Category: General

CEO of road contractor, PBS&J, steps down in pay to play scandal

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Link to article here.

PBS&J gets lots of contracts in Texas despite the perpetual scandals revealed about the company. Between embezzlement, overbilling, the company paying employees back for political contributions, and now it’s pay to play bribes, PBS&J is clearly a criminal outfit beyond redemption. The San Antonio MPO awarded them a contract even after we alerted them to the first round of corruption with this company. Now we find out the corruption has been at the top all along. Where’s the outrage in Texas? Why don’t they ban all contracts going to this criminal company? Why can’t these guys make an honest living? No wonder the public remains skeptical when it comes transportation contracting…

Tue, Feb. 02, 2010
CEO of PBS&J to step down amid scandal
BY DAN CHRISTENSEN
BrowardBulldog.org
Miami Herald

The boss of one of Florida’s biggest government contractors has announced he’s stepping down. The news comes weeks after embarrassing disclosures about his personal involvement in a corporate pay to play scandal, and disclosures about possible corrupt payoffs overseas by company officials.“After a decade of my executive leadership through the best of times and through difficult times it is now time to plan an orderly transition to a new CEO,” PBS&J chief executive John Zumwalt, 58, said in a prepared statement last week. Zumwalt will continue as chairman of PBS&J’s board of directors.

A company source told Broward Bulldog that Zumwalt was forced out by a group of unhappy employee-shareholders. PBS&J spokeswoman Kathe Riley Jackson deniedit.

PBS&J is a major competitor for government contracts in Broward, where over the years it has made tens of thousands of dollars in campaign contributions to Republicans and Democrats.

At the same time, PBS&J has received public sector business worth tens of millions of dollars. The company currently leads the design engineering team for the county’s $810 million airport runway expansion project. At the Broward School Board, PBS&J has helped manage school construction projects.

Until last summer, Zumwalt was also president of PBS&J International — the subsidiary that’s the focus of an internal investigation into possible violations of the Foreign Corrupt Practices Act.

The act prohibits corrupt payments to foreign officials to obtain or keep business. Zumwalt was replaced as president by Walid Hatoum.

“Initial results of the investigation suggest that FCPA violations may have occurred. However, the investigation does not suggest that any violation extends beyond the international operations or that members of our executive management were involved in the illegal conduct,” the company said in its annual report filed with the SEC on Jan. 13.

PBS&J, which shifted its headquarters from South Florida to Tampa in 2007, has provided no details about what spurred the internal probe, nor has it named the country or countries where payoffs are suspected.

Dan Christensen, a former Miami Herald reporter and columnist for The Daily Business Review, is founding editor of BrowardBulldog.org, a nonprofit online-only newspaper.

Lawmakers trot out special interests to lobby for tax hikes

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Public hearing turned lobbyist feeding frenzy
By Terri Hall
San Antonio Express-News/Houston Examiner
Feb 02, 2010

We’ve seen it before. But in an election year during an economic downturn, it’s breathtaking — a room stacked with lobbyists and elected officials lobbying for higher taxes. Yesterday’s Joint Public Hearing of both the House and Senate Transportation Committees (more news coverage below) to discuss the state of transportation finance was what San Antonio Rep. Ruth McClendon defined as insanity, doing the same thing over and over and expecting a different result. McClendon feels that unless the political aspect of why road funding has not been properly addressed, all the public hearings and testimony won’t change the outcome.

Ultimately, Governor Rick Perry has repeatedly threatened a veto of any increase in transportation funding other than his policy of privatized toll roads, and he’s managed to successfully starve or squander existing funding enough to accomplish his goal. Perry, David Dewhurst, Tom Craddick and Steve Ogden’s desire to raid teacher retirement and public employee pension funds to finance these risky toll road deals fell flat in the Legislature, a sentiment echoed in yesterday’s hearing.

Once again, lawmakers tried to make the case that TxDOT is plum out of money and that higher taxes are needed to build more roads, while conservative legislator Rep. Linda Harper-Brown and a handful of conservative watchdog groups pushed back saying there’s already tax collected that’s not getting to transportation, which needs to be fixed first.

Business interests like the Texas Association of Business and virtually all the urban Chamber of Commerce groups shamelessly advocated private toll roads, and every tax imaginable to go to roads. San Antonio Greater Chamber of Commerce President Richard Perez even asked for a “arterial collection” tax, which is code for tolling surface streets, not just highways. These hogs at the trough want no tax left “un-levied” to exploit the powers of government taxation and forcibly empty our pockets to fill theirs. They want it all — from a hike in vehicle registration fees and vehicle sales tax to property tax, sales tax, and basically taxes on anything that moves.

