Category: Why Foreign Companies?

Nadar: Purloining the People's Property

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Published on Monday, August 3, 2009 by CommonDreams.org
Purloining the People’s Property

by Ralph Nader

Every week, Marcia Carroll collects examples of privatization (that is, corporatization of the peoples’ assets). Looking at her website, privatizationwatch.org [1], will either make you laugh helplessly or make your blood boil.

The “off the wall” giveaways at bargain-basement prices of what you and other Americans own eclipses imagination. The latest escapes from responsible government are called “public-private partnerships” and are designed to enable the likes of Morgan Stanley and Goldman Sachs to take over highways, meter-collecting, and public buildings in deals that are loaded with complex tax advantages for the investors.

Here are two of her latest entries. Arizona lawmakers and Governor Jan Brewer are moving to fill a $3.4 billion budget shortfall by selling state-owned buildings. These include not only prisons, but also the House and Senate buildings. That’s the state legislature, fellow Americans! Metaphor becomes reality!

The proposed sale has bipartisan support and will require a leaseback by the buying corporation to the lawmakers with the right to repurchase the premises within twenty years.

The Arizona Republic reports that the deal, which includes 32 state properties, would bring in $735 million in upfront money and entail state lease payments totaling $60-70 million a year.

“We need the money,” State Minority Whip Linda Lopez, a Tuscon Democrat said, adding, “You’ve got to find it somewhere.” Well, why not rent out the backs of the state legislators to their favorite corporate funders? At least the public would get full disclosure of ownership.

“I look at it as taking out a mortgage,” practical Arizona House Majority Leader John McCormish, a Republican, told the Wall Street Journal.

The second item comes from the Denver Post, which reports that the foreign consortium, auto-estradas de Portugal (Brisa), operating the toll road Northwest Parkway under a 99-year lease, objected to improvements on a nearby public road. Under the complex leasing contract, the company could cite the improvements as an “adverse action” reducing toll revenue and the number of vehicles using the parkway. This action would presumably entitle this foreign company to compensation from Colorado taxpayers.

Last year, Pennsylvania Governor Ed Rendell tried to push through the legislature a complex, 75-year lease of the storied Pennsylvania Turnpike in exchange for $12.8 billion up front. All kinds of tax breaks and trap-door evasions filled the 686 page lease. The Governor was prepared, for example, to agree to pay the consortium of foreign investors if new safety measures or emergency vehicles entered the toll road and affected the flow of traffic. Fortunately, the legislature rebelled and blocked the deal.

The Indiana Toll Road was turned over to private companies in 2006. The 75-year lease was for $3.8 billion, which is a little more than the cost to repair the Woodrow Wilson bridge over the Potomac River between Virginia and Washington, DC.

Tolls on the Indiana Toll Road have already doubled and are expected to double again within ten years, according to the Dallas Morning News.

Last year, Mayor Richard Daley of Chicago privatized the city’s parking meters. Chicago’s inspector general concluded that the meters were worth nearly twice as much to the city as the $1.15 billion that the city received under an agreement rushed through the City Council with no civic input. A fourfold increase in meter rates this year has driven many motorists to residential neighborhoods in search of free parking spaces.

Indiana, a leader in outsourcing governmental functions to private corporations, gave the servicing of the state’s welfare program to IBM. According to the Indianapolis Star, error rates since corporatization have risen 17.5 percent last November and 21.4 percent in December.

The myth that corporatization is “better, faster, and cheaper” is falling apart. This year, the IRS announced that it will end the use of private tax collectors after consumer groups argued that taxpayers were subjected to immediate payment demands by private collectors while IRS employees would offer citizens an array of options to help pay their tax debt.

Then there are the corporatized water systems where the companies deliver poorer service at higher cost.

Since the 19th century, privatizing public functions has opened the doors to kickbacks, price fixing, and collusive bidding.

New depths of corruption were reached in Pennsylvania recently when two state judges pleaded guilty to taking bribes in return for sending youths to privately-owned jails.

After reading report after report about the vast, relentless waste, fraud, and abuse arising out of corporate contractors to the Pentagon in Iraq, why should readers be surprised at this domestic scene whereby taxpayers pay through the nose for corporations to govern them?

So, you’re not surprised. But are you indignant? Are you ready to make sure the politicians hear from you in no uncertain terms, hear from you to stop this recklessness and restore public control of the public infrastructure under accountable government?

If the state politicos try to pull a fast one, demand public hearings with thorough reviews of the proposed contracts or leasebacks. Better yet, in states like Arizona or Colorado, require any such proposals go through the open, state-wide referendum voting process.

Corporatizations such as the above just pass on to our children the burdens that our generation should have assumed itself to run government within its means funded by fair taxation.

Ralph Nader [2] is a consumer advocate, lawyer, and author. His most recent book is The Seventeen Traditions [3].
Article printed from www.CommonDreams.org

URL to article: http://www.commondreams.org/view/2009/08/03-9

Outsourcing Sovereignty: Why Privatization of Government Functions Threatens Democracy

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Link to article here.

Ex-W&M chief sets IT framework
Richmond Times-Dispatch by Jeff Shapiro
Sunday, August 2, 2009

As Virginia deals with the headaches — financial, political and administrative — of turning over its info-tech system to deep-pocketed defense giant Northrop Grumman, a voice from the past may offer guidance for the future of privatization in a state that seems more corporate subsidiary than commonwealth.

Paul R. Verkuil, former president of the College of William and Mary, is a free-market advocate who worries that relinquishing government responsibilities to the private sector only drives up profits at the expense of public capital.

In his book “Outsourcing Sovereignty: Why Privatization of Government Functions Threatens Democracy and What We Can Do About It,” Verkuil warns that taxpayers are surrendering power by letting big business do the people’s business.

Verkuil, now a professor at the Benjamin N. Cardoza School of Law at Yeshiva University in New York, made it clear the other day he’s not familiar with the continuing food fight over Northrop Grumman.

