Texas Department of Transportation Commission Meeting

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

9:00 a.m. Thursday, March 25, 2004

COMMISSION MEMBERS:

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

STAFF:

MICHAEL W. BEHRENS, Executive Director
STEVE SIMMONS, Deputy Executive Director
RICHARD MONROE, General Counsel
DEE HERNANDEZ, Chief Minute Clerk

P R O C E E D I N G S

MR. WILLIAMSON: Good morning. For the record, it's 9:13 a.m., and I would like to call this meeting of the Texas Transportation Commission to order. Welcome to our March meeting, everyone, and particularly our friends from the Brazos Valley area, who have driven our excellent state highways to get here.

(General laughter.)

MR. WILLIAMSON: And we appreciate your entertaining us and our staff last night; that was very nice of you.

It is the tradition of the commission to set the chair in the center of the dais, and as you can see, we've elected to change that tradition this year, and seat the chair next to the executive director where he's not allowed to go off on his own and make deals that the chair doesn't know about.

(General laughter.)

MR. WILLIAMSON: It's also the tradition of the commission to offer opening remarks, and the chair normally leads, but coming from a legislative background, Mr. Brown, I've decided that the chair will make the last remarks, as is the case in the legislature. So I will ask, beginning on my far right, Hope, you're first.

MS. ANDRADE: Good morning, Mr. Chairman, and I wonder if there's a reason that you put me at the end, and it's kind of lonely over here.

MR. WILLIAMSON: It was so you could watch Robert.

(General laughter.)

MS. ANDRADE: But it's great to be here this morning. I'd like to thank all of you that are here with us this morning and glad that you arrived safely. I'm proud to say that I arrived this morning on IH-35, and the traffic continues the same; it took me longer to get across Austin than from San Antonio to Austin. But I'm glad that I'm here safely and I'm excited about what we have before us and hope that we make the right decisions for the state of Texas.

MR. WILLIAMSON: Very good. Robert.

MR. NICHOLS: For the record, although he said we elected to have these seating positions, we never voted on it.

(General laughter.)

MR. NICHOLS: I would just like to welcome everyone here. I know a lot of you took the time out of your day to be here, to present the views of your community and the dreams and your wishes, and we appreciate that. Look forward to the presentation. Enjoyed the reception last night, thought that was very, very good. And when you leave today, drive careful. Thank you.

MR. HOUGHTON: I used to sit next to Mr. Behrens, and the deals that the Chair is talking about, well, El Paso County now has a high-speed rail system that the Chairman does not know about yet but soon will.

(General laughter.)

MR. HOUGHTON: And driving from the Brazos Valley to Austin, I didn't get to do that, but I've driven that road many, many a time, and is it an eight-mile stretch that's two lane? I understand that your senator is making sure that that will get taken care of in short order. But welcome to all of you from the Brazos Valley.

MR. JOHNSON: I guess without being introduced, I'm next. I would like to reiterate what my colleagues have said. Appreciate the hospitality of the Brazos Valley group. I apologize again for my late arrival last night, but I was overwhelmed with other stuff that I needed to do in order to have a clear conscience to leave the office. We're appreciative of what you do for your communities and we're appreciative of what you do for this great state. We're glad you're here and we wish you a safe journey home.

MR. WILLIAMSON: Thank you, members.

Let's all together now take out our cell phones and our personal communication devices and put them on silent -- I'll be the first one -- because the commission members get very irritated when somebody's phone goes off and we're trying to listen to people. Very good. I hear all kinds of beeps out there. Thank you.

And I also welcome each of you to our commission meeting. Thank you for attending. We're particularly appreciative any time a member of the legislature takes time to be with us, and we appreciate your presence, and Mr. Ellis, we appreciate your presence as well.

Is there anyone else -- my eyesight is poor -- is there anyone else in the audience that might be a sitting member of the legislature?

(No response.)

MR. WILLIAMSON: Well, we appreciate the service that you give the state of Texas for not a whole lot of money and a whole lot of pain, and I guess a whole lot of pain here in the next few weeks, it sounds like.

Please note for the record that public notice of the meeting, containing all items on the agenda, was filed with the Office of Secretary of State at 1:06 p.m. on March 16, 2004.

If you intend to comment on an agenda item, we ask that you go to the table in the lobby and complete the appropriate card to comment on an agenda item which is the yellow card. If you intend to comment on an agenda item, we appreciate your filling out the card. And if you wish to comment in the open comment period, there's a blue card -- we don't have any up here because we discourage comments in the open period -- no, that's not true.

(General laughter.)

MR. WILLIAMSON: There's a blue card in the back and we ask that you fill out that blue card and turn it in. And in any event, regardless of the color of the card, if you intend to comment about an agenda item or comment during the open comment section, Former Engineer Director Oliver, please limit your remarks to three minutes or less, because normally our meetings last a long time and we have a lot of business to take up today.

