Texas Department of Transportation Commission Meeting

Dewitt C. Greer Building
125 East 11th Street
Austin, Texas

9:00 a.m. Thursday, February 26, 2004

COMMISSION MEMBERS:

RIC WILLIAMSON, CHAIRMAN
JOHN W. JOHNSON
ROBERT L. NICHOLS
HOPE ANDRADE
TED HOUGHTON, JR.

STAFF:

MICHAEL W. BEHRENS, Executive Director
RICHARD MONROE, General Counsel
TAMMY STONE, Executive Assistant to the Deputy Executive Director
DEE HERNANDEZ, Chief Minute Clerk

MR. WILLIAMSON: Good morning. For the record, it is 9:11 a.m., and I would like to call this meeting of the Texas Transportation Commission to order, and welcome you to our February meeting. It's a pleasure to have all of you here this morning, and in particular, it's a pleasure to have those of you who have traveled from the far reaches of the state to be with us.

It is the tradition of the commission to ask each of the commissioners to offer whatever remarks they might feel are necessary or appropriate at the beginning of the meeting, and I do not remember the order that chairman Johnson followed, so we'll take it in the order of least service, or junior member. Is that a good way of putting that?

MS. ANDRADE: Younger member.

(General laughter.)

MR. WILLIAMSON: We'll take younger member forward, and since we have two younger members, we'll start with the youngest younger member, Ms. Andrade. Hope.

MS. ANDRADE: Good morning, Mr. Chairman. It's good to be here this morning and I was glad the traffic was okay this morning to be here on time.

MR. WILLIAMSON: Ted?

MR. HOUGHTON: Just proud to be here from far West Texas.

MR. WILLIAMSON: I guess Robert would be the next junior, wouldn't he?

MR. JOHNSON: You know, Robert is in that hybrid area: he could be considered junior or senior.

MR. WILLIAMSON: What's up, Robert?

MR. NICHOLS: My turn? I just want to also welcome everybody. We really appreciate you taking the time to be here. Those of you who are going to make comments, we welcome them; hope you feel comfortable with us.

I would like to say that today there are a number of things that we're going to be voting on that are extremely significant, many of the tools that were passed by the legislature to give us some opportunities to work to solve the problem that's before us. It's a culmination of a long series of events; the finals are in the book today that we'll be voting on many of those. So we appreciate it.

MR. WILLIAMSON: Good morning, John.

MR. JOHNSON: Good morning, Mr. Chairman.

MR. WILLIAMSON: How are you?

MR. JOHNSON: I'm doing well. I was shocked when I got here and found out that my chair had not moved nor my place on the dais which I'm still trying to work through this, but I'm sure in the next few months I'll get used to it.

I'd like to echo what Robert said. It's a delight to have everyone here and to see so much interest in what's going on, such an integral part to everything, whether it's business, industry, or when you get to the bottom line, the quality of life in our great state.

Chairman, those are my remarks. Thank you.

MR. WILLIAMSON: Thank you, members.

Please note for the record that public notice of the meeting, containing all items on the agenda, was filed with the Office of the Secretary of State at 2:44 p.m. on February 18, 2004.

Before we proceed with our agenda, we want to take just a moment to ask Mr. Behrens and staff to specially recognize. Mr. Behrens?

MR. BEHRENS: Today we have a service award, and it's for five years of service and it's for our former chairman, Johnny Johnson, and we'd like to recognize him because he is now a TxDOT employee for five years, and it's our custom, of course, to present these service awards.

(Applause; pause for photos.)

MR. WILLIAMSON: John, would you like to comment on five years of service to the State?

MR. JOHNSON: What happened to my chair?

(General laughter.)

MR. JOHNSON: Well, I'm shocked and surprised and humbled. It's been a wonderful five years; it makes me all that more admirable of Robert Nichols' service and his stamina to consider and serve for more than one term in this job, but it's been a delight to meet so many people with the attitude of "We're going to get things done" and that's what it takes. If we continue along those lines, I'm sure we're going to be very successful in meeting the challenges we all want to meet and to be successful.

MR. WILLIAMSON: The staff and the commission, in addition to the certificate, would like for you to have this clock and the pin. I think the pin is automatic and the clock was something that staff helped us come up with.

MR. JOHNSON: Thank you very much.

MR. WILLIAMSON: We sitting up here realize the sacrifice that not only TxDOT commissioners but all boards and commissioners, for the most part, have to make in their personal lives to participate in what is, in effect, voluntary government, and it's a sacrifice not undertaken lightly and you've given it your absolute best for five years. We appreciate what you've done for the state very much.

MR. JOHNSON: Well, I appreciate that. We can set this clock up here so you'll know what time the meeting starts.

MR. NICHOLS: We can also assure you it's under the $50 limit.

(General laughter.)

MR. WILLIAMSON: Before we begin the business portion of our meeting, let me remind everyone if you wish to --

MR. JOHNSON: Could I ask a question?

MR. WILLIAMSON: Sure.

MR. JOHNSON: How did you get my signature on this certificate without me realizing? I didn't sign a check or a note, did I?

MR. WILLIAMSON: Actually, the John Johnson Toll Road, you've advanced all the money for it. We thought you might not have caught that.

MR. JOHNSON: That will be a very short road.

(General laughter.)

MR. WILLIAMSON: Before we begin the business portion of our meeting, let me remind everyone if you wish to address the commission, you need to complete a speaker's card. It's at the registration table in the lobby. I do not find an example; I'm sure it's here someplace but I don't find it.

Down here to your right, you'll notice that if you're going to comment on an agenda item, if you're going to comment directly on an agenda item, you need to fill out a yellow card and you need to identify the agenda item for us, please. If it's not an agenda item and you wish to comment on something else in the open comment period, you need to fill out a blue card. And regardless of the color of the card, we would ask you, as a matter of courtesy, to limit your comments to three minutes, as we frequently have many comments and the meeting is long enough as it is.

We have one other request, and that is if you have a cell phone or a pager, this would be the appropriate time to stop and place your respective device in the silent or vibrate mode. It's very unsettling to the commission meeting to hear those noises during its meeting. Thank you.

The first item on the agenda is the approval of the minutes of the January commission meeting. Do I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: Do I have a second?

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second. All in favor, signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: Motion passes.

The second item on our agenda is the presentation of the Partner Award to the department by Keep America Beautiful, a project of the United States Department of Transportation, and a brief presentation of accomplishments in the area of litter prevention in our great state. Doris?

MR. FRAZIER: I'm obviously not Doris. Good morning, Mr. Chairman, commissioners. My name is Kyle Frazier. I am honored to serve as president of the board of directors of Keep Texas Beautiful here in Texas, and I want to thank you for the opportunity to be before you today. Also, I'd particularly like to thank the person that put us at the top of the agenda.

First, let me take a second and recognize KTB board members who are present with us today: Joanne Weik, who is president elect, from Angleton, Texas; Donna Albus, who is the immediate past president from Abilene.

MR. WILLIAMSON: Wait. Joanne and Donna, why don't you stand up so we can see you. If you would, just remain standing.

MR. FRAZIER: Debbie Albert from San Angelo -- I don't know if Debbie is here yet; and then Dennis Hobbs here in Austin who is also a past president.

MR. WILLIAMSON: Would you turn around and let everybody see you? And we thank you for what you do.

(Applause.)

MR. FRAZIER: Keep Texas Beautiful is a non-profit organization whose mission is to empower Texans through education to take responsibility for enhancing their community environment. We were formed in 1967 when a group of business representatives and citizens decided our state needed to be clean and beautiful for the Hemisfair taking place in San Antonio. In 1985 we became state affiliate for Keep America Beautiful.

Our organization has had a long and distinguished history with the Texas Department of Transportation. The two groups first began working together in the late 1960s when the two groups were known as the State Department of Highways and Public Transportation and the Beautify Texas Council. Over the years the names may have changed but with the common goals of making Texas roadways attractive and safe for motorists and encouraging tourism have remained constant for 37 years.

Keep Texas Beautiful has partnered through an annual contract through the Texas Department of Transportation since 1985. This contract supports TxDOT's Anti-Litter Beautification Program, the KTB Affiliate Program, the Don't Mess With Texas Trash-Off, and the Governor's Community Achievement Awards.

In particular at this moment, I would like to thank Michael Behrens who really kind of makes all this possible for us to do these things with you, and particularly the folks over in the Travel Division, Doris and Dara. They are really unique individuals who work extremely hard, are vastly underpaid, and do an excellent job for the state and for us.

And right this second I want to introduce Stacy Cantu, our executive director who has a few more words.

MR. WILLIAMSON: Welcome Stacy.

MS. CANTU: Thank you.

I want to talk about some of the specific programs that the contract helps fund for Keep Texas Beautiful. First and foremost is the Keep Texas Beautiful Affiliate Program. It's designed to mobilize grassroots volunteers in Texas communities. We have a network of more than 330 communities that are Keep Texas Beautiful affiliates, 60 of which we say have achieved the graduate level of Keep America Beautiful. They represent 16.3 million Texans -- I think that's a statistic that we are very proud of.

Keep Texas Beautiful, through our TxDOT contract, offers excellent programming in litter prevention, cleanup, beautification, community improvement, and minimization of solid waste activities. We provide them monthly leadership updates, a quarterly newsletter called "Grassroots"; we have a group of executive trainers that are all volunteers who provide their seasoned experience for training opportunities for our affiliates.

Another volunteer group are our ambassadors. They recruit and mentor new affiliates. The affiliates are the heart of Keep Texas Beautiful; they range from El Paso to Port Lavaca, Harlingen, Brownsville, Lubbock, Dallas-Fort Worth, from all ends of the state, from east to west, north to south.

The Don't Mess With Texas Trash-Off was initiated in 1985 for the Adopt-a-Highway participants. In the 1990s, Keep Texas Beautiful joined the effort by encouraging their affiliates to participate. In 2003 over 1 million pounds of trash were picked up by these volunteers, 100,000 volunteers from the Adopt-a-Highway group and Keep Texas Beautiful volunteers.

We're also proud to have 800 mobile billboards out there in the form of the Keep Texas Beautiful license plates; 3,100 have been sold and there's 800 that are still active, and it just displays the Don't Mess With Texas slogan.

Keep Texas Beautiful offers two awards programs: the prestigious Governor's Community Achievement Award for communities, and the KTB Award Programs for individuals, government, business, civic organizations, media and youth. The first Governor's Community Achievement Award was presented in 1970, and TxDOT joined in the efforts in providing landscape projects in 1985. Award applicants are divided into nine population categories, and we determine annual winners in each of those categories.

We're proud of our focus on youth projects; we know that's the future. This past year, Keep Texas Beautiful initiated an environmental education toolkit which I hope most of you received. We provide those to educators who attend our Waste In Place workshops. Waste In Place is the premier litter prevention curriculum for the State of Texas and it's a Keep America Beautiful curriculum nationwide. We also offer youth membership and a patch program for incentive and recognition of youth.

Our annual conference is for networking and recognition and education. This year the conference will be held in Austin, June 15 through 18 at the Austin Marriott at the Capitol. Our theme is "Explore and Experience our Texas Environment". We are proud of our growth in our conference: five years ago we had 310 attendees and this past year 900 attendees at our Dallas conference. We're looking forward to all of you joining us at that conference; you'll have an invitation in the mail very soon, I promise.

Part of the growth for the conference has been attributed to the youth and law enforcement officials. Our "Stop Trashing Texas -- It's The Law" seminar for the past three years has helped law enforcement officers be educated on illegal dumping and litter prevention efforts. This past year the North Central Texas COG provided 800 officers in that 16- county area with a resource toolkit.

You might be interested in a few facts: 106,000 miles of right of way was cleaned in 2003 by our KTB Affiliate and their volunteers; 283,000 acres of parks were cleaned in 2003; we participated in twelve statewide conferences either as an exhibitor or speaker, reaching thousands with the Don't Mess With Texas and Keep Texas Beautiful message.

Through our contract with the Texas Commission on Environmental Quality, we manage two programs: the Lake and River Cleanup Program, and Texas Recycles Day. Lake and River had 112 cleanups last year, 23,000 volunteers, and almost one-half of them were under the age of 18. Texas Recycles Day had 330 events; we reached a million people in 119 cities.

We're proud of our diverse funding sources from business, civic, government and individuals.

At this time I would like to introduce our staff:

Cecile Carson, director of training and education -- and I'm going to ask them to stand -- she manages the Affiliate Program, the Awards Program, and is a senior staff member with five years of experience.

Stacey Elkins, our office manager; she helps with the billings on the TxDOT contract, as well as everything that the title Office Manager portrays.

Katie Sternberg, she manages the Great American Cleanup, Don't Mess With Texas Trash-Off, and Lake and River Cleanup programs.

Alanna Reed, she manages the annual conference, our membership, merchandise and license plate programs.

Carley Dowell, who has just joined us as our communications coordinator, oversees the newsletter, leadership update, website, Texas Recycles Day, and all communication aspects for KTB.

And Michelle Newkirk, our administrative assistant who does a lot of work on the affiliate services side.

MR. WILLIAMSON: Ladies, if you don't mind, turn and let everybody see your faces. And we thank you for being here and thank you for what you do.

MS. CANTU: And Commissioner Johnson, it was so good to hear you say something about quality of life at the beginning of the meeting because that's what Keep Texas Beautiful is about is providing a better quality of life for all of our communities.

Our slogan is "Who Keeps Texas Beautiful." We think youth do, business does, government does, civic organizations do, our affiliates do, and certainly TxDOT does. We're proud to be the grassroots arm of the Don't Mess With Texas campaign and the premier environmental community improvement organization in the great State of Texas.

We do have a special presentation to make, but we would welcome any questions if you all have any.

MR. WILLIAMSON: Members, any questions or dialogue with this young lady?

MR. NICHOLS: I have no questions but I want to thank what all of the staff does and particularly the volunteers around the state. I've been to some of those dinners you've had, and I'm just really amazed the enthusiasm that the volunteers have from all over the state to do something to make our state so much prettier, and it really does have an impact, and we thank all of you for what you do and for being here today.

MS. CANTU: Thank you, Commissioner.

MR. WILLIAMSON: Members?

MR. JOHNSON: Stacy, I want to say much the same thing. I remember this past summer at the conclusion of the campaign where you went to college campuses across the state and tried to recruit and get energetic young college students involved at the right age, and plant the seed not only for anti-litter but also to clean up what others have left behind, and I believe it was a very successful campaign and the outreach was incredible, and the conclusion was very enjoyable for me to be a part of.

The big picture is that you do such a wonderful job in assisting people in terms of planting the seed that we need to take care of what we have. Robert said this is a beautiful place and we need to keep it beautiful, and litter and trash is the first thing that make it a waste area, and it wasn't intended to be a waste area.

So I want to thank you, the staff, and all your thousands of volunteers. I mean, the numbers that you've presented are just awesome, and it's just a start on what we really need to do. Thank you for all you do for the state.

MS. CANTU: Thank you, Commissioner. And I think you're speaking of the Don't Mess With Texas Road Tour, and we're always willing to help with any of the Don't Mess With Texas campaigns that the Travel Division and Enviro Media put together.

We also are going to leave you with a packet and it's called "Mapping It Out" and it tells you a little bit more about our programs and gives you more facts and figures, and we'll be leaving that as well.

MR. HOUGHTON: We have an annual event in El Paso and it's highly publicized and the attendance and participation is huge. So again, the reach is long and thank you very much for all your efforts -- a labor of love.

MS. CANTU: Thank you.

MS. ANDRADE: Stacy, thank you so much for what you and your staff do and thank you for reaching out to our youth and getting them involved in our great state. Last night I got to personally witness the enthusiasm and passion of your board former chair, and I'm just delighted that you're a partner, and again, thank you.

MS. CANTU: Thank you. We do think youth is a major focus area for Keep Texas Beautiful. We have all the right tools, staff and curriculum, and we're ready to take off in that area.

MR. WILLIAMSON: And you said you had a presentation.

MS. CANTU: Yes, we do.

MR. FRAZIER: I'm sorry you didn't have any questions; she studied all night, she was ready for anything.

MR. WILLIAMSON: Well, we saw that in her demeanor and it scared us; we didn't want to embarrass ourselves.

(General laughter.)

MR. FRAZIER: Keep Texas Beautiful was honored to nominate the Texas Department of Transportation for the U.S. State Department of Transportation Partnership Award. The award recognizes the partnership efforts with KTB and the outstanding programs like the Don't Mess With Texas Road Tour and waste minimization efforts. The award was presented December 6 at the Keep America Beautiful Conference held in Washington, D.C. Darrell Waltrip accepted the award on behalf of the board of directors, staff and thousands of volunteers for Keep Texas Beautiful. We are pleased to present to you the U.S. State Department Transportation Partnership Award, and thank you all for helping keep Texas beautiful.

MR. HOUGHTON: I do have one question.

MR. WILLIAMSON: Hang on, Kyle.

MR. HOUGHTON: What's the tonnage of trash?

MR. FRAZIER: I think we have the poundage.

MS. CANTU: May I get back with you because we have 20 different programs and I don't have them all accumulated. Are you just teasing, or do you really want the figure?

(General laughter.)

MR. FRAZIER: I know you all are aware of this, but some of the audience may not think about it, but of course, everything a volunteer picks up, that means the State doesn't have to pay somebody to pick it up, and that's, of course, the biggest deal.

But we would like to give this to you.

MR. WILLIAMSON: Shall we go down in front, is that how we want to do this? So for the benefit of the audience, we're going to take some pictures and we're going to take about two minutes. If you want to take a break before we start the business portion of our meeting, this would be a good time to do that.

