The most important signal in this story is the likelihood that Senator Robert Nichols’ CDA moratorium bill (SB 1267) WILL be voted OUT of committee today! That said, Governor Perry continues to spew inaccurate spin about the overall affect of the CDA moratorium bill. It only halts private toll equity projects (Comprehensive Development Agreements or CDAs) as Senator Robert Nichols, the bill’s author, has repeatedly emphasized, nor are Perry’s “cronyistic” private toll road deals and secret back room deals selling off Texas to the highest bidder the ONLY way to finance new roads. Just read this A&M Study from HIS OWN COMMISSION that says otherwise. Perry knows he’s in trouble when he has to call in the Secretary of Transportation, Mary Peters, to hold his hand…

Link to article here.

Perry rips bill to hold off on toll roads
By Clay Robison
Express-News
04/03/2007

Austin Bureau AUSTIN — With U.S. Transportation Secretary Mary Peters offering her support, Gov. Rick Perry on Tuesday lashed out against legislation that would impose a two-year moratorium on toll-road privatization.Perry said the proposal, co-sponsored by strong majorities in the House and Senate and reflecting the public controversy over the Trans Texas Corridor, would cost the state critical business expansion opportunities.

“Our message today is that building needed infrastructure is essential to creating jobs and attracting economic development investments in Texas. And you can’t accomplish that with a two-year moratorium on needed road projects,” Perry said.

Although the moratorium legislation is co-sponsored by 27 of 31 senators and 111 of 150 House members, it faces an uncertain future because of strong pressure to continue building highways and waning mileage from the state gasoline tax, the traditional revenue source for highway construction.

Lt. Gov. David Dewhurst said the Senate Transportation and Homeland Security Committee is likely to approve the bill today but that further action would be delayed as lawmakers continued seeking a compromise.

In a related development, the Senate approved a bill Tuesday by Finance Chairman Steve Ogden, R-Bryan, that would double to $6 billion the cap on bonds that may be used to fund highways.

Ogden said the bill would eliminate the need for highway officials to seek “exotic funding” in the form of privately owned toll roads.

But Perry said there will be no new roads in Texas without his public-private financing scheme. And Peters said other states need to adopt Perry’s approach to road building.

The governor chose a visit to a Samsung semiconductor plant in Austin to make his highway pitch. The plant is near the route of the first Trans Texas Corridor project, a proposed series of toll roads running parallel to Interstate 35.

It has sparked considerable controversy, mainly over the state’s decision to contract with a private consortium headed by a Spanish company, Cintra, to develop a long-range plan for the corridor.

The state would share in profits from the toll roads. But a recent report by the state auditor’s office was sharply critical of the corridor project, concluding that taxpayers might never know how much they could end up paying for it.

Editorial – By Terri Hall

Problem: Spanish company to take taxpayers for 50 year toll ride

Solution: Index gas tax

Wonder why all the fuss over toll roads? Well, we’re not talking about traditional toll projects. Governor Perry and his Transportation Commission are pushing private toll road deals that limit free routes and allow the private operator to charge very high tolls. Take a gander at what the winning bidder, a Spanish company named Cintra, is telling their shareholders about the Hwy 121 private toll deal in Collin and Denton counties:

“Provides a corridor to Dallas on which there is no alternative roads.”
– Page 6, It will connect I-35 with US-75

“No planned proposed improvements to free alternative routes in the long term. Concessionaire is entitled for compensation in case existing long-term planning is modified.” – Page 11

You see, as ex-Transportation Commissioner Senator Robert Nichols, who is a stickler for details and who is also the author of a bill to halt CDAs, has noted the devil is in the details. These private toll contracts called Comprehensive Development Agreements (CDAs) include non-compete agreements like Cintra brags about to its shareholders. This means there will be no improvements made to existing roads nor any new free routes built within a certain mile radius of the toll road. Doing so would compete with or reduce toll revenues, and a private company simply won’t allow that.

Toll rates $1.50 a mile

TxDOT promises toll rates of 12-15 cents a mile, but the reality has been 44 cents up to $1.50 PER MILE on similar projects that just opened in Austin. You see, when TxDOT has admitted it costs 11 cents just to collect the tolls, they can’t possibly cover the operation or maintenance of that road with 12-15 cent tolls much less pay the private toll operator their guaranteed 12% profit. In fact, TxDOT’s mantra is that the private company will charge “market rate,” which essentially means tolls without limit since there will be few if any alternatives. Bottom line: using CDA private toll contracts is THE most expensive option for motorists. Yet the Governor and his cronies claim they’re doing all this without raising your taxes. Who do they think they think they’re fooling?