But, says Verkuil, if there are constants in these big-money deals — Northrop Grumman is pocketing $2.3 billion over 10 years in the state’s richest-ever outsourcing contract — they are: Is it appropriate to privatize a particular service? Is the public assured oversight and accountability?

On the face of it, farming out IT might a no-brainer.

But when one considers that Northrop Grumman is now custodian of data that make every man, woman and child in Virginia more than a number — remember the recent hacking of the state’s prescription-drug file? — it could be argued this exercise is fraught with risk. At a minimum, this would include your privacy as well as the state’s and the company’s liability.

“Not every public solution is wrong and not every private solution is better,” says Verkuil, president of William and Mary from 1985 until 1992.

Verkuil, who has examined such controversial privatization contracts as guns-for-hire in Iraq and housing in post-Katrina New Orleans, suggests that one measure of the effectiveness of the Northrop Grumman deal may be how it stacks up against IT programs still under state control.

The General Assembly and Virginia’s courts are not covered by Northrop Grumman’s contract with the Virginia Information Technologies Agency. Nor are colleges and universities. More than 80 departments, all in the executive branch, are on the Northrop Grumman hook for computer services.

The legislature, judiciary and higher education have contractual relationships with high-tech firms but, for the most part, retain authority over hardware, software, networks and staff. In other words, they determine their own destiny.

“Are these other branches prospering better in some ways — and why?” says Verkuil. “Is it because they retain power and capacity that Northrop Grumman didn’t allow [the state]?”

Perhaps these questions could be put to the watchdogs of this monster deal: the Joint Legislative Audit and Review Commission, which is the General Assembly’s investigative arm, and the Auditor of Public Accounts, the legislature’s bean counter.

One element of Virginia’s adventure in outsourcing-land that neither JLARC nor the auditor can fully measure: $833,374 in political contributions from Northrop Grumman since 2001. That year, voters chose as governor the techie who led us down this rabbit hole: Mark Warner.

_________________________________________________

Link to article here.Sunday, August 02, 2009
Richmond Times-Dispatch – McClatchy-Tribune

EDITORIAL: Keep Digging

On July 2 we said: “A definitive judgment regarding the state’s information technology program must await the completion of a thorough report. We have confidence in the Joint Legislative Audit and Review Commission.” A determined probe remains an imperative.
The story broke with Lem Stewart’s ouster as head of the Virginia Information Technologies Agency.  Stewart had questioned the public-private partnership with Northrop Grumman. The questions have multiplied. Stewart’s reputation has been enhanced.

Situations such as this often have political implications. Governors take heat when controversies strike state agencies. The Northrop Grumman contract presents political complications, however. The public-private partnership was the brainchild of Mark Warner’s administration. The stories have surfaced during Gov. Tim Kaine’s watch. Yet if Republicans in the General Assembly attempt to score partisan points, they might run into some difficulties. Warner originally proposed that VITA report to the governor, but in a compromise with Republicans in the legislature he agreed to create VITA as a free-standing agency, led by a board independent of the governor’s office. Now add this: Although VITA does not fall under direct executive oversight, Stewart’s interim replacement — Len Pomata — also serves as Virginia’s secretary of technology, which makes him a member of Kaine’s Cabinet, which exposes the administration to second-guessing.

The questions bother Virginians. We do not have all the answers. Mergers in the public sector do not always proceed as smoothly as predicted. Business relationships such as these typically experience imperfections. They also require great scrutiny. Northrop Grumman concedes some of the delays but argues that the transformation process has proved more complicated than anticipated. The company points to considerable progress. Critics still wonder whether the commonwealth is seeing the expected efficiencies — and whether it ever will.

The program may be undergoing pains associated with birth, although this seems a protracted delivery indeed. VITA may suffer from organizational flaws. The private side of the partnership may be falling short.

The Times-Dispatch will continue to press the story. We hope the commonwealth will be spared unhappy choices.

Indiana toll road value tanks under private operator

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The Indiana toll road value went from $3.8 Billion down to a pathetic $445 million. The foreign investors get to jack up the rates to cover their costs and milk taxpayers for profits, while Hoosier motorists have to pay increasingly aggressive tolls for 75 years. Who’s getting the sweetheart deal? Certainly not Indiana taxpayers. Truckers pay nearly $70 to use the road. Think our cost of goods isn’t going up to cover that kinda financial damage? Think again!
Toll-road lease tumbles in value
Ailing operator denies talk that it might sell its stake
Sat. August 01 – 2009 Peter Schnitzler –  pschnitzler@ibj.com Indiana Business Journal staff

Gov. Mitch Daniels expected his unprecedented $3.8 billion Indiana Toll Road lease to last 75 years. It may be tested after just three. The foreign companies that privatized the property haven’t escaped the global economic downturn. As a result, the value of their investments has plummeted.
Now, as they labor to shed enormous debt loads, analysts and the financial media are abuzz that the Indiana Toll Road lease could change hands. In June 2006, Indiana struck a deal with Australia-based Macquarie Group Ltd. and Spain-based Cintra Concesiones de Infraestructuras de Transporte SA. Indiana got $3.8 billion upfront, money it’s used across the state to fund the Major Moves highway improvement initiative. In exchange, the investors bought the right to collect tolls, with the obligation they manage, maintain and upgrade the road.
If the companies sell the lease, the new owners would take over that duty. Or if Macquarie and Cintra retain the lease but fail to live up to its terms, Indiana gets its toll road back. The outlook for the state of Indiana might be least favorable under the status quo. That’s because the companies could try to dig themselves out of their financial hole by continuing to aggressively raise tolls.
Getting the road back, on the other hand, wouldn’t necessarily be an unfavorable turn of events for the state. Indiana would be on the hook for future improvements, but also would receive the toll revenue—which totaled $155 million last year. Retaining ownership might be the most appealing option for Macquarie and Cintra, since any sale likely would reap a fraction of what they paid. Recent write-downs by Macquarie suggest the same lease deal today could fetch as little as $445 million.
Both companies have been exiting investments across the globe to reduce debt, and some Australian stock analysts say Macquarie is likely to do the same with its stake in the Indiana Toll Road, since vehicle traffic hasn’t met expectations. Macquarie flatly denies that possibility.
“[Macquarie] is not in the market pursuing a sales process for any of its U.S. assets, including the Indiana Toll Road,” wrote Macquarie spokesman Alex Doughty in an e-mail. “Speculation suggesting otherwise is simply incorrect.”
The private operators, who thought they bought a cash cow, have already proven aggressive in hiking tolls. With so much invested, the companies have an incentive to milk the lease, taking advantage of language in the agreement that could permit annual toll increases of 5 percent or higher.
That’s exactly what House Speaker Pat Bauer, D-South Bend, an outspoken critic of the Indiana Toll Road lease, feared from the start. “It was never meant to be a profit center or to make money,” he said of the highway, which opened in the mid-1950s. “It was meant to be low tolls for maintenance and, eventually, a free road.”
Unbreakable lease?

