Senate Transportation Committee debates road funding, questions market valuation

Overall, today’s Senate Transportation Committee hearing studying several interim charges on public-private partnerships (PPPs or CDAs in TX), market valuation, the Trans Texas Corridor and road financing, at least began a much needed evaluation of the many areas of concern to the taxpaying public. That said, there were also plenty of political bombs dropped and even ultimatums like “over my dead body” to keep the marathon hearing nerve rattling for what’s become one of the most politically radioactive issues in the State.

Of the nine committee members, 6 showed up: Kim Brimer, John Carona, Robert Nichols, Florence Shapiro, Kirk Watson, and Tommy Williams. Notably absent, as usual, was San Antonio & Hill County Senator Jeff Wentworth. Our favorite comments came from Senator Williams who told TxDOT that it’ll be “over my dead body” before TxDOT takes toll revenues from Houston to fund northern or southern segments of the Trans Texas Corridor. His message: keep your mitts off our region’s money.

This discussion occurred during the CDA panel where the Committee trotted out Jose Maria Lopez of Cintra, David Zachry of Zachry Construction (Cintra’s partner on many toll projects and the Trans Texas Corridor), the Associated General Contractors, and an attorney who represents the public sector on public-private deals who said the decision on the maximum toll rate and escalation formula cannot be left to the private sector. Amen!

Lopez and Zachry agreed that:

1) It’s difficult to determine a “market price” for a toll road without a previous sale price (like a home)

2) That the private sector can offer more up-front cash than the public sector despite its tax-free, low interest loans

3) That there is no single market value for any given toll project since competitors would use varying formulas and criteria and would naturally arrive at different numbers.

Senator Nichols, former Transportation Commissioner, had offered up a new way to do buyback provisions in CDAs that would give the State a guaranteed not to exceed buyout price in the contract so there’s no guesswork or court battle over the pricetag of a toll road should the State need to buy it back from a private entity.

MARKET VALUATION CHALLENGED

Then TxDOT hinted they could raid “excess toll revenues” (code for profit) to fund non-toll viable segments illiciting Williams’ ultimatum. “Once you redistribute money it’s no longer a user fee; it’s a tax,” Williams said. We’d argue that ANY money forcibly taken from taxpayers and given to the government is a TAX, not a fee to begin with, but his point is well taken.

In TURF’s testimony, we addressed that aspect of the new “market valuation” scheme, which the Governor injected into his counterfeit moratorium bill SB 792, calling a spade a spade. Market valuation is nothing more than a Robin Hood scheme to milk taxes from one set of motorists to pay for other projects elsewhere, which is horrific public policy and smacks of a slush fund for politicians to raid for any number of projects without accountability or a direct path to track the tax collected to the tax spent.

It was clear that “market valuation” and the words “financial terms” (to be agreed upon) had any number of definitions even among lawmakers who voted for the bill. Senator Nichols expressed concern that 3 bidders could give 3 totally different market values to the same toll road making TxDOT’s insistence on locking local toll authorities into a single market value pricetag for the life of a contract was as foolish as it was impractical. There was much debate over TxDOT’s interpretation of the market valuation language in SB 792 versus lawmakers’ and local entities’ definition.

In fact, the North Texas Tollway Authority (NTTA) revealed new details in the prolonged Hwy 161 market value fight with TxDOT showing TxDOT tried to force the NTTA to agree on no less than 200 different financial terms before agreement could be reached so the project could move forward. And the 200 items delved into insignificant minutiae like grass-cutting measures and requiring no more than 20 pieces of litter on the roadside.

WASTE AND ABUSE

This is what our hard-earned tax dollars have been wasted on…more than 60 meetings of taxpayer-paid bureaucrats fighting over the amount to gouge motorists to use a public highway. In the end, TxDOT believes they could have extracted an additional half BILLION out of our pockets in up-front cash on the project (that the taxpayers would then have to pay back with INTEREST if TxDOT had had its way).