Lawmakers again had a hard time discerning the true funding “needs” due to TxDOT persistently including projects not on the state highway system in its “funding gap” figures that started at $86 billion in 2006 (then was revised downward by $30 BILLION after the State Auditor found TxDOT had bloated that figure) and is now up to $387 billion. TURF also obtained sworn testimony from a former employee of the State Auditor that Perry’s Transportation Commission directed the agency to gin-up its 2006 funding gap so that it appeared insurmountable under the gas tax system (so it could push private toll roads as the solution to funding shortfalls). Distrust of TxDOT is the elephant in the room few lawmakers seemed prepared to address.

Americans for Prosperity and Texans Uniting for Reform and Freedom, two of only three watchdog groups to testify (Eagle Forum didn’t show and Texas Public Policy Foundation was invited but declined) compared with 31 invited witnesses in favor of higher taxes without accountability, emphasized prioritizing existing funding first, like ending diversions of gas taxes revenues away from transportation, and cleaning up a broken TxDOT that continues to illegally use taxpayers money on lobbying for more privatized toll roads.

Defending the indefensible
Though the Texas Conservative Coalition echoed many of the same sentiments, its Director, John Colyandro, was taken to task by Chairman Senator John Carona for advocating the most expensive road tax while rejecting a more affordable gas tax increase. “How is that conservative?” asked Carona.

While Colyandro stopped short of endorsing Rick Perry’s position of having all new capacity being toll lanes handed over to foreign corporations that charge 75 cents PER MILE to use public roads, he did advocate that private toll roads have a legitimate role as part of a mix of both toll and non-toll roads.

Earlier in the hearing, Carona laid down the gauntlet asking, “I’m looking for someone to come and defend to me that a privately built toll road is less expensive than a free road ’cause it just ain’t so.” While Colyandro and many of the lobbyists and local politicians asked for the moratorium on private toll roads be lifted and remain “one of the tools in the tool box,” none could defend how that funding “option” was more affordable than a gas tax increase. Because it isn’t. It’s rather telling when even a so-called anti-tax advocate lobbies for the most expensive road funding option, but outright rejects the most affordable one.

TxDOT admits Trans Texas Corridor still alive & well
Considering all the campaign rhetoric from Perry claiming the Trans Texas Corridor (TTC) is “dead,” his highway department laid it to rest when it admitted on the record that it’s still alive and well in the transportation code. The Department still has the legal authority to move forward with it should Perry be re-elected. So once again, all the claims that the TTC is dead, are just plain inaccurate. In fact, one of Perry’s appointees to the Transportation Commission, Ned Holmes, asked at a Commission hearing last fall that the TTC-69 private toll contract be expedited. Two other pending TTC corridors, La Entrada de Pacifico and Ports to Plains are also actively being pursued.

Private toll roads cost more than public
As part of the discussion on private versus public toll roads, several lawmakers queried TxDOT staff and Commission Chairwoman as to why public agencies can’t go to the bond market and fund these toll roads the same as a private operator can and even more cheaply since they can access tax-exempt bonds and don’t need to make a profit. The answer is it can stay in the public’s hands more affordably.

Though Transportation Commission Chairwoman Deirdre Delisi tried to say the private operators can tap money the taxpayers can’t, it’s totally false. In fact, it’s the other way around. The private sector is exploiting the tax-exempt capital backed by taxpayers (like federally backed TIFIA loans and Private Activity Bonds, PABs, as well as other sources of taxpayer revenue like gas taxes to subsidize toll projects) in addition to its access to the private bond market, which charges higher interest rates resulting in higher toll rates.

If a potential road is toll viable, the public toll entity can go to Wall Street and get private investors to fund the project using toll revenue bonds based on traffic forecasts. The private investors, not the taxpayer, are on the hook if the traffic fails to show-up to cover the debt. No public money has to be tapped when building a toll viable road.

Delisi seemed clueless as to what a toll viable road even was or how one is funded, looking to TxDOT staff to bailout her out of answering the question. That’s because TxDOT hasn’t built any toll viable roads since she became Chair. Delisi also claimed there were no guarantees (where the taxpayers bailout the private entities) that the private operators would make a profit, yet an article in today’s Bond Buyer confirms there are.

Financial death spiral
Under Perry, rather than scrap toll projects that won’t pay for themselves, he’s buried the taxpayers in massive amounts of new debt to SUBSIDIZE losing toll projects, socializing the losses and privatizing the profits. Pre-Perry, there was ZERO debt for roads. On Perry’s watch, $12 billion in debt has been amassed, not counting the off-budget debt local toll entities have had to incur to pick-up the slack for the State’s failure to properly fund STATE highways (and millions the Governor’s office has spent on roads for Colonias).