The Indiana Toll Road lease is hundreds of pages long, all legal screed. It details the operators’ duties and every other obligation a legal team led by locally based Ice Miller LLP and Chicago-based Mayer Brown LLP could negotiate. State officials consider it unbreakable. And they say it anticipates every conceivable risk, including operator bankruptcy.
“No question there are financial challenges out there for both [Macquarie and Cintra]. But that’s the nature of the economy,” said Leigh Morris, the Indiana Department of Transportation’s deputy commissioner for toll road oversight. “I have every confidence this is not going to turn out to be a problem for the state of Indiana.”
The lease mandates $4.5 billion in improvements over its seven-and-a-half decades. The companies already have made good on $191 million worth of upgrades, mainly by adding electronic tolling and widening congested stretches of the road. Another $157 million in projects are scheduled by the end of 2010.
The partnership is funding improvements through a $660 million bank loan, which Cintra spokesman Patrick Rhode said is scheduled to remain in place until 2014. “The Indiana Toll Road is a long-term lease and during that term there will be peaks and valleys,” Rhode wrote via e-mail in response to IBJ’s questions. “This is a valley, but the economy will recover and in the future we will be talking about the ITR and its performance peaks, not the valleys.”
Analysts’ main concern today is that weak tolling traffic could drain cash reserves used for debt service on the bank loan before 2014.

In a June 2009 report on the state of U.S. toll roads, Moody’s Investors Service gave the industry a negative outlook for the next year to 18 months, noting weak economic conditions have flattened traffic growth. On July 17, Macquarie reported revenue fell 5.1 percent on three of its four U.S. toll roads last year. The company also holds stakes in Chicago’s Skyway and Virginia’s Dulles Greenway. The exception was the South Bay Expressway in San Diego. Its traffic fell just 2.3 percent.

“For the most part, toll roads have demonstrated pricing power and financial stability through aggressive toll increases, or the reduction or elimination of discounts,” according to Moody’s report. “Careful budgetary management, the deferral of some capital projects, and lower construction costs have allowed most toll roads to maintain solid cash flows and credit metrics.”

The report adds: “We are concerned that accelerated traffic declines and toll increases (needed to support increased debt issuance) could soften financial ratios and cause more ratings downgrades.”
But Ian Myles, an equity analyst for Macquarie Securities—a unit of the Australian financial giant—downplayed the possibility of an Indiana Toll Road cash crunch. “ITR has significant cash reserves. The purpose of those reserves is to ensure they meet their debt obligations during periods of weak traffic,” he said in an e-mail from Australia. “Whilst they may never have forecast the extent of the weakness, there is significant cash on the balance sheet to meet the interest obligations. We estimate reserves of $110 [million]. … We do not believe the road is at risk of default.”
Unwinding portfolios
The Indiana Toll Road is just one of many infrastructure properties Macquarie and Cintra hold stakes in around the world, acquired in deals mostly funded with debt. In the recession, both companies became over-leveraged and now are unwinding their portfolios. One of the Macquarie properties on the block is downtown’s Chase Tower, the state’s tallest building. The company listed it in January, with an asking price of $180 million.
“No matter how you look at it, Macquarie Group is in the process of unraveling itself from the tangled web of funds that once catapulted its executives into the salary stratosphere but now shackle every attempt to resurrect its tarnished image,” Ian Verrender, a columnist for the Sydney Morning Herald, wrote in June. “Everything—including the flagship Macquarie Infrastructure Group—is now up for grabs.”
On July 17, Macquarie subsidiary Macquarie CountryWide Trust agreed to sell its 75-percent interest in 86 U.S. grocery-anchored shopping malls for $1.3 billion. Macquarie Communications Infrastructure Group is nearing completion of a $1.3 billion takeover by the Canada Pension Plan Investment Board. Cintra has had its own problems.
A March 24 analyst’s report by Credit Suisse called the Indiana Toll Road “Cintra’s most risky major asset,” pointing out disappointing traffic has led the company to curtail dividends. It also says refinancing Indiana Toll Road’s debt will be tough. On July 27, Cintra sold its parking lot division for $634 million. The next day, Bloomberg News reported that Macquarie may sell its leases on the Chicago Skyway and Indiana Toll Road to raise cash.
But if either Cintra or Macquarie sold now, they would be locking in huge losses. Macquarie subsidiary Macquarie Infrastructure Group has written down its stake repeatedly in the past year, most recently in July. The valuation for its stake is 61-percent less than it was a year ago and suggests the entire lease may be worth just $445 million on the open market. If either Macquarie or Cintra decided to sell their stakes, they’d need the state’s approval, said Ryan Kitchell, director of Indiana’s Office of Management and Budget.
Enforcing the lease
Before the deal, Indiana had been spending about $35 million annually on maintenance, INDOT’s Morris said. If the state got the road back, it would be on the hook for the billions of dollars in improvements the private partnership promised to make over the life of the lease. But Indiana already has its $3.8 billion, noted University of Indianapolis finance professor Matt Will.
If it repossessed the toll road, it might even be able to enter a fresh lease with somebody else, creating another payday.
“This is why it was such a genius deal, because of the upfront payment,” Will said. “It’s a no-lose situation for the state.”
For the state, the biggest challenge could be ensuring the current leaseholders live up to all aspects of their agreement despite their financial problems. There’s a lot of middle ground between failure to meet the standards of one of the lease’s sub-clauses and complete default.
INDOT’s Morris said the contract lays out a series of steps on the way to repossessing the road if the partnership fails to keep it up properly, each requiring 90 days’ notice. So far, he said, the companies have been in complete compliance.
“They have met every obligation they assumed under the lease,” Morris said. “They have been very good business partners.”
But Hoosiers, long used to low tolls, still are getting used to having the Indiana Toll Road run with a business mindset. In 2005, the year before the lease, state records show the Indiana Toll Road generated $96 million in revenue, almost entirely from tolls.
By 2008, the private partnership had boosted the road’s revenue 62 percent, to $155 million. From 1985 to 2006, the state kept the price for driving a car with two axles across the Indiana Toll Road’s 157 miles constant at $4.65. Today, the toll is $8 for the trip. And the price is far higher for larger vehicles. A truck with seven axles pays $69.75.
Those prices will rise. The lease allows operators, starting in 2011, to hike tolls every year by the percentage increase in the U.S. gross domestic product or by 2 percent, whichever is greater. Over the last 25 years, U.S. Department of Commerce records show that U.S. GDP has risen an average of 5.7 percent a year. In 1984, when the United States came out of its last deep recession, GDP grew 11.2 percent.
“It is impossible to pinpoint future rates,” wrote Cintra’s Rhode. “But rest assured any adjustment will be within the provided parameters.”