(Whereupon, a brief recess was taken.)

MR. WILLIAMSON: Before we turn the meeting over to Mr. Behrens for the business portion of the agenda, there are a few housekeeping things we need to do.

First of all, let me talk a little bit about the communications between commissioners and those at the dais. I would like to continue the tradition of Chairman Johnson -- and I understand Chairman Laney -- and that is while the rules call for recognition from the chair, the truth is we're a pretty collegial bunch, and if you've got something you need to say or you need to ask of a member, please just go; we can sort it all out as we go. So don't hesitate when you need to ask something or say something, just do it, and we'll move along.

I would also ask that we make it a policy at the beginning of our meetings, Mike, before we turn it over to you, to recognize any member of the legislature before we get started as opposed to waiting, both as a matter of courtesy, and also as a matter of determining if they need to leave.

My understanding is that we have Mr. Phillips, Representative Phillips, and I think that's the only member of the legislature today. Do you need to go now, or do you wish to wait until the agenda item of interest appears.

MR. PHILLIPS: (From audience.) Wait.

MR. WILLIAMSON: Then we'll reserve our kind remarks for you until you come up, and we appreciate you being here.

Lastly, I think we all need to pause and congratulate the governor's director of transportation policy for having finally walked out of the canyon of darkness and into the sunshine of the bright light of marriage. Kris Heckmann was married in the last two weeks and he's now well on his way.

MR. JOHNSON: St. Valentine's Day.

MR. WILLIAMSON: On Valentine's Day 2004. We congratulate you, Kris.

Mike, the meeting is yours, buddy.

MR. BEHRENS: Thank you, Chairman.

We'll start out with agenda item number 3 which are two minute orders: one for monthly airport improvement projects, and the second which would recommend two members to be appointed to the Aviation Advisory Committee. David?

MR. FULTON: Thank you, Mike. Commissioners, for the record, my name is David Fulton, director of the TxDOT Aviation Division.

Item 3(a) is a minute order containing a request for grant funding approval for 15 airport improvement projects. The total estimated cost of all requests, as shown in Exhibit A, is approximately $7.2 million, approximately $3.6 million federal, $2.8 million state, and $800,000 in local funding.

A public hearing was held on February 9 of this year; no comments were received. We would recommend approval of this minute order.

MR. WILLIAMSON: First of all, are there any questions of Mr. Fulton or comments to be directed towards him, members?

(No response.)

MR. WILLIAMSON: Secondly, the chair advises the executive director that Mr. Nichols wishes to be shown in the following vote as abstaining from any portion that affects the Cherokee County Airport in Jacksonville, Texas.

Do I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: Second?

MS. ANDRADE: Second.

MR. WILLIAMSON: All those in favor will say aye.

(A chorus of ayes.)

MR. WILLIAMSON: All those opposed?

(No response.)

MR. WILLIAMSON: Mr. Nichols abstains from that portion of the motion affecting the Cherokee County Airport. Motion carries.

MR. FULTON: Thank you. Item 3(b) is a minute order for the purpose of appointing two new members, Mr. Joe Crawford and Mr. Greg Jones, to the Texas Aviation Advisory Committee for a three-year term to expire on August 31, 2006.

Greg is here today; he's a pilot for Southwest Airlines, and I'd like to recognize him, please.

MR. WILLIAMSON: And members, the note to the chair was that Dave wanted to recognize Greg but didn't necessarily find it necessary for Greg to speak, however. Greg and I have a long history together, going back to the days when Governor Perry decided to quit flying his own airplane and used Greg instead, and I can't think of a finer person to have appointed to our advisory committee. And it's good to have you as a colleague now as opposed to depending on you for my life.

MR. JONES: You're one of my survivors.

(General laughter.)

MR. WILLIAMSON: Members, do any of you want to have some dialogue with Greg, want to tell him how things ought to be done?

We have a couple of pilots up here, you know.

MR. NICHOLS: I want to thank you for being willing to do this because for the next three years you're going to be all over the place and studying a lot of aviation related things and the impacts to the communities. It is real important to those communities to have those projects and be able to connect like that. But we appreciate you taking the time to do that.

MR. JONES: And you're welcome.

MR. JOHNSON: It's a well-known fact that Chairman Williamson has built up thousands of miles of frequent flyer in various programs, and I was just wondering firsthand how you would rate him as a passenger.

MR. HOUGHTON: Go ahead, jump into that one.

MR. JONES: Actually he's, I'd say, a nine; he never complains.

MR. JOHNSON: When he's very sedated?

(General laughter.)

MR. JONES: He's a good passenger.

MR. WILLIAMSON: Mr. Johnson pokes fun at my well-known aversion to being in the air.

Other comments, members?

MR. HOUGHTON: Welcome aboard.

MR. JONES: Thank you.

MR. WILLIAMSON: Yes, Greg, we appreciate it. As I said earlier before on the Don't Mess With Texas, volunteer service on boards and commissions and committees is a labor of love, and we appreciate you being willing to share some of your time with us.

MR. JONES: I'm looking forward to it.

MR. WILLIAMSON: Okay, David.

MR. FULTON: Chairman, we would recommend approval of this minute order.

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: Do I have a second?

MR. JOHNSON: Second.

MR. WILLIAMSON: All those in favor, please say aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: Thank you, David.

MR. FULTON: Thank you, sir.

MR. BEHRENS: Going to agenda item number 4, it's our rules for proposed adoption. 4(a)(1) is a rule pertaining to Contract Management. Thomas?

MR. BOHUSLAV: Good morning, commissioners. My name is Thomas Bohuslav; I'm director of the Construction Division.

Item 4(a)(1) is a minute order for the proposed changes to Title 43, Chapter 9 of the TAC; these are Contract Management rules.

Besides some editorial changes, there are two major changes that we've made. The first one is in regard to bid errors, and I'll read you the exact language out of the proposed rules. It says: "The Commission may consider an alleged bid error caused by an effort to unbalance the bid as failure to exercise ordinary care." That's one of our criteria that we look at and we find cases where contractors begin to move their numbers around that create errors that way and we don't consider that to be reasonable care. That would be a reason that you could consider with regard to considering a bid to be in error that you would reject bids for.

The other change is in regard to rescinding contracts. If you've awarded one before it's executed, that gives you the power to rescind a contract prior to execution.

And we'd propose these rules for the Texas Register.

MR. WILLIAMSON: Members, as Mr. Nichols pointed out earlier, this is probably going to be a long day for us. We're adopting probably some of the most significant rules the department will adopt all year long. We really need to ask questions of our guys and gals if we have them in our mind, so this is the time. Are there questions for Thomas or comments? Do you need to have any dialogue with Thomas before we adopt? Robert.

MR. NICHOLS: This is a proposed rule.

I was going to make a comment and then a question. The comment is as much money as this department spends in contracts over an extended period of time, I think the state is real proud that the system is considered beyond reproach, it's just absolutely amazing. The processes that are in place, that have been in place and strictly enforced by the commission and the department for years, is part of what has kept it that way, and the policing by the industry, I might also add.

With that having been said, I know that we began a process some months back, or a year ago or so, when someone really makes a mistake, and our intention is not to penalize them, and so we began a process of setting it up so that if someone has an error that we might be able to have a system in place and some grounds for which we don't have to penalize them because of that process.

So we began a process that I think some of us were concerned might be a slippery slope. Once you start the process of all the reasons why a bid error may or may not be acceptable or may or may not be penalized, I know I've heard a number of stories of mistakes in the past that cost people a lot of money. And the one thing that we looked at as a commission -- I heard the industry even say -- you know, each of these individually may be of a concern but the one thing the department had always done that we could count on was that we were brutally consistent. Because we were brutally consistent, no one complained and they thought it was fair.

As we've begun the process of, in previous rules, setting up for bid errors, we've begun the process that might be a slippery slope, and this is the first time since we made that other change that now I'm seeing this change.

Do we anticipate changes further in addition to these in this process, or do you think this will be it for a while?

MR. BOHUSLAV: First off, in regard to have we had complaints because we were brutally consistent. Individual contractors may complain in that regard; contractors as a whole supported that system, but we've followed some criteria that was what we have found as case law, and we established that criteria.

I can't say that I foresee any other changes that we see on the horizon. We have developed just some criteria on how we would process these and bring our recommendations to you that don't rise to the level of really critical decisions on how we handle them and carry them forward. I don't see anything right now that we would bring to you in the near future.

We have had cases where you have rejected all bids because of a bid error, and there have been cases where you have not rejected all the bids and the low bidder because of a bid error that they have claimed; there have been decisions both ways with these new rules. So I believe that we're very consistent in how we're analyzing these, and we provide that contractor an opportunity to come up here and plead their case, in addition to what we bring as far as recommendations here.

So I think our rules are sound and they're broad enough to give you the latitude to make good judgment decisions with our recommendations. We're keeping a history of what we're doing in this area by contractor and across the department, including maintenance contracts that are awarded at district level -- they bring those to us -- so we haven't identified anything through that that we say we need to tweak some things other than this minor change here in regard to addressing when they unbalance their bids.

MR. NICHOLS: I just want to make sure that we are consistent in sending out a message, as much money as we deal with, that if there's a question, that I would rather err on brutally consistent and keep the system beyond reproach than have a doubt on an error. And I think you do that. I just want to make sure that we've got it on the record and that everyone understands that keeping this system beyond reproach is extremely important to all of us.

MR. BOHUSLAV: And I would add that I'm proud to be part of the process, but it wasn't mine to develop and it was established years ago back, I guess 1925, when the original law was written for award to low bidder. So I'm just proud to be part of that, and with my staff as well.

MS. ANDRADE: Mr. Chairman, I have a question.

Thomas, at our last commission meeting, we had to cancel two contract awards because the contractor did not have enough bonding coverage because he had gotten more than he was expecting awards. Did we do anything to protect ourselves from that in the future?

MR. BOHUSLAV: When I bring these to you, we either award them or reject the contracts.

MS. ANDRADE: Well, if it were true that we rescinded because the contractor could not provide the bonding because he had gotten more awards than his bonding could cover him, and I'm just wondering if in the future we could include anything to protect us.

MR. BOHUSLAV: Okay, that was a maintenance contract and that was awarded to the second lowest bidder. I guess Amadeo brings that up here.

MR. SAENZ: Good morning, commissioners. For the record, Amadeo Saenz, assistant executive director for Engineering/Operations.

The two contracts, Commissioner, that you're inquiring about were maintenance contracts, and in the routine maintenance contracts, any contract under $100,000 we can award to the second low bidder. That's why we rescinded the first two that that contractor could not bond. It just so happened that during that time the contractor bid on more work and he was successful more than what he wanted. We will watch that to make sure that we don't get into that. But we do have that capability for those types of contracts where some of these maintenance contractors do have a small amount of bonding capacity that we can go to the second bidder, but that second bidder also agrees to do the work at the bid price of the first one, so the department doesn't lose anything.

MS. ANDRADE: So we're protected on that.

MR. SAENZ: Yes, ma'am.

MS. ANDRADE: Thank you.

MR. WILLIAMSON: Other questions or comments, members?

(No response.)

MR. WILLIAMSON: Okay, do I have a motion?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: Do I have a second?

MR. JOHNSON: Second.

MR. WILLIAMSON: All those in favor will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: Motion passes.

MR. BEHRENS: Agenda item 4(a)(2) is a proposed rule which would repeal an existing MOU that we have, and it's with the Texas Department of Economic Development, Parks and Wildlife, Commission on the Arts, and the Historical Commission, and due to legislation, we need to have this repealed.

MS. HOWDESHELL: Good morning, commissioners. For the record, my name is Doris Howdeshell, the director of the Travel Division at TxDOT.

As Mike said, the minute order before you this morning is to propose the repeal of a memorandum of understanding that we had with four other state agencies in the area of travel and tourism. The reason for the repeal is the MOU is actually out of date now, and a new one has been executed under Senate Bill 275 after the close of this past legislative session.

With that information, I recommend approval of the minute order. I'll be glad to answer any questions.

MR. WILLIAMSON: Questions or comments?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All in favor will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: Motion passes.

MS. HOWDESHELL: Thank you.

MR. WILLIAMSON: Thank you, Doris.

MR. BEHRENS: Now we'll have our rules for final adoption. Item 4(b)(1) is rules for Management which concern amendments to commission meetings. Richard?

MR. MONROE: Thank you, Mike.

Good morning, commissioners. For the record, my name is Richard Monroe; I'm general counsel for the department.

If you approve the minute order currently in front of you, we will delete a portion of our rules which has been superceded both by judicial decision and by Black Letter Law. It was duly published for consideration in the Texas Register; no comments were received. I would urge that the minute order be passed.

MR. WILLIAMSON: Are there questions directed to Mr. Monroe, or is there discussion, members?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: Do I have a second?

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: Motion passes.

MR. MONROE: Thank you, sir.

MR. BEHRENS: Item 4(b)(2) is proposed rules concerning our Vehicle, Titles and Registration. This will be presented by Mike Craig, and we also have one who wants to speak on this agenda item.

MR. WILLIAMSON: You say we have a speaker on this.

MR. CRAIG: Good morning. I'm Mike Craig; I'm deputy director for Vehicle Titles and Registration Division for TxDOT, and we bring to you today for final adoption: amendments to Chapter 17, specifically Section 17.2; repeal of Section 17.8,; repeal of Subchapter D, and that would be Sections 17.6 through 17.64; new Subchapters D and E concerning Nonrepairable and Salvage Motor Vehicles and Salvage Vehicle Dealers.

A little background on this, in House Bill 2813 during the 77th Legislature which was in 2001, it re-codified the provisions of Texas Civil Statutes, Article 6687-1(a),6687-2, and 6687-2(b) relating to Salvage Vehicle Dealers. The provisions are now located in our Occupations Code, Chapter 2302.

House Bill 3588, Article 17 of the 78th Legislature Regular Session 2003, amended the provisions of Transportation Code Chapter 501, Subchapter E relating to Nonrepairable and Salvage Motor Vehicle Dealers, and the Occupations Code, Chapter 2302, again, relating to Salvage Motor Vehicle Dealers.

House Bill 3588 requires the Texas Department of Transportation to adopt rules to establish a list of valid identification documents that must be presented by a person who purchases a nonrepairable or salvage motor vehicle for export only, in accordance with Transportation Code 501.099, necessary to administer Occupations Code Chapter 2302 and necessary to regulate and enforce casual sales of nonrepairable and salvage motor vehicles by salvage vehicle dealers, insurance companies, and salvage pool operators.

The Texas Transportation Commission, by Minute Order 109448, dated October 30, 2003, proposed amendments to Section 17.2, the repeal of Section 17.8, and the repeal of Subchapter D, and with the addition of a new Subchapter D and a new Subchapter E. On December 9, 2003, a public hearing was held to receive the comments, views and testimony concerning the proposed rule revisions. Oral and written comments were received and are addressed in Exhibit A of your minute order.

At this time, we'd like to recommend adoption of the amendments as presented.

MR. WILLIAMSON: We have one person who wishes to testify on the rule. I think is it appropriate for us to take that testimony before commission members ask questions? At this time I'd like to recognize Dave England.

MR. NICHOLS: Does it say who he's representing?

MR. WILLIAMSON: Dave is representing Texas Independent Auto Resellers Association, known as TIARA.

MR. ENGLAND: TIARA. Thank you, commissioners, Mr. Chairman. I appreciate the opportunity to come up here and visit with you. I'll keep my comments extremely brief.

Number one, I don't have a copy of the amended rules so it's going to be very difficult for me to comment on something that I don't have in front of me, but I would like to thank Mr. Dike, the staff of TxDOT, the General Counsel's Office of TxDOT. We've been working together for a few months on these amendments and things of that nature, so that will conclude my comments, and thank you very much.

MR. WILLIAMSON: So from your association's standpoint, you think the rules as proposed probably will work?

MR. ENGLAND: We made written comments on December 9 and I was assured that all the comments that we had were addressed in these rules for final adoption, and so I guess when I see the final adopted rules.

MR. NICHOLS: Addressed doesn't necessarily mean agreed to.

MR. ENGLAND: That's correct.

MR. NICHOLS: I know that's what you're concerned about.

MR. ENGLAND: Yes, Commissioner.

MR. WILLIAMSON: I was trying to get him to agree to them.

(General laughter.)

MR. NICHOLS: He used that word addressed and he was fixing to walk off.

MR. WILLIAMSON: Hang on a second. Members, questions or comments, discussion with Mr. England?

MR. NICHOLS: I appreciate the fact that you felt comfortable enough to sit and work through all your concerns with our people and they took the time to work with you and tried to adjust as many and whatever. It's having the dialogue and openness with the industry is real important.

MR. ENGLAND: Well, thank you, Commissioner, and they've been a great group to work with and they've really been helpful. Thank you very much.

MR. WILLIAMSON: Thank you, Dave.

That was the only person commenting, Mike?

MR. CRAIG: So again, we'd like to offer this for approval at this point.

MR. WILLIAMSON: Okay, members, questions or comments directed to our staff?

MR. NICHOLS: So moved.

MR. WILLIAMSON: I have a motion.

MR. JOHNSON: Second.

MR. WILLIAMSON: I have a second. All those in favor of the motion, signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, say no.

(No response.)

MR. WILLIAMSON: Motion passes. Thank you.

MR. CRAIG: Thank you very much.

MR. WILLIAMSON: I would like to say you're a good substitute for Jerry but then Jerry might be upset.

MR. CRAIG: Unfortunately, Jerry is here, so that's subject to a second opinion.

MR. BEHRENS: Jerry will present 4(b)(2)(B) which will be final adoption on rules on Specialty License Plates, et cetera.

