The full project – which would stretch 28 miles and include four rebuilt free lanes and two tolled lanes in each direction – would cost $4.3 billion, Texas Department of Transportation officials said.

Trouble is, the only money Texas has now for the project – or will likely have in the near future – is $592 million set aside from the billions North Texas Tollway Authority paid for the State Highway 121 project, deputy executive director John Barton said.

To stretch that money, Barton said, the department is considering seeking private partners to help build a 12-mile segment of the road. The scaled-down project would also begin with just three free lanes in each direction plus the tolled lanes. Frontage roads would also be added or rebuilt.

The segment would stretch from the Bush Turnpike in Dallas to FM2181 in Denton County.

But even to do this much of the project will take a new approach by the department and a rule change by the Texas Transportation Commission. It will take the agency about 12 months to select a private firm to do the work, Barton said.

The rule change is necessary because the state would seek to use a so-called pass-through toll agreement with a private company to build the 12-mile segment. The company would agree to build and finance the road in return for an upfront payment – usually a portion of its construction costs – plus guaranteed payments from future toll revenues.

If toll revenues are higher than expected, Texas would see a windfall, but if they are lower, it would still have to cover the promised payments to the firm.

Denton County Judge Mary Horn said she strongly favors the approach, because she believes the state has no other way to pay for the badly needed widening of Interstate 35E.

“Yes, I hear people objecting to the idea because it is a toll road, but I do not see this as a toll road,” she said. “The traveling public will have a choice. For the anti-toll road people, if they feel that strongly about it, well bless their little hearts, there will be free lanes right beside the tolled lanes and they certainly won’t have to use the toll lanes.”

A similar hybrid approach to tolls – with rebuilt free lanes being joined by brand-new tolled lanes – will be used on LBJ Freeway in Dallas, which should begin construction early next year.

Hutchison accepts money from toll road builder, Zachry

Posted on by

Link to article here.

Kay Bailey Hutchison accepts campaign cash from toll-road builder

01:58 PM CST on Tuesday, January 26, 2010

By WAYNE SLATER / The Dallas Morning News
wslater@dallasnews.com AUSTIN – Kay Bailey Hutchison has railed against the Trans-Texas Corridor, but she counts one of the state’s premiere toll-road builders among her major financial contributors.

Bartell Zachry, whose San Antonio-based construction company partnered with the Spanish company Cintra to develop the multi-billion transportation project, gave Hutchison $25,000, according to a campaign finance report filed with the state.

Hutchison campaign spokeswoman Jen Baker said the senator was happy to accept money from the toll-road builder, even though she has denounced the Trans-Texas Corridor as a land grab and has pledged to curb toll-road construction if she’s elected governor.

“Clearly, Zachry agrees with 60 percent of primary voters that don’t have any interest in four more years of Rick Perry,” said Baker, referring to Perry’s 39 percent share of the vote when he won re-election in 2006 in a four-way race.

Perry campaign spokesman Mark Miner said Hutchison is being hypocritical.

“The senator criticizes the project, yet she has no hesitation taking money from the company building the project,” Miner said.

Zachry has been one of Perry’s major benefactors over the years, delivering more than $200,000 from officers and the company’s political committee since Perry became governor in 2000.

A company spokeswoman said the construction executive has long supported both Hutchison and Perry in their separate races but had to choose between them in the GOP primary.

“Bartell has supported Sen. Hutchison since she first ran for the U.S. Senate,” said Zachry Group spokeswoman Vicky Waddy. “He has a history of supporting her that probably as long as his history of supporting Gov. Perry. And he had a tough decision to make.”

The Trans-Texas Corridor – which envisioned a network of highways, railroads and pipelines criss-crossing Texas — was a major Perry initiative. But it faced strong public opposition and has been declared dead by state transportation officials.

In a campaign commercial, Hutchison warns voters that the only way to make sure the corridor is dead is to elect her governor. She would push the Legislature to revoke authority for development of the project. But in her larger transportation plans, Hutchison does not call for the elimination of new toll-road projects.

Such projects continue to be developed in several parts of the state, and Zachry remains involved in those projects.

Baker of the Hutchison campaign said the candidate remains committed to de-emphasizing toll roads.