Hutchison gets federal money for I-69

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Link to story here.

A contract has been awarded to ACS of Spain to develop the entire Trans Texas Corridor TTC-69 trade corridor, but it has yet to be signed. TxDOT has now re-named the project back to I-69 to make the public think it’ll be a free interstate. Hutchison is seeking federal funding to ensure the project remains a FREE federal interstate not to continue Rick Perry’s foreign-owned toll road, land-grabbing Trans Texas Corridor debacle.

Hutchison secures half-million dollars to finance I-69 project

By ASHLEY COOK
The Lufkin Daily News

Sunday, August 02, 2009

U.S. Sen. Kay Bailey Hutchison announced half a million dollars in funding Friday toward building a massive highway project Lufkin’s mayor said could be the city’s single largest economic development factor.

Hutchison (R-TX), a member of the Senate Appropriations Committee, announced approval of the funding through the Fiscal Year 2010 Transportation, Housing and Urban Development and Related Agencies Appropriations bill, according to a press release. The bill’s next step is consideration by the full Senate.

The I-69 Corridor is a nationwide transportation plan for a route running from Mexico through Texas and up to Canada.

The Texas portion of the I-69 project — formerly the Trans-Texas Corridor, Gov. Rick Perry’s mammoth plan to link the state in freeways, rail and utility routes — was pronounced dead in January after heavy public backlash against the proposed plan which would have required new infrastructure trails cutting across the state. That plan has been separated into smaller corridor and local infrastructure development plans.

“It really upset a large number of people. The map of possibilities looked like it was going through everybody’s backyard,” said Lufkin’s Mayor Jack Gorden. “Now it’s back on track, for the most part sticking to the existing right-of-way for U.S. 59.”

Gorden is on the I-69 state level committee and on the executive board of the I-69 Alliance, representing cities, counties and other interested parties from Laredo to Texarkana.

Access to the interstate is one of the top priorities for businesses, and Gorden’s preference is for the route to stay right on U.S. Highway 59 — through that highway’s current path. Other ideas over the years have included an S-shaped curve skirting Lufkin’s south side by a few miles, turning north at Diboll or as far south as Corrigan.

Gorden said an interstate just south of Lufkin would be fine as well, likening it to the benefits Tyler sees in its proximity to I-20.

“If it can be built, it can be the single largest economic development factor for Lufkin in all of Deep East Texas,” Gorden said.

Gorden said Hutchison’s continuing efforts ensures more steps will be taken to move the project forward.

“If they can get the environmentals finished, it will be in a position to actually seriously get laid down and hopefully built,” Gorden said.

A town hall meeting in Nacogdoches last week allowed local residents to voice their questions to a panel of state and regional officials, the (Nacogdoches) Daily Sentinel reported. The discussion centered around the I-69 Corridor and whether the Trans-Texas Corridor was gone for good.

Amadeo Saenz, TxDOT executive director, said then that the state was “in essence” not working on looking at the entire TTC, but was going to look at building I-69, to “build what needs to be built.”

The state would be relying on segment committees to work with locals on identifying regional needs in order to determine where construction would take place, he said.

Critic Larry Shelton said in July he was concerned the project would leave other important local projects on the back burner, including the congested south loop in Nacogdoches that is one of the high-priority projects within the Lufkin TxDOT District.

TxDOT on Friday announced an upcoming regional citizen advisory group meeting to discuss I-69 development. The meeting is set for 9:30 a.m. until noon Wednesday at the Polk County Economic Development/Chamber of Commerce Center, 1001 U.S. Highway 59 Loop north, Livingston. Angelina County will be represented by Jerry Huffman. Lufkin/Angelina Economic Development Corp. will be represented by Jim Wehmeier. Diboll will be represented by Mayor Bill Brown.

Gorden on Friday said the meeting and others like it were an improvement for citizens to have input, something he said TTC never offered.

“I hope they can make some serious progress for us. It had gone away, and now it’s got a little life again,” he said.

Commissioners vote to continue controversial Grand Pkwy, feeder to Trans Texas Corridor

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Link to article here. Grand Parkway is a feeder to and possibly even a leg of the Trans Texas Corridor TTC-69 (the route around Houston has not yet been identified). Another controversial aspect of the Parkway is the fact officials are seeking stimulus money to subsidize the project as a toll road, a massive double tax. More here.

County to seek Grand Parkway stimulus funding
By JAMES PINKERTON Copyright 2009 Houston Chronicle
July 29, 2009

Harris County Commissioners Court voted today to apply for $181 million in federal stimulus money to pay for construction work on a $600 million section of the controversial $5.1 billion Grand Parkway project.