MR. DIKE: Thank you, Mike.

Commissioners, and Commissioner Johnson, congratulations on your long tenure of service with TxDOT.

MR. JOHNSON: Thank you, Jerry.

MR. DIKE; And Commissioner, I do agree, Mike is a wonderful substitute, wonderful.

The reason we split these up, these are two of the most complex and lengthy legislative bills that we've had, thus the rules are very complex also.

This minute order adopts amendments to Rule 17.28 concerning all of our specialty license plates. House Bill 2971 in the past legislative session, under the excellent leadership of Representative Phillips and Senator Wentworth and others, completely re-codified all provisions relating to all TxDOT specialty plates. The bill essentially did six things: 1) it gave us authority to prorate specialty license plate fees; 2) to issue specialty license plates for all vehicle classifications; 3) to sell souvenir license plates; 4) the authority to issue new categories of license plates; 5) to contract with a private vendor to market special license plates; and 6) also created 38 new specialty plates -- normally a legislative session gives us five to ten new specialty plates.

These amendments incorporate the provisions of House Bill 2971 into our department rules. The Transportation Commission in October proposed these amendments; on December 9 a public hearing was held; comments were received and they're addressed in Exhibit A. We had a total of eleven comments from ten different commenters, plus we had one identical comment from 63 commenters and also a petition that had 860 signatures on that. Out of these twelve issues: six we agreed with, those rules required no changes; five we disagreed with, those rules were not changed; and then one we had comments from both sides of the issue. And staff recommends adoption of this minute order and the rules. If you have any questions?

MR. WILLIAMSON: Members, I know this has been a not long and drawn-out but it's been a complicated rule-making procedure. Are there any questions that you wish to direct towards Jerry, or any comments you'd like to add. Robert?

MR. NICHOLS: Yes. I think you already know the answer to this, I just want to get it out open on the record. We had received a lot of letters and requests from legislators requesting that I know there's been kind of a hard stance about having a white reflective background behind the letters, and we did receive a lot of letters from the legislature requesting that we review that, look at it. They didn't seem to really understand why we took such a hard ground.

And I know many of us had visits from some of the industry that had interest in this issue, and I know they showed me some license plates that were very pretty that did have colors other than white reflective background and there was contrasting and it looked like it was real obvious, you could see real well. Being able to see real well with contrasting colors in my office is a lot different than having a pull-away car from a shootout or robbery or an accident at night on a rainy evening with mud and stuff thrown up on there, dramatically different.

MR. DIKE: Yes, sir.

MR. NICHOLS: And those numbers are there for a very important reason, for traceability and identification and stuff like that. I wish you would address that because that was one of the primary concerns, and you had gone through in this book -- I don't want to sit here and read it but I would like you to comment on three or four of the different groups who actually have to enforce and work with these things, their comments.

MR. DIKE: I'd be glad to. We got several comments from legislators stating that a white background would not be necessary, that a colorful background will sell more license plates. Unquestionably, we believe that it would. It would sell more if we had a very colorful background on license plates.

MR. WILLIAMSON: Kind of like your tie?

MR. DIKE; Yes, sir, kind of like the tie. There are some on here, but if you notice on here, about 80 to 90 percent have white background. Most states have some small percentage of their plates that are color background, a few of those states have their general issue plates; in Texas we've always kept the white background.

Department of Public Safety Colonel Davis gave us comments that it was essential for law enforcement to have a white background with dark letters. In the other states, there are at least three states and there might be four or five, that have had a colorful plate design that had to be recalled after it was issued to the public. Arizona, Maryland and another one or so have had plates that were too colorful and they caused law enforcement problems either in the daytime or at night or dusk or early morning, and so after a number of complaints, they recalled those. Pennsylvania has two of their plates that have a darker background and they're in the future going back to white background on all plates, but there are a number of states that have some.

So that's one of our issues: safety for law enforcement. The Texas Police Chiefs Association also provided similar comments to the Department of Public Safety. One is for the safety of those folks that are enforcing these; for their intent it is to identify the vehicle so they can get that address information on the vehicle's owner.

The second thing is readability of license plates. In Texas we have several license plate scanning and reading facilities. The Turnpike Authority Division is very concerned about future toll readers. They think it's essential for the white background for their license plate readers to work, the automated readers, and they think that every colored background plate would not work and it would require manual key entering of the license plate, or the alternative is we'll have to test all license plate reading and scanning equipment for each new license plate design. That also holds true for the DFW Airport. Along the Texas-Mexico Border, the Federal Government has some license plate readers that read either the rear or the front of the vehicle, and when they can't read it they'll take a picture of the plate, and then that will have to be manually inputted later. So all of those type of license plate reading/scanning devices would have to be tested so that would be additional cost.

The other issue -- and it's really the same as the safety issue -- the processes we use here in Texas, we've got what we call the general issue plate and that's the Lone Star State plate; that's on about 85 percent of all the vehicles out there. I actually don't have a Lone Star State plate, but I've got an example of the technology and that's the one that's punched -- it's all called embossed. Those are the only plates that we emboss now is the general issue or Lone Star State plate; all the other plates in Texas, the specialty plates, are made using a digital license plate process -- this also is done in the prison system -- and it's a flat plate. And we're going to aluminum in this next year as soon as we can get the cost down.

But the process of this plate, the letters and characters are actually painted on the plate and it loses that reflectivity. So we visited with Materials and Tests Division and looked at all the research reports that are available in the United States about license plate conspicuity and legibility, and going to a colored background or colored designs loses the conspicuity and legibility for law enforcement. Materials and Tests feels like going, for example, from a white to a yellow background, it would lose about 30 percent of conspicuity and legibility, so it would reduce that legibility.

The other alternative to not painting the graphic information and making a unique plate is to have the background sheeting manufactured at the sheeting manufacturer. We have a sheeting manufacturer in Brownwood that manufactures sheeting, delivers it to Huntsville, and then Huntsville does all the production. In past years, five years ago we had 100 different huge rolls of sheeting that had all the different plates on it. We'd have a roll for Texas A&M University, one for University of Texas and one for Parker School of Chiropractic. And Parker School of Chiropractic, we bought a huge roll of sheeting; well, we haven't sold that many plates on Parker School of Chiropractic.

But these huge rolls of sheeting do keep that reflectivity if they're manufactured in the plant, but what that would mean is we would have to for every license plate design have that roll of sheeting manufactured to keep that reflectivity, so cost would be a consideration.

So for safety, cost and readability, that's the issue on the white background.

MR. NICHOLS: That's really all the questions I had, but the only other comment -- and I don't know whether to direct it to you or the executive director -- after we vote on this, I think it would be -- if we have not already done it, I think we should write a letter to a number of these legislators explaining the white background.

MR. DIKE: Yes, sir.

MR. NICHOLS: Have we already done that?

MR. DIKE: We have draft letters to be sent next week.

MR. NICHOLS: To let them know that we're not just not changing because we don't like to change things, but there's some real reasons.

MR. DIKE: We agree with their comments; it will reduce some plate sales.

MR. NICHOLS: That's all I have.

MR. WILLIAMSON: Other questions or comments, members?

MR. JOHNSON: I have a question, Jerry.

MR. DIKE: Yes, sir.

MR. JOHNSON: Obviously a lot of interest in this bill and subsequent avenues that it opens up in terms of the different plates, the marketability of those plates. Robert touched on one, there are a lot of requirements, technology advances. It occurs to me that in the not too distant future there will probably be a small chip in a plate for recognition purposes, just as, I believe, a chip is going to be in the license decal at some point in time in the not too far future. Will that change the dynamic on the recognition of the plates? And let's assume for a moment either that occurs or there are a group of professional studies that are done that prove beyond a reasonable doubt that you can modify the background or you can change this or that about a plate, or another comment was made on the proposal there be a 30-day wait period and that timing might throw off the marketability when you're trying to seize on an event.

MR. DIKE: Like a championship, for example.

MR. JOHNSON: Like the Astros win the World Series this year or something along those lines. Are we going to be malleable enough to whereby, as Robert mentioned -- I mean, we're not resistant to change as long as we're doing the right thing. I just want to ask you and make sure that that is our approach, that if a better way of doing things comes along, that we'll seize the moment.

MR. DIKE: Yes, sir, that is our approach, but like for example, we believe that public comment period is necessary. There have been a number of states that have gotten into trouble and are in court right now over controversial license plates, so these rules, if you pass these, would require a 30-day comment period both from the Texas Register, and then another comment we agreed with putting on our department website and the vendors website. So it would be have a 30-day comment period so we couldn't take immediate advantage of a championship event, and those things would occur.

MR. JOHNSON: Well, we hope they occur.

MR. DIKE: And we know they would occur, yes, sir.

Your other comment on do we envision seeing that in the future, yes, in theory we do, we see a chip either in a registration sticker or on a license plate, but there's so many political and privacy and the Big Brother issues that there's not another state in the nation at this time planning to do that. We've been at a number of meetings with the Turnpike Authority Division and other entities around the country that see that. For example, if in Texas in ten years we have 2 million people that go through tolls, we would want to or need to do something like that rather than having a separate transponder, give them the option of having it on the license plate or on the windshield registration sticker or a safety inspection sticker, and I believe one of the commissioners has a prototype in their pocket right now. But that technology is possible, it just would require fairly significant additional cost.

Each year we issue 8 million new plates around the state of Texas and our per-plate cost is $1.21 -- it's one of the best in the nation -- so we can add 10 cents, 20 cents, 50 cents, a few dollars, and then provide whatever that maintenance is to replace those that fail, but absolutely, the technology is available.

MR. HOUGHTON: What are the restraints to that technology?

MR. DIKE: I'd have to defer to the experts on those transponders, and a lot of those would be in the Turnpike Division.

MR. HOUGHTON: I'm talking about general restraints to putting chip technology on the plate.

MR. DIKE: General? Can I put a commissioner on the spot and see if he's got one in his pocket? But some of them, the transponders for E-Z Pass, for example --

MR. HOUGHTON: But I'm talking about on the plate.

MR. DIKE: On the plate. It would have to be something that would be suitable for the Texas environment for five to eight years.

MR. WILLIAMSON: This is what we call "Big Brother."

MR. DIKE: It would be "Big Brother," yes, sir. Commissioner Houghton, it needs to be something that would work for five to eight years to be on a license plate.

MR. WILLIAMSON: Patent Number 67432 in the name of Robert Lee Nichols.

MR. HOUGHTON: That would be embedded in the plate.

MR. DIKE: The potential of something being embedded in a plate or in a windshield sticker.

MR. JOHNSON: This expired in February of '03.

MR. DIKE: For our business purposes, if it's embedded in a windshield sticker, its shelf life would only need to be a year or so; if it's embedded in a plate, it would need to be five to eight years.

MR. JOHNSON: You have to replace the physical plates every six years, do you not?

MR. DIKE: You have to replace them every eight years. and there's an optional between five and eight, yes, sir.

MR. HOUGHTON: Do we allow satanic symbols on plates?

MR. DIKE: No, sir, we screen -- in fact, our executive director personally screens at the present time all personalized license plates to make sure they're not obscene, objectionable, misrepresenting of law enforcement agencies and other objectionable criteria. We try to help him out.

MR. HOUGHTON: I see horns on plates all the time.

MR. DIKE: Sir?

MR. HOUGHTON: Horns.

MR. DIKE: Oh, you see these? Those are not only not objectionable, those are wonderful

(General laughter.)

MR. WILLIAMSON: Other questions or comments?

MS. ANDRADE: I have a question, Jerry.

MR. DIKE: Yes, ma'am.

MS. ANDRADE: I don't have a problem with the white background. As a matter of fact, after I also met with the industry, I surveyed friends and employees and we feel that the white gives it a consistent professional, proud Texan plate. But I have a concern with the 30-day posting. Do other states have such a posting time?

MR. DIKE: A lot of other states, the final approval of the license plate design goes all the way to the governor, and in some other states -- in general, I'd say no. We haven't researched that specific thing.

MS. ANDRADE: Because you're going to have a committee seeing this -- right? -- approving this?

MR. DIKE: Yes, ma'am.

MS. ANDRADE: I'm also concerned just in case the Spurs had another world championship and we'd want to get that. But it seems like it's a long time, the 30-day period.

MR. DIKE: Yes, ma'am, and we don't know of a good way to get public comments. If we put something out on a website for a day or two, we feel people aren't going to see it, so our approach was the legal public way to publicize things is through the Texas Register, so we didn't know of another good way. We though about, say, advertising a potential plate in six or eight urban newspapers and see if the public responded, but we would like to avoid issuing a controversial plate. But right now, these rules, if passed, would require that 30-day public comment period.

MR. JOHNSON: Jerry, in your opinion, how user-friendly is our website in terms of finding the choices for these special plates?

MR. DIKE: I think it's fair to good; it's not excellent, you can't get it on one particular enter key, you've got to go through about three different enter keys, or four, to get to the special plates. So it could be improved, but it's good.

MR. JOHNSON: My sense is if we want to get serious about marketing these things, it ought to be on the front page with an icon that you can go directly to it.

MR. DIKE: Yes, sir. We'll visit with staff and ISD about that, yes, sir.

MR. BEHRENS: Commissioners, we are looking at our website and ways that we can upgrade it, not only for this issue but making it more accessible for other items of business that we do, making it more user-friendly.

MR. WILLIAMSON: Any other questions or comments, members?

MR. JOHNSON: So moved.

MR. NICHOLS: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: Motion carries.

MR. DIKE: Thank you.

MR. BEHRENS: Item 4(b)(3) is rules for final adoption concerning our Motor Carrier Operations. Carol?

MS. DAVIS: Good morning. I'm Carol Davis, Motor Carrier Division director, and I'm here today with a minute order for the final adoption of amendments to 43 TAC, Chapter 18 concerning Motor Carriers. These amendments implement provisions of Senate Bill 1184, Senate Bill 1904, Senate Bill 1063, and House Bill 849.

In summary, these bills required certain types of notification for the department to give to DPS concerning motor carrier certificates of registration; there are some requirements for tow truck operators to carry cargo insurance and to file rate sheets with TxDOT to put on our website, and increases their annual per-vehicle fee for tow trucks.

We received one comment and it's addressed in Exhibit A to the minute order. The comment was from TMTA, Texas Motor Transportation Association, and DPS requiring some technical changes, and we did make those changes, and today we are proposing approval of the minute order.

MR. WILLIAMSON: Members, are there questions of or comments to be directed towards the staff member?

MR. JOHNSON: I have a question.

MR. WILLIAMSON: Please, John.

MR. JOHNSON: Actually, I have two. We have defined a bus as a vehicle designed to carry more than 15 people. Is there a definition for a van or a vehicle that carries more than a passenger car but less than 15 people?

MS. DAVIS: I'm not sure but I don't think they would be required to register with us. I think the requirements are for -- actually, that definition changed it to not just designed but designed or used to transport more than 15 people.

MR. JOHNSON: Insurance requirements have changed. Now, if there are more than 15 and less than 26, I think the minimum coverage is $500,000 and greater than 26 is $5 million?

MS. DAVIS: Yes, sir.

MR. JOHNSON: What were they prior to the change in this?

MS. DAVIS: Actually, I don't think the limits were changed for the liability insurance; what was changed were the requirements for cargo insurance, and what these rules do which implement the legislation is require that tow truck operators carry on-hook cargo insurance, and that was the insurance change.

MR. JOHNSON: So the situation that occurred where the independent bus drivers in the Houston Independent School District, some of the bus drivers' insurance was inadequate, that situation has not been affected by this?

MS. DAVIS: No, sir. The requirements on those carriers are the same as they have been since 1996 or so.

MR. JOHNSON: Thank you.

MR. WILLIAMSON: Other questions or comments, members?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: Second?

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All in favor will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, say no.

(No response.)

MR. WILLIAMSON: Motion passes.

MS. DAVIS: Thank you.

MR. WILLIAMSON: Agenda item 4(b)(4) is final adoption of rules concerning Right of Way and agreements concerning utility adjustments, relocation and/or removal of utilities. John?

MR. CAMPBELL: Good morning. For the record, my name is John Campbell, director of the Right of Way Division.

I'd like to present for your consideration Minute Order 4(b)(4) which provides for the final adoption of new Section 21.22 of the Texas Administrative Code concerning agreements for utility adjustment, relocation or removal.

Senate Bill 487 of the 78th Legislature Regular Session in 2003 added new Transportation Code Section 203.0935 which requires that a utility company owning a facility that is in conflict with a proposed improvement to the state highway system execute an agreement for the adjustment of that facility in a timely manner. If the utility does not sign the agreement, the Texas Department of Transportation may relocate the facility at the utility's expense.

The new section implements the provisions of Section 203.0935 of the Transportation Code and enumerates the documents to be exchanged between the utility and the department to provide both parties with sufficient information to enter into the agreement.

The Texas Transportation Commission, by Minute Order 109512 on December 18, proposed the new Section 21.22 and no public comment has been received. Staff recommends your approval.

MR. WILLIAMSON: Members, are there questions? Please, Robert.

MR. NICHOLS: I realize there's no formal written comments or verbal comments, but I recall during the session this was kind of a lively issue with the industry.

MR. CAMPBELL: Yes, sir.

MR. NICHOLS: Did they informally sit and visit with us at all on these rules?

MR. CAMPBELL: Yes. Senator Ogden's office facilitated a number of discussions between the department and various members of the utility industry towards the end of working out the substance of these rules.

MR. NICHOLS: Okay. That's why I was just inquiring that there were no comments, so there was a dialogue, though.

MR. CAMPBELL: Yes, there was.