“When she’s elected, the days of the toll-road-only mentality and land grabs that give foreign companies the land so they can build toll roads and tax Texans is over,” she said.

Zachry’s two sons, John and David, head different parts of the family business. David contributed $10,000 to Perry, while John gave the same amount to Hutchison.

“It’s really pretty rare for us to split,” Waddy said. “But David believed that Gov. Perry has worked with him during the legislative sessions, and he believes that Gov. Perry should be able to continue to work he has started as governor of Texas.”

Asked whether Bartell Zachry’s support for Hutchison was in his own business interest, Waddy said the state will continue to need highways and the company can do it however the state chooses to build them.

“Whether they are built as toll roads, as free roads, as managed lanes, we are able to build them. So it may impact our business in that these projects don’t happen as quickly as certainly the driving public would like. But regardless of the delivery method for the projects, we can still build them,” she said.

She noted that others in the company have divided loyalties in the race.

General Counsel Murray Johnson has given $2,000 to Hutchison. And Vice President Cathy Obriotti Green is a statewide coordinator with the Hutchison campaign. Waddy has given $1,000 to Perry.

“There are longstanding personal relationships in play and everybody’s doing what they think is the right thing to do,” Waddy said. “And we hope whoever is elected, we’ll be able to work with them.”

Voters overwhelmingly REJECT privatized toll roads, 70% say it'll increase toll rates

Posted on by

Link to article here. Illinois voters are no different than Texans when it comes to economics. The voters surveyed inherently know that when a private company takes over a public toll road, the toll rates will go up if for no other reason than private companies have to make a profit. One man quoted below also noted how a private company is likely to cut corners to drive up profits thereby decreasing the level of maintenance. Texas politicians beware: Texans, too, don’t want their roads privatized, and Texans don’t want higher transportation costs/toll rates.

Privatize Illinois’ tollways? Voters say no

January 25, 2010 9:00 PM | No Comments

Chicago Tribune/WGN

Politicians who hope to gain traction with voters by urging that the Illinois Tollway be leased to a private company might want to rethink their strategy.

By overwhelming numbers, Republican and Democratic voters alike oppose privatization of the tollway system and believe it would lead to higher tolls, according to a Tribune/WGN-TV poll.

The statewide poll of likely primary voters, conducted Jan. 16 to 20, shows Democrats opposing privatization 72 percent to 14 percent, with 13 percent undecided. Republicans oppose the idea 65 percent to 16 percent, with 19 percent undecided.

Why? Among Democrats, 71 percent say tolls are certain to increase if the tollway is leased to a private company; 68 percent of Republicans feel the same way.

The idea of leasing the tollway has been floated — and shot down — before, in Illinois and elsewhere. Several states are considering similar plans.

GOP gubernatorial contender Jim Ryan recently became the most prominent candidate to suggest the plan. The former Illinois attorney general noted that a long-term lease of the 286-mile system could generate billions of dollars to fund public works improvements across the state.

Ryan pointed to Indiana’s lease of the Indiana Toll Road for $3.8 billion as a guide.

A consultant’s report commissioned by the General Assembly in 2006 estimated Illinois could receive up to $23.8 billion by leasing the tollway system under a 75-year contract. The estimate assumed increases in tolls by 50 percent every 20 years.

These days, however, experts say a tollway lease would command far less because of the poor economy. The global credit crunch killed Chicago‘s proposed deal to lease Midway Airport for $2.5 billion last year.

Tollway officials had no comment on such a plan.

Critics say privatizing public assets amounts to a temporary fix. Many point to how Mayor Richard Daley’s deal to lease the city’s parking meters provided a one-time windfall but led to steep rate hikes, broken machines and unhappy users.

Frequent tollway user Alex Sidorowych, 56, of Lake Zurich, called tollway privatization a “bad idea.”

“It’s a taxpayers’ asset, and I think it should stay with the state,” said Sidorowych, a property manager who drives the tollways for business.

Motorist David Cromley, 52, a salesman from Sugar Grove, agreed: “There’s no doubt private industry could run the system better … based on the mismanagement in the public sector. But the private sector has to show a profit. I think prices would go up more, and maintenance would go down to a worse level.”