We do have a delegation from the Brazos Valley Council of Governments appearing before the commission today, and this will be the third change in commission habit that we're going to play with. We normally have our delegations at the front-end of the meetings; we are going to begin to put our delegations where we think you fit appropriately in our agenda, and as it turns out, we have some matters to take up of business today that might affect your area and we think you might benefit from listening to how we approach our problems. It won't be too much of a delay but it will give you a chance, sort of a sense of how we problem-solve at the commission level.

Before we go to the agenda item -- well, first let me get the minutes from the last commission meeting approved. Do I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: 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.

(No response.)

MR. WILLIAMSON: Motion carries.

Before I go to the next agenda item, I'd like to take an opportunity to express the commission's and department's appreciation to one of our very most dedicated employees of 33 years of service to the department.

Joe, are you out there? I wish you'd walk up here a second, son; I'd like to talk to you.

All of us have something to say and in this case the Chair will go first. The commission wishes to thank you for all of your service and hard work over 33 years. We who spend most of our time, either at the commission level or at the department level, on transportation matters in the state know that the men and women who rise to the district engineer and division director level are almost daily given the opportunity to leave public service and go to work for the private sector at a good deal more money, and those who choose to say no to that and stay with the department should be among the highest honored employees we have.

And this is something that we'll be talking to the legislature about in the next nine months: the difficulty of recognizing men and women for their skill set, elevating them in the organization, and then watching them have to resist a doubling in pay to stay with the state. So men and women who do that are deserving of the highest honor, and we deeply appreciate the 33 years you've given to the department. And we hope that you'll stick around, at least on a volunteer basis, and give us the benefit of some of your wisdom and your accumulated years.

MR. WILLIAMSON: Hope?

MS. ANDRADE: Sir, thank you so much for the past 33 years. I'm sorry I didn't get a chance to work with you, but I hope you enjoy your retirement. Thank you for everything you did for TxDOT.

MR. NELSON: Thank you.

MR. NICHOLS: I'd also like to say thank you very much for the dedication that you have given to the state. Thirty-three years is a long time, and I know most engineers who get into engineering is because they like to build things, and I know that over the years you've had the opportunity to touch a lot of projects around the state, influence their development, and I know you can drive around and look and see a lot of things that you've built and had a part of, and I know there's got to be a lot of personal satisfaction in that. And we want you to know that we appreciate what you've done. Thank you.

MR. NELSON: Thank you.

MR. HOUGHTON: It's a rarity in today's environment that somebody stays with one institution, whether in the public or private sector, for 33 years, ten years, five years. People roll and it's like professional athletes, a what's-in-it-for-me type attitude. And the attitude you've displayed here, staying here and resisting what the Chairman has talked about, Corporate America, is commendable and I salute you, and congratulations.

MR. NELSON: Thank you, sir.

MR. JOHNSON: Joe, on a personal note, I want to thank you for your hospitality. I was a lost commissioner from Houston that wandered into Wichita Falls for a day and a half, and your hospitality and your explanation of what was going on in the district was very meaningful and helpful for me, and I deeply appreciate that.

On a larger note, I'm reminded of the fiber and fabric which make up the TxDOT family, and I think you typify and exemplify that in so many ways. You know, 33 years of service, as Ted said, is somewhat incredible in this day and age, and yet many of your colleagues in TxDOT do that and I think it speaks volumes about this agency, but this agency is just a byproduct of the people that comprise it, and you stand at the top of the list. And thanks so much for all that you've done across the width and depth of this state. I personally am going to miss you and I know that there's going to be a void briefly, but we have others that will step in behind you that you have trained. So I'm confident of the future but I thank you for where you've gotten us and I will miss you.

MR. NELSON: Thank you, sir.

MR. WILLIAMSON: Mike, would you like to make a comment?

MR. BEHRENS: Yes, I would.

I would first, Joe, like to read this resolution on behalf of the commission. It says:

"Whereas, the Texas Transportation Commission takes great pride in recognizing Joe H. Nelson III, Professional Engineer, as an outstanding dedicated transportation engineer who has served the Texas Department of Transportation for more than three decades, most recently as the Wichita Falls district engineer;

"And whereas, Mr. Nelson earned his civil engineering degree in 1970 from the University of Texas at Austin and is licensed as a professional engineer in 1974;

"And whereas, Mr. Nelson has devoted 33 years of his life to public service by holding various positions, including: engineering assistant and design engineer in the Design Division; project engineer in the Dallas District; area engineer in Corsicana; and deputy district engineer in the Waco District;

"And whereas, Mr. Nelson became the district engineer of the Wichita Falls District in 1998 and was responsible for all transportation-related projects and programs in the nine-county district;

"And whereas, Mr. Nelson has devoted his professional life to improving transportation safety and mobility and has worked to improve the quality of life for all Texans;

"Now, therefore, be it resolved that the Texas Transportation Commission, on the occasion of his retirement from service with the State of Texas, hereby recognizes and thanks Joe H. Nelson III, P.E., for his professional career achievements and loyal service on behalf of Texas and its citizens.