MR. NICHOLS: Okay.

MR. WILLIAMSON: Are there other comments or questions directed towards John?

(No response.)

MR. WILLIAMSON: Could I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: Second?

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed will say no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. CAMPBELL: Thank you.

MR. WILLIAMSON: Thank you, John.

MR. BEHRENS: Phil Russell will be coming up and addressing agenda item 4(b)(5) and 4(b)(6). 4(b)(5) would be final adoption of the rules for Regional Mobility Authorities, and 4(b)(6) will be final adoption of rules concerning Toll Projects. Phil?

MR. RUSSELL: Thank you, Mike. Good morning, commissioners. For the record, I'm Phillip Russell, director of the Texas Turnpike Authority Division.

Agenda item 4(b)(5) relates to a minute order authorizing the repeal of Chapter 26 regarding Regional Mobility Authorities, and simultaneously adopting changes to Chapter 26 to implement House Bill 3588. 3588 repealed Section 361.003 of the Transportation Code which authorized the commission to approve the creation of an RMA. To replace this legislation, 3588 enacted a new comprehensive RMA statute called Chapter 370 which expands the powers of the RMAs and includes other modes of transportation in addition to turnpikes.

Chapter 370 further requires the commission to appoint a Rules Advisory Committee to give advice to the department on the development of these initial rules. The committee was appointed and was involved throughout the process of developing these rules. The rules were posted in the Register and a public hearing was held on November 25, 2003. Public comments were received and revisions were made to the draft rules in response to public comments. They are addressed in detail in Exhibit A to the minute order.

We received a multitude of comments from individuals and several groups as well. Just to give you an example: the Central Texas Regional Mobility Authority, Capital Area Transportation Coalition, the MoPac Boulevard Alliance, Just Transportation Alliance, Save Our Springs, Texas Association of Counties. So really, we got comments from the full gamut across the spectrum. Three or four broad categories seemed to have some interest from all these groups; those specifically were comments related to department responsibility for environmental clearance on all system projects, conflict of interest issues, requirements related to public support and public hearings, and just generally on conversion of non-tolled highways to toll roads.

And I might also mention that as Mike said, we have two other minute orders coming up that you will be considering that are kind of companions to this relating to conveyance and conversion for department and county toll road projects. And these last two elements really ran the spectrum throughout, not only in these RMA rules, but the county and the department rules.

Now, while TxDOT, of course, wasn't able to include all requested changes in the revised rules, the comments were considered and addressed and many of these were ultimately included in the final version.

We would recommend approval of this minute order and I'd be happy to address any comments you might have.

MR. WILLIAMSON: Okay, members, questions for Mr. Russell, or comments to be directed towards Mr. Russell?

(No response.)

MR. WILLIAMSON: Amazing. Do I have a motion?

MR. NICHOLS: The only comment I have is that this issue has been discussed and discussed and worked on for really several years, I guess, so I think everything has been thoroughly hashed out. This session the legislature did a magnificent job of working all the way through this stuff, and I think that's why we don't have any comments. So I so move.

MR. WILLIAMSON: Do I have a second?

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second. All in favor of passing the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, say no.

(No response.)

MR. WILLIAMSON: Motion passes. Thank you, Phillip.

MR. RUSSELL: Agenda item 4(b)(6)(A) relates to a minute order which would repeal Subchapter B, Chapter 27, Sections 27.11 through 27.20, concerning the Texas Turnpike Authority, and would simultaneously propose new Subchapter B, Chapter 27, concerning transfer of department turnpike projects and conversion of non-tolled state highways.

House Bill 3588, of course, amended Chapters 361 and 362 to clarify the powers of the commission and the department regarding toll roads and to delete obsolete and duplicate sections that are no longer needed. 3588 also amended provisions in the Code concerning the transfer of department turnpike projects to certain governmental entities, and the conversion of non-tolled segments of the state highway system to department projects.

Section 361.282 of the Code authorizes the department to lease, sell, or otherwise convey all or any portion of a turnpike project to certain entities if the commission and the governor approve the transfer.

Section 362.041 of the Code also provide that the commission determines that the conversion of an existing non-tolled segment of the state highway system to a tolled facility will improve overall mobility in the region or is the most feasible and economic means to accomplish necessary expansion and improvements to that section.

These new rules and the repeal of former Subchapter B, Chapter 27 are proposed to implement these legislative changes. These rules were posted in the Register and a public hearing was held here on November 25, and as I mentioned a moment ago, we had a great number of comments; many of those applied to the former RMA rules, they applied to these rules, and they also applied to the county toll road rules in just a moment.

I'd be happy to address any comments that you might have on these rules.

MR. WILLIAMSON: Before commission members question or comment, Mr. Monroe, in the order of business we're discussing 4(b)(6), is it within the purview of the chair to set this aside a moment and go to the discussion item on the Mobility Fund, or do I need to proceed with this?

MR. MONROE: No, sir. You as chair can decide what gets heard when.

MR. WILLIAMSON: Phil, I want to thank you for laying that out and ask for the patience and indulgence of my commission members. I think you'll see why I'd like to change the order up a little bit after we finish hearing from Mr. Saenz. If you would take a seat, Phil, and Amadeo and Mike, let's jump on the agenda and let's move to the discussion portion on the Texas Mobility Fund Strategic Plan.

MR. BEHRENS: Amadeo, the floor is yours.

MR. SAENZ: Good morning, commissioners. For the record again, I'm Amadeo Saenz, Jr., assistant executive director for Engineering Operations.

Item 5 is a discussion item where staff is bringing to the commission that we are in the process of beginning the putting together of the strategic plan for the Texas Mobility Fund.

The Texas Mobility Fund, of course, was established by the 77th Legislature and approved by the Texas voters, and allows the department to issue bonds to accelerate mobility projects throughout the state. That piece of legislation also required that prior to the department issuing any bonds, that a strategic plan had to be adopted that will put in place how this money will be used and what benefits will be derived by the use of this fund. It also requires us to go to the Texas Comptroller's Office and get a certification on the projected revenues, and we're in the process of requesting that so that we can have information as to how much available resources we will have for that.

The purpose of this minute order is to advise the commission and to get some feedback and some comments on that we are in the process of beginning the development of this strategic plan. Some of the things that we will be looking at is based on some of the things that have been going on in the last few months as part of commission action. For example, in August of 2003 the Texas Transportation Commission approved the Texas Metropolitan Mobility Plan where it allows the local officials to set priorities and determine how they will spend monies allocated to their area to develop the transportation system. A way to measure their effectiveness will be to use a congestion index to determine how effectively they will be spending their money.

We also have been having discussions into finding additional ways to increase our revenue, and of course, the commission has been working on showing how the development of toll roads will accelerate our program and will also provide us a future funding source. In December of 2003, you all also approved a policy instructing TxDOT to evaluate controlled access highways as possible tolling projects. So using this criteria, we have kind of come up with some fundamental guidelines that we will be using to guide us as we put together this strategic plan.

One of the things that we want to do is we want to make sure that the funds are allowed to be used on a multimodal type of an approach to projects, not just for highways but also public transportation and other transportation modes that are needed to effectively improve transportation needs statewide. We want to continue the efforts that regional transportation decisions need to be made at the local level -- that is, those people that probably know more about what needs to be done in their particular area.

Where feasible, we want to make sure that we leverage this money with toll projects so that we can stretch this money and make it go further. Of course, we also have identified that toll projects will allow us to accelerate some of these needed projects because it gives us another funding source. And of course, one of the things that we're really looking at is trying to accelerate projects that are currently already in the planning process. We've done a lot of work; we can go back and make some changes to some of the environmental and some of the planning work, but these projects already have work on them so we can take advantage of what we've done and get those projects accelerated faster.

And of course, very important to our plan, we want to make sure that we put something that we can measure how effective we're going to be using this Mobility Fund and really answer the question what are the benefits that the department will derive by the use of the fund.

So really why I'm here today is to kind of roll out that we're going to be working on this thing and ask for any comments from you at this time or in the next few months. Our plan is to work on this strategic plan over the next month and then bring to you a minute order either in March or April with the proposal for the strategic plan for the Mobility Fund.

MR. WILLIAMSON: Members, there are a couple of reasons for asking Amadeo to lay this out at this time, and I'll try to get to them in the order that they make sense to me. Primarily, as we consider either proposed or final adoption of rules having to do with toll projects, and particularly rules that concern the conversion of a tax road to a toll road, I think that it benefits us and the persons who are most interested in the transportation world to sort of understand that we have a complex but not hard to understand vision we're trying to put together that links the rules we're passing on toll projects to things such as the Mobility Fund Strategic Plan and how they balance against each other to provide greater resources to the regional and local level. And I purposely asked Amadeo to lay this out at this time -- that's one of the reasons, there are two others.

I want to be sure I heard you correctly. This is the first time I've ever seen on our agenda something called a discussion item. Did I hear you say this is our first step in trying to get to a point where we give the public notice of our intention to adopt rules almost along the federal guidelines?

MR. SAENZ: Yes, sir. We felt that this was a big enough item that it would let the public know that this is something that's going to be happening over the next short period of time, and even though it is not a formal public hearing, they know that they can contact us and give us some feedback that we may want to take into consideration as we put together this proposed minute order. So this is really our first attempt to let people know that this is what we'll be working on.

MR. WILLIAMSON: Can you give me a moment and let me visit with Mr. Monroe?

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Good morning again, Richard.

MR. WILLIAMSON: Richard, over the past six months or so there's been some moments of tension in the public eye over whether or not we were giving vendors or local government or potential players in the relationship between transportation planning and transportation execution enough notice about what we were going to take up considering and ultimately pass as rules. And I don't, by using those words, validate those complaints or that tension, I just observe that it's occurred.

Commission members may have different viewpoints about this but I would like to ask you -- I think this is a good step, this discussion item business, I just don't think it's aggressive enough, and I would like to ask you if you could put together, and visit one-on-one with each commissioner, a process that would work something like this: a notice of intent and an invitation to comment on how rules should be structured, not unlike the Federal Government rules are used, a process where when staff has a final first draft for consideration, we could post it either to our website or perhaps to the Texas Register -- maybe the Texas Register would be too much; I don't want to put that thought out there unless it's appropriate -- but at any rate, some way of saying to the North Texas Turnpike Authority that: be on notice, we're fixing to start thinking about how to structure rules having to do with the commonality of electronic signal devices for automatic tolls; if you've got some idea about how we should structure those rules, you've got some time to tell us what you think they ought to be.

And then a next step that says: Okay, here are the beginning first draft of the rules that we're going to work off of, there's going to be a public comment period in the future, if you wish to have comments, be thinking about them. And then perhaps a layout of the final draft at some point before the commission meeting where they will be laid out.

I would appreciate you developing some thoughts and ideas about that that you could visit with each commissioner about so that we might open our process up a bit without violating what I consider to be the sanctity of staff-commission negotiation and discussion about those rules. And I'd invite any comments you might have about that at this time. Sorry to catch you off guard.

MR. MONROE: No, sir, that's fine. Having once worked for a federal agency -- two of them, as a matter of fact -- I'm still fairly familiar with the federal practice which was to publish in the Federal Register: We're thinking about these things and we invite comment. And we can certainly do that and come up with something that I hope will be acceptable to all the commission members.

I will just inject this: lawyers, in my opinion, at least good lawyers, are by nature conservative, and most of us think along the lines of if it can go wrong, it probably will. So I'm glad you added at the end that we're not going to do anything that goes against the Administrative Procedures Act, but this will be a complement to it. And we can certainly come up with a procedure that I hope will be acceptable to the members.

MR. WILLIAMSON: Well, like I said -- although, members, you're certainly welcome to add whatever you wish -- I don't ask to raise it as a discussion item so much as I was favorably impressed with this item that you placed on the agenda, Amadeo. I thought it was a good first step to publicizing to the world -- we live in three worlds, it seems to me: we live in the world of transportation vendors, people who build our roads, execute our public transit contracts and so forth; we live in a secondary world, our partners, NTTA, HCTRA, the large counties, regional mobility authorities from Austin to Sherman and all points in between; and then the third world we live in is the public world, the world of citizens who pay their taxes, who only know about us through what they read or what they see on television.

And I think it's a good thing to announce to all three of those worlds this is what we're thinking about doing, and then perhaps to share with the world our first thoughts after listening to the comments of others and then our final thoughts after considering it amongst ourselves. I don't think that's a bad thing, and if you would prepare something to begin to discuss that with the commissioners individually, I would appreciate that.

MR. MONROE: I can assure you I'll be happy to.

MR. WILLIAMSON: And members, you're welcome to visit Mr. Monroe, if you wish, or you may allow him to go do his work and come back to you over the next month or so.

Thank you, Richard, I appreciate it.

MR. MONROE: Yes, sir.

MR. WILLIAMSON: Amadeo, back on the discussion item, I'm going to ask you in a moment to step back and let Phil finish, but I want you to try to tie up for the commission what the Mobility Fund might mean in terms of the items that Phil brought up, the toll projects, the county toll roads, and the other items that are here that I can't find right now. In other words, why is it important to have a strategic plan for the Mobility Fund in the context of items 4(A)(B) and (C)?

MR. SAENZ: Well, all of them will be used as tools that will complement each other, for example, the use of the Mobility Fund tied to a toll project or a project that is currently under development. And if you recall, in December when the commission passed a minute order, it said to look at projects that were all through the time phase, so we may be developing a project that we will now require that we will, through everybody's agreement, go through the process and convert that project from a tax road to a toll road, then we can use Mobility Fund as part of the toll equity to do that and help fund part of that project, and of course, the rest of the funding that may be needed for the project would come from the issuance of revenue bonds.

So it just complements each other; it will complement all the different tools that we have to help us develop projects faster.

MR. WILLIAMSON: So as an example, the rules we're discussing or considering regarding toll projects right now, have been designed to anticipate that the Mobility Fund might supply the necessary equity for either a new-build or a convert-build.

MR. SAENZ: That's correct, sir.

MR. WILLIAMSON: I don't want to open old wounds -- I think Bob Davis has made his decision and that's fine -- but let's take as an example the possible conversion of soon-to-be-open 183. Once the toll project -- all of the toll rules are in place -- well, that's an RMA, that's a different thing. Let's think of a toll road we hope to build through Jacksonville.

MR. SAENZ: Connects to the airport?

MR. WILLIAMSON: Right to the new airport.

(General laughter.)

MR. WILLIAMSON: Once they're adopted and once the strategic plan for the Mobility Fund is adopted, it would be possible for Mr. Nichols to go to his backyard and say: Yes, it's uncomfortable for us to convert this tax road or this tax lane to a toll lane, but because we have this Mobility Fund which is focused on all forms of improving transportation, we now have the ability to convert this lane, the state will borrow the money through its Mobility Fund, advance it for the conversion, and we can also at the same time purchase the right of way for a commuter rail line along this road linking to the Dallas commuter system, and over the long haul use the tolls from the previous tax road that's now a toll lane to help offset the cost of the commuter line in order to extend public commuter transit all the way to Jacksonville, Texas.

MR. SAENZ: That's correct. It gives us almost total flexibility to be able to develop a multimodal type project where the different funding -- because say for example Fund 6 is limited to only highway projects, the Mobility Fund gives us additional flexibility by bringing us money, now we can do some of the alternate -- other modes.

MR. WILLIAMSON: Well, if you would then take a rest and we'll let Phillip finish laying out the others.

MR. HOUGHTON: I have one question.

MR. WILLIAMSON: Mr. Houghton.

MR. HOUGHTON: On the certification from the Comptroller's Office, what are we certifying: revenue on what numbers?

MR. SAENZ: The Comptroller will certify the projected revenue that will be available in the Mobility Fund based on the legislation that was passed and the fees that are being collected that are going into the Mobility Fund.

MR. HOUGHTON: They have to identify a project and the anticipated revenues off of that project. Correct?

MR. SAENZ: No, sir. I think what we will be getting from the Comptroller is these fees that are being collected right now that are going into the Mobility Fund, she will then project and give us a certified projection of how much money will be available in the Mobility Fund say at a certain time, and then we can use that -- and I'll defer to James Bass if I go a little bit errant -- we can use that money to go out there and issue the bonds.

MR. WILLIAMSON: She'll have to certify the revenue that we can borrow against.

MR. SAENZ: Yes.

MR. NICHOLS: From like the DPS fees and stuff.

MR. SAENZ: She will certify the amount of revenue available in the Mobility Fund and then we will use that to go in there and issue bonds on; that will back the bonds to pay the debt.

MR. WILLIAMSON: Other questions or comments? And Amadeo is going to be back up on this matter in a second; we're not closing this out yet.

Okay, Phil, if you want to return then and finish laying out 4(b)(6)(A) we're were on?

MR. RUSSELL: Yes, sir. Phillip Russell, again, with the Turnpike Division. It is 4(b)(6)(A) and I have completed laying it out and happy to address any questions you might have.

MR. WILLIAMSON: Okay. Phillip has laid out 4(b)(6)(A) regarding final adoption of rules concerning toll projects. Members, questions for Phillip or comments directed towards Phillip about this agenda item?

(No response.)

MR. WILLIAMSON: I would just comment, Phillip, that you and your staff, the whole department did a great job formulating these rules and getting to this certain point. There's some good stuff in here.

MR. RUSSELL: Thank you, Chairman, and of course, a lot of that was Bob Jackson with General Counsel that really did a lot of heavy lifting on these.

MR. WILLIAMSON: It's kind of you to share the recognition with Bob because he did work hard, but as you know, this is the governor's focus; this is the basis of his vision of how we will improve transportation in this state, and so I watch this perhaps a little more carefully than I do everything else, and I'm just real pleased with the process that you've followed.

