Link to article here.

The North Texas Tollway Authority is drowning in a sea of debt. Toll road ridership is down, so they’re at risk of not being able to make bond payments, so they’re looking to raise toll rates, which will in turn make ever fewer people able to afford to take the tollways. It’s a cat and mouse boondoggle that will come back and haunt us all once their debt service payments balloon to half a billion PER YEAR in 2020. We need to abandon this reliance on toll taxes, fix the gas tax (end diversions, do a top to bottom review of TxDOT’s books and eliminate the waste, fraud and abuse, and then if we need more funding for roads, modestly raise the gas tax), and return to affordable transportation policies.

Dallas-area toll agency delays vote on plan to raise rates
Wednesday, June 17, 2009
By MICHAEL A. LINDENBERGER / The Dallas Morning News
The North Texas Tollway Authority finance committee heard – but did not approve – a staff recommendation Tuesday to increase toll rates throughout its growing network of toll roads.

After lengthy discussion, the committee decided against voting on the proposal to raise rates on toll roads by 32 percent, from 11 cents per mile to 14.5 cents, effective Sept. 1.

The committee will meet twice more to discuss the proposal, including at a meeting next week. The full nine-member board will vote on the hike in July.

But an increase appears certain. NTTA staff and its financial advisers said failure to raise the rates significantly could make it difficult, or even impossible, to issue new debt to complete work on already promised toll roads.

Still, board member Bob Day, a former Garland mayor, wants his colleagues to phase in the increases, waiting till 2010 to impose the full increase.

He also proposed making tolls twice as expensive for those who do not get a TollTag, though some steps would be made to help low-income drivers who do not have credit or debit cards avoid the surcharge. Drivers have been slower to get the tags than NTTA expected, making it more expensive to collect tolls.

“Let’s face it, this is kind of a tax on transportation,” Day said.

A delay might not be possible, however.

Talk of higher tolls comes as NTTA seeks to reassure bondholders, who hold $6.1 billion in NTTA debt, that a steep decline in traffic on NTTA’s toll roads does not threaten the authority’s solvency. Its trust agreement with major lenders requires that NTTA take whatever steps are necessary to ensure that enough revenue comes in to cover debt payments.

Those annual debt payments are already far more than the authority’s approximately $92 million annual operating budget, and are projected to get steeper every year. Debt payments will equal nearly $140 million in 2009, and will be $300 million by 2012. By 2020, the figure will likely be a half-billion dollars, advisers said Tuesday.

Those big debt payments are a legacy of the big bet NTTA, and by extension the region, made on the State Highway 121 toll contract, which was awarded to NTTA after fierce political skirmishing in 2007. NTTA won the 52-year contract after promising to build the road and pay $3.2 billion upfront with money it borrowed against future tolls.

A private company had offered to pay nearly as much, and take the risk that traffic – and therefore revenue – would meet projections.

But regional officials decided to bet on the record-breaking population growth in North Texas, and chose NTTA, which unlike a private company will reinvest any profits on future transportation projects.

But the recession has slowed the Dallas-Fort Worth area’s population growth, though it is still fast by national standards. Traffic also has decreased as drivers seek to minimize transportation costs, including spending money on tolls.

“My wife and I … both drive 121 every day, now spending $160 a month in tolls,” said Walter Lowe of McKinney. “If you raise the tolls, we will be forced to abandon the tollway completely. We just can’t afford it anymore.”

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Link to article here.

Big upfront deal for Highway 121 toll road weighs on NTTA officials
Wednesday, June 17, 2009
By MICHAEL A. LINDENBERGER / The Dallas Morning News
Was $3.2 billion too much to pay for the State Highway 121 toll road?

That’s a question top officials of the North Texas Tollway Authority are asking themselves as they consider a staff proposal to send tolls soaring on all of its highways by Sept. 1.