"Presented by the Texas Transportation Commission on this the 25th day of March 2004."

And Joe, as I read this -- and I think people need to recognize -- you've served several positions with the Texas Highway Department, the State Department of Highways and Public Transportation, and now TxDOT, and you did it in a lot of places. You served here in Austin and then you went to the Dallas District and served there in a couple of capacities; then you took the responsibility when you were asked to go to the Waco District and assume that role of deputy district engineer; and then when you were asked to go to Wichita Falls and to lead that district, you did that also. When I see that, it tells me, and it should tell others, that Joe was willing to serve wherever needed within the department, and that's very important. When you move from one place to the other, you can share the knowledge that you learned in some areas and then bring that to others.

Commissioner Johnson mentioned about training other people, and you have definitely done that because we have all seen people that you have worked with in those various capacities and also seen those people move up into leadership roles in the department, so we thank you for that and congratulate you on your retirement and wish you well.

MR. NELSON: Thank you very much.

MR. WILLIAMSON: Joe, do you have anything you want to offer to the commission?

MR. NELSON: Yes, sir, I do. First, I didn't realize that the commission would kind of give a breakdown of where all I've been because some folks have thought I just couldn't hold a job that long, so I appreciate you putting it in perspective.

(General laughter.)

MR. NELSON: It has been an honor for me to be an employee of TxDOT, truly an honor. No matter where I've been, I think I've been impressed by the quality of people that we've got, and every time that there's been a major change in our administration or organization, I think I've been surprised at first that folks were ready to step up to the plate and were ready to take responsibility, but I think in the last few years I've recognized that as a trait that we have of all of our people. We have very dedicated people who do their best to do as you would have us to do, primarily, though, to keep the public safe and to have good highway facilities.

We thank you for the part you all play, and the people who come to Austin to serve are actually sacrificing quite a lot, and we appreciate those sacrifices too. So I think our organization is outstanding from the top to the bottom, it's one of the best, if not the best, and I just wish the legislature would recognize the quality that we have a little more than they do.

But other than that, sir, I thank you very much for the opportunity to speak.

MR. BEHRENS: And Joe, you couldn't have done it without the support of your wife Barbara, and I know Barbara is sitting back there. Barbara, why don't you stand up so we can recognize you also.

MR. WILLIAMSON: Do you want to come up here and receive this with him?

(Applause.)

MR. WILLIAMSON: On behalf of the administration, 14,000-plus employees, and on behalf of the commission, I would like to present the resolution that Mike read, and we do appreciate very much your service.

(Pause for photos.)

MR. WILLIAMSON: So thank you.

(Applause.)

MR. WILLIAMSON: The second item on the agenda is a presentation of an award by the National Business Aviation Association in recognition of support and success of general aviation in Texas. And at this time I'd like to recognize Paul Smith. Paul is the regional representative of the National Business Aviation Association. Paul?

MR. SMITH: Mr. Chairman, lady and gentlemen. On behalf of the National Business Aviation Association, it's a real pleasure for me to be here with you today and to represent our over 7,500 corporations in the U.S. who fly more than 9,500 aircraft. Those corporations, as you may know, generate about half the gross national product in the country, 5.2-something trillion dollars.

On behalf of those organizations, I'd like to present this resolution, and if I may read it.

MR. WILLIAMSON: Please.

MR. SMITH: The National Business Aviation Association Resolution.

"Whereas the state of Texas, being the largest state in the continental United States, is dependent upon a statewide aviation system to provide critical air transportation to its citizens and to ensure continued growth and economic development;

"And whereas, the National Business Aviation Association represents business and corporate aviation, including over 90 percent of the Fortune 500 companies;

"And whereas, NBAA has over 700 member companies in the State of Texas who employ over 2.2 million people;

"And whereas, an adequate statewide system of airport facilities is vital to meeting daily transportation needs of the business traveler;

"And whereas, the Texas Transportation Commission, through the Department of Transportation, is primarily responsible for improvement, development and maintenance of the general aviation segment of the state's aviation system;

"And whereas, the commission and the department, upon being assigned this responsibility by the Texas Legislature in 1991, found the statewide airport system in Texas to be inadequate, particularly in the rural areas of the state;

"And whereas, the department administers an Aviation Capital Improvement Program of approximately $60 million and an Airport Maintenance Program of $3 million annually;

"And whereas, the department provides assistance to a system of 300 airports in Texas that contribute $6 billion to the Texas economy;

"And whereas, through the commitment and efforts of the commission and the department, the statewide airport system in Texas has been substantially improved during the past 14 years;

"Now, therefore, be it resolved this 25th day of March 2004, the National Business Aviation Association does hereby express appreciation and gratitude to the Texas Transportation Commission and the Texas Department of Transportation for outstanding leadership in statewide airport system development and support of business aviation within the state of Texas."