Williams rightly agreed that pulling the “excess revenue” out of a toll project on the front end carries interest and debt (versus extracting excess revenue when and if the toll road produces the cash at a later date), not to mention higher toll rates (though TxDOT insisted it wouldn’t increase the toll rate…yeah right!). He repeatedly said they (the authors of the bill) didn’t want the market valuation language in the bill (inserted by Dictator Perry, but they certainly could have stood up to the Governor and told him NO), and that he’d be more than happy to see it go away next session. Here, here!

Senator Carona also dispelled the myth that private operators take the risk from the State on public-private toll projects therefore justifying the guaranteed profit in these contracts. He said: “Private investors don’t want the risk either, only the most profitable, low-risk projects like we do.”

TxDOT’s TWO-STEP

Senators Carona and Shapiro were flabbergasted that Houston’s Grand Parkway negotiations with TxDOT allowed a non-CDA approach when TxDOT FORCED the NTTA into an up front cash payment in competition with the private sector (Cintra) for Hwy 121. The Harris County Toll Authority attorney then explained their approach, “we weren’t trying to milk this project.” It’s clear TxDOT milked North Texas, though. TxDOT apparently backed-off in Houston, but stuck it to the taxpayers insisting on $3 billion in quick cash (in borrowed cash, no less, based upon future profits) from the Hwy 121 deal in North Texas.

TRANS TEXAS CORRIDOR

All of these revelations preceded the Trans Texas Corridor discussion where Senator Shapiro asked the burning question: why 1,200 feet wide and why not expand existing highways instead of building the Trans Texas Corridor? Of course TxDOT gave it’s usual convoluted ramblings trying to convince the senators they may not use that much right of way and “assured” them they’d expand existing right of way first wherever possible. Who are they kidding? Their environmental documents submitted to the feds will clearly authorize 1,200 feet of right of way regardless of what TxDOT tells the senators in some hearing. The same is true of utilizing existing right of way first. That alternative isn’t even on the table in the current draft environmental study for TTC-69. TxDOT can do a dance for the senators today and steal our land and livelihoods tomorrow.

A suggested solution: Make it law to limit the right of way to 400 feet (the standard for a fully built-out interstate highway) and make it law to force TxDOT to expand existing right of way before embarking on ANY new corridor ventures.

TxDOT also tried to assure Senator Nichols that it will listen to and heed the advice given to it by the TTC Advisory Committees and Working Groups, but then said that tomorrow the Transportation Commission would vote on policy changes to the Trans Texas Corridor regarding use of existing right of way, bisecting land, and converting non-tolled highways into tolled highways (ie – SH 59 and SH 77) among other things, WITHOUT hearing word-one from these Advisory Committees!

Also of note, the counties who had representatives before the Committee today singing the praises of the TTC and toll roads all have goodies being granted to them in tomorrow’s Transportation Commissioner Meeting. Quid Pro Quo? Sure looks like it.

That was the most appalling aspect to today’s meeting, overall. Listening to elected officials and bureaucrats alike promote the Trans Texas Corridor, knowing the destruction it’ll bring. Senator Williams said he supported the TTC-69 despite the farmers with pitchforks! The Lufkin Mayor Jack Gorden said the TTC-69 would increase the standard of living in East Texas. Oh really, Sir, how does increasing one’s taxes and stealing one’s land and livelihood increase someone’s standard of living? Then, Bowie County Judge James Carlow welcomed the TTC to his community saying: “we’re ready to give the land right now. Come build it.” It’s not YOUR land to give, Mr. Carlow. What a slap in the face to his constituents. This deplorable behavior is easy to explain however. These officials have been heavily lobbied USING OUR OWN TAXPAYER DOLLARS by registered LOBBYISTS and TxDOT, and no doubt promised the moon to get on board. Just look at the goodies the Commission is doling out at their meeting tomorrow.

Let the taxpayer revolt kick it up a notch. Let these elected officials hear from you with your thoughts on their “representation” of YOU before this committee.