Much of this money has been leveraged multiple times (using borrowed money as collateral to borrow more money, and often several times over), the same reckless financial methods that got us into the mortgage crisis and bailout era. If we continue down this road, debt service payments will likely eat-up our existing gas taxes at a faster pace than inflation, fuel efficiency, and diversions COMBINED!

Though there’s some room to borrow more money for roads, the Texas Bond Review Board Executive Director warned, there’s not much available. Many of the State’s bond ratings have already dropped from AAA to AA+. Perry has basically maxed out the State’s credit card in just 5 years!

Carona closed the hearing saying the committees planned to reach out to taxpayer groups next time around to try and reach consensus so that road funding issues get solved and not stonewalled for another session. From our perspective, more funding is a non-starter until they end gas tax diversions and audit and clean house at TxDOT, holding them accountable for the years of wrongdoing.

Be sure to read TURF’s oral testimony and written testimony.___________________________________________________________

Link to article here.

North Texans revive push for local-option transportation funding bill

Posted Monday, Feb. 01, 2010

By DAVE MONTGOMERY
Star-Telegram
AUSTIN — Undaunted by failure in the last two legislative sessions, North Texas leaders are organizing another push behind a local-option transportation bill that would authorize local elections to finance millions of dollars in road and rail projects.

Officials from Fort Worth, Dallas and Arlington signaled their intentions at a joint hearing before the state House and Senate transportation committees Monday, saying that congestion and pollution have only worsened since a similar bill died in the closing days of the 2009 Legislature.

“We in North Texas are facing nothing less than a mobility crisis,” said Fort Worth Mayor Mike Moncrief. “North Texas needs your help. The people of Fort Worth need your help.”

The legislative initiative being prepared for the 2011 Legislature would allow county or regional elections in which voters would choose from a menu of funding options, such as an increase in gasoline taxes or auto registration fees, Fort Worth Councilman Jungus Jordan said in outlining the plan after the hearing.

Jordan said proponents are tailoring the local-option feature for use in any region and plan to mount a statewide push on behalf of the bill.

In another key difference from the previous campaign, Jordan said, proponent cities will rely on help from business groups instead of tax-financed city funds to pay for lobbying efforts for the bill.

The measure is similar in concept to the 2009 bill, which Gov. Rick Perry and vocal conservative groups denounced as a tax increase. But Jordan said supporters will stress that urban residents are already paying millions of dollars in “hidden taxes,” such as lost productivity and increased business costs, because of traffic congestion.

Arlington Mayor Robert Cluck, a physician, told lawmakers that proponents will also cite the public-health benefits of reducing traffic. He pointed out that pollution in the Metroplex carries the same consequences as smoking and exacerbates pulmonary illnesses.

“As we get more and more cars off the street, the amount of asthma that we see will go down dramatically,” he said.

More than two dozen suburban communities joined with Dallas, Fort Worth and Arlington in the unsuccessful effort to pass the 2009 measure, called the Texas Local Option Transportation Act. The larger municipalities also hired one of Austin’s premier lobbying firms, HillCo Partners, to help push the bill.

“We didn’t stop after the last session,” Jordan said.

Planners are still working out details but hope to have a draft within 30 to 60 days. North Texas leaders will also hold discussions with their counterparts in San Antonio, Houston, Austin, Lubbock, Corpus Christi, El Paso and smaller urban areas to form a statewide coalition, Jordan said.

Metroplex leaders, he said, still have the same priorities as in 2009: finding money for up to 250 miles of commuter rail and expansion of the now overburdened road and highway network.

“The unparalleled quality of life that we’ve built is severely threatened by our congested highways and roadways,” Moncrief told the lawmakers, saying that “many if not most” of North Texas residents are “fed up” with being stuck in traffic.

“They deserve answers,” he said. “Not next month. Not next year. Now.”

The daylong hearing by the House Transportation Committee and the Senate Committee on Transportation and Homeland Security was called to explore funding options to help the state avert a looming transportation crisis.

Some lawmakers are touting an increase in the gasoline tax, which hasn’t been changed since 1991.

Deirdre Delisi, chairwoman of the Texas Transportation Commission, declined to take a position on the proposal but said the state needs financial stability to address “serious transportation challenges” over the next two decades.

The state will run out of money for new transportation projects by 2012. A panel of Texas business and civic leaders appointed by the commission says the state needs to invest at least $315 billion through 2030 to maintain roadways, combat urban traffic congestion, and increase mobility and safety.

_________________________________________________________________

Link to article here.

Money for roads sought

State could look at fuel tax hike

Posted: 02/02/2010 12:00:00 AM MST

EL PASO — State legislators on Monday began what will be a long and difficult process to create new revenue streams for highway construction in Texas.

Money to relieve the congested freeways in the state has dried up and lawmakers have been left with the task of coming up with billions of dollars to relieve traffic tie-ups.