Dennis Enright, an expert in these public-private partnerships testified on March 1 to the Senate Transportation and Homeland Security Committee that CDAs cost 50% more than traditional public toll roads. He also stated it’s always better to keep these toll projects in the public sector (having a tolling authority or TxDOT do them) rather than to privatize our highways in these monopolistic 50-year contracts.

What’s perhaps even more appalling is that the U.S. Government was involved in facilitating some $2.6 billion of this $2.8 billion project. So who’s really bringing the money to the table? The U.S. taxpayer, not the private company as TxDOT claims. So the taxpaying public will pay billions both on the front end with federally backed bonds and loans and on the back end of this deal through tolls for the next 50 years just to accelerate the construction of a single 10 mile stretch of highway.

This same company won a deal to build SH 130, won the development rights to build the first 600 miles of the Trans Texas Corridor (called TTC 35), and is one of two foreign companies bidding to takeover existing highways SH 281 and Loop 1604 in San Antonio and turn them into tollways. Senator Eliot Shapleigh asked TxDOT in a recent Senate Transportation Committee hearing if giving that much of our state highway system to a single foreign company for the next half-century gave him pause. TxDOT dodged the question.

So what’s the solution?

Pass the CDA moratorium

It’s past time to rein-in TxDOT’s push to privatize and toll our public highways in these very controversial deals that amount to horrific public policy. HB 2772 and SB 1267 have more than two-thirds majority support and would place a 2 year moratorium on CDAs giving the Legislature time to get the details of these contracts right before signing away our public highways for 50 years! Senate and House Transportation Committee Chairmen Senator John Carona and Mike Krusee are tying them up. Let’s get these bills to the floor for a vote in time to override a promised gubernatorial veto.

Index the gas tax

Let’s assume that even though TxDOT’s budget has tripled since 1990 and doubled since Rick Perry took office, and even though TxDOT has $7 billion in bonds available to them, that we are still short of cash for highways. A recent Texas Transportation Institute study showed that indexing the gas tax to inflation is all that’s needed to meet our future transportation needs without tolls. Politicians in the House, in particular, need to have the political will to enact the most affordable, most sensible financing solution. All the options we’re faced with are tax increases of one sort or another since tolls are clearly a tax, an aggressive one in the hands of a private company. The gas tax increase would cost perhaps $50 – 100 more a year versus $2,000-3,000 more a year per motorist in tolls!

However, before adding ONE DIME to TxDOT’s budget, the Legislature must also pass Senator Wentworth’s bill to stop any further hemorrhaging of the gas tax that’s been going to non-transportation sources and frivolous earmarks. The taxpayers won’t tolerate putting more money into a leaky boat. That’s what got us into this mess in the first place. So since an ounce of prevention equals a pound of cure, let’s revisit the gas tax to prevent this shady widespread shift to private tolling and be done with it.

Link to article here.

Toll road bids running out of fuel
By Gary Scharrer
Express-News
03/31/2007

AUSTIN — Public wrath over private company toll roads has soured most Texas lawmakers on a 2003 law that started the controversy, but some of their leaders say they can’t support a moratorium on it — at least not yet.As they jockeyed over whether and how to slow down toll-road privatization, the state’s first private toll highway contract, to build toll lanes between Austin and Seguin, was quietly signed just one day after a Senate panel held the only hearing so far on a moratorium bill.

The bill, which would put decisions on future contracts on hold for two years, is expected to pass out of a Senate committee this week but stay parked on the back burner as a last-resort measure while lawmakers look for compromise in the final two months of the session.

Lt. Gov. David Dewhurst has directed Senate Transportation and Homeland Security Committee Chairman John Carona to allow the panel to approve the bill, despite Carona’s discomfort with it.

“I think a moratorium ought to be a last resort rather than a first response and, while I support a moratorium as a last resort, I believe it’s much too early in the session,” Carona, R-Dallas, said.

The veteran legislator said he has assurances that Dewhurst will give him time to try to draft legislation that calms the outrage over proposed 50-year state contracts with private companies to build and operate toll roads.

Critics are howling at contract provisions that restrict competing highways near the toll roads and contain prohibitive terms for buying back the roads in the future.

They say the specter of high toll rates combined with a loss of control over Texas highways has inspired broad, bipartisan support for a moratorium.

Sen. Robert Nichols, R-Jacksonville, has 27 of 31 senators backing his moratorium bill. On the House side, 111 of 150 members have signed up for Rep. Lois Kolkhorst’s bill.

“It boils down to whether the 10th largest economy in the world (Texas) can build its own highways or if we’re going to give private equities the chance to take all the profits from Texas,” Kolkhorst, R-Brenham, said.

Investors will net a projected $300 million over the next 50 years for private company toll roads in major cities along the Interstate 35 corridor, Kolkhorst said.