The court also voted to solicit proposals for a comprehensive traffic and revenue study to determine the viability of the 15-mile toll road known as “Segment E,” a stretch of the proposed 180-mile Grand Parkway project that would link U.S. 290 and the Katy Freeway in northwest Harris County.

Although contracts for $20 million in engineering and other work on Segment E were approved this year, an “investment grade“ study of the ability of tolls to pay for the project has not been awarded and may not be completed by the February deadline to begin construction.

Art Storey, who heads the county’s Public Infrastructure Department, said the study does not have to be completed before construction begins.

“Today’s action was merely a formality in the process ,” County Judge Ed Emmett said afterward. “But anything that helps expedite this project is an important step in the process of alleviating the persistent congestion that has become such an obstacle for motorists across western and northwestern Harris County.”

The toll project and the use of federal stimulus funds, which was recommended by the Texas Department of Transportation, has a number of critics.

“Today, the problem is they’re rushing to spend stimulus money that could have been spent on maintenance and transit, and other things more aligned to community priorities. Instead, they’re spending on new roads where a small fraction of the people in our region live,” said Jay Blazek Crossley, program developer for Houston Tomorrow, a nonprofit group focusing on transportation and urban planning.

Precinct 3 Commissioner Steve Radack, who has been critical of TxDOT’s handling of the project, called Segment E “the only thing out there, short term, that will bring any kind of relief to 290.”

He acknowledged that the roadway project still faces environmental hurdles, including a obtaining a permit from the U.S. Army Corps of Engineers.

“The fact of matter is, this has to be ready to bid by February and we don’t even know if we’ll have a Corps permit by February,” Radack said. “There are all kinds of things that can jump up and keep us from getting a permit. ”

Ports to Plains, new Trans Texas Corridor route hits West Texas

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Link to story here.

Same playbook, different names. The Ports to Plains Coalition is patterned after the Alliance for I-69 and other business and trade groups looking to soak taxpayers for their own personal gain. The article sounds innocuous, but it’s just like the Trans Texas Corridor TTC-69 project that was renamed I-69 in hopes of quelling the controversy surrounding the Trans Texas Corridor. Of course, what this latest group fails to disclose is that ports to plains has been identified in sworn testimony by TxDOT Executive Director Amadeo Saenz as part of the Trans Texas Corridor network of foreign-owned toll roads. Buyer beware, it’s never as rosy as the big business interests paint it to be.

Group promotes ports-to-plains highway
By Amanda Casanova
Abilene Reporter News
Monday, July 27, 2009
Duffy Hinkle, vice president of membership and marketing for the Ports-to-Plains Coalition, has a photo of a truck circling the Boise City, Okla., courthouse, carrying wind turbines and disrupting traffic. It is a common sight for the small town and others like it where heavy truck traffic causes congestion.

The coalition is hoping for congressional support for a highway expansion project it favors to construct a major freight roadway, better serve rural U.S. areas, and ease trade congestion.

“Everything that travels from south to north or north to south goes right through the middle of our town,” said Gloria McDonald, Big Spring City Council member and city representative for Ports-to-Plains. “We’re very interested in making a pathway.”

A 20-year plan would expand the highway between Laredo and Denver to four lanes at an estimated cost of $2.6 billion. The expansion would allow for an increase in the flow of goods from Mexico to Canada. It is also estimated that the roadwork would generate $4.5 billion in new jobs, sales taxes, lodging and manufacturing.

“Economic development has always followed transportation,” Hinkle said. “Enhanced infrastructure for transportation of goods and services will increase economic development opportunities in rural communities throughout the corridor.”

New Mexico, Oklahoma, Nebraska, Wyoming, Montana and North and South Dakota are encouraging regional projects, which together with the Texas-Colorado segment, would connect Laredo to the Canadian border, spanning a total distance of 2,300 miles.

Produce, livestock, petrochemicals and oil and gas equipment are transported on the roadway. Combined, the nine states accounted for about $43.2 billion in corridor truck exports to Mexico in 2007 and $38.2 billion in imports.

While the city of Big Spring, Howard County, Howard College, the chamber of commerce and the economic development board are all supporting the highway, the town’s 25,000 people were not as thrilled with the project in the beginning.

“Like anything new, people were bitterly opposed at first,” McDonald said. “Three years of town hall meetings, they’ve come to understand the kind of traffic we’re trying to get to go around is not the kind that is going to stop and buy barbecue or get gas.”

McDonald said she has assured residents that Big Spring visitors and travelers will not be affected by the road.

“We’ll still have the traffic that will stop and eat and buy gas,” she said. “The other road is not a shorter route, so we’ll tell travelers to go through town.”

Launched in 1997, the Lubbock-based coalition has worked with the project’s founder, U.S. Rep. Randy Neugebauer, and other state and federal officials to secure project funding.

“As far as opposition, we see very little,” Hinkle said. “People realize the potential of what the corridor can do for their communities.”

The multilane highway would connect with the Heartland Expressway and Theodore Roosevelt Highway, leading to the Canadian border.

In May, the Province of Alberta in Canada joined the coaltion in hopes to transport Canadian oil and agriculture.

“They can get the oil where it needs to be more quickly,” McDonald said. “It’s really connecting all the dots.”

In Big Spring, the McMahon-Wrinkle Airport could be used for moving shipments.

“If goods are moving from Colorado and somebody wants to switch, we have the area to store containers,” she said. “We’re probably also the only one on the route that has a truck-rail-air connection here.”

While Big Spring welcomes the route, McDonald said other parts of Texas should as well.

“This road is also a priority of Texas Department of Transportation because it will relieve the 1-35 corridor,” she said. “It’s much simpler to build roads in the wide open spaces than in the metro area.”

Within the next 25 years, Texas population is expected to balloon by 64 percent, with highway use estimated to increase 214 percent.