The members of the Texas House and Senate transportation committee had a joint meeting in Austin to discuss how the state will come up with additional revenue to help build new roads starting in 2012.

Both committees heard from mayors — including El Paso Mayor John Cook — transportation officials, lobbyists and business leaders during a meeting that began at 7 a.m. El Paso time and lasted until well past 4 p.m.

Although no official plan was discussed, most of the conversation revolved around a proposed hike in the state’s fuel tax, which has been stagnant at 20 cents per gallon since 1991.

“Yes, that’s on everyone’s mind, but the reality is that it won’t be easy to sell a gas tax increase to the public,” said state Rep. Joe Pickett, D-El Paso, the chairman of the House’s transportation committee. “Just think about the sound bite on television. As soon as you hear increase, your mind is going to be turned off by it.”

Pickett’s committee, along with its counterpart in the Senate, began pitching a hike — or at least a retooling — of the fuel tax since last fall.

According to figures from the Texas Department of Transportation, the state could be $250 billion behind in highway construction by 2050, when the population of the state will reach 50 million.

“By January 2012, TxDOT will be dead-flat broke and without new revenues to build new roads. That’s a big issue,” said state Sen. Eliot Shapleigh, D-El Paso, a member of the Senate’s transportation committee.

Shapleigh said the state should not only increase the fuel tax but also alter it to make sure fuel-efficient vehicles pay their fair share in taxes for new highways.

Gov. Rick Perry, though, has said he will veto any bill that asks for an increase in fuel tax.

“Both Perry and (Lt. Gov. David) Dewhurst have seceded from reality and they’re doing nothing to fix the problem,” Shapleigh said.

Members of both committees conceded Monday that fixing TxDOT’s budget shortfall would require innovative legislation and changes to long-standing fee structures.

Some of the proposed changes include increasing vehicle registration fees, pushing cities and counties to use the Transportation Increment Refinancing Zone funding mechanism, and forcing TxDOT to become more efficient.

Officials also discussed creating a local option that would allow municipalities and counties to create local fuel taxes to help build local roads.

Legislators said the state needs to be more in tune with the U.S. Department of Transportation to secure as much federal funding as possible.

“Whatever happens, I hope all these tools that have been discussed are kept on the toolshed for us to use,” said Cook. “El Paso has taken advantage of many of these tools and we are doing well because of it.”

Many El Paso commuters, though, said they wouldn’t like to see an increase in fuel taxes, especially because gas prices have skyrocketed in the last five years.

“Look at me. I’m almost paying $3 a gallon here. And now they want me to pay more? That’s awful,” said Susan Robert, who was fueling her car at a Central convenience store on Monday. “I think we have enough roads for right now. Don’t raise my taxes.”

Pickett said he is concerned that the recent boom in highway construction — about $1 billion worth has been approved — in El Paso could make people think TxDOT is in good shape and that a fuel tax increase is not needed.

“El Paso is in good shape for the next four or five years, and I say that with hesitation because I know that we have done things right here and things have played in our favor,” he said. “But we are talking about the future and our list of projects is long.”

Pickett added, “Finding a solution to the transportation funding problem is going to be one of the most difficult things to get through the Legislature in the next session … but I guess I already knew that.”

__________________________________________________________________

Web Posted: 02/01/2010 6:18 CST

Legislators debate road funding

By Josh Baugh – Express-News

AUSTIN — Texas lawmakers on Monday hammered home that without a new funding method, the Texas Department of Transportation will be unable to build any new roads beyond 2012 and will not have enough money to properly maintain existing roads within two to three years.

They also demonstrated that finding a new funding solution they can agree on won’t be easy.

Legislators on the Senate Committee on Transportation and Homeland Security and the House Committee on Transportation grappled with the use of “public-private partnerships” and comprehensive development agreements, or CDAs, that in some cases privatize toll roads.

Senate Chairman John Carona, R-Dallas, chastised language often associated with toll roads, that drivers can “choose” to use them. Carona said it’s “disingenuous” to say drivers will have an option if the only way to fund new-road construction is by tolling them.

“If every new road going forward is a toll road, that’s no choice,” he said.

Looking into other potential sources of dollars, Sen. Eliot Shapleigh, D-El Paso, asked Texas Transportation Commission Chairwoman Deirdre Delisi whether her board, appointed by Gov. Rick Perry to oversee TxDOT, supported an increase in the gas tax, something Perry has said he opposes. Delisi said it’s not the commission’s role to determine how much the gas tax should be increased, that’s the Legislature’s job.

Increasing the gas tax has been a political hot potato, but it’s an issue that’s gaining traction among lawmakers. It’s unclear, however, what chance it will stand during the 2011 legislative session.

Read the rest of the story here.

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

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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

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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

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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

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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

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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

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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

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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

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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