That's signed by my boss, Shelly A. Longmuir, the NBAA president and CEO.

If I might just add one comment. I think you all are extremely fortunate as well to have the director of your aviation department, Mr. Dave Fulton. Thank you.

MR. WILLIAMSON: Thank you, and we appreciate the recognition. We try to be as best as we can in all modes of transportation, aviation included.

(Pause for presentation and photos.)

MR. WILLIAMSON: Okay, Mike, I'm going to turn the agenda over to you to handle the public transit, and then we're going to jump back on to another matter, if you don't mind.

MR. BEHRENS: We'll go ahead and start our regular agenda which will be agenda item 3 which is our routine aviation minute order for the month of March, and Dave will present that.

And Dave, make sure you pass on to all your staff our congratulations for what you and your staff have done in the aviation endeavors in Texas.

MR. FULTON: Thank you, Mike. I will do that, and there's no question we couldn't do it without administration and commission support.

For the record, my name is David Fulton; I'm the director of the TxDOT Aviation Division.

This minute order contains a request for grant funding approval for eight airport improvement projects. The total estimated cost of all requests, as shown in Exhibit A, is approximately $8.3 million, approximately $5.1- federal, $1.9- state, and $1.2 million in local funding.

A public hearing was held on March 8 of this year; no comments were received. We would recommend approval of this minute order.

MR. WILLIAMSON: Members, are there questions?

MR. JOHNSON: I have a question.

MR. WILLIAMSON: Please.

MR. JOHNSON: Dave, first of all, congratulations on your leadership. It's a wonderful award for the state and the department.

Is your alma mater's basketball team in the Sweet Sixteen?

MR. FULTON: I'm glad you brought that up. I'm keeping my fingers crossed. Yes, that's absolutely correct. I believe at 6:15 tonight.

MR. JOHNSON: I sure hope they win.

MR. WILLIAMSON: Now, whoa. We're not biting off on that one. Dave, is it possible that you have an alma mater that's shared with one of the commission members?

MR. FULTON: As well as, I believe, with one of the governor's children who is attending school there.

MR. WILLIAMSON: You know, I smelled that rat right off the bat. Now, let's see, you didn't go to UT. Oh, Vanderbilt. I forgot.

(General laughter.)

MR. FULTON: Hopefully they will prevail.

MR. JOHNSON: I'm glad you remembered. That was my question.

MR. WILLIAMSON: Other questions for Dave?

(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 in favor, say aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: Motion passes.

MR. FULTON: Thank you.

MR. BEHRENS: Agenda item 4 is our Public Transportation items for the month. We'll have two minute orders presented by Sue Bryant: one will be for distribution of 5311 funds for rural transportation, and the other will be for 5310 funds for transportation operators for the elderly and persons with disabilities. Sue?

MS. BRYANT: Good morning, commissioners, Mr. Behrens, Mr. Simmons. My name is Susan Bryant and I'm the Public Transportation director, and yes, I also have an alma mater that is in the Sweet Sixteen -- I just wanted to make sure that you all knew that, but they're not playing tonight.

MR. JOHNSON: Does one of the commission members share that alma mater, one or more?

MS. BRYANT: I believe so.

MR. WILLIAMSON: I think there are two of us.

MR. JOHNSON: Did you go to Vanderbilt?

MS. BRYANT: No, I'm sorry, I didn't.

(General laughter.)

MS. BRYANT: We have two minute orders for your consideration this morning and I do appreciate very much your consideration. They are both for the allocation of federal funds for extremely needed public transportation services in the state.

The first is for federal funding that is dedicated to rural public transportation. The funds have been allocated according to the current approved formula. In Exhibit A of the minute order, there are two columns: there is an available column and a total column. The available column funds is for the amount that Federal Transit has currently allocated. That allocation was made February 11. By having the two columns and by setting up the minute order to approve the total, this will allow the department to issue the remainder of the funds once Congress passes further appropriations.

Page 2 of the exhibit provides the information on how the total amount was derived to be allocated. There are some subtractions that are made, including a required amount for inner city bus -- that is by federal regulation. And the formula from which these allocations are derived are also included further on in the commission agenda today to be discussed, so the formula is a discussion item on the agenda. So I would be glad to answer any questions.

MR. WILLIAMSON: And I think, members, we're going to have an opportunity to fully discuss the formula allocation, as Sue said, later on, but certainly if you wish to ask questions about how these figures were arrived at, this would be the appropriate time to ask those questions. Agenda item 4(a), questions about 4(a)?