It’s a question that was asked two years ago, too, when state and local officials awarded NTTA the rights to the richest new toll road contract in American history. But it wasn’t one that officials in North Texas asked for long.

With every dollar of the massive payment, made in cash by NTTA and reserved for roads, rail and bike trails in North Texas, officials were eager to spend the badly needed money. Scrambling to a get a piece of the Highway 121 pie, local governments submitted hundreds of transportation project proposals worth more than $8 billion.

“This is about the future,” Richardson City Council member John Murphy said just after casting his vote on the Regional Transportation Council in favor of awarding the project to NTTA. “Not long ago, we were at a point where we were saying, ‘Oh my gosh, where are we going to get the money to build roads?’ Now, we’re saying instead, ‘Show us the money.’ ”

With resources tight everywhere, the deal was more than just a way to advance a needed highway. It was seen as a harbinger of a new way to pay for roads in Texas, where raising taxes to build them the old-fashioned way had long since run out of favor.

But just two years later, that future has turned out different from what anyone foresaw. Traffic is slowing across the NTTA toll system, where revenue is down, too. On Highway 121 itself, now known as the Sam Rayburn Tollway, traffic is nearly 20 percent below levels projected two years ago.

As a result, drivers will soon be paying more, much more, to drive on NTTA toll roads. The money from higher rates is badly needed to satisfy creditors, who are owed more than $6.1 billion.

Did NTTA simply pay too much for the toll contract? Did the Regional Transportation Council demand too steep a price?

“Yes, it did,” said NTTA vice chairman Victor Vandergriff. “Both in what it paid and in the way it was paid.”

Paul Wageman, the hard-fighting NTTA chairman who had led the authority in its campaign to wrest the project away from its private-sector competitor in 2007, said it’s too early to tell whether NTTA made a good deal with the 52-year contract. Time (and a better economy) may ease many worries, he said.

Still, hindsight makes the decision to pay so much money upfront, leveraged against future tolls, look shortsighted on the part of the agency and the Regional Transportation Council, which insisted on the payments if NTTA was to win the contract over Spanish toll road firm Cintra, he and Vandergriff said.

But if the RTC was pushing too hard, it was doing so out of well-earned frustration, even desperation.

For years, North Texas leaders had looked at the area’s worsening traffic and increasing air pollution and seen a ticking time bomb capable of blowing apart the region’s powerhouse economic growth.

State and federal gas taxes had been frozen since the early 1990s. Area roads got older, more expensive to maintain, and increasingly crowded. Meanwhile, every six or so years, the region said hello to a million new faces.

So it was hardly Murphy alone who looked at the 26-mile toll road running through some of America’s fastest-growing communities and had a Jerry Maguire moment.

Wageman still sees the Highway 121 project as a good investment. The economy will rebound, and not even higher rates will persuade Dallas drivers en masse to trust their commutes to the region’s jammed free roads. But he worries that too much is being expected from toll roads, and from tolling in general.

“There is a high level of receptivity to tolling in North Texas, especially on the eastern side of the region,” Wageman said. “But TxDOT has run out of money, and now we look at a regional transportation plan that is replete with tollways. Add to that a new wave of managed lanes, a concept that is completely untested in Dallas, which will have toll rates that are incredibly high.

“My concern is that the elected officials really need to be talking to the citizens about what’s coming down the pike. Sure, we’re all glad there is going to be added mobility, but there is a cost associated with that.”

Drivers could one day soon realize they are being tolled every which way, and decide they don’t like it. “That receptivity will be gone,” he said.

But if too much is being asked of toll roads, it’s not because local leaders haven’t tried to find other answers.

A Dallas senator led efforts to raise the gas tax in Austin this year, but failed. Local efforts to get permission to ask voters to pay more taxes and fees for roads and rail also died in Austin.

Even private toll roads, the model NTTA managed to beat out in 2007, is under a cloud in Austin, where a legal tussle over the constitutionality of long-term contracts with private toll operators has stalled two major North Texas projects.