Chicago leased the Chicago Skyway to a Euro-Australian consortium in 2004 for 99 years for $1.83 billion. Since then, the toll for cars on the 7.8-mile stretch has risen to $3 from $2.

The lease allows tolls to rise to $3.50 in 2011, $4 in 2013, $4.50 in 2015 and $5 in 2017.

A benefit of the skyway lease is it frees the city from having to maintain the toll bridge, while providing long-term funding, said Laurence Msall, president of the Civic Federation, a non-partisan fiscal watchdog group.

But the parking meter lease turned into a fiasco because the deal was struck with no public scrutiny, he said.

The worst thing the state could do is use the proceeds from a tollway lease to relieve pressure on the state’s operating budget, which faces a $12 billion deficit, Msall said.

State Sen. Jeffrey Schoenberg, D-Evanston, proposed leasing the tollway in 2006, but the idea was doused by suburban GOP legislators.

Schoenberg said he finds it “somewhat ironic if not amusing” that some Republican candidates for governor are now talking up the same idea.

“It’s quite different from the harsh criticism many of them were lobbing my way a couple of years ago,” he said. “Now they’re more interested, and I’m more skeptical.”

Schoenberg also disagrees with those like Ryan who would suggest using lease proceeds for roads or infrastructure. The most prudent path, Schoenberg said, is to use the funds to pay down the state’s massive unfunded pension liability, estimated at $80 billion.

This past fall, the tollway wrapped up its $6.1 billion rebuilding and widening program. But the five years of construction have saddled the Illinois State Toll Highway Authority with $4 billion in debt that won’t be paid off until 2034.

And state law requires toll revenues to be reinvested in the tollway, not channeled to other agencies or the state’s general fund.

Keeping the system the way it is works just fine for Tammy Clayton, 46, of Harvey, a postal worker who commutes 100 miles a day on the tollway.

“I like the way things are now,” Clayton said while on a dinner break at the Hinsdale Oasis on the Tri-State Tollway (I-294). “The tolls would probably go up extremely (with a lease). It would make things pretty difficult for me.”

—Richard Wronski

Toll road lobby firm entangled in scandal, gives free rent to legislators

Posted on by

Link to Texas Watchdog’s article here. Three members of the San Antonio delegation are included in this connection to the Hillco lobbying firm giving free office space to legislators while pending legislation pushed by Hillco was on the table. Hillco was the powerhouse hired by many local governments in DFW to push the local option gas tax bill that included an array of other tax hikes.

Despite the push, the bill didn’t have the support to pass the House. Hillco has also been a longstanding lobby firm pushing Rick Perry’s toll road policies in general and is a major roadblock to consumer protections and overall reform of transportation tax abuses. Its connection to pension funds is also a key element to financing the toll roads schemes. Perry, Lt. Governor David Dewhurst, Senate Finance Chariman Steve Ogden, and former Speaker Tom Craddick pushed to get pension funds on the table to fund toll roads in the 2009 legislative session. So the explosive investigative report below does indeed involve toll roads.

Austin lobbying powerhouse HillCo Partners quietly gives free rent to legislators’ group — despite in-session ban on donations

Mon Jan 25 15:02:00 2010 CST
By Steve Miller

Texas Watchdog

One of the state’s most powerful and connected lobbying firms has given thousands of dollars’ worth of free office rent to the state Mexican American Legislative Caucus and its nonprofit foundation despite state laws that prohibit campaign contributions to lawmakers during the state legislative session.

These donations raise questions about a serious conflict of interest: Can lobbyists funnel money to a group of lawmakers during the few months when they are crafting and voting on bills that could benefit, or harm, those same lobbyists?

Bill Miller says the rent his firm, HillCo Partners, provided to the all-Democratic caucus — and to the Mexican American Legislative Leadership Foundation that shares the office — is legal under state ethics rules. State law bans legislative caucuses from accepting “direct or indirect transfer of money, goods, services, or any other thing of value” from nonmembers during the legislative session, but the state Ethics Commission may have created a narrow loophole in 1994 allowing for contributions of free office rent in some cases.