MR. RUSSELL: Thank you.

MR. NICHOLS: So moved.

MR. WILLIAMSON: I have a motion.

MR. JOHNSON: Second.

MR. WILLIAMSON: I have a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed will say no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RUSSELL: Okay, commissioners, the next agenda item is 4(b)(6)(B). Again, it's the last of the companion bills related to conveyance and conversion. It relates to Section 284.009 of the Transportation Code. That provides that the commission may convey a non-tolled state highway or a segment of a non-tolled state highway to a county for operation and maintenance as a toll road project under Chapter 284. And of course, there are several conditions that have to first be met. Among those, the commissioners court of each county has to approve the conveyance, the Transportation Commission has to determine that the proposed conveyance will improve overall mobility in the region, or at least is the most feasible and economic means of accomplishing these necessary improvements.

This section is required that the commission adopt the rules necessary for implementation. These rules are necessary for this new and existing legislation for the county toll road authorities. We did post it in the Texas Register, had a public hearing on November 26. Once again, we did receive quite a few comments; they've been reviewed and that input has been integrated into the rules that are now in front of you.

Once again, I'd be happy to address any comments related to these rules that you might have.

MR. WILLIAMSON: Members, do you have questions for or comments directed towards Mr. Russell on this agenda item?

MR. NICHOLS: So moved.

MR. JOHNSON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed will say no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RUSSELL: Thank you, commissioners. Agenda item 4(b)(6)(C) is a minute order authorizing final adoption for amendments to Chapter 27 concerning financial assistance to toll facilities. As you know, various governmental entities in the state operate toll facilities; most of these have electronic toll collection capabilities that will utilize transponders, and of course, transponders are the devices placed on or within a motor vehicle that are capable of transmitting information which will ultimately be used to collect or assess those tolls.

The department, of course, is in the process on our Central Texas project of implementing just such a system. Interoperability, as you all have been very focused on for the last couple of years, is very critical to us all. The basic definition of interoperability would be that the transponder technology that we utilize, say, here in Central Texas would be compatible with any technology in Dallas or Houston.

With the emphasis of project financing and development tools offered in 3588, the department and regional mobility authorities will contribute to the expansion of the network of toll facilities in the state. This anticipated expansion of toll facilities will increase the need for this user interoperability between electronic toll systems of the various governmental entities operating those toll roads. Interoperability will provide a seamless access across the state, regardless of the facility owner, adding the value and convenience for the toll road patrons.

The proposed amendments are intended to facilitate interoperability and to clarify the intent of the rules. Once again, these rules were posted in the Register and we received no comments. And I'd be happy to address any questions you might have.

MR. JOHNSON: Question.

MR. WILLIAMSON: John.

MR. JOHNSON: Phil, on interoperability, who's the gatekeeper?

MR. RUSSELL: Great question, commissioner.

MR. WILLIAMSON: I thought we settled on the Amarillo Chamber of Commerce.

MR. RUSSELL: Amarillo Chamber of Commerce is the gatekeeper on that.

(General laughter.)

MR. RUSSELL: Commissioner Johnson, right now we're really focusing our discussions through the Team Texas Organization. We had our last meeting in January and we had a breakout session to discuss nothing but interoperability. Dallas and Houston now are up and running and can interoperate between those; we are coming on line very quickly along with the CTRMA and others, and so I think it's more of a cooperative spirit as we move forward, and the goal, without a doubt, is we have to have interoperability when we come up and come online in about two to three years.

MR. JOHNSON: The same thing is applicable to the Bexar County RMA, the CTRMA, the Grayson County RMA?

MR. RUSSELL: Yes, sir. We had representatives from Bexar County, we had representatives from the toll bridges along the border, so it's been a very inclusive effort and I think we're making great strides.

MR. JOHNSON: Great.

MR. WILLIAMSON: Robert.

MR. NICHOLS: Just for clarification, we're not, through this, dictating what type of technology they use, we're just saying that it must be interoperable. We don't care which technology you use -- although we might have a preference, we're not requiring it, but it needs to work on ours and ours needs to work on yours. But we're carrying it up a notch; whereas, I've been to some of those meetings over the years and there was a spirit of cooperation but getting an agreement of which one we were going to use was difficult, and what we're doing here is more formally saying that if you're going to build one and you expect our financial assistance, we are going to require that whatever technology you choose is interoperable throughout these other systems.

MR. RUSSELL: Yes, sir.

MR. NICHOLS: That's it.

MR. RUSSELL: Yes, sir.

MR. NICHOLS: So there is a little bit of a stick -- there's not a little bit of a stick, there is a stick here.

MR. RUSSELL: There is a substantial stick.

MR. NICHOLS: But it's still in the spirit of cooperation.

MR. RUSSELL: Always cooperative. And really, Commissioner, apart from all the electrons and all the complex entities, our basic goal comes down to we want to make sure the customers have one tag and they get to use it anywhere, because they don't care about the electrons, they don't care about any of the business rules, they want one tag.

MR. NICHOLS: I understand.

MR. RUSSELL: So clearly our goal is to make sure it works.

Mr. Houghton?

MR. HOUGHTON: And that includes international bridges?

MR. RUSSELL: Yes, sir, we had representatives there as well.

MR. HOUGHTON: In El Paso?

MR. RUSSELL: I don't think the El Paso folks were there but they've been extended an invitation. We would love to have as many of those folks up and down the border as possible involved in our Team Texas meetings.

MR. HOUGHTON: Because they are currently now using that tag.

MR. RUSSELL: We think it's very important, and when you start expanding it, looking at Trans-Texas Corridor and some of the other issues, the implications are obviously very apparent.

MR. WILLIAMSON: Other questions or comments, members?

Phil, I just want to sort of repeat for reinforcement what Robert said, and I've said it before in this forum. Notwithstanding our great partners at NTTA and HCTRA and Central Texas RMA, in order for tolls as an alternative to adequate tax roads, in order for that to succeed, there is one basic marking tool that has got to be in place as soon as possible, and that's the ability for me to send my check or authorize a charge to my card to purchase one tag that's good anywhere in the state under any condition. That's real important; we need to begin marking that opportunity as soon as possible. So notwithstanding everybody's different viewpoint about it, we need to press forward.

MR. RUSSELL: We understand very clearly, Chairman.

MR. WILLIAMSON: Other questions or comments for Phillip?

(No response.)

MR. WILLIAMSON: Okay. Do I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: And a second?

MR. NICHOLS: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of passage will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed will say no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RUSSELL: Thank you, commissioners.

MR. WILLIAMSON: Thank you, Mr. Russell.

MR. BEHRENS: We'll now go to agenda item 4(c), if that's the will of the Chair, and then we can come back to Amadeo.

MR. WILLIAMSON: What we're going to do, if Mr. Monroe doesn't mind, is we're going to take a three-minute break.

(Whereupon, a brief recess was taken.)

MR. WILLIAMSON: Mike, let's return to the order of business, and I believe that we're on 4(c).

MR. BEHRENS: Yes, sir.

MR. WILLIAMSON: And I thank Mr. Monroe for allowing us to break ahead of him.

MR. BEHRENS: We'll go to item 4(c) which is Rule Review, and this will be presented by Richard Monroe.

MR. MONROE: For the record again, my name is Richard Monroe.

It's kind of embarrassing to come with anything this prosaic after all the important stuff, but this is part of a rule review program which we are required to do by statute. We filed notice of reconsideration of rules with the Secretary of State, published in the Texas Register, and the rules that we published for consideration are listed there on your cover page. No comments were received as to why these rules should be rescinded. The divisions involved believe that the need for the rules still exists. Therefore, if you approve this minute order, you will re-adopt those rules. I would request your approval of the minute order.

MR. WILLIAMSON: Questions for or comments directed to Mr. Monroe?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second. All in favor of the motion, signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, say no.

(No response.)

MR. WILLIAMSON: Motion passes.

MR. MONROE: Thank you.

MR. WILLIAMSON: Thank you, Richard.

MR. BEHRENS: We can reopen agenda item number 5.

MR. WILLIAMSON: And I wish to do so, please.

Amadeo, you don't need to go through your whole layout again but I want you to touch on two things: one, what you intend to do as far as reaching out and inviting people to begin to comment on what the plan ought to look like; and two, I want you to reinforce the fundamental guidelines on the second page.

MR. SAENZ: Yes, sir. What we will do, of course, we've presented it today and we hope that we can get some comment from each of our commissioners, for one, but this is a public meeting and we hope that anyone that has any comments or interest in providing some comments on this would contact either myself or Jim Randall here in Austin, and we will be happy to sit down and listen to them. And I will visit with Jim and with PIO and OGC to see what I can do to maybe solicit some comments from some of the stakeholders that have been working with us on the Mobility Fund.

MR. WILLIAMSON: So at a minimum it will be website.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: And then probably additionally it will be letters to known stakeholders.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: NTTA, North Texas Commission.

MR. SAENZ: That is correct.

MR. WILLIAMSON: HCTRA, Judge Eckels, probably all the county judges in all the major counties. In other words, you will at least send letters to El Paso and Tarrant and Dallas and Collin and Denton and Parker, all the major counties.

MR. SAENZ: The other thing that we will also do is probably get with the eight metropolitan areas through the MPO and MPO directors and get them involved. In fact, we're working with the working groups that helped us put together the UTP that you all approved this last year with the new funding formulas and the new streamlined UTP process and bring the Category 2 working group, for example -- which was the eight metropolitan areas -- together to get them some feedback on this also.

So we will try to get as much input as we can as we draft this plan together and then present it to you all. I would hope that we could do it in a month, but it may take me two.

MR. WILLIAMSON: And the fundamental guidelines?

MR. SAENZ: The fundamental guidelines that we're trying to look at is: one, we want to make sure we take a multimodal approach and that we understand that as we work with, especially in the big metropolitan areas, building highways is not going to be the only solution, you're going to have to have a complement of solutions, be it rail, be it public transportation, be it highways, and that's one of the requirements that we have put in place as to the big metropolitan areas that they will be required to look at as they put together their regional mobility plans.

Of course, we also want to stay with the idea that we're working with the regions and they're the ones that are putting this plan together and we will hold them accountable and work with them, and we'll hold them accountable through the determination of what improvements they're making to their congestion.

And of course, the other thing we want to do is we want to see how we can leverage the Mobility Fund as much as possible, and that is to be able to try to use the Mobility Fund where feasible to leverage it and build toll roads, because by building a toll road using the Mobility Fund, for example, as either toll equity or building it with the Mobility Fund but tolling it, you in essence create a new funding source that will be available for your area to build more projects.

As these big metropolitan areas put together their regional mobility plan, we're working with them, and they will be given an allocation -- as part of the mobility plan -- they will be given an allocation. They are working right now on their needs-based plan.

This is a non-financially constrained plan. Now, when we provide them the allocation that's available to them, they will be able to say: Okay, based on that I can reach down and do my first ten projects, but I've got twenty projects to do so I've got to come up with some kind of funding or additional funding to make up the difference or the gap, as we said.

They will be able to use the Mobility Fund to help leverage this, and using the Mobility Fund, as well as some of the other tools, through toll projects they can stretch on down and do more of the projects that are in the gap, you might say.

We will be putting this thing together, we'll do some public outreach, get some comments, put some stuff together following these fundamental guidelines and then some guidance that you might offer.

MR. WILLIAMSON: Now, each one of the commissioners, I know, has questions and comments, and we're fixing to turn them loose on you, but I want to give you two examples and I want you to either affirm or not affirm that I understand it correctly.

The Mobility Fund is not restricted to constructing highways.

MR. SAENZ: That's correct.

MR. WILLIAMSON: The Mobility Fund could be used to construct commuter rail.

MR. SAENZ: That's correct.

MR. WILLIAMSON: It could be used for internal combustion machine transit vehicles, buses, taxicabs, that are publicly regulated.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: So it's entirely possible if one were sitting in the audience and thinking of the implications of this, and if one said, you know, I don't remember the mobility plan being discussed as seed money for toll roads back when it was sold to the voters, it's entirely possible for that person to say, on the other hand, I don't remember the fact that it's so robust in its different applications being discussed by the voters. And in fact, certain parts of the state might wish to take their allocation of the Mobility Fund and buy a dollar's worth of road and pay cash for it; some might wish to take their allocation and buy four dollars' worth of debt and build a toll project.

MR. SAENZ: That's correct.

MR. WILLIAMSON: In some parts of the state, particularly those parts of the state that seem to be most interested in a regional transit system, might choose to say we'd like to take our allocation and do a combination of toll roads and regionalized transit.

MR. SAENZ: That's correct.

MR. WILLIAMSON: So if you were from the Dallas-Fort Worth area where there's a lot of discussion about regionalizing the transit effort, and maybe beginning to reexamine the relationship of the sales tax to individual transit authorities, one might could really let their mind expand and say you know, this is our opportunity to homogenize our sales tax through every city and maybe lower it in some, and take our Mobility Fund as the revenue we need to recreate a regional transit service. That is possible.

MR. SAENZ: Yes, sir, that is.

MR. WILLIAMSON: And there is a deference at this commission for toll projects, but access to the Mobility Fund is not necessarily limited to that.

MR. SAENZ: That's correct.

MR. WILLIAMSON: And thank you for clarifying that. And I know members have questions, so who's first? Robert Nichols, he's first.

MR. NICHOLS: Oh, I thought we were going to go to the younger members.

The magnitude of the transportation problem, particularly in the urbanized and metro areas, is so great that we need to find every opportunity to leverage, to multiply the effect of this shot in the arm the legislature gave us. When they say Mobility Fund, that tells me get things moving.

I think it is fair to take a very large portion of that, the preponderance of it -- I think the way we're doing the expansion money on the UTP is taking a minimum of two-thirds as an example -- and these are just discussions -- and apply that at least a minimum of the two-thirds goes to the metros and hold out or lay out an allocation much in a similar fashion that the task force came up with so that each would know proportionately what they have to work with, hold that money out there for them so that they can apply it on projects that can be leveraged.

When I say leveraged, I have a preference for tolling, and I think each of these areas has an opportunity to do toll projects and see what they come up with, but it needs to be held out there for them. Of course, they may choose to put it on transit or light rail or whatever, that's fine. But on the highway projects, the leverage, I think, is very, very important because a bonded leverage where they kick in local money off a bond issue to leverage a project doesn't build future revenues to solve the massive problem that's coming at them -- or at all of us, that's on us now.

But a toll-type, something that develops to not only help solve the problem today but generates a solution with options of how that solution is done in the future is extremely important. So I have a preference that that money be used for that but be laid out in a proportional manner to each of those metros and giving them a reasonable period of time to come up with projects that fit that bill. That's the seed corn for a massive wave of projects today and revenue sources for tomorrow.

But if those communities choose not to leverage that shot-in-the-arm the legislature gave us, and after a reasonable period of time -- which I'm not quite sure what that is -- we'll know whether or not they're pursuing that direction or not, and if all they're going to do in that community is apply that to another project, while we have other communities who are willing to do that, I have a preference that that money, once we've gone past that reasonable period of time, that money be divvied up among the metros that are in trouble who are willing to leverage it. That's my feeling.

I guess you took notes on that, didn't you?

MR. SAENZ: It's going to be on the record.

MR. NICHOLS: I understand; that's about as on the record as you can get.

MR. WILLIAMSON: Members, this is a good time to give Mr. Saenz some direction.

MR. JOHNSON: Well, I have an observation followed by an impression that's probably similar to Robert's. The observation is this: this is the first new money, if you will, that the department has received in quite some time; it's not encumbering future Fund 6 revenues to amortize the bonds which will be floated through the Mobility Fund, and so to my way of thinking, this is the first new money that we've received in some time.

I think it is entirely appropriate and the right thing to do that we are setting a template of how we're going to deal with this infusion of new money, and so from that standpoint, I think this is absolutely the correct thing to do: let people know in advance the considerations and the parameters that are going to be used for the treatment of this new money.

I have said often that the most daunting challenges we have, and likewise the most expensive challenges we have, is what is going on in the mobility issues in our larger metropolitan areas, so it follows, at least in my way of thinking, that we should commit to using a substantial amount of these new funds to go where our most daunting challenges are, and that's in the metropolitan areas.

Now, the breakdown of how and how much and where, I think we need to go through that mine field, if you will, and come up with something that clearly -- even the respondents of the poll when we were trying to determine the goals which the users of the system thought that TxDOT ought to hold near and dear, the meaningful and measurable goals, mobility and congestion were at the top of the list. I think this gives further fuel to giving the preponderance of this new money, if you will, to our populated areas.

MR. WILLIAMSON: Ted?

MR. HOUGHTON: Well, I have to chime in on the template issue and the carrot-and-the-stick approach. If we give a community a buck and they decide to spend that buck on a tax road and not leverage that, I think a lot of communities -- I'm not prejudging but I'm just thinking out loud -- could in fact say we'll take the easy way out of this and we'll continue just to get in line for our funds, but I would think that we would want to encourage or provide that template that Johnny is talking about for the use of these funds for serious consideration as to how they get used and the leveraging effect on the funds instead of taking a dollar and spending a dollar instead of investing a dollar into the future.

That's my quick and easy.

MR. WILLIAMSON: Hope?

MS. ANDRADE: Mr. Chairman, I'd first like to thank you for this opportunity to have an open discussion, and also to welcome the public to help them understand that we're also trying to understand this.

I think one of the things that I'm worried about is how do we ensure, what criteria are we going to put to make sure that our committees don't get into a bad debt, that they borrow and a project is not good? Are we going to have some criteria on the feasibility studies?