By 2012, the Texas Department of Transportation will be out of money for new construction, officials there have said. And in Washington, the highway trust fund is running out of money, too.

“I am an NTTA board member, and I hate tolls,” Vandergriff said. But for now, he and others say, it’s the only option on the table.

But as tolls soar later this year, it won’t just be the drivers who are paying more. If they are angry enough, or simply too strapped, they may decide to avoid them altogether, traffic jams or no.

That’s when North Texas will find itself right back where it started, before Highway 121: bad air, more traffic, and fast running out of options.

Link to article here.

There’s scarcely more sacred ground in Texas than the Alamo, and Rick Perry trampled on it Monday when he faked signing a bill that was really a constitutional amendment that didn’t need his signature. Even worse, the amendment that was already headed to the voters was personally watered down by Perry’s goons that police the Legislature, reducing the measure to nothing more than window dressing for his election year politicking. This after Perry VETOED real eminent domain reform, HB 2006, last session. Anyone with a pulse ought to see this flip flopping grandstanding for what it is. Perry is no more for meaningful eminent domain reform than he is for affordable transportation.
Genuine protection from the Supreme Court’s eminent domain Kelo case would torpedo Perry’s plans to sell Texas highways to private corporations in a scheme to forcibly take Texans land, pay them next to nothing for it, and hand it foreign toll operators for private profits. He’s made it his mission to prevent Texans from gaining private property protections that more than half the states have secured for their citizens since the Kelo decision. His motto: name your price and I’ll sell you Texas.

Insiders at the Legislature said Perry was holding the eminent domain bill hostage until lawmakers capitulated to re-authorizing the private toll contracts (called public private partnerships or CDAs in Texas) that essentially sell Texas highways to Spain. Due to the infighting over the local option gas tax at the end of the session, Perry didn’t get his private toll contracts, and the citizens of Texas didn’t get genuine eminent domain reform.
The fact that the Express-News took Perry’s bait and made him appear the hero to Texas landowners rubs salt in the wound. We give the paper kudos for acknowledging its mistake and attempting to correct it.

Setting It Straight: ‘Eminent domain fight’

San Antonio Express-News
06/16/2009

Gov. Rick Perry signed something in front of the Alamo Monday, but, it turns out, it wasn’t a bill to allow Texas voters to decide a constitutional amendment restricting eminent domain because the governor doesn’t figure in that process and doesn’t sign anything approving it.

The Express-News’ coverage resulted in an inaccurate story Tuesday that editors learned of late Tuesday.

The event, on a sunny Monday morning, with the Shrine of Texas Liberty in the background, did, however, garner news attention. The Express-News report was printed on the front of the Business section beneath a headline, “Eminent domain fight,” and a sub-headline: “Perry signs bill allowing vote on constitutional amendment limiting its use.”

Staff writer Jennifer Hiller described the event as Perry signing a bill “that would send the property rights decision to voters …”

A June 12 media advisory from Perry’s office promised he “will sign legislation to allow Texans to vote on a constitutional amendment to increase property owners’ rights.” And a story on the governor’s Web site Monday was headlined: “Gov. Perry signs legislation protecting Texas property owners.”

Unfortunately, with that kind of help from the governor’s office, the Express-News got the story wrong. While it requires two-thirds approval by both houses of the Legislature, a constitutional amendment does not require the governor’s approval to be put on the ballot.

A Perry spokeswoman, Allison Castle, told the Express-News via e-mail: “It was a ceremonial signing as the governor has done numerous times before to highlight priority issues,” citing events in 2007, 2005, 2003 and 2001.

However, the ceremony was unnecessary to the amendment process or to whether it goes to voters, and for erroneously explaining that process, the Express-News apologizes to its readers.

Story as it was published: http://www.mysanantonio.com/news/local_news/Gov_Perry_takes_a_swing_at_eminent_domain.html

Bob Richter is the Express-News public editor. Contact him at brichter@express-news.net or (210) 250-3264.