HillCo, whose client list this year includes AT&T, Blue Cross Blue Shield of Texas, Continental Airlines and Microsoft, leases space in the historic Goodman Building, a former grocery store at 202 W. 13th St. in Austin, within spitting distance of the state capitol’s pink granite dome.

HillCo has given free rent to the caucus and its foundation for two years now; the foundation has valued the rent payments at about $5,000 a month, for an annual contribution of about $60,000.

“We took the lease on the building. It’s close to the capitol. They are a big caucus, and they thought, ‘Well, it’s very convenient,'” said Miller, a veteran campaign consultant with ties to Gov. Rick Perry, former House Speaker Tom Craddick, among other key players. In an interview, Miller said the free rent was an in-kind donation, although it was not noted as such on the foundation’s campaign finance forms dating back to 2007.

He cited a 1994 opinion from the Texas Ethics Commission that said a “legislator-elect” may accept “a political contribution in the form of office space” for use as a district office if the use will continue during the legislative session.

When pressed about HillCo’s relationship with the caucus beyond the gratis rent deal – including questions concerning any benefits it may have reaped from the generous gift of free rent to the caucus — Miller declined to answer further questions, including questions about how long-serving members of the caucus might be considered legislators-elect.

“As far as I’m concerned, there is nothing else to discuss on the subject,” Miller said in an e-mail.

Calls and e-mails to the caucus and the foundation were unanswered.

Caucus chairman Trey Martinez Fischer, a Democratic state House member from San Antonio, did not return two e-mails. A representative from his office made contact with Texas Watchdog but failed to follow up.

HillCo: Plugged in and powerful

There are a lot of lobbying firms in Austin, but HillCo is one of the most plugged-in and powerful. Founded by Miller with former Democratic state House member Neal “Buddy” Jones, the firm’s client list this year also includes General Motors and the pension systems for both Houston police officers and non-police municipal employees, among other big names. Another of its major clients, Blue Cross Blue Shield of Texas, actually owns the Goodman Building, which is also home to the Cloak Room bar, the famed watering hole for legions of lawmakers and lobbyists (and the site where Sen. John Whitmire was alleged to have tried to get a bartender fired a few years ago for refusing to serve him when he was drunk).

Miller served on Craddick’s transition team in 2002, and the PR firm he headed before launching HillCo included among its employees Anita Perry, wife of Gov. Rick Perry. The liberal watchdog group Texans for Public Justice has called HillCo’s political action committee “a known pass-through for GOP super donor Bob Perry,” naming the powerful homebuilder as one of the firm’s most prominent clients.

For years, HillCo has also provided financial backing for Mexican American Legislative Caucus events and members. A recent example: In 2008 MALC caucus chair Fischer, received $12,950 in 2008 from HillCo related sources, including two donations of $2,500 from Neal Buddy Jones.

The caucus counts more than 40 members this year and constitutes more than a quarter of the Texas’ legislature’s 150-member lower chamber.

malcmembershelpedbyhillcopac-graphic

Along with corporate heavyweights including Anheuser-Busch, AT&T and Wal-Mart, HillCo is a sponsor of the caucus’ foundation, which states its purpose as “fostering civic participation among Texas Latinos and educating the state’s Hispanic communities on issues of particular consequence.”

Do HillCo’s payments violate the law?

Getting a definitive answer from the Ethics Commission about the legality of the HillCo rent donations to the caucus is difficult.

A 1997 opinion says it’s illegal for a lawmaker to get free accounting services during session –– but it also suggests it’s OK for a lawmaker to get free office rent, saying “a contribution of long-term use of real property” is different from receiving a service.

Tim Sorrells, the commission’s deputy general counsel and spokesman, declined to specifically address the HillCo-MALC relationship — the Ethics Commission staff says it is bound by state confidentiality laws that preclude it from speaking publicly about anything other than founded complaints. (In order for the Ethics Commission to actually take action on any issue, someone must first file a formal complaint.)

Texas Watchdog then posed a hypothetical question to Sorrells: If a lobbyist asked the commission whether it were legal to make a contribution of free rent to a legislative caucus, what would Sorrells tell them?