“According to a Ports-to-Plains study,” Hinkle said, “upon completion of the corridor, the number of accidents will be reduced by almost half in the state of Texas as well as a significant reduction of accidents in the other Ports-to-Plains states. Safety is just one of many benefits that will result from upgrading highways from two to four lanes along the corridor.”

Several highway projects along the corridor have been started. In mid-July, Eagle Pass broke ground for State Loop 480, while Dalhart and Texline, towns near the New Mexico-Texas state line, have also began construction for the highway.

Toll authority approves immediate 32% rate hike, automatic hikes every two years!

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The North Texas Tollway Authority (NTTA) is literally drowning in debt and can’t make it’s debt service payments without raising toll rates 32% in a down economy, yet it’s hard to feel sorry for them when they acted like high rollers on the taxpayers dime with its $42,000 junket to Austria.

The NTTA wouldn’t be in this mess were it not for being forced to bid against Spain-based, Cintra, in order to keep Hwy 121 in public hands. They had to come up with an up front “balloon” payment of over $3 billion and now it’s coming home to roost. Regardless of who got the rights to what was once called the “road to riches,” it’s the taxpayers who are on the hook to pay the tolls. The tolls would be even higher were Cintra in charge. Read about the coming 75 cent per mile toll Cintra will bleed out of motorists on LBJ and I-820 here. Add to that the fact Senator Robert Nichols added an amendment to his bill to GUARANTEE when a public road is sold to a private toll operator that the corporation NEVER LOSES money on the deal, you see how severely our politicians have sold out the taxpayers!

North Texas Tollway Authority OKs rate hike
Thursday, July 16, 2009
By MICHAEL A. LINDENBERGER / The Dallas Morning News
Tolls will jump about 32 percent on North Texas Tollway Authority toll roads Sept. 1, thanks to a 8-1 vote this morning by board members.

The new rates will be about 14.5 cents per mile on the President George Bush Turnpike, State Highway 121, now known as the Sam Rayburn Tollway, and the Dallas North Tollway.

In imposing the increase, the board turned aside, by a 7-2 vote, a proposal by board member Bob Day, a Dallas County appointee. Day wanted the increase to be phased in over time. Day voted against the increase.

The new rates will boost NTTA revenues about $14 million this year, and $43.5 million in 2010, and a steadily rising amount in every year beyond.

Director Dave Denison said he was concerned that the rate was in response to temporary conditions caused by the current recession, and will bring in more than is necessary to meet the agency’s obligations.

“I’m not absolutely fully convinced” that the 14.5 cent rate is necessary, Denison said.

“If we come out of the recession and are going great guns we may not need all this money,” he said.

Some board members also initially seemed opposed to wording in the new rate policy that nows sets an automatic toll rate increase every two years. Every two years from now on, rates will jump nearly 6 percent, without the need for a board vote.

The increase is necessary, CFO Janice Davis said, because NTTA’s revenues are no longer enough to meet obligations to creditors to whom NTTA owes about $6 billion. Bond convenants require NTTA revenues to be at least 1.5 times its debt payments. Without the increases, the agency would likely not meet that obligation in the next couple years.

The automatic increases are necessary, too, or else NTTA’s ability to borrow more money to build new roads will be constrained, staff and financial advisors said. Previously, toll rates were reviewed only every five years.

NTTA’s financial squeeze is due to a combination of factors: while total traffic numbers are up, they are lower than expected; collections from drivers without toll tags have been less successful than expected; and fewer drivers on the new Sam Rayburn Tollway have signed up for toll tags.

Foreign-owned toll roads not dead yet…lawmakers vow to resurrect

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Mr. “Pro-Toll Tax” and lobbyist-in-chief, Bill Noble, needs to do a simple glance at our web site to see we’re all about non-toll solutions and have offered them for years. They don’t like our solutions, so they dismiss them. However, the taxpayers deserve the most affordable transportation solutions, not the most expensive one that he and Rep. Larry Phillips are advocating: foreign-owned toll roads.

CDAs ‘not dead yet’ opponents, supporters say
by Andy Hogue
Sun, Jul 12, 2009
Dallas Morning News blog

Two billion dollars and another two years of life isn’t a bad deal for the Texas Department of Transportation, is it?

It depends on with whom you speak.

Besides losing the ability to continue transportation comprehensive development agreements (CDAs), the Texas Department of Transportation (TxDOT) and the Perry administration also lost a great deal of political capital and bargaining power after the special legislative session.

The Legislature renewed TxDOT without much in terms of reforms, but did not approve a bill continuing a list of 13 CDAs — effectively calling a time-out on a six-year expansion of toll roads.

This raises a few questions as to where things are going next with transportation.

Surely, $2 billion in recently released Proposition 12 funds won’t last forever in building freeways. So the next two-to-four years are still anyone’s game, and both sides in the toll road debate agree that CDAs aren’t dead — nor is TxDOT giving in.

What projects were stopped?

At least two CDA toll projects will be preserved through 2011 under SB 792 from the 80th session — Highway 161 in Dallas and the Grand Parkway loop around Houston. While forging a deal on those projects may continue, most other CDAs will expire Sept. 1.

A lifeline was cast to 13 projects during the special session as part of SB 3, which would have extended their CDAs on a project-by-project basis. There was not enough legislative will to see the whole list through (LSR, July 3), but members attempted to compromise with a short list — only those projects already agreed to by the North Texas Tollway Authority (NTTA), namely managed lanes on I-35 East, Highway 183 and I-30 in the DFW area.

Bill Noble, executive director of the pro-CDA Texans for Safe and Reliable Transportation, said CDAs made Highway 130 bypass around Austin possible, for example. Projects like I-69 were casualties.

There were 87 toll road projects implemented in Texas, per discussion during the 80th legislative session in 2007. According to committee testimony during the 80th interim, about 400 toll projects were being considered. So is it possible that, by the Legislature’s not continuing CDAs, that nearly 300 would-be toll roads were prevented? Terri Hall of Texans United for Reform and Freedom (TURF), a TxDOT watchdog, thinks so (at least for now).