MR. NICHOLS: I don't have so much a question as a comment or confirmation. The public hearings and the PTAC evaluation for the new formula is for the fiscal year to come.

MS. BRYANT: Correct.

MR. NICHOLS: And this is, in effect, an allocation for the remainder of the existing fiscal year.

MS. BRYANT: That's basically correct. Yes, we're talking about changing the formula for the next fiscal year. That's correct.

MR. NICHOLS: And this basically fills out the balance of this year.

MS. BRYANT: That's correct.

MR. NICHOLS: That's the way I understood it.

MS. BRYANT: Thank you.

MR. WILLIAMSON: Other questions or comments about this?

MR. JOHNSON: Sue, the two columns, the left column, the Available Allocation for Fiscal Year 2004, is the funding that we've already received, and the right column is what we anticipate receiving.

MS. BRYANT: That's correct.

MR. JOHNSON: How does this total amount of money compare to Fiscal Year 2003 for this particular category?

MS. BRYANT: It's actually approximately the same. There's really no major difference; there may look like there's a difference because it does include some carry-forward funds and so that's where there is a bit of a difference.

MR. JOHNSON: And our expectation is that this category of funds will remain approximately the same in the next fiscal year '05 and as far out as we dare predict?

MS. BRYANT: That's a best guess. There is certainly a need for more. It's real difficult to predict right now. The best prediction is that it will remain largely the same, possibly with some increases.

MR. JOHNSON: Mr. Chairman, if I might -- and I see Coby Chase over here -- I wanted to emphasize one thing. This is all part of the reauthorization process, and I believe that out of committee yesterday in the House version of the reauthorization bill in Washington. And I mention that because this bill is very important to Texas. What came out of the Senate version left a lot of the items that are important to Texas out because I believe they were in a rush to pass the bill, and so I would urge you to have our Texas delegation and any contact that you can make in the Texas delegation in the House of Representatives, that all Texas get in lock step to support these issues that are important to Texas and transportation, not only transit but also the highway portion because there are a number of extremely important portions of the reauthorization bill that are non-financial that would mean a great deal to this department and to the state.

As the Chairman notes, we have intersections that are smart -- I have something called a smart key that supposedly my car knows when I'm getting close to it if I have my key. Well, you know, roads aren't smart enough to know who's driving on them, so regardless of your political affiliation, it's important to the state, and so I encourage everyone in the audience to encourage your elected representative in Washington to join with the Texas delegation. Most have, but we just need to emphasize that and remind them how important these parts of the House version are so that it can get to conference and they can be included in the final bill.

And I'm sorry for the discussion.

MR. WILLIAMSON: No. What are you talking about? Whatever, take all the time you want.

Any other commission member for a question or comment about this matter?

(No response.)

MR. WILLIAMSON: I have a few then, Sue.

First of all, one of the reasons we asked the Brazos Valley delegation to delay their presentation was specifically to hear this and a few other things because they are a large player in the rural public transit world. It would appear to me that we are making available to them $1.4 million.

MS. BRYANT: Actually, the total allocation, sir, would be $2.5 million.

MR. WILLIAMSON: But the $2.5- assumes a reauthorization level.

MS. BRYANT: That's correct. Currently it would be the $1.461776-.

MR. WILLIAMSON: So they know drop-dead certain they're going to be allocated the $1.4-.

MS. BRYANT: That's correct.

MR. WILLIAMSON: If House and Senate conference can't agree and we don't have an allocation for the fiscal year, they won't get the rest of it but they'll get the 1.4-.

MS. BRYANT: That's correct.

MR. WILLIAMSON: Now, Sue, tell me is it your understanding that the commission, or at least the previous commission before the two were added, feels very strongly that the allocation in the next fiscal year should be more focused on results and not process?

MS. BRYANT: That's definitely my understanding.

MR. WILLIAMSON: And do you think that the transit operators in the state understand that, and in particular this, one of the most important transit operators, Brazos?

MS. BRYANT: My understanding is that they also understand, but I would hope that that would be a question you might want to ask them.

MR. WILLIAMSON: And is it possible that sometimes in the communication between us and you and between you, and for example, Brazos Transit and between their board of directors and say Representative Brown or the county judge from Washington County, that maybe sometimes it kind of gets lost in translation and it's easier just to say: Well, those SOBs just didn't give us as much money as we asked for? Is it possible that happens?

MS. BRYANT: I would hope not.

MR. WILLIAMSON: But the truth is we are a results-based commission.

MS. BRYANT: Correct.

MR. WILLIAMSON: And not only public transit providers but highway contractors, engineers, bankers and everyone else we do business with, we are consistently telling them that we want to allocate the taxpayers' resources based on results, not process, not the past but the future. Right?

MS. BRYANT: Correct.

MR. WILLIAMSON: Do you think we got a message?

MS. BRYANT: I think so.