Link to article here.

Senator Robert Nichols removed the State Auditor from oversight over these private toll rip-offs, called CDAs, in his bill SB 1669 (which didn’t pass), so he is likely the one who removed the Attorney General from any oversight in the TxDOT sunset bill, HB 300 (which also didn’t pass). Nichols knew what none of us did yet, that Attorney General Greg Abbott was holding up the two big North TX CDAs. Guess the BIG MONEY got  to Nichols and/or the senators who were members of the HB 300 conference committee, Nichols, Glenn Hegar, Juan Hinojosa, Kirk Watson, and John Carona.

Taxpayer advocate and private property rights hero Rep. Lois Kolkhorst’s big contribution to the original sunset bill (that got stripped in the senate) was to have the Attorney General and Comptroller certify every CDA with their own signature on the dotted line. She instinctively knew that any politician who aspires to higher office would never sign their own name to such a taxpayer rip-off. She was right. We must insist her provision stays in ANY bill addressing CDAs. However, we predict this move by Abbott will be the death-knell for CDAs for good. FYI, the Legislature DID NOT re-authorize CDAs so they are set to sunset August 31. Let’s see if Perry addresses that in the call for the anticipated special session…

Texas Attorney General Greg Abbott refuses to OK North Texas tollway contract
Friday, June 12, 2009
By MICHAEL A. LINDENBERGER / The Dallas Morning News

Texas Attorney General Greg Abbott has refused to sign off on the first of two major private toll road projects approved for North Texas earlier this year.

Abbott said provisions in the contract with the Spanish firm Cintra, which is slated to build the North Tarrant Express in Fort Worth and the mid-cities, violate the Texas Constitution and must be amended.State law gives Abbott the power to hold up the contracts indefinitely if they are not “legally sufficient.”

Negotiations between his office and the department have already extended for weeks beyond an initial 60-day deadline.

Cintra has agreed to spend billions in North Texas to build the North Tarrant Express toll road and to rebuild the LBJ Freeway.

But in return, the state department of transportation has pledged more than $1 billion in tax dollars toward the projects. As a result, main lanes on both highways will be free, but Cintra will collect tolls for 52 years on adjacent lanes.

The LBJ Freeway contract has not yet been reviewed, but it is likely to be saddled with the same legal issues.

Abbott said the department’s contract for the North Tarrant Express obligates the state to pay $740 million over several years to Cintra.

“The Texas Constitution says that one Legislature cannot financially bind a future Legislature,” he said.

The contract must be amended to reflect that any promises for payment are subject to discretion of future sessions of the Legislature, Abbott said.

Any provision that leaves payments from the state subject to future action by the Legislature could give Cintra pause.

TxDOT continues to work to meet Abbott’s objections and to settle on terms agreeable to Cintra, spokesman Chris Lippincott said.

Link to article here.

Politics and the Financial Crisis Slow the Drive to Privatize

New York Times
June 4, 2009 It was hailed as a win-win for Main Street and Wall Street — a way for states and cities, along with financiers, to make some money.

But now privatization, the selling of public airports, bridges, roads and the like to private investors, looks like a boom that wasn’t. Deals are collapsing. Airy hopes of quick profits are vanishing. And what was celebrated as a new wave in finance is, for the moment, barely making a ripple.

What happened? The financial crisis, for starters. The easy money that Wall Street was counting on to finance its purchases has largely disappeared. Then the Obama administration unintentionally damped interest with its $787 billion economic stimulus package, a windfall that local governments are now racing to spend.

Bankers concede they got a bit ahead of themselves. When times were good, investment banks and private investment funds raised billions of dollars in hopes of buying infrastructure. But many state and local governments resisted selling because of money, politics or both.