Sorrells said he would first refer the lobbyist to section 253.0341 of the state Election Code, which says that a legislative caucus may not knowingly accept contributions from nonmembers during the session-long moratorium period — starting on the 30th day before regular session convenes and continuing through the last day.

malcrent_timeline

Texas Watchdog spoke to seven prominent Texas lawyers and academics — including in the group both Republicans and Democrats — seeking comment on the propriety of both the actions of HillCo and the existing state law prohibiting campaign donations during legislative sessions. Six of them declined to speak on the record, citing policies at their respective organizations or a personal reservation.

The one who would speak on the record was Eric Opiela, a former general counsel for the state House of Representatives who recently stepped down as executive director of the Republican Party of Texas. “On its face, it appears a violation occurred,” he said.

HillCo first shows up in public as paying rent for the foundation in August 2007.

That year, the foundation states on its IRS Form 990 tax filing that it paid $27,729 in rent. Campaign finance forms indicate that it paid that amount to HillCo, but HillCo reimbursed the money – via a contribution for the exact same amount, down to the penny.

On Feb. 6 of last year, the foundation sent a check for $5,041.66 to HillCo Partners for rent. Three days later, the foundation reported a contribution from HillCo Partners – for $5,041.66. The same thing happened each month from March through June, exact change passing in the mail, expenditure for rent duly noted, but the in-kind contribution box on the requisite finance reporting form was blank. The monthly contributions covered the duration of the legislature’s regular session.

For reasons that were not immediately clear from the disclosure forms, for one month — November 2007 — the caucus, not the foundation, reported a payment of $5,041.66 to HillCo for rent, with no corresponding credit in the form of a contribution from HillCo. Instead, the exact same amount — $5,041.66 — was contributed to the foundation, which reported no rent payment for that month to HillCo. 

In the two years that the foundation has reported the rent-for-donation exchange in its campaign finance forms, the box that denotes an in-kind contribution has never been marked.

Texas Watchdog Staff Writer Mark Lisheron contributed to this story.
hillcoinfluence


Top donors to HillCo PAC, as of Jan. 1, 2010

A Texas Watchdog analysis of Texas Ethics Commission data

  1. Bob Perry, prominent homebuilder and major GOP donor: $1.2 million
  2. Stephen Jones, executive for the Dallas Cowboys and son of Cowboys owner Jerry Jones, $295,500
  3. Jerry Jones Jr., head of marketing for the Dallas Cowboys and son of Cowboys owner Jerry Jones, $131,585
  4. Neal T. “Buddy” Jones, co-founder and partner in HillCo, $119,500
  5. Good Government PAC, Corpus Christi-based PAC tied to major Democratic donor Mikal Watts, $100,000
  6. James “Mattress Mac” McIngvale, owner of Houston’s Gallery Furniture stores, $75,000
  7. Charles Butt, scion of the HEB grocery store family, $68,500
  8. Dan Pearson, lobbyist for HillCo, $65,130
  9. Marc Samuels, HillCo partner, $56,500
  10. (Tie) Jerry Jones, Dallas Cowboys owner, and Paul Foster, head of Western Refining, both $55,000
  11. Bill Miller, HillCo co-founder and partner, $52,500

Privatized toll road in South Carolina goes belly-up

Posted on by

Link to article here. The key buzz word for these taxpayer rip-offs is “innovative.” It’s important to note Rick Perry calls public private partnerships (PPPs) “innovative financing,” too. His new name for the Trans Texas Corridor is “Innovative Connectivity Plan.” The common theme is these things are being pushed by corporations who stand to profit handsomely off these deals (if the traffic materializes), so all the terminology is the same. Trust me, politicians aren’t smart enough to come up with stuff on their own…

1/21/2010

South Carolina: Innovative Toll Road Goes Bust
Southern Connector toll road in Greenville County, South Carolina finds itself $169 million in the red.

Southern Connector toll roadThe first public-private partnership toll road established as a not-for-profit corporation has gone bust. The Connector 2000 Association, which operates a sixteen-mile, four-lane toll road linking Interstates 85 and 385 in southern Greenville County, South Carolina, announced last week that it was in default on its financial obligations.

“Traffic on the Southern Connector was inadequate to permit the association to collect sufficient toll revenues to pay debt service on the bonds which came due January 1, 2010,” a Connector 2000 Association statement explained. “The association has been advised that the trustee has made no payment of any such debt service. An event of default currently exists… The association is actively negotiating the restructuring of its bonded indebtedness with the trustee, the South Carolina Department of Transportation (SCDOT), and certain owners of large blocks of the bonds.”

