SB 17 fails to protect public from private roads

TURF Legislative Bulletin
HB 2929/SB 17
March 31, 2009

Protecting the public interest is PARAMOUNT! How we do that is the open question here today.

We have some concerns with HB 2929/SB 17 as drafted. CDAs need to go away completely. CDAs are almost universally opposed wherever we go in Texas, they cost 50% more, are failing all over the country, and result in extremely high tolls, like the DFW contracts just signed that will charge commuters 75 cents a mile to get to work! That’s $3,000 a year in new toll taxes. Especially in these economic times, that’s unsustainable!

And knowing how TxDOT operates and how it has become an extension of private industry instead of the guardian of the public interest, we think there are some gaping holes through which TxDOT will gladly leap through using the language of this bill, particularly the loophole that allows them to waive all the requirements and pass go…to hand the project directly to private toll operators.

HB 2929/SB 17:

– Allows compensation to the private developer for the future loss of toll revenue (Sec. 301.103) in the form of a non-compete agreement for up to 30 years. Though you could argue the Dept. can still build anything in an MPO plan and for safety and maintenance, we’ve seen TxDOT strip-out projects from the MPO plans in anticipation of selling bonds where the bond investor required a non-compete. So this will be manipulated in favor of the private investors placing the public interest at risk (by guaranteeing congestion on surrounding free roads for 30 years).
– We feel strongly that the State Auditor should still review these contracts. Even on a public toll project, US 281 in San Antonio, the Auditor reviewed the terms of a design-build CDA and found the RMA had not properly factored the price of gas into their toll viability studies and recommended they re-do the study. The public deserves this extra protection.
– Allows the private developer to receive “fair market value” for a PUBLIC road. We’d like to see the bill require transparency on the debt owed (to avoid a self-reported figure) and have the calculation of “fair market value” scrutinized for soundness by the State Auditor or the public will, once again, be left holding the bag.
– TxDOT will naturally decline the project as a public project in favor of a private concession as they’ve already demonstrated when asking Harris County to sell their toll system to a private entity. The way this is structured, if the public toll entity like an NTTA cannot get the financing together (or the bonding capacity), they’d have to pass this to TxDOT and then TxDOT could hand it to the private developer, especially to use private funds to subsidize a toll project that can’t stand on its own feet (that isn’t 100% toll viable) (Sec 373.054). So this section ultimately doesn’t give the public protection, but shows TxDOT they can just wait it out, not provide any public subsidies (like TMF funds, other discretionary funds, etc) until they get possession of the project and then they can hand it to the private companies.
– Allows TxDOT & toll entity to waive these steps, which defeats the purpose of the bill (Sec 373.057) and allows them to jump precipitously into a CDA.

Ultimately, we’d like to see an honest, legitimate process to evaluate ALL road projects with a process that helps us determine FIRST between tolled and non-tolled, then go to a public or private toll road evaluation scenario. This assumes most projects will be tolled. All these pots of public money being used to subsidize toll projects that won’t collect enough toll revenue to pay for the cost of construction, operation, and maintenance simply should NOT be built as toll projects. If they’re not 100% toll sustainable, don’t build them as toll roads! To subsidize toll projects with public money is a DOUBLE and TRIPLE tax scenario unduly burdening our citizens for generations to come.

What it comes down to is, the citizens do not trust any process where the status quo Transportation Commission is still in place. As we described, TxDOT can quite easily hand over a massive portion of our highway system to private operators through CDAs (even using this process) that would cost 50% more than publicly owned projects and are faltering or failing all over the country. Not one PPP could even be held up as a model during the CDA Study Committee hearings, not even by the FHWA Administration who has been pushing this stuff.

Instead of investing so much time and effort on how to cage the beast of CDAs unleashed by HB 3588 in the Williamson era, allow them to ride off into the sunset as scheduled and chart a new course. Modestly raise the statewide gas tax and get back to the business of building and maintaining a STATE highway system, instead of a slice and dice, hodge-podge separating rich from poor, urban and rural, and the city-state system you’re creating versus ONE unified and uniform system we can all easily access and be proud of again.

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