“The real question is, do you want that $300 million just on one highway to be plowed into more highways in Texas, or do you want that $300 million to go to Wall Street and Spain? That’s what it boils down to,” she said. “That’s a clear policy question.”

Debate heating

Many lawmakers likely will defer to Nichols, who spent eight years on the Texas Transportation Commission before becoming a senator. He expects a moratorium to pass.”We need to call a time-out. We need to fix this problem, and we need to fix it right,” Nichols said. “The current plan removes the control of your future transportation system out of your own hands. It sells the future revenues at a discount, and it’s designed to extract exorbitant toll rates.”

Dewhurst called those rates “astronomical” but declined to discuss them because of confidentiality agreements with the private companies.

Decisions about the state’s future highway system will be dictated by corporations instead of Texans unless lawmakers intervene now, Nichols said.

But Carona and House Transportation Chairman Mike Krusee, R-Taylor, are urging caution. Political dissent will scare off investors and increase the state’s financing costs for building roads, they warn.

Texas is short “tens of billions of dollars” needed to build highways, Krusee said.

Publicly run regional toll authorities can build some of the roads but lack necessary bonding authority to build all of them, he said.

“Once we tell the capital market that Texas is closed for two years, will they ever want to come back? Because it’s very expensive to make proposals,” he said. “The capital market looks for willing partners and if Texas is not a willing partner, they leave.”

A moratorium is shortsighted because it simply postpones a solution for two years, Carona said.

“What we need to focus on is a bill that takes care of the problems and allows us to meet our transportation needs,” he said. “A moratorium stops the process, but no part of that bill addresses how you will fix the problem.”

Carona also favors indexing the state’s gasoline tax to keep pace with inflation. The state’s 20-cent per gallon tax has not increased since 1991.

Texas’ ongoing population boom requires “a massive road building project today — not two years from now,” he said.

Done deal

The concession-development agreement to extend Texas 130 from south of Austin to Seguin was widely trumpeted last summer when the state and a group led by the Spanish firm Cintra and Zachry Construction Corp. of San Antonio settled on terms.But not a peep was made when officials signed the contract March 22 at the Texas Department of Transportation office in Austin, across the street from the Capitol.

“We made an announcement in June, when we made a tough decision to do it,” said Ric Williamson, chairman of the Texas Transportation Commission.

Awarding Cintra the construction fulfills a contract guaranteeing the firm at least one segment of the project, Kolkhorst said.

Cintra-Zachry will pay to build and operate the 40-mile, four-lane tollway and has pledged to give the state $25 million in up-front cash and a share of profits. The road could open in 2012, with toll fees set at about 15 cents a mile in today’s dollars and increasing with annual growth of state domestic product.

But Kolkhorst said it’s costing Texas $19 million in environmental and legal fees to get the $25 million, “so we’re really not even going to net anything on that one.”

Up next is a concession to make Texas 121 north of Dallas into a toll road, another Cintra project that has created an even bigger uproar. An agreement was unveiled in February and could be signed within three months, said José Lopez, a Cintra director in Austin.

“We would be very happy to sign tomorrow,” Lopez said.

The North Texas Tollway Authority, which had agreed not to bid on the project, said it could have matched Cintra’s upfront carrot of $2.1 billion and that for the rest of the 50-year contract they could have paid $4.2 billion compared to Cintra’s $700 million.

Motorists will pay the $3.5 billion difference if the deal is signed, officials say.

In San Antonio, Cintra-Zachry is competing with a consortium headed by Macquarie of Australia to develop and operate toll lanes on 47 miles of U.S. 281 and Loop 1604 on the city’s North Side. That contract could be signed as early as next year.

A moratorium on concession contracts could stall that work for a year or two.

“A lot of it depends on what the language actually says,” said Clay Smith, a TxDOT engineer in San Antonio.

When Cintra-Zachry submitted a proposal in 2005 for the $2.2 billion project, about $630 million in public money was freed up for other uses. If environmental studies get federal clearance this summer, construction could start next year and finish by 2012.

San Antonio lawmakers say they’re hearing plenty of complaints about toll roads from Bexar County residents.

“A lot of it is because of the lack of information,” Sen. Carlos Uresti, D-San Antonio, said.

Sen. Jeff Wentworth, R-San Antonio, who supports a moratorium, emphasized that a two-year cooling off period would not affect toll roads built by public toll road authorities.

“We have to continue building highways. The people are coming whether we like it or not,” Wentworth said, noting it took Texas hundreds of years to reach a population of 23 million but its population is expected to double over the next 30 years.

Carona can’t promise that a consensus will emerge from negotiations on SB 1929, the moratorium bill, but he complimented Krusee and TxDOT officials for showing good-faith efforts to resolve nagging worries about long-term private toll road projects.

The moratorium option hovering over negotiations will help that process, he said.