Some deals turned out to be less lucrative than these would-be sellers had hoped. Government officials also began questioning whether taxpayers would be better off if infrastructure were in private hands. After Chicago sold its parking system to a private operator, for instance, drivers had to feed meters with as many as 28 quarters to park for two hours.

“We will see a few transactions,” said Fred Pollock, a vice president at Morgan Stanley Infrastructure, a private equity fund. “But we know what we won’t see — a tidal wave of projects.”

Some big names still want to enter this business, among them Citigroup, Goldman Sachs, Morgan Stanley and Kohlberg Kravis Roberts. Such investors have raised about $180 billion for global infrastructure projects. Large funds have also been established in Australia, Britain and Bahrain, where such public-private partnerships are more common. More than 20 states enacted legislation in recent years to allow some form of private-sector investment that would help fill budget gaps and repair crumbling roads, bridges and even airports.

But now the deals are falling apart. In April, a much-anticipated $2.5 billion plan to privatize Midway Airport in Chicago collapsed after a group of investors was unable to obtain debt financing. The deal, which had been in the works for four years, was to have been the first in a Federal Aviation Administration project that would have allowed up to five major airports to move into private hands.

Midway was just the latest setback. The biggest was the failure last fall of the largest deal proposed to date — a $12.8 billion lease of the Pennsylvania Turnpike to an investor group headed by Citigroup and a Spanish investment firm. Postmortems into that failed effort show that privatization advocates vastly underestimated the political opposition the deal would stir up in the Pennsylvania legislature.

Late last month plans to privatize “Alligator Alley,” a 78-mile stretch of Florida highway that connects Fort Lauderdale with Naples, collapsed when no bidders showed up. The failure has had a ripple effect — in Mississippi, state officials have pushed back the bidding schedule for a new 12-mile toll road.

Then there is the $1.2 billion privatization of 36,000 parking meters in Chicago. In the five months since the deal took effect, widespread complaints about poor service and rising parking rates have created a political firestorm for the Chicago City Council. Public opposition was so strong that on Wednesday the council approved a delay in voting on any future asset sales.

Chicago public officials have called the work of the private operator, Chicago Parking Meters L.L.C., “simply unacceptable.” For its part, the operator has apologized and announced it would delay price increases at the meters.

Proponents of public-to-private asset sales point to the $1.8 billion lease of the 7.8-mile Chicago Skyway in 2004 and the $3.8 billion raised by Indiana through a 75-year lease of its toll road in 2006 as successful pioneering efforts.

In Indiana, the money went to pay for a 10-year highway infrastructure program, and Gov. Mitch Daniels was re-elected last year promoting the lease, despite bumper stickers that read “Keep the Toll Road, Lease Mitch.”

The stimulus money, as well as other infrastructure money promised by Congress, has provided temporary relief for cash-poor municipalities. But this situation will not last forever.

“They still have expenses, and revenues will not keep up,” Scott Pattison, executive director of the National Association of State Budget Officers, said of state and local governments. “Some states will have to look at asset sales and decide. Once we step back from this crisis mode, I think they will be looked at again.”

If the market revives, the problems that scuttled recent deals may provide some lessons. In the case of the Pennsylvania Turnpike, politics clearly played a role in the deal’s collapse. A study by the Pew Center on the States found that proponents of the deal had overpromised what the turnpike could fetch and had failed to make it clear where the money would go.

After indicating that the turnpike might be valued at as much as $26 billion, when the winning $12.8 billion bid came in lawmakers felt it looked too small. Even more, there was concern that the money would be squandered and that the state was putting a valuable asset into foreign hands, since the top bidder included a Spanish company.

“It simply wasn’t a sufficient bid by a long shot,” said Joseph F. Markosek, a state legislator and head of the Pennsylvania House Transportation Committee.

Similar sentiments are coming into play in Florida, where few had expected Alligator Alley to be leased. “I believe the private partnership is like fool’s gold,” said David Aronberg, a state senator in south Florida who has led the fight against privatization. “It only looks good from afar.”