MR. WILLIAMSON: Let me ask you one other question about public transit. Is there any reason why we should really fear that that allocation will go down next year? I know we're always careful to not represent the brighter side of things, but the truth is is there any reason to expect the allocation won't be at least as much?

MS. BRYANT: Not that I'm aware of.

MR. WILLIAMSON: I appreciate that.

Let me also echo Mr. Johnson's comments. Judge, you know your congressperson far better than we do, and you probably know the two senior senators of the state of Texas. It is critically important for each of you in the audience today as soon as we're through to go send your congressperson and your two senators a letter, a telegram, an e-mail, whatever it takes, highlighting the tremendous importance of the non-cash changes in the law that the state has requested and that our delegation has advanced, Michael Burgess and Senator Cornyn, particularly.

It means hundreds of millions of dollars to our state at the expense of no other state, just simple changes in the law. For example, the Congress may well adopt a block grant pilot program allowing states to take their apportionment and instead of being forced to spend it on things that are not really emergency in order to get their full federal reimbursement, allowing us to go through a certification process where we go to the Federal Highway Administration and say: You know, Highway 6, sixteen people a year -- or whatever the number is -- are dying a year on Highway 6; this is a safety issue for us; instead of this road in Weatherford, we need to build Highway 6 right now and it's possible for us to be allowed that flexibility. That's just one of about 15 items that are really important to the state, and I just can't emphasize that enough.

Mr. Cornyn, Ms. Hutchison, and your congressperson need to hear these flexibility issues, these non-cash issues are really important to the state of Texas. Obviously we would like to have more funding, but as you know, our governor was an experienced legislator before he was a governor. He has been an appropriator; he understands that no matter how hard you try, sometimes you can't cut the pie like you want it cut. He understands that. But there are other things besides cutting the pie, and these flexibility issues are really important to us.

Thank you. Anything else, Sue, about item 4(a) that we need to talk about?

MS. BRYANT: Not that I'm aware of.

MR. WILLIAMSON: Members, you have before you minute order item 4(a). Do I have a motion?

MS. ANDRADE: So moved.

MR. WILLIAMSON: Do I have a second?

MR. NICHOLS: 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 carries. Item 4(b).

MS. BRYANT: The second minute order for your consideration is very similar in that it allocates federal funds. In this case it is specifically a program for elderly and persons with disabilities.

In this case the funds are allocated to districts, the 25 districts, and the districts then generate a program of projects. Similar to the previous minute order, there are two columns: the A projects that would cover the currently available funding, and then there are the category or the column B projects for those projects that would be granted upon further federal funds becoming available.

MR. WILLIAMSON: Are there questions or comments by commission members? Hope?

MS. ANDRADE: Thank you, Mr. Chairman.

Sue, I certainly would like to thank you for taking this on. I think the transition has been smooth and no one will be sacrificed at changing of agencies, but I agree with chairman Williamson that we are result-oriented and that we're not going to tolerate abuse. We have a service to provide to our elderly and disabled and we're going to do that, and I'm looking forward to working with you closely and making sure that we provide those services in the state of Texas and look forward to attending the public hearings with you.

MS. BRYANT: Thank you very much. We appreciate that.

MR. WILLIAMSON: That's great. Any other questions or comments, members?

(No response.)

MR. WILLIAMSON: Now comes my second part of my direct message to the Brazos Valley delegation.

Have you also made it clear to Brazos Transit and the other transit providers in the state that in addition to being globally a results-oriented commission, that we fully intend to take the public health and human services responsibilities that we now have that we didn't have last year and the money associated with that, and that we intend to blend that into our overall public transit operation and that we will be using that money as an incentive to encourage transit operators to contract directly with us to provide those services?

MS. BRYANT: Yes, sir.

MR. WILLIAMSON: Some of you might know, Judge, the legislature basically -- well, I talked about what Arlene did last night, what Representative Wohlgemuth did last night was to save the state $150 million a year. Again, we want it to be an excellent service and part of our strategy is to say to Brazos Transit: We want you to bid to serve this contract, and this is a way you can generate additional cash flow for your operation, serve your community, and help the state do a much better job of serving those perhaps who can't serve themselves. Because we're real focused on doing that. We don't want to think any person living in the country that needs to get to a doctor or to social services or counseling is left at home because we didn't do our part, so I'm glad to hear that you're reinforcing that.

Members, we have 4(b), a minute order in front of you. Do I have a motion?

MS. ANDRADE: So moved.

MR. WILLIAMSON: Do I have a second?

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: Opposed?

(No response.)

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

MS. BRYANT: Thank you, sir.

MR. WILLIAMSON: We're going to deviate from the agenda for a moment, and Steve, or is it Tammy -- I'm looking for Tammy and Tammy is not down there -- Steve, would you give the commission and the two House members -- and I didn't know what Senator Ogden's schedule was and I didn't want to presume he wouldn't be here, so I've waited for this on the assumption that he is still tied up on his business.