MR. SAENZ: We will be working with them closely and reviewing their feasibility studies. In fact, a lot of the communities we're working with right now and doing some of the early feasibility studies ourselves, and of course, the other thing is if they go into debt, the people in the market are also very watchful and they ensure that the feasibility studies that are being presented by the people that want to come and borrow their money are good and reliable, and they have a lot of experience in that.

But I guess through working together we should be able to address a lot of those concerns.

MS. ANDRADE: My biggest fear is that we leave our grandchildren in debt.

MR. SAENZ: That's correct.

MS. ANDRADE: Okay.

MR. WILLIAMSON: Amadeo, I only have one comment. To the extent that you can warn the metros who might be interested in taking their share and at least considering something in the area of public transit, we ought to require -- well, require is a bad word -- we ought to expect a firm commitment from the EPA on the mobile source solution credits we receive as a result of this investment in an area. In other words, something that might make a big difference, again, in my part of the state where air quality is becoming a very important issue.

MR. SAENZ: I think it's something that is just like everything we do, as this program gets rolled out -- as Commissioner Johnson said, this is new money -- it will bring in new projects or will bring in projects faster and they will be transportation projects. But in the areas that are in the non-attainment areas, they will have to redo their model and we need to be working closely, I agree, with the federal resource agencies to make sure that proper credit is given when those projects that will result in improvements to air quality are put in place.

MR. WILLIAMSON: In other words, clearly when you take a buck and put four in debt to build a toll road, that's an investment, but it could also be said that it's an investment in Dallas County's fear of being shut down by the EPA to say we're going to take the dollar and instead of building a toll road, we're going to do this train business that will get us 21 tons a day of credit which puts us five months further down the road or whatever before we go to non-attainment. That's the point I'm trying to make. Ted put it best: We ought not to make it easy to take the easy way; we ought to say there are strings associated -- I don't want to say attached -- associated with these decisions. That's my individual observation.

MR. NICHOLS: We're in discussion. If they choose the transit or light rail or whatever, would we want to see any type of information if that money is spent in that form that there is some reduction in congestion?

MR. WILLIAMSON: In my view, that's a great criteria.

MR. SAENZ: We have been working with TTI to develop what we call the Texas Congestion Index that takes into account not just automobile congestion but it takes into account overall congestion. So we will be able to measure the improvements of congestion with whatever system they put in place, and it will be across modes.

MR. WILLIAMSON: In fact, I want to give you a living example that Amadeo and Hope and I had the opportunity to witness just a couple of weeks ago, and you may be familiar with this, and I think you are, John. And that is the opportunity to move part of the UP Line in the Brownsville-Harlingen area that at first blush it appears it's just like a railroad deal, but as it turns out, by moving the line, we avoid how many grade separation projects?

MR. SAENZ: Seventy-nine.

MR. WILLIAMSON: We eliminate 79 at-grade intersections which, in turn, improves mobility in that area by a certain percent which, in turn, reduces congestion and pollution. But unless you inspire those regions and unless we inspire you to use those kinds of outcomes as measurement, sometimes we overlook that kind of thinking outside the old line decision-making.

Just in closing, don't think we're not united. We're all focused on toll roads; there's not any question about that.

MR. SAENZ: I think you've given us some good starting -- I won't say marching orders but starting guidance that will help us put kind of a stick man in, and as we get some comments from our stakeholder partners, we will be able to come forward and we'll bring you a good plan.

MR. WILLIAMSON: And since this is the first step, Amadeo, let's be aggressive and bright and cheery. Let's reach out and say: Okay, we're kind of going down a new road here; you've got the opportunity to help us decide what our first rules are going to look like, so if you don't complain now, don't complain later.

MR. SAENZ: That's good. I like that.

MR. WILLIAMSON: You don't need a motion on this item, do you?

MR. SAENZ: No, sir, this was just discussion.

MR. WILLIAMSON: Thank you very much.

MR. SAENZ: Thank you.

MR. WILLIAMSON: Mike, where are we at, buddy?

MR. BEHRENS: We're on agenda item number 6, our Transportation Planning minute orders, the first being agenda item 6(a) which concerns the acquisition of abandoned rail in Fannin and Lamar Counties.

MR. WILLIAMSON: And Jim, Mr. Houghton would want to know that, along with myself and a few others, you share that satanic symbol he was so concerned about.

MR. RANDALL: To the bone.

MR. WILLIAMSON: To the bone.

MR. RANDALL: Sorry, Mike. You knew that when you hired me.

My name is Jim Randall; I'm director of the Transportation Planning and Programming Division.

Item 6(a), this minute order approves the department's acquisition of a 33.5-mile rail facility in Fannin and Lamar Counties between Paris and Bonham, for an amount not to exceed $601,995. Transportation Code, Chapter 91 authorizes the department to acquire abandoned rail facilities. Approving this type of acquisition requires the commission to consider the local and regional economic benefits realized from the disbursement of funds to acquire the rail facility in comparison to the amount of the disbursement.

Title 43, Texas Administrative Code, Sections 15.150 to 15.153 require the department to request that a municipality, county or rural rail transportation district in which all or a segment of the rail facility is located to provide documentation concerning the local and regional economic impact of an abandonment. If a determination is made that there is a need to acquire the rail facility, the rules require the department to conduct one or more public hearings in order to receive public comment on the proposed acquisition.

Both the Union Pacific Railroad Company and the Texas Northeastern Division Mid-Michigan Railroad, Incorporated, have filed notices of exemption with the Surface Transportation Board for the Union Pacific to abandon -- and the Texas Northeastern to discontinue service over the 33.5-mile rail facility.

After negotiating with the Fannin Rural Rail Transportation District, Union Pacific has agreed to sell the rail facility for a purchase price of $601,995. Since the rail district does not have the funds to purchase the facility, the rail district has asked the department to grant the funds needed. The rail district is in agreement with the department's acquisition of the facility and leasing its management and operations back to the rail district.

The department has determined, based on the information obtained concerning the local and regional economic impact of the abandonment from the rail district, and upon the notices filed by the Union Pacific Railroad and Texas Northeastern with the Surface Transportation Board, that there is a need to preserve the rail facility for continued rail service. The department has determined that the purchase price is indeed $601,995 and is fair and reasonable.

Exhibit B to the minute order contains a summary of public comments on the proposed acquisition, following a public hearing that was held at the department's Paris District office on February 9, 2004. Staff has evaluated the rail line based on the criteria prescribed in Section 15.153 of the rules, and recommends your approval of the acquisition of the rail facility. Continuing this rail service will preserve a regional transportation alternative through Fannin and Lamar Counties as necessary for rural economic development opportunities. Staff recommends your approval of this minute order.

MR. WILLIAMSON: Thank you, Jim. Members, we have several who will comment on this agenda item.

I'm going to let you decide, Mr. Phillips, do you want to go first or last?

MR. PHILLIPS: Go first.

MR. WILLIAMSON: Members, if you haven't met Mr. Phillips, Representative Phillips serves on the House Transportation Committee; he's a younger member. He's one of the eight or possibly ten House and Senate members who are responsible for so much of the legislative success we enjoyed the last session, and we're deeply -- again, deeply grateful for your commitment to transportation.

MR. PHILLIPS: Well, I appreciate that, and I didn't come back again this month to hear those comments, but it was a monumental process for all of us working together, and I appreciate those kind words.

With this project, I kind of got brought into it a little bit late in the process. It's something they've been looking at and want to first thank the commissioners and their staff in helping with this, and some of them worked a little bit harder, and the department as well. I know that Mario Medina did yeoman's work on this in Wayne Dennis's office, and appreciate the excellence that went about in looking at this whole project.

This project is about economic dollars and lives in a rural part of Texas that I represent, and it's a stretch that I think is real important that we continue. It goes from in Fannin County over to Lamar County which is Paris, Bonham to Paris, so to speak. If something were to happen to this line in the future, Paris would have no rail except for north over the Red River to Oklahoma, and so we need to make sure that we keep these corridors open, especially with the possibilities in the future, and that's why I think this is a fine -- you voted on these rules last month and this would have probably been brought before the commission earlier, but they wanted to get the rules in place, and that was a great process to go through.

I'm just here lending my support to this project. I know that Representative Mark Homer, who represents Lamar County -- it's one of his several counties -- wrote a letter that was read at the public hearing. I want to commend the TxDOT staff on that hearing. Although I was down here at an interim Transportation Committee hearing, they had an excellent presentation and I had really good feedback that they came, they explained to it, and the citizens that showed up and had an interest really had a full understanding of what was taking place and left there saying we understand that and they were very helpful. So when you have people from Austin come and explain things like that, it sounds like it was a real success, and so I just appreciate that effort and I think it's a good effort to go through on these projects that we're looking at.

I'd like to introduce two people who are not going to speak: Shane Wallace and Gary Blackburn are here in the back of the room. They're citizens from Fannin County, two community leaders in Fannin County, and they came up with our county judge, who I'm going to introduce, and you can call him. Our County Judge Derrell Hall has worked very hard on this project. He's right behind me, and he's going to speak first, and I think introduce and lead into someone else.

But I do thank you for your consideration and would ask that you vote supportive of this. Any questions?

MR. WILLIAMSON: Members, any questions?

MR. NICHOLS: Well, I was going to wait till I heard it all because he may answer some of the questions before I ask them.

MR. PHILLIPS: As far as specifics, I think that probably would be better.

MR. NICHOLS: I'll hold my questions but I would like to make a comment, and I'm going to echo the comment by the chair that we appreciate what you've done, but I also wanted to note to the judge and to the people back there from Fannin County that every time I got north of I-20, Representative Phillips tackled me about this project. He bulldogged this thing to make sure not that it wasn't right, it was right, but to make sure that it got the attention it deserved. I don't know how many phone conversations we had and face-to-faces on it, but I thought you all ought to know that he has worked quite a bit on this.

MR. PHILLIPS: I appreciate that, and I appreciate the courtesies extended because it was mutual. TxDOT has been busy and you guys and gal have been busy with all of these rules and going through this. I know it's monumental, and so to see us so quickly -- we were concerned. This was a project that we statutorily had authority to probably do that before 3588, but with 3588 we've clarified and expanded and changed somewhat this particular authority of TxDOT. So it was good to see that the rules didn't take years to get implemented, the projects came and we continued. So I thank you very much.

This is Judge Derrell Hall, county judge from Fannin County. You may want to call him.

MR. WILLIAMSON: Okay, the chair recognizes Derrell Hall.

JUDGE HALL: Thank you, Mr. Chairman, commission members. I want to be the next person to toot the horn for Larry Phillips. He's a great representative for us, and Mr. Nichols, I know that he has pestered you considerably.

MR. NICHOLS: I didn't say pestered, I said tackled.

JUDGE HALL: That's because I've pestered him considerably.

MR. WILLIAMSON: I love this: you all got pestered, got tackled, got bulldogged. Man, this guy is something.

(General laughter.)

JUDGE HALL: We appreciate your kindness in hosting us here today and having this item on your agenda for your consideration.

I also want to toot the horn a little bit for Mario Medina from the Multimodal Section. I met Mario last July at a meeting in McKinney, Texas, and as was mentioned earlier, he has poured himself into this project. And we appreciate the hard work that staff has put into this project, and I commend Mario for the hard work that he has put into this project, the many hours of labor that he's poured into this project that we feel is important for us.

Many areas of the state would look at this as a very small project; for a county such as ours, it's extremely important. We are an agricultural and rural county; the industries that depend on rail service in Fannin County are predominantly rural and agricultural in nature. It's extremely important that we be able to retain this, the final cross-county rail line in Fannin County for the benefit of those industries and for our local economy.

We just appreciate your consideration of this proposal and ask that you act favorably on the recommendation of staff that you approve the purchase of this 33-1/2 miles of line.

I would like to introduce someone who has worked with our Fannin County Rural Rail District since about 1999, and many of you are familiar with him, Mr. John Helsley, our consultant in this project. Thank you all.

MR. WILLIAMSON: The chair recognizes Mr. Helsley.

MR. HELSLEY: Thank you very much.

Chairman Williamson and members of the commission, I'm John Helsley, president of Community Rail Development Corporation. We basically travel throughout the state of Texas developing rail districts, and most of our work is in rural areas of Texas. To date we've had roughly 28 rail districts developed consisting of over 70 counties.

I had a full head of hair when I started working with the Fannin County project, and it's been a very interesting endeavor, and I want to especially thank James Randall, Wayne Dennis, Mario Medina, Gil Wilson and Will Dewand for their continued assistance with this effort. It's been a very difficult endeavor and we could not have done it without their persistence and assistance.

I want to thank specifically Judge Hall and the members of the rail district. We formed this in '99 and we had a lot of meetings that there wasn't a whole lot to talk about, but generally we created the district to protect and preserve and enhance rural rail transportation in Fannin and Lamar Counties.

The petition is to let TxDOT acquire the right of way from Union Pacific, lease it to the rail district and let the rail district be responsible for upgrade, restoration, and also bringing in an operator for the line -- that's what our proposal is today.

MR. NICHOLS: I don't want to interrupt you, but I was trying to make sure I knew exactly. You're saying us own it and lease it to you all.

MR. HELSLEY: Yes, sir.

MR. NICHOLS: Okay, got it.

MR. HOUGHTON: Do you have an operator?

MR. HELSLEY: We have several operators. Since the word has gotten out that this line was going to be rehabbed, we've had numerous operators come to the table. Since their understanding that the line was going to be acquired by TxDOT and restored by the rural rail transportation district, there's been a lot of interest from operators. We've had numerous operators; we've had some that have helped us develop our business plan, future operational projections, that type of thing. So we don't think operations is a major concern at this point.

MR. NICHOLS: Do you want to speak on the maintenance or rehabilitation or upgrade?

MR. HELSLEY: Yes. After several attempts to high-rail the line and give us some estimates on restoration, it's our belief that it's going to take us within probably $2-1/2 to $3 million to do the restoration on the line.

There's a lot of vegetation, there's trees that have grown up in the right of way in between the rail ties and the rail system, so there's a tremendous amount of growth that will have to be taken out. We'll have to bring in some new ballast to help support the underlying foundation of the rail; we will have to do a tie replacement program. Those will be the initial phases of our restoration: tie replacement and ballast replacement.

The weight of the rail is roughly 85-pound rail which is light in today's standards of rail construction. We realize that over the period of the next few years we're going to have to replace some rail, but right now we feel like the tie replacement, ballast and some stabilization will help us at least get the traffic flowing, and this would move the traffic probably in the range of 25 to 30 miles per hour.

We've had several industries that used to use rail; they have gone to trucking, and they have told us that if we don't get rail, if we cannot move our goods and our products by rail within a reasonable period of time, we will probably just have to phase out our operations. So job retention is a big issue in this project.

We've already been talking to numerous groups about grants; we've talked with the Texas Department of Ag about some Texas Capital Funds; we've talked to some federal authorities about some possible monies to help us with restoration. So we think the odds are very good that we're going to be able to go out and acquire the funds to restore the line.

We've talked to several other lending groups. The Federal Rail Administration has a program called the RIF, Rail Infrastructure Financing, and it's a low interest bearing type of program of rail rehabilitation. But we have determined that if TxDOT purchases the right of way, that you would be the sole owner of the 33.5 miles of line currently owned by the Union Pacific. We would not be able to use that real estate and the improvements as collateral because of it being under the TxDOT ownership. So therefore, we're going to have to go out and seek some grant funding to help with restoration.

We anticipate through our operational plan that was submitted back to TxDOT, we anticipate in the first year of operation roughly 1,500 rail cars moving over this line in the first twelve months of operation. This would directly move roughly 5- to 6,000 truckloads off of our highways. And these goods and products that would be using our rail, their destination points are Fort Worth-Dallas, Houston, and New Orleans which have major air pollution problems. We've looked at the maintenance factor reduction of wear and tear on our highways by moving these products back to rail.

MR. WILLIAMSON: Other questions, members? Mr. Nichols?

MR. NICHOLS: Comments, questions. In the packet there was a list of economic development -- in other words, jobs, dollars in the community, things like that. You have neither commented on those but there was quite a bit of information related to that.

MR. HELSLEY: Yes. Job retention is the big issue right now in protecting the industries that would be potential users of this rail, but this does not include any new economic development opportunities developed in Bonham, in the Bells area, possibly, in the Paris area. This will give Paris and our friends in Lamar County a new gateway to the west by utilizing this rail system. So right now they go to the north, over the RailTex Line, the old Kiamichi Rail Line, so this provides them dual access to metropolitan areas.

MR. NICHOLS: It's in our books so I just want to make sure it's on the record, there are studies that you have done to show the economic payback on that thing.

MR. HELSLEY: That's correct.

MR. NICHOLS: In addition to the actual movement of freight whether it's on a road or not.

Judge, I want to compliment you or commend you on having the foresight to try to save this rail and get it going back, because really and truly most people don't seem to recognize the importance of long-term economic viability of your community and the businesses that you might get in the future or might lose in the future, and without the rail, those opportunities would be lost forever, literally. With the rail and your working to bring it back up, that opportunity will be in your community and your whole county and those jobs, so that's real important.

Unfortunately, in the state in the last two decades, we've lost 4,000 miles, in the 1980s and '90s, Texas lost 4,000 miles, 30 miles at a time. It's absolutely amazing. I'm hoping that communities like yourself will not only help save those things but put them back together and keep our businesses competitive with other states and stuff.

Are you ready for a motion?

MR. JOHNSON: I have one question. John, you mentioned that due to the fee being owned by TxDOT that that wouldn't serve as collateral for an FRA loan, and so to get the money that you think is necessary to bring the line back into usable condition, you're going to depend on gifts and grants. In your experience, do you believe that obtaining these gifts and grants is highly likely?