In 1998, the association floated $200,177,680 in tax-free bonds to fund construction of the toll road that opened in 2001. These bonds were to be repaid over thirty-five years with the proceeds from toll collections. Just a few years ago, SCDOT touted this project as a prime example of the department’s “innovative financing successes.”

“Without innovative financing, this southern loop around the city of Greenville would be nothing more than a dream,” a SCDOT brochure boasted.

Like other highly-leveraged tolling efforts, the Connector was hampered by unrealistic traffic projections and rosy financial scenarios for an area expected to experience an economic boom.

“The expected growth in the region has yet to materialize,” the toll road’s 2008 annual report admitted. “This factor, the recession and consumer resistance to the payment of tolls (the Southern Connector Toll Road is the only toll road in Upstate South Carolina) have all contributed to the lower-than-forecasted traffic demands.”

There is little hope for the road’s recovery. In 2009, the association collected $3.9 million in tolls from motorists. Because SCDOT decided not to make the Connector a freeway, the majority of that revenue was swallowed by $2.8 million in expenses for things such as consultant fees, marketing, toll collection employees and legal fees — most of which would not be required if operated as a free road. With such a constrained cash flow, the road could not come close to meeting its $13.1 million annual bond interest obligation. The toll road’s bond payments had been insufficient since 2004, and now the association’s net deficit stands at $169 million.

As a result, Standard and Poor’s downgraded the toll road’s bonds from C- to the lowest possible rating of D. A copy of the road’s latest financial statement is available in a 600k PDF file at the source link below.

Source: Briefing by the Connector 2000 Association (Connector 2000 Association, Inc., 1/11/2010)

Wasteful spending plagues use of federal highway dollars

Posted on by

Link to article here.

So where have our federal gas taxes been going? To restore historic courthouses, build tourists centers, rest areas with free wi-fi, millions in landscaping contracts, and airport museums! So this is the reason why Rick Perry won’t listen to the people of Texas and end his toll road policies. Look at the last few lines of this story…Perry’s commissioner says it all. They think transportation issues (the lifeblood of daily living) are not as radioactive as education issues or as disdained as nationalized healthcare, so obviously Perry thinks it won’t hurt him at the ballot box. It’s up to Texans to prove him WRONG!

It boggles the mind that this reporter taps the Texas Public Policy Foundation as the guardian of the taxpayer when they are the foremost state organization promoting the sale of our public infrastructure to foreign companies (using public private partnership toll road contracts called PPPs or CDAs) and guilty of using their resources as a shield for Rick Perry’s anti-taxpayer, highly controversial and unwanted toll tax hikes. To pass off TPPF like it actually cares about the taxpayers is an insult!

Where was TPPF when TxDOT illegally spent $7-9 million on lobbying for PPPs, toll roads, and the Trans Texas Corridor? Where was TPPF when transportation taxes per mile went from 1-2 cents to 75 cents when Perry signed over LBJ and I-820 to Cintra using $1 BILLION in our gas taxes to subsidize the projects while all the profits go to Spain? Where was TPPF when TxDOT gave the Alamo RMA $20 million in “management fees” to “supervise” an interchange project that TxDOT can do in-house? Where was TPPF when the cost to fix US 281 went from $100 million as a freeway project to $1.3 BILLION to turn this existing freeway already bought and paid for into a toll road? Oh, but TPPF is on the scene to fight any gas tax increase that could reduce the reliance on tolling and PPPs, which are the MOST expensive way to fund roads, presumably on behalf of its friends in the industry.

Hundreds of millions spent on Texas transportation projects that have little to do with traffic

Posted Saturday, Jan. 23, 2010

By GORDON DICKSON

gdickson@star-telegram.com

No one disputes that the Woodall Rodgers Deck Park under construction in downtown Dallas is innovative.

The 5-acre park is being built on top of an eyesore freeway. Soon, the concrete canyon of a roadway will be covered by an elevated green space where people can walk, ride bikes or play checkers.