The two House members we have been strong friends of transportation, but the chairman and the senator has been an unbelievable advocate for a new vision of transportation in this state, and we are deeply appreciative to your senator for his work.

One of the things the senator has been interested in is a little bit more notification to the public and a little bit more public discussion about the things that we are dealing with at the Transportation Commission, so we've had our staff working on some ideas about how to address the senator's interest in that regard, and we're not completely there yet but we're getting there.

And Steve, if you would take a moment and share with the commission where we are right now in our journey towards figuring out how we're going to do this, I would appreciate it.

MR. SIMMONS: Thank you, Mr. Chairman and members of the commission. For the record, my name is Steve Simmons and I'm the deputy executive director of the department, and my sitting on the dais is not a new change in the direction of the commission, it's a result of the commission continuing to steal staff from me.

(General laughter.)

MR. SIMMONS: That wasn't a dig at anybody in particular.

We have been asked to look at ways to start being more --

MR. WILLIAMSON: Robert Nichols started that, didn't he?

MR. SIMMONS: Yes, he did, but I wasn't going to name any names.

(General laughter.)

MR. SIMMONS: And while I'm here, I want to take the opportunity to tell you how much I appreciated Helen in her capacity previously, and Tammy and Cheryl, both the last two filling in on a temporary basis, but we are in the process of filling that position on a permanent basis, and hopefully by tomorrow I'll have that done. The three of those people have done an outstanding job putting the commission meetings together and I want to thank them publicly for that.

The commission and the public has been asking, I guess, the department to be a little bit more responsive, letting them know the ideas and issues that will be coming before the commission, and so we're trying to outline a model that we can bring forward to start allowing that information to be presented to the commission and allowing the public to see it before the actual vote is put before the commission.

And what I've prepared is this diagram, and I know it's hard for the audience to see, but it's basically looking at a six-month time frame where we have a commission meeting that's established well in advance, and if you notice our commission agendas have started including discussion items, and that's what that first red bar on the left side is. It's where we'll bring an item for discussion before the commission so that you can hear the ideas that we need to be addressing and we can get guidance from you on the way to proceed with it.

After that discussion item, we basically will have a period where we'll have an opportunity to go out and have an open discussion with the public, either through mailouts or advertising on the internet or things of that nature, where we can get their input on how the rule or minute order should be prepared.

For an example process, the pastel colors at the bottom of the page, I tried to use an illustration there, so if you're looking at that first month where there's a discussion item, perhaps we would like to have fun again talking about an access management policy, and so our staff would come before the commission and discuss what changes or what new rules we need to have to talk about access management.

We'd then go out through mailouts, as I mentioned, through the internet, setting up meetings with our partners in transportation to start getting their ideas on that, and at some point in time, our staff would take those comments and start drafting the rules. We would then go through a process where the rules would be drafted and we would present them to the commission well ahead of time of what we have been doing in the past, so we can get your comments on those to move forward with.

Then I think the critical thing we're looking at is once we have gotten all the commissioners' comments and are ready to move forward, three days before the commission meeting we would be posting that minute order or rule that would be proposed at that meeting on the internet, and of course, being able to provide that information to other interested parties at that time. At that commission meeting three days after, the commission would then vote on proposing a rule. So we would once again go into our formal comment period where the public again has the opportunity to work with us to develop the final rule that would be presented to you.

So the pastel colors at the bottom are basically reflecting: the yellow area is where the public is an active participant in the process of developing the rules; the blue area is where staff and the commission is either preparing or reviewing the rules.

So we'd basically have another time period for the public to comment on and then a time for the staff to develop it and the commission review it before you finally act upon it in adopting a final rule or minute order. Once again, we would post three days before the commission meeting on the internet the final rule that the commission will be voting on for acceptance.

There's two other items that we're looking at. One is basically having a twelve-month moving agenda posted on the internet because we know that there are a lot of issues that we do on a regular time frame or at some time out, and we're going to start posting those agendas twelve months out there and it will be moving as we go along.

The second part of that is we want to make sure that people know exactly what we're going to be voting on, so we will be -- a hard, fast sounding term is "locking" the agenda 45 days ahead of the meeting, but we would basically be restricting any items to be added to the agenda 45 days out so that way people will see that we are positively moving forward to address being up front and open with our agendas.

MR. WILLIAMSON: I've got a couple of questions. Members, there's no action required of us today but I certainly want each of you to question and this is a good time to discuss this, but I've got a couple of things I want to clarify before we start that discussion.

Early on I asked the question of you and OGC could we follow or parallel the federal practice of notice of intent to develop a rule, and what we decided -- if I understand it correctly -- was because of our peculiar state statutes, we really wouldn't feel comfortable about something so formal as a notice of intent so we've elected to adopt the term "discussion item" as opposed to "notice of intent". Is that correct?