MR. HELSLEY: Yes, sir. The Northeast Rural Rail Transportation District was successful in getting a $2 million grant back several years ago to help with the acquisition of that. Just recently I've been involved in the South Orient project and we were notified by our congressmen, Charlie Stenholm and Henry Bonilla, that we were going to get a $5-1/2 million grant to help us in continuing maintenance issues on the South Orient. So we're very confident that we can get these funds, and we're already laying the groundwork to visit with our allies in state levels and federal levels to secure these grants. We may have to go through four different vendors, but we're going to get there.

MR. WILLIAMSON: Other questions or comments, members?

MR. NICHOLS: So moved.

MR. WILLIAMSON: Jim, is there anything else you need to tell us?

MR. RANDALL: No, except I need for Mario to raise his hand. The two new commissioners haven't met him, so go ahead, Mario.

(Applause.)

MR. WILLIAMSON: We're going to start calling him "UP Medina."

MR. JOHNSON: I'll second the motion.

MR. RANDALL: I'll let you call him that; he's a big old boy.

(General laughter.)

MR. WILLIAMSON: Okay, we've got a motion and a second. All those in favor, signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All those opposed, no.

(No response.)

MR. WILLIAMSON: Motion passes. Thank you, Jim.

MR. RANDALL: Thank you, sir.

MR. NICHOLS: Let me ask one more question. Maybe I could ask it later but I think it's more appropriate. Because you are going to have to have an agreement between the rail district, just so that everyone knows up front, TxDOT is going to be very patient in watching the maintenance and rehabilitation, and we're going to lease out and you use the line and stuff like that, but if something happens over an extended period of time, let's say ten years from now or 15 years from now, you might not still be judge, and the community may just no longer choose to support that -- I don't know.

But if we ended up with an extended period of time of non-use, then TxDOT at some point might pursue other options. One option would be to encourage you and give them another shot at it, whoever is in charge; it might be to utilize that right of way for roadways or pieces of the Trans-Texas Corridor -- but I don't know where all that's going yet -- or some of these other options.

And then if it doesn't do all that, the State then has the right, obviously, to scrap and salvage and stuff like that if we can't find any other use for it. So that flexibility needs to be in there but with reasonable protection for their county.

MR. RANDALL: Yes, sir.

MR. NICHOLS: I don't know how you word that, but I'm sure our executive director and our counselor do.

MR. WILLIAMSON: So that motion passed, and we'll say once again to Mr. Phillips, thank you very much, sir. And Judge, you're exactly right, you have one of the good ones, and is that what you wanted?

(General laughter.)

MR. WILLIAMSON: We were happy to be part of it.

MR. BEHRENS: Commissioners, agenda item 6(b) is going to be deferred, so Jim will continue on with 6(c) and (d), and those two minutes orders.

MR. RANDALL: Yes, sir. Item 6(c), we bring to you the second quarter program for economically disadvantaged counties to adjust matching fund requirements. In your books is Exhibit A that lists the projects and staff's recommended adjustments for each of the. The adjustments are based on the equations approved in earlier proposals. There are 32 projects in eleven counties; the total reduction in participation for these projects is $1,403,266. We recommend approval of this minute order.

MR. WILLIAMSON: Questions or comments of Mr. Randall on this item?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: Do I have a second?

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of passage, please signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, say no.

(No response.)

MR. WILLIAMSON: Motion passes.

MR. RANDALL: Okay, sir, item 6(d). This minute order appoints seven members to the Port Authority Advisory Committee to serve staggered three-year terms. House Bill 3588, 78th Legislature 2003, amended Transportation Code Section 55.006 to create the Port Authority Advisory Committee. The amendment merged certain duties from the now defunct Texas Department of Economic Development's Port Transportation and Economic Development Advisory Committee with the department's Port Authority Advisory Committee.

The committee will provide a forum for the exchange of information between the Texas Transportation Commission, the department, and committee members representing the Texas Port System and others who have interest in ports.

The following four individuals are recommended to serve terms expiring February 26, 2007: Mr. Wade Battles, Port of Houston Authority; Mr. Chris Fisher, Port of Beaumont; Mr. John LaRue, Port of Corpus Christi; Mr. Raul Besteiro, Port of Brownsville.

The following three individuals are recommended to serve terms expiring February 26, 2006: Mr. Steve Cernak, Port of Galveston; Mr. Pete Reixach, Port of Freeport; and Mr. Robert Cornelison, Port of Port Isabel.

Your approval of this minute order is requested.

MR. WILLIAMSON: Is there discussion or comments directed towards Jim on this matter?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: Do I have a second?

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of passage of the motion, signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, say no.

(No response.)

MR. WILLIAMSON: Motion passes.

I deferred my question and discussion about this till the end because I wanted to finally release Mr. Phillips so he could leave.

I want you to tell me, Jim, real quickly, and I want you to tell the commission what you can about the use of toll credits to help finance commuter rail in our state, or what you can't tell us but what you will research and tell us about that later on.

MR. RANDALL: Well, not being the toll credit guru of the department -- I believe Mr. Bass is -- basically toll credits can be used toward the non-federal share of any funds that are available either under Title 23 which is the highway portion of the federal act, or Title 49 which is for transit, and if you're going to use them toward transit projects, then it could be used toward either light rail or commuter rail.

MR. WILLIAMSON: Let me give you an example, and if you don't know this, perhaps you could report back to the commission.

MR. RANDALL: Yes, sir.

MR. WILLIAMSON: US 90, Houston area, there's a Union Pacific line that Judge Eckels would like to make part of a broader Harris County commuter rail system. Union Pacific would like us very much to help them expand those rails, build more rails in order to make that happen, and we've got a study going on I think Mario is participating in.

MR. RANDALL: Yes, sir.

MR. WILLIAMSON: Are there federal funds available for the conversion or addition of that rail as commuter rail, and if so, does access to those federal funds depend upon state share, and if so, do toll credits qualify as that state share. Those are three questions.

MR. RANDALL: I'm going to have to research those, to be honest with you. But from my understanding, those funds would be available from the Federal Transit Administration to do that type of work, but if you'll give me a chance to research that.

MR. WILLIAMSON: That is the type of question I'm interested in answering. And there are others in the state: US 90 in John's area; I think there are some in Ted's area; I think there are some in Hope's area; Robert and I live in parts of the state that just don't have anything but horses and toll roads.

MR. NICHOLS: Wagons.

MR. WILLIAMSON: Wagons and taxicabs. But there must be a project you can use as an example in the San Antonio area; I know there's one in the El Paso area because a certain senator never lets me forget about it; and then there's US 90 and I think 290 in Harris County. And what I want you to do is do the research and come back next month.

MR. RANDALL: Okay.

MR. WILLIAMSON: Because each of us are under some pressure to release toll credits for use in buying buses, and some of us wish to not use those toll credits for buses if they can be used to gain greater leverage in getting commuter rail systems up and running.

MR. RANDALL: Very good, sir.

MR. WILLIAMSON: So maybe for us to make a good decision and to be able to tell our public transit bus friends who want all those toll credits that maybe we're going to have to learn to share them, maybe we should base that off of some hard facts about how much leverage can we get. Because if we can't give them much leverage, then there's no reason to keep saying no, we need to release them to buy buses.

MR. RANDALL: Very good. Look forward to it.

MR. WILLIAMSON: Thank you, Mike.

MR. BEHRENS: Agenda item number 7 is a minute order handled by the Turnpike Authority and this would be to authorize payment for work product for unsuccessful proposers on our 45 Southeast project. Phil.

MR. RUSSELL: Thanks, Mike. Again for the record, I'm Phillip Russell, director of the Turnpike District.

This minute order would authorize payment for work product for unsuccessful proposers on the State Highway 45 Southeast project currently being developed by the Austin District in Travis County.

The Transportation Code requires that the department pay unsuccessful proposers who submit a CDA project to be paid a stipend. Now, that stipulated amount must be stated in our request for proposal and it may not exceed the value of any work product which is contained in that proposal.

On September 12 of 2003, the department issued a request for competing proposals and qualifications for the development of State Highway 45 Southeast in Travis County which would connect up Interstate Highway 35 with the juncture of US 183 and State Highway 130. The department intends to issue a request for detailed proposals to develop this corridor on or about March 25 of this year, next month.

The department anticipates receiving detailed engineering design and other information from the short list of proposers that may be used by the department. A payment for this work product would allow the department to use the work product not only for the benefit of State Highway 45 but also any other projects across the state. Now, the stipend is intended to defray some of the costs for developing these proposals; it's not intended to reimburse these proposers for all of their costs.

On the State Highway 45 project right now we estimate it to be about $150 million, and through this minute order, our recommendation is that we would pay a stipend of .15 percent, and if you do the math on that .15 percent on a $150 million project, it would amount to $225,000 to each one of the unsuccessful proposers. So right now on this procurement we have four teams that are involved, we had three unsuccessful proposers, doing the math would amount to $675,000.

Now, on 130, the amount that we paid for the unsuccessful proposers was higher than that but the percentage was lower, and we've looked at various analyses, and we think that .15 is about correct. The project is smaller but the amount of work and effort they're putting in is very comparable, and of course, the amount here of $225,000 is probably less than a fourth of what we paid on the State Highway 130 project.

The other thing that we would mention, too, if for some reason this procurement was canceled, then we would also recommend that the proposers that make the minimum criteria would receive $200,000 as a flat amount to all of the proposers. And again, the reason for that is to kind of protect all of those proposers. They always have nervousness when they enter into these sorts of endeavors whether the political will or whatever the case may be would fade away after they've invested significant time and effort and money, so that would provide at least a minimum allocation for them if for some reason we chose to stop the procurement process.

Again, we recommend approval of this minute order and I'll be happy to address any questions -- which I'm sure you have.

MR. WILLIAMSON: Well, I think it's safe to say that Mr. Johnson and Mr. Nichols and myself have a pretty deep knowledge of this process, but it may be the case that Mr. Houghton and Ms. Andrade might not. So maybe slow down a little bit and use a non-engineer -- use a legal approach since you're both -- well, don't do that. Take like one minute and explain exactly what it is that we're doing.

MR. RUSSELL: Sure. The issue of a stipend is essentially, again, paying unsuccessful proposers, potentially in an effort to defray some of their costs to develop this project.

MR. WILLIAMSON: Unsuccessful proposers in response to a comprehensive development agreement which is a sort of design-build or turnkey proposal -- not quite but it's sort of -- and it's unlike anything we've ever done in Texas.

MR. RUSSELL: You're exactly right, Chairman. Most of these consultants and contractors, as the price of doing business, are used to providing proposals for a normal engineering project for the department, requests for proposals. Construction companies do the same thing when they estimate a project on the low bid, maybe they're successful, maybe they're not, but they eat that cost as part of their business development process.

The chairman is exactly right: on a comprehensive development agreement, it's a level up and it takes quite a bit more level of effort, money and everything else, and for us to essentially compete so that we do get good competition, we get plenty of those firms involved in our proposal process, a stipend is one way to help get those firms involved in the process.

I might mention that as I've talked to the private sector in the industry, when they start looking at projects in Texas or any other state, they look at all the attributes of the project, of whether they choose to invest that time and effort and capital into it, they look at political will, they look at management team, they look at all that, and the issue of stipends is always critical to all of those private sector teams.

So in this case we think the .15 percent which would be .15 percent of the successful proposers price would be an adequate level of a stipend. We've canvassed the entire country, we've looked at what ranges typically are paid by other entities, and typically they range somewhere between .1 and the ceiling maybe a .3, and dependent on this particular project, complexity, size of the project, we think a .15 percent is about the right amount.

MR. WILLIAMSON: And who are the three unsuccessful proposers who are going to get this boondoggle?

MR. JOHNSON: They're not known yet.

MR. RUSSELL: Well, we don't know who the three will be.

MR. WILLIAMSON: So I can't ask if former executive director Burnett is one of these?

MR. RUSSELL: He is definitely one of the proposers; whether he's going to be successful or unsuccessful is yet to be determined.

MR. WILLIAMSON: He tried to cut his hair like Ric but didn't fool me, I recognized him.

MR. RUSSELL: He wants to be like you; it's a short haircut.

(General laughter.)

MR. WILLIAMSON: Do you need to explain anything else to us members? Ms. Andrade?

MS. ANDRADE: So that was my first thought is this the cost of doing business because these are apparently larger projects, but what you're telling us is that other entities when they request something like this, they pay a stipend?

MR. RUSSELL: Most do; it's not always but most do.

MS. ANDRADE: And we're not setting a precedent on projects?

MR. RUSSELL: No, ma'am. We did pay a stipend on State Highway 130. Just order of magnitude, that was a billion three project; the stipend we paid was $1.3 million to the two unsuccessful teams. So it's a very competitive market. Just to give you a little order of magnitude, I am told that each one of those teams spent somewhere in the neighborhood of about $3 million apiece to propose on State Highway 130, so I think by most accounts that probably goes above and beyond just the cost of doing business, and a stipend is an intent to, again, defray some of those costs.

MS. ANDRADE: Well, at the end, it is in the best interest of the state for us to do this.

MR. RUSSELL: Yes, ma'am, without a doubt.

MS. ANDRADE: Thank you.

MR. JOHNSON: I want to clarify one thing. The $1.3 million stipend was the total divided by two -- went to two different --

MR. RUSSELL: No, sir.

MR. JOHNSON: It was $1.3 million each?

MR. RUSSELL: Yes, sir.

Now, the other thing -- again, I touched upon it pretty quickly but let me just spend a couple of seconds on that -- we are required by the statute to pay a stipend but we also are required to ensure that we're getting valuable work product for that, intellectual property, as it were, and again, we intend not only to use that on State Highway 45 but any other project that we might have. Just as a marker, on State Highway 130, when we calculated all those costs, what we bought for $1.3 million per unsuccessful proposer, the amount came to about $75 million that we ultimately energized throwing back into the successful team's proposal on State Highway 130. So just from a dollars-and-cents standpoint, it was a great deal for the state.

MR. HOUGHTON: Does this set a precedent for coming down to the next level?

MR. RUSSELL: Setting a precedent as far as paying one or as far as the amount?

MR. HOUGHTON: Paying one.

MR. RUSSELL: No, sir. We paid it on State Highway 130 --

MR. HOUGHTON: I'm talking about to the general contractors that come in and bid and say: Oh, by the way, we have intellectual properties in this deal.

MR. RUSSELL: That's a great question, Commissioner. I don't think it would. Again, these are comprehensive development agreements; it's not a low bid, it's not a professional services procurement. Those are truly the cost of doing business; these are, in my mind at least, completely different, and I would always argue --

MR. HOUGHTON: So you believe there's intellectual properties being purchased here?

MR. RUSSELL: Yes, sir.

MR. HOUGHTON: My fabric is against this, but I'm an at-risk guy.

MR. WILLIAMSON: And it was difficult for me. When I came aboard, Mr. Nichols was just finishing up -- he kind of took the lead for the commission on 130 and he was just finishing up putting all that in place, and I found it a little bit shocking as an at-risk guy that we would pay somebody for taking a risk. But I think maybe until we well establish the notion of turnkey and design-build, we may have to do this for a while, at least on the engineer side. We find that -- without offering any offense to our two engineering buddies or to Mr. Behrens or to anyone else -- we find that the engineering community sure doesn't like taking a chance.

MR. RUSSELL: Chairman, if I might add to it again, I think we all struggled on this as well, because we were used to doing business the old-fashioned way, professional service procurement and low bid. We talked to a lot of different folks, a lot of different DOTs; most of them do offer that stipend within that range. And again, in my humble opinion, I just don't think we get many teams proposing, if any. Perhaps somebody throws a proposal in, but I think a stipend is extremely critical to all those private sector teams, and we like the competition, obviously, on our projects.

MR. WILLIAMSON: Any other questions or comments, members?

MR. NICHOLS: I've got a bunch.

MR. WILLIAMSON: Robert. I thought it was okay with you.

MR. NICHOLS: Oh, really? I'm going to vote for it, but I'm going to make some comments about it.

MR. WILLIAMSON: I'm going to get some coffee.

(General laughter.)

MR. NICHOLS: Am I putting you to sleep?

My feeling on it -- your instinct that I don't like this -- I will tell you that I've been having that instinct for a long time. What we in effect are doing is we've got four people, as I understand it, that are going to bid on this thing, and we're going to pay the three losers $200,000 each, so we're going to buy $600,000 of losing bids.

Now, when the legislation was being put together, the word "may pay a stipend" was kicked around and the word "shall pay a stipend" was kicked around, and there's a huge difference. I was encouraging, in all of my testimony, for the word "may pay a stipend" because I think there's sometimes where they may be appropriate -- may. And on the 130 project, a billion dollar project across many, many roadways, across many communities that had to be done in a critical time period for an issuance of bonds, and all that kind of stuff, we had one other -- we really just had two or three on 130?

MR. RUSSELL: Proposing teams?

MR. NICHOLS: Yes.

MR. RUSSELL: Three total.

MR. NICHOLS: But those teams, that was an extremely critical, large, complicated job, and I can understand that and I supported that, I really did, and I think because of that, we as a state came out well.

We're down to $150 million roughly -- is that right?

MR. RUSSELL: Yes, sir.

MR. NICHOLS: The last time I remember a year or two ago, it seems like it was a $120 million project, seven miles, not that complicated. I mean, it's a big project, but we're not dealing with something that's that complicated here, and in effect, because the way the legislation was passed -- I never question legislation because it's in the wisdom of the legislators they have got an idea -- but the word "shall" is what ended up. We had somebody offer us a proposal so we, therefore, go out and now we must pay a stipend. So that's what we're doing here. And if you go back and you do the comparisons, all this, that's probably a fair rate on that.