But nearly all the money that’s being spent on the first phase of construction — $42.7 million — comes from federal transportation funds, supported largely by gasoline taxes that Americans pay at the pump.

The Woodall Rodgers project is a glaring example of how, at a time when many Texans distrust their transportation leaders, huge chunks of federal and state money are being spent on projects that have little or nothing to do with directly improving traffic.

“Texans should be outraged by it, especially when they’re being asked to support tax increases for transportation,” said Justin Keener, vice president for policy and communications at the Texas Public Policy Foundation, a nonpartisan research institute in Austin.

The Star-Telegram reviewed 515 state projects awarded funds under the federal transportation enhancement program during the past 18 years and found projects large and small that had little to do with mobility.

One reason is that state legislators often require the Texas Department of Transportation to spend its enhancement dollars on pet projects by attaching last-minute “riders” to the department’s appropriation.

And federal officials require states to spend 10 percent of transportation funds on enhancement projects to gain access to the other 90 percent for actual road work.

“We didn’t ask for them. It’s a mandate,” said Ted Houghton of El Paso, one of five members of the Texas Transportation Commission, which oversees the Transportation Department.

In Wichita Falls, a project to convert a rail depot to a visitors center was awarded $267,200 in federal funds, plus a $53,440 local match. The building now houses an insurance company.

In San Elizario, near El Paso, $96,000 in federal and local money was set aside to conduct and report on an archaeological dig.

In Fort Worth, a vintage Interurban trolley was restored at a cost of $211,200. The dapper red rail car, which is parked at 1001 Jones St., doesn’t ferry passengers on the city’s transit system but instead serves only as a static display, shielded by an iron fence from contact with the public.

Meanwhile, drivers in Dallas-Fort Worth, the nation’s fourth-most-congested metro area, are being asked to pay tolls on a growing number of roads and could face higher gas taxes in the coming years to make up for a shortfall of funds to expand highways.

Creating money pools

Texas faces a shortage of $332 billion through 2030 to meet the needs of its growing population, according to “Funding the Future,” a report published in July based on research by the Texas Association of Metropolitan Planning Organizations and experts at Texas A&M and the University of Texas at Austin.

Since the federal requirement began, $997 million worth of work in Texas has been identified as enhancement projects, including more than $410 million in projects for which the federal government has already provided reimbursement. At least $269 million more is in the process of being spent, according to a review of state and federal records.

It’s difficult to say how much $997 million would buy if it could be used on highway lane construction instead of enhancements.

It could be enough to pave over 330 miles of rural highways or to expand nearly 250 miles of four-lane interstate highway to six lanes, based on construction estimates from the American Road and Transportation Builders Association. But those figures don’t include expenses such as land purchases.

In North Texas, an extra $997 million might make it unnecessary to include toll lanes or spend federal Recovery Act stimulus funds on a pair of multibillion-dollar projects: the DFW Connector and North Tarrant Express. Another way of looking at it: The $997 million would be enough to build eight miles of Southwest Parkway from Interstate 30 to Dirks Road — and make it a freeway instead of a toll road as planned.

The DFW Connector, the makeover of Texas 114/121 and other Grapevine highways, is scheduled to begin Feb. 15. The North Tarrant Express, which includes the reconstruction of Loop 820 and Airport Freeway in Northeast Tarrant County, could begin later this year.

“What if the roof of your house was leaking, pipes were breaking, and the government tells you that you have to spend money to buy a fancy piece of art on the wall?” Keener said. “When you’re looking at transportation funds going toward historic preservation, landscaping, it doesn’t have anything to do with improving traffic on highways.”

During a Fort Worth visit late last year, U.S. Transportation Secretary Ray LaHood wouldn’t specify his plans for enhancement funds, but he said his agency is reviewing how money is distributed.

“We’re getting out of the sort of mode of business where highways get X amount and transit gets X amount,” LaHood said. “We’re working with the Department of Housing and Urban Development so we can put transit lines where people really want to live. We’re going to try to create pools of money that really integrate with walking and biking trails with some of our highway money.”

How we got here

Transportation enhancement funding dates to 1991, when Congress overhauled how highways are paid for.