“I do think that they [toll road lobbyists] are going to keep trying to bring CDAs back up, as there’s so much money behind them. So it’s up to the taxpayers to remain vigilant,” she said. “CDAs are the more expensive tool in the toolbox. But that’s the one they keep reaching for.”

Does TxDOT have any clout left?

Hall claims the support of a large movement of taxpayers who oppose the expansion of toll roads and accumulation of debt from CDA agreements. Noble said he’s certain toll roads remain a popular transportation option among voters as a “tool” in the aforementioned toolbox.

“We want all the tools — and that includes gas tax and indexing,” Noble said. “But we don’t believe that a massive gas tax would be politically viable, and that’s what would be required if you didn’t have the option of toll roads.”

Hall said allowing international conglomerates (such as Cintra of Spain) to own and manage toll roads in private, behind-closed-doors contracts is less politically viable than proposing upping the gas tax.

TxDOT declined to comment.

Rep. Larry Phillips (R-Sherman) thinks there’s plenty of room left for TxDOT to negotiate its future — as well as an extra session in which to debate meaty issues.

“We will need to build roads in the future, and I think that will be the debate over the next two sessions on how we build those roads,” Phillips said.

One option to continue CDAs in the future is to give the Legislature oversight over each individual project — a method Phillips said might prove burdensome.

Phillips called for a greater role of toll authorities, such as NTTA and the Harris County Toll Road Authority (HCTRA), in the approval process, as a check on TxDOT.

“Conventional wisdom is that projects may be approved on a case-by-case basis rather than a blanket authority through TxDOT,” Noble said. “But that’s a cumbersome process … at the end of the day, Texans are going to realize that roads are not going to get better unless all options are on the table, including toll roads.”

Noble said TxDOT’s overall standing has been lowered since mid-decade, but there has been some rebound under the leadership of TTC Chair Deirdre Delisi.

“We did some polling when I first got involved, and back then TxDOT was a highly credible entity. And Texans really had a high opinion — far greater than lawmakers,’” Noble said. “And some of that has come down, especially with leadership. But under the leadership of Delisi and Amadeo Saenz, we’ve seen a sea change — that being, they appreciate the openness, the responsiveness, and the efforts to work with Legislature to find solutions. And you look at it in what the Legislature could have done as far as radical changes in Sunset, all that really didn’t happen.”

At least until 2011, TxDOT continues to have a friend in the Governor—most recently exemplified by a veto of HB 2142, which would have prevented TxDOT from advertising the use of toll roads.

“Marketing toll roads as a user-fee-based alternative to congested highways is important to relieving congestion on other state roads and keeping Texas moving,” Gov. Rick Perry said in his veto proclamation, echoing TxDOT’s ad campaign slogan “Keep Texas Moving.”

U.S. Sen. Kay Bailey Hutchison, likely Perry’s biggest major challenger in the GOP primary for Texas Governor, called for federal legislation to ban tolls on federally owned roadways — a sign that transportation will be a key issue in the 2010 gubernatorial campaign.

Will anti-toll road movements keep on?

Noble said anti-toll-road activists, now that they have their way for at least another two years, are going to have to provide solutions — solutions that may not prove popular with their own volunteers. “The only other way to relieve congestion is a massive gas tax increase,” he said. “Opponents of toll roads are slowly beginning to trickle out when faced with the question of ‘what’s your answer?’”

Many conservative opponents of toll roads were leery of Sen. John Carona’s (R-Dallas) solution in the form of the Local Option Transportation Plan – most vocal were concerns that the gas tax would be raised in large communities.

True, a motor fuels tax increase (or index to inflation) won’t be popular with some conservatives, Hall said. But there are more issues at stake in her organization than just the CDAs vs. the gas tax debate, such as transparency in contracts.

“Our legislators often don’t have a clue what’s in these contracts — they have no idea what they’re selling off,” Hall said, noting that a Cintra contract for the North Tarrant Express near Fort Worth had a charge of 75 cents per mile at peak hours.

“We’re all in favor of a motor fuels tax increase,” she said. “But you have to end [Fund 6] diversions before we give you more money. Also, we’ve got to reform TxDOT — getting into the books, looking into the finances, and basically gutting the agency … Until they change the culture at TxDOT, they will continue to have problems and blowback from the public.”

What message was sent by the 81st?

A simple message was sent by the refusal of the Legislature to approve CDAs in the 81st regular and special sessions: CDAs are still highly suspect. Whether or not the Legislature’s inaction on CDAs was a referendum on their viability as a transportation solution is debatable.

“I don’t think the special session was specifically that,” Phillips said. “I think that referendum occurred during the regular session on the Sunset bill. And it’s pretty clear that the Legislature wants us to have a transparent process, and that it becomes understandable to the public on how roads are being built … and how MPOs interact with the state, environmental studies are conducted, etc. … It’s fairly difficult in such a short time frame to hash these things out and discuss them [CDAs]. The question was in 2007 can we slow down and take some time in the interim to look at it. So tapping on the brake is not such a bad thing for now.”

Noble, who said there has been a “thoroughly inadequate hearing on CDAs” in recent sessions, agreed there is room to haggle. “I think it’s a clean slate for us — we know where we stand now, and for a few years,” Noble said.

“I don’t see that CDAs are dead,” Phillips said, “as long as we make sure they’re approved by a local community.”

Nichols deliberately misleads about ties to TTC lobbyist to protect private toll operators

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This CBS News expose of Senator Robert Nichols’ efforts to protect private toll road investors instead of taxpayers is spot-on. However, Senator Kevin Eltife says he’s against foreign-owned toll roads on camera, but he voted FOR every bill and amendment that would hand our public roads to private toll operators on the floor of the Texas Senate. Why won’t politicians tell the truth and defend the taxpayers over the special interests? We MUST hold them accountable! To read more specifics about how Nichols brokered this deal with a lobbyist, go here.

Senator Robert Nichols and Toll Roads
By Roger Gray

In the last legislative session, the future of toll roads was on the line.

But one area state senator was more involved than most. In fact some critics say the fix was in.