However, at the end of this thing, the law says, the statute, that we're really paying for the value of the work to be used by the department in the performance of its function. That means that if there's work there that we can really use and it has that value, that's what we pay. And we can't use three sets of drawings. We can only use one. I don't think there's going to be any real proprietary information here that the first guy, whoever the winning proposal -- I mean, really and truly, are we really going to use $600,000 of these other people's blueprints and stuff?

Or are we going to double check and make sure they did $200,000 worth of work each, in our opinion, and pay them $200,000 and really not use the work product?

MR. RUSSELL: No. We have to be able to show that we're getting value for that $225,000 of that amount of money. Is it going to be something truly revolutionary? I don't know. Is it possible to have some really good ideas on how to build this project? Yes, I think probably so. We certainly got those on 130, different ways, different solutions. Instead of building a bridge over, build an underpass and things like that that ultimately saved us a fair amount of money, and I suspect we'll easily achieve $675,000 of savings or ideas even on a project, as you say, that's quite a bit smaller.

So I think the answer is yes, I fully expect that we'll have that value for it, and if we can't, as I understand the legislation, I don't think we can pay it.

MR. NICHOLS: I know it's going to be factored on a percentage with a dollar cap. The dollar cap is $200,000, not $225-.

MR. RUSSELL: The minimum is $200,000.

MR. NICHOLS: Minimum/maximum? Maximum amount.

MR. RUSSELL: No.

MR. NICHOLS: Up to a maximum amount per proposer of .15 or $200,000.

MR. RUSSELL: If for some reason we cancel the procurement, then it would be a minimum amount of $200,000 per each proposer, including the successful proposer.

MR. NICHOLS: All right. I've got a problem with it. I'm not having a problem to the extent I don't want to do this, I do want to do this. This is a very good project, it's a new process we're all learning, so it's important for us to go through this as we learn through this process. And we have a commitment on our bond covenant to get this project done in a critical time frame, and we're using a process that's laid out there.

Just if we end up saying we're going to use this valuable work, and we're paying each of them $200- or $225,000, it would be reasonable for somebody to look at this and say: Well, okay, his work is only valuable to us at $150,000 but his work may be valuable at $175-, but I have a feeling when it's all said and done, they'll all get paid the same amount.

MR. RUSSELL: I would anticipate that each one of them would have much more again than that $225,000. So in that case, yes, they would all be paid the same amount, $225-.

If it might be worthwhile -- this is obviously a fertile ground for discussion and we will have more of these types of projects -- we might go ahead and put some sort of paper together and provide it as a kind of briefing.

MR. WILLIAMSON: Well -- and I know that Ms. Andrade has got a question -- it's inevitable that we have to put a paper together and it's inevitable that we have these conversations because from the pending Grayson County RMA to the Trans-Texas Corridor, we've got a huge range of pending comprehensive development agreements which are -- in a different lingo -- turnkey projects, and this is going to come up over and over and over again. I mean, no one is battering you.

MR. RUSSELL: No, I understand.

MR. WILLIAMSON: It's probably time for us to start writing these documents and educating the commission and the public about what it means to be in the turnkey business.

MR. RUSSELL: And we've got a lot of that documentation, not only from the 130 but the district has done a great job on 45 putting that same sort of package together, so it shouldn't be that big a deal for us to go ahead and put a package together and let you all start kind of looking into it and giving us your input and your insight into it.

MS. ANDRADE: Mr. Chairman, I was just going to comment that it seems that we all are uncomfortable with the new way of doing business, but since it's new, could we monitor this to see if it does indeed encourage competition? What we don't want to do is encourage people just to submit to get paid, to create work.

MR. RUSSELL: Right.

MS. ANDRADE: But could we set a period that we'd monitor this and get back so that if it doesn't work, we're not stuck with it, and if it works, we can promote it?

MR. RUSSELL: Yes, ma'am, we can, Commissioner Andrade. And that's a discussion Mike and I have talked about before: what happens if somebody says gosh, I'll just go ahead and put a little proposal together so I'll get the money. They are required to go through the qualification stage, RFQ stage -- no stipend attaches at that point -- and then they have to make and meet certain minimum criteria before they will even be eligible for that stipend.

So we think we set those standards fairly high and that pretty well weeds out any of the guys essentially that aren't the players. So when we get to this point, I think we have the folks that we can do business with, and as such, they're putting the time and effort into it.

But again, be happy to monitor it and set up any sort of process. Again, ultimately, we're always going to look at the concepts that come out of this and we have to be able to place a value on it and say yes, in this case it will exceed $225,000 and move forward. So we try to monitor it pretty closely on each one of these projects, but we'll be happy to provide any sort of report or backdrop on that.

MS. ANDRADE: I think I would be comfortable with a report. I trust that you are going to put the right criteria, but at least some reporting mechanism so that we'll see how it's doing.

MR. RUSSELL: Okay, be happy to.

MS. ANDRADE: Thank you.

MR. WILLIAMSON: John?

MR. JOHNSON: Phillip?

MR. RUSSELL: Yes, sir.

MR. JOHNSON: Are we using exclusive development agreements and comprehensive development agreements interchangeably here in this process?

MR. RUSSELL: Essentially the answer is no. On State Highway 130 we have to do some of that because it started out as an EDA, now called a CDA, but from henceforth, everything is a comprehensive development agreement.

MR. JOHNSON: So from henceforth, there is no EDA.

MR. RUSSELL: Not as far as I'm concerned, no, sir.

MR. JOHNSON: So when we get a proposal in, then we go out and ask for competing proposals, and at that point in time it becomes a CDA as opposed to an EDA.

MR. RUSSELL: Well, I think the answer is yes, Commissioner. Any project that we're given direction to move out on will be a comprehensive development agreement. That's really the only legal authority that we have now on any of these projects is through a CDA. The EDA was just for 130; the documentation reflects that so we have to kind of live with that, but any project post-130 will automatically be a CDA.

MR. JOHNSON: Okay, thank you.

MR. NICHOLS: I think during the legislative work on this, they literally just changed the name. I don't think they liked the word "exclusive" because it sounded like it's excluding people, so they changed it to "comprehensive" to make sure it's more open.

MR. WILLIAMSON: But nothing prevents us in the legislation -- and please correct me if I'm wrong, Richard -- nothing prevents us from allowing as how any responder to this proposal to offer an alternative to this CDA, nothing prohibits us from saying that we're going to pay a stipend.

MR. RUSSELL: I'm not sure I understand the question, Chairman.

MR. WILLIAMSON: Well, let's say that we have an unsolicited proposal and we choose to follow the CDA route, and so we send out to 57 people: we've had this unsolicited proposal, we like the goal, we're going to pursue it, do you wish to propose an alternative? Nothing prevents us from saying oh, by the way, this is such a big project that if you choose to go past the RFQ process and into the final ranking, we are going to pay a stipend not to exceed this amount if you're not selected as a proposer. Nothing prevents us from doing that, I don't think.

MR. RUSSELL: No, sir. And in fact, at the RFP stage we have to put that in there; we have to tell them what the amount is going to be.

MR. WILLIAMSON: So even though we're not doing EDAs anymore, we still are going to be dealing with this stipend business.

MR. RUSSELL: Yes, sir.

MR. JOHNSON: Is that a fixed amount or a percentage amount?

MR. RUSSELL: It's a percentage amount of the successful proposer's bid.

MR. NICHOLS: We set the percentage.

MR. HOUGHTON: We shall or we may?

MR. RUSSELL: We shall. But again, we have to certify that we're getting value for that amount.

MR. NICHOLS: But we set the amount.

MR. RUSSELL: We set the amount and we test the value.

MR. WILLIAMSON: We just can't exceed .15 percent, but we might say it's .0001 percent.

MR. NICHOLS: Yes, the percentage isn't in the law.

MR. RUSSELL: That's correct.

MR. JOHNSON: Actually we're not setting the amount, we're setting the percentage.

MR. RUSSELL: Yes, sir. That is exactly right.

MR. JOHNSON: The bid sets the amount.

MR. RUSSELL: The only amount we're setting is that $200,000 minimum. But you're exactly right, we're only setting the percentage; the successful bid will set the amount.

MR. WILLIAMSON: It's misleading, but it's $200,000. $200,000 is the minimum we pay if we don't award to anybody.

MR. JOHNSON: Right.

MR. NICHOLS: Okay.

MR. WILLIAMSON: You can see why it's probably time for a good discussion document for the commissioners.

MR. RUSSELL: I think so.

MR. WILLIAMSON: Other questions or comments for Phil?

(No response.)

MR. WILLIAMSON: Could I have a motion?

MR. NICHOLS: I so move.

MR. JOHNSON: Second.

MR. WILLIAMSON: I have a motion and a second. All in favor will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, say no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you, Phillip.

MR. RUSSELL: Thank you, commissioners.

MR. WILLIAMSON: Before we get started, I need to tell Katy -- the audience is not as big -- but I'm told I owe at least a clarification, if not an apology. You're no longer with NTTA -- their loss -- and you're now with Dannenbaum?

MR. RUSSELL: Carter Burgess.

MR. WILLIAMSON: Carter Burgess. We congratulate Carter Burgess. Sorry I didn't know that. It's probably deep in my reading someplace, I just haven't got down to it yet.

Okay, Mike, continue.

MR. BEHRENS: Agenda item number 8, we have two contested cases for the commission's consideration, and Richard will present those to you.

MR. MONROE: Commissioners, again for the record, my name is Richard Monroe. I'm general counsel for the department.

The two contested cases here, if you approve the minute orders, you will confirm the decision of the administrative law judge. In the first case, this concerns someone who wanted to be a salvage dealer, and under the law, you are required to have been discharged from parole for three years. This person was a felon but he is an honest felon and he let us know for a fact that on the form that he did not fulfill the obligation. So we refused his license, and he took exception to that. However, by the time it got to the hearing stage, he had pretty well lost any enthusiasm for the fight. And so the SOAH judge ruled in our favor, and I would urge you to approve the minute order in which you will endorse the SOAH judge's finding.

MR. WILLIAMSON: Members, is there a motion? Is this one we can have discussion on, Richard?

MR. MONROE: Sure.

MR. WILLIAMSON: Mr. Nichols.

MR. NICHOLS: There are some legal terms I don't always quite get. Is honest felon a legal term?

MR. MONROE: It is now.

(General laughter.)

MR. NICHOLS: I so move.

MR. WILLIAMSON: I have a motion.

MR. JOHNSON: Second.

MR. WILLIAMSON: I have a motion and a second. All in favor of passage of the motion, please signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, say no.

(No response.)

MR. WILLIAMSON: Motion passes.

MR. MONROE: The next case involves a billboard in which we canceled an outdoor advertising permit for the sign because the facts proved, both to our satisfaction and to the satisfaction of the ALJ, that the sign could not in fact be maintained anywhere other than from the highway. Signs are required to be so located that they can be maintained from the private property adjacent to them.

Once again, the sign company seemed to lose enthusiasm for the fight, and after the hearing filed no exceptions to the finding of the administrative law judge, and therefore, we would ask you to approve this minute order endorsing the findings of the ALJ upholding the position of the department.

MR. WILLIAMSON: Questions or comments on this matter?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: Second?

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of passage of the motion, signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, say no.

(No response.)

MR. WILLIAMSON: The motion is passed. Thank you, Richard.

MR. BEHRENS: Agenda item 9 is our contracts for the month of February which would be our maintenance and highway and building construction contracts. Thomas?

MR. BOHUSLAV: Good morning, commissioners. My name is Thomas Bohuslav; I'm the director of the Construction Division.

Item 9(a)(1) is for consideration of award or rejection of highway maintenance contracts let on February 10 and 11, 2004 whose engineer's estimated costs are $300,000 or more. We had 19 projects; the average number of bidders is about four. We recommend all projects for award.

MR. WILLIAMSON: Are there questions or discussion that needs to be made with Mr. Bohuslav on this matter?

MR. NICHOLS: So moved.

MR. WILLIAMSON: I've got a motion. Do I have a second?

MR. JOHNSON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of passing the motion, please signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, say no.

(No response.)

MR. WILLIAMSON: Motion passes.

MR. BOHUSLAV: Item 9(a)(2) is for consideration of award or rejection of highway and building construction contracts let on February 10 and 11, 2004. We had 63 projects; average number of bidders is five.

We have three projects we recommend for rejection. The first one is in Brown County, Project Number 3216; it's about 22 percent over. We did have good bidders on the project; this is for a transportation museum in Brownwood. The city doesn't have the available funds so they're going to go back and re-scope the project, reduce some of the landscape work, I believe, and reduce some material requirements to try to re-scope it down.

The second project is in Comanche County. It's also a Transportation Enhancement project for a log cabin courthouse building they have there, I believe on the square. We only had one bidder for the project; I believe it's about 40 percent over. The city, again, doesn't have the money; they'd like to go back and re-scope the project, reduce some landscape work on it.

The last project recommended for rejection is in Knox County; this is a Safe Routes to Schools project. The overrun on the project would be fully funded by the city and they're unwilling or do not have the funds to do that in Munday, so they recommend that we reject the project. Any questions?

MR. WILLIAMSON: Questions, members; comments, members? Do I have a motion?

MR. JOHNSON: So moved.

MR. NICHOLS: So moved.

MR. WILLIAMSON: Do I have a second?

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of passage of this item, please signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, say no.

(No response.)

MR. WILLIAMSON: Motion passes.

MR. BEHRENS: Agenda item 9(b), Amadeo will present a contract claim, one that involved a project in Dallas County.

MR. SAENZ: Good afternoon, commissioners. Again for the record, I'm Amadeo Saenz, assistant executive director for Engineering Operations, and also chairman of the Contract Claim Committee.

The minute order before you approves a claim settlement for a contract by C.C. Carlton Construction of Austin, Inc., for project STP 98(368)MM in Dallas County in the Dallas District. On January 15, TxDOT's Contract Claim Committee considered this claim; we made a recommendation for settlement to the contract, and the contractor has accepted. The committee considers it to be a fair and reasonable offer in settlement of this claim and recommends your approval. I'll be happy to answer any questions.

MR. WILLIAMSON: Questions for Mr. Saenz or comments directed towards him?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of passage will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed will say no.

(No response.)

MR. WILLIAMSON: Motion passes.

MR. SAENZ: Thank you.

MR. BEHRENS: Commissioners, you have the routine minute orders. We will be deferring 10(c)(2) which is a minute order for Hays County, removal of a highway segment. We didn't get a resolution from the city so we'll bring that back next month.

Otherwise, the remainder of those minute orders have been posted on our agenda, and unless you have any questions, we'd recommend approval of the routine minute orders.

MR. WILLIAMSON: I want to ask you something, Mike. In the past it's been a habit at this point in the meeting for one or more of us to ask, if we didn't know, whether or not anything we're fixing to approve affects us personally, i.e., is it near any land we might own. And I fear that we've put Thomas and yourself in an unusual position, in that we've assumed that you know where our land is.

So I just want to say for the record, members, if you want to pre-protect yourself -- which I do, but now, I don't own much land, but I have made Mike aware of the pieces of property I own in this world -- but I'm going to always ask this question and if you want to be fully sort of protected from anybody accusing you of taking care of your own world, you might want to share with Mike where your land is as well, so that when I ask the following question: To your knowledge, Mike, are there any transactions reflected in the minute order we're fixing to pass that would affect any of us negatively or positively personally, he can say with certainty "No." I want him to be able to do it for me. If you want that, it's incumbent upon you to let him know where your land is through a county roadmap or whatever.

So I ask the question, Mike: To your knowledge, do any of these transactions affect any of the members negatively or positively?

MR. BEHRENS: Not to my knowledge.

MR. WILLIAMSON: Thank you.

MR. BEHRENS: What we can do, Chairman, is like you said, they can just note it on a map and they can give it to their assistants and if they review the agenda for the upcoming month and they can say, well, here's this highway, here is this land, maybe we need to see if there is a conflict. And sometimes there's not a conflict if we're just going out there and rehabbing a road or something.

MR. WILLIAMSON: Do I have a motion?

MR. NICHOLS: So moved.

MR. JOHNSON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of passing the various motions will vote aye.

(A chorus of ayes.)

MR. WILLIAMSON: All those opposed, vote no.

(No response.)

MR. WILLIAMSON: All those motions pass.

And now, Mr. Behrens, is there any reason for us to go into executive session?

MR. BEHRENS: Not to my knowledge.

MR. WILLIAMSON: Is there any other business that needs to come before this commission? Do we have any notice of someone wanting to speak in the open comment period?

MR. BEHRENS: We have no cards for open comment.

MR. WILLIAMSON: There being no other business, there being no reason to go into executive session, and there being no one who is interested in open comment, I will entertain a motion to adjourn.

MR. JOHNSON: Before I make a motion to adjourn the meeting, whom do I see when my clock stops running?

(General laughter.)

MR. JOHNSON: I move we adjourn.

MR. NICHOLS: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: We're adjourned.

(Whereupon, at 12:50 p.m., the meeting was concluded.)

C E R T I F I C A T E

MEETING OF: Texas Transportation Commission
LOCATION: Austin, Texas
DATE: February 26, 2004

I do hereby certify that the foregoing pages, numbers 1 through 161, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Penny Bynum before the Texas Transportation Commission.

__________03/01/04
(Transcriber) (Date)
On the Record Reporting, Inc.
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Austin, Texas 78731