At the time, states and major cities were under fire for making decades of shortsighted decisions about where to put roads, resulting in sprawling suburban areas stretching farther from the urban core. The problem was often compounded when lanes were added to monolithic highways as planners tried to keep up with population growth.

To promote a more holistic approach to transportation planning, Congress directed the states to spend 10 percent of their federal surface transportation funds on what are called transportation enhancements. The idea was to promote a mix of uses, including hike-and-bike trails, landscaping, historic preservation, and access to rail and mass transit. States were left to pick the projects themselves, build them according to federal guidelines and seek reimbursement from a federal fund that has made $9.5 billion available nationwide since 1991.

The 10 percent requirement for enhancements did not apply to all transportation funds. Congressional earmarks and maintenance funds, for example, were not figured into the ratio.

Politics as usual

As is often the case, politicians got involved in the project selection process for enhancement funds and began directing where to spend the money.

At the end of the 2009 legislative session, for example, lawmakers ordered the Texas Transportation Department to spend its enhancement funds on projects of dubious benefit to the state’s transportation system:

■ $16.1 million for the Battleship Texas restoration project in La Porte.

■ $2 million for a Houston fire museum.

■ $455,000 for beautification of the Texas State Cemetery in Austin.

■ $150,000 on a Lufkin tourist center.

Even more enhancement funds will likely become available when Congress reauthorizes funding. A vote on that bill, which could total $500 billion over five or six years — a 38 percent increase from the last authorization, in 2005 — may come later this year.

Enhancement funds, like earmarks, have become a way for federal and state elected officials to prove to constituents that they can bring home the bacon, critics say.

About $20.4 million has been spent renovating 21 county courthouses in Texas, including $3.6 million for the Hill County Courthouse, which was gutted by fire in 1993.

It’s up to lawmakers working on the state Transportation Department’s two-year budget to determine whether such projects are an appropriate use of transportation funds, said Steven Polunsky, director of the Senate Transportation and Homeland Security Committee. Some projects are added during open meetings, while others are tacked on in the final hours of a legislative session as lawmakers scramble to gain approval for projects they support.

And add $9 million or so more in gas-tax-supported funds for projects benefiting those who prefer to travel in the sky — $8.7 million for the Frontiers of Flight Museum at Dallas Love Field and $138,000 for the Hangar 25 Air Museum in Big Spring.

Defending Woodall Rodgers

In Tarrant County, more than $35 million was awarded to hike-and-bike-trail projects in Arlington, Colleyville, Euless, Fort Worth, Grapevine, Keller, North Richland Hills and even Burleson near the Tarrant-Johnson county border.

In North Richland Hills, $2 million was awarded in 1999 to the Walker’s Creek Park trail project, which included installing lockers under a large canopy near the city’s water park, for bicycle commuters to stow their belongings. But a few months ago, the lockers were removed, and now they’re sitting in a storage facility, said Bill Thornton, assistant parks and recreation director.

“We were concerned that you couldn’t see inside, and you could have someone stuck in a locker,” he said, adding that the city intends to retrofit the lockers with safer doors and locks and put them back out on the trail.

In Arlington, $102,479 was awarded in 1994 for median landscaping on Six Flags Drive, just outside the theme park entrance.

Supporters of the Woodall Rodgers Deck Park note that plenty of other funds are committed to the project beyond the $42.7 million in enhancements used to finish the first phase by 2012. Besides the original $25 million in traditional enhancements committed to the project since 2007, the federal government chipped in $16.7 million in Recovery Act stimulus funds last year to get the shovels turning. And $40 million more in private and local contributions are expected to cover the costs of phase two.

“That’s big bang for the buck, and it’s transportation-related,” said Amanda Wilson, spokeswoman for the North Central Texas Council of Governments.

In North Texas, the emphasis is on using transportation funds for trails and access to rail, officials said. In rural parts of the state, more than $172 million has been spent to overhaul 23 highway rest areas.

Houghton, from the Texas Transportation Commission, foresees a day when federal transit money is awarded to states in block grants, not reimbursements, to be spent as states see fit within federal guidelines.

But he isn’t convinced a change like that will happen soon. “It’s not sexy enough for the electorate to say, ‘Stop!’ It’s not education. It’s not healthcare,” Houghton said.