“You can’t do toll roads in rural Texas. It won’t work,” says State Senator Kevin Eltife.

Yes, the original Trans Texas Corridors were huge, and controversial.

Whitehouse rancher and toll road critic Hank Gilbert called it, “the largest land grab in the history of the U.S.”

Senator Eltife agreed. “It’s a total property right’s mess.”

Gilbert added, “I don’t think the people of Texas, rural and urban, are going to allow that to happen.”

And Austin seemed to get the message.

“I think there’s no question, the Trans Texas corridor is dead,” Eltife concluded.

But some advocates clung to the idea of foreign companies building and running toll roads as private enterprises.

Eltife is an opponent. “They should never be owned by a private company, ever. That’s a gold mine for the state.”

As is Gilbert, of Texans United for Reform and Freedom. “Comprehensive Development Agreements that would allow private investors to come in, plan, build, operate, maintain, the whole nine yards.”

Eltife agreed, “The state ought to own them. They ought to be a small piece of the puzzle.”

State Senator Robert Nichols “seemed” to agree when we spoke to him by phone during the session.

“The people of East Texas are clear,” he said. “They do not want the East Texas Corridor. But they do want to develop Interstate 69.”

But did Sen. Nichols want to insure that private toll road contracts were a part of that I-69 development? He added an amendment to his transportation bill that seems to guarantee a contractor couldn’t lose money.

Gilbert explained, “You have one of our own East Texas Republican senators is offering an amendment to his own bill which would guarantee a profit. To me that kind of goes against capitalism.”

Nichols, though, disagreed. “There is language related to buy backs, but there is absolutely no guarantee whatever that anybody will ever get any of their debt back.”

But, we have a copy of an e-mail sent out by toll road lobbyist Gary Bushell, and it says,

“…we have reached an agreement with Senator Nichols on a buyout provision…that provides protection of their position in the event they find themselves upside down on their debt to fair market value…I want to thank Senator Robert Nichols and his chief of staff Steven Albright for making this outcome possible.”

Nichols doesn’t think that’s what he did. “Well, it’s incorrect, because that’s not true.”

Gilbert concluded, “That’s not very free market.”

So, according to one lobbyist, Senator Robert Nichols went to bat for private toll road contractors.

“That’s crazy,” he protested. “No. I don’t know who told you that, but that’s nuts.”

I responded, “Well, I’ve got an email from a lobbyist who says that’s exactly what you did.”

Nichols again disagreed, “Well, it’s incorrect, because that’s not true.”

“So this lobbyist is wrong,” I replied.

“If that’s your interpretation of what he says,” Nichols responded. “I’m not looking at whatever it is you’re reading.”

“I read you exactly what he said, ” I said. “that provides protection of their position in the event they find themselves upside down on their debt to fair market value.'”

“Ok, I did not write that.” He concluded.

Toll road critic Hank Gilbert is skeptical.

“At any point in time, this developer comes to the realization that they’re not getting the return on investment they anticipated from this road, they can sell it back to the state at that time and with this amendment, they’re guaranteed not to lose money.”

Nichols again protested, “If you’re saying the State of Texas or any entity is going to guarantee an investor his money back, no. Not correct.”

But we have a copy of the amendment and it says.

“.the fair market value of the private entity’s interest…is not less than the (entity’s) outstanding debt at that time plus other reasonable costs.”

In short, they get out at least what they’ve put in.

So why would Nichols continue beating the toll road drum? The explanation may lie in his contributor list.

His top donor by far, James Pitcock of Williams Brothers Construction of Houston, the second largest TxDOT contractor for toll roads.

But Nichols still insists toll roads aren’t a certainty.

“So, it’s your contention that even though these CDA’s, comprehensive development agreements are in HB300,” I asked, “we’re not talking toll roads for East Texas.”

“Well, now, that’s a different question.” He replied. “You have toll roads in Tyler.”

And Robert Nichol’s tried to push these CDA’s again in the special session last week. He didn’t succeed.

Apparently, as long as the political money is there, toll road advocates will keep pitching.

Road privatization dies for now, Carona promises to resurrect

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Senate leaders: Private toll-road bill DOA
By Mike Ward | Thursday, July 2, 2009, 02:43 PM
Austin American Statesman
Lt. Gov. David Dewhurst and Senate leaders just announced publicly what senators had confirmed an hour ago: A bill to continue to allow more privately built toll roads to be constructed is dead in the special legislative session.

And lawmakers plan to finish their other business — approving the issuance of $2 billion in road-building bonds and continuing the operations of five state agencies — and then go home later today.

Dewhurst said attempts for a compromise on the toll-road bills — Senate Bill 3 and House Bill 3 — failed amid growing questions about whether any action on the matter was needed before the Legislature convenes in regular session again in January 2011.

State Sen. John Carona, R-Dallas, chairman of the Senate Transportation and Homeland Security Committee, said the urgency of the matter waned after local and state transportation assured legislative leaders that no projects would be killed or delayed by the lack of a vote.

“If it was a critical issue, we’re here to deal with it,” Corona said. “But we have been assured … that no major project is going to be left behind … We will take this (issue) up in 2011.”

Gov. Rick Perry had called lawmakers back into special session to address three issues: The bonds, to continue the operations of the five agencies that otherwise would have shut down, and to give the authority of the Texas Department of Transportation continued authority to contract for the privately built toll roads — through deals called “comprehensive development agreements.”

Dewhurst said Perry’s reaction to let the third issue on the agenda die without action was: “roads need to get built.”

“They will,” Corona said. “It would be a mistake to do away with CDAs. But we need to take some time to look at this issue, and we can do that in 2011 without any impact on projects.”

So with the controversial issue off the table, here’s what the schedule for the rest of the special session looks like:

At 3:30 p.m., the Senate Finance Committee is expected to approve House Bill 1 (bonds). It will then go to the full Senate for a vote, probably about 5 p.m.

The House earlier today approved Senate Bill 2 (continuation of the agencies, also called the safety-net bill).

Adjournment of both the Senate and the House is expected by early this evening.