MR. SIMMONS: Yes, sir.

MR. WILLIAMSON: So that when a city councilperson in Dallas or a state senator in Bryan-College Station or a House member in Brenham brings up our web site and sees something pop up as a discussion item for the December meeting, he or she will know that that's basically our notification to the public that access management is of concern to the commission, or recent laws have been passed concerning access management and we have to adopt rules and we are starting the process of talking about how we're going to make those rules fit.

MR. SIMMONS: Yes, sir, that's our intent.

MR. WILLIAMSON: And so once that discussion item pops up the first time, we're going to give the public approximately 30 days to get a hold of us. We might even have some informal informational meetings, not public hearings, and we will begin the dialogue with the impacted players, whether it's government or private sector or whomever, on a particular area, even before we start drafting rules for presentation to us.

MR. SIMMONS: That's our intent, yes, sir.

MR. WILLIAMSON: And then, Steve, the obvious question is: Well, are there exceptions to this? It looks like we're setting up a really hard and fast system for which there's no allowances for the unplanned. Are there exceptions for this?

MR. SIMMONS: Yes, sir. Just thinking off the top of my head, there are several exceptions that would fall into that. Of course, you know when the legislature is in session and they pass legislation that requires immediate enactment upon their passage, then of course we couldn't wait six months to pass that rule, we would need to put that in.

If we had an unexpected tragedy -- for example, the Queen Isabella Causeway -- that possibly would require us to have some commission action, we would need to have an exception for that.

And then if there was possibly an unexpected economic opportunity -- for example, the Toyota plant -- that something came in to the department that we would need to act on to take advantage of some things.

I think those would be some exceptions that could be added into it, and if there were other minor issues that could be added by the commission's discretion, I think those would be it.

MR. WILLIAMSON: So this approach basically is we're going to do the very best we can to start warning everyone of what's coming up, what we're going to talk about, what we're going to propose rules on, what we're going to adopt rules on -- probably; don't know that for sure till the vote is taken -- and there are exceptions to every rule, but as best we can, this is the system we're going to try to maintain to see how it works.

MR. SIMMONS: We're going to give it our best shot.

MR. WILLIAMSON: Lady and gentlemen, the floor is open to dialogue.

MR. JOHNSON: Steve, the use of access management is purely an example here.

MR. SIMMONS: Purely an example.

MR. JOHNSON: I don't want Florence Shapiro coming through and saying: Oh, my gosh, they're revisiting this issue.

MR. SIMMONS: Purely an example, and I think it was intended to use as a way that we could have improved the process previously.

MR. JOHNSON: And predominantly what we're talking about here is the rules that are developed and will come before the commission. Can you think of any other paths that we might go down with this particular process in terms of the commission's deliberations and conclusions?

MR. SIMMONS: I think that these are really geared towards those major policy changes and development of new rules and things like that that really require good thought and participation from the public to develop.

MR. JOHNSON: Thanks.

MR. NICHOLS: Are we taking turns?

MR. WILLIAMSON: I'm probably less formal than I should be. Just sing out.

MR. NICHOLS: Lady's first.

MS. ANDRADE: I'm not sure I like that rule that it applies here.

Steve, I certainly would like to thank you for coming up with it. I just want to make sure that we remain flexible so that we don't restrict ourselves to not being able to do what needs to get done because of our restrictions that we've placed on ourselves. But thank you, because I welcome that the public will know what we're discussing, but also with my busy schedule of traveling that you've given me time to work on this, so thank you very much.

MR. SIMMONS: That was the second part of that is to allow you to have a little bit more time to be able to review some of these things and not put under the crunch.

MS. ANDRADE: Since you seem to support the commission, is there anything you can do about my chair?

MR. SIMMONS: Yes, ma'am, I'll be working on that this afternoon.

MS. ANDRADE: If I move all the way back, my feet don't hit the floor and they go to sleep, so I would appreciate it.

MR. SIMMONS: I'll take care of that.

(General laughter.)

MS. ANDRADE: Thank you very much.

MR. NICHOLS: For the record, she can have my chair.

MS. ANDRADE: It's still too wide.

MR. NICHOLS: It's still too wide?

MS. ANDRADE: It's still too long.

THE WITNESS: Mine is just right.

(General laughter.)

MR. NICHOLS: Let me make some comments. On the positive side, I think by trying to lay out a year in advance the agenda -- and I know it will be a constant moving thing, but there's a lot of people who try to follow some of the processes and have a difficult time finding out the critical points in time that we do these things. And I have seen in some of our processes -- I call them flow charts -- out in time, where the windows open on things, where they close, where the hearings are, where they close, and on and on, and I think it will be very helpful for those transportation people who really study some of this stuff out there in the communities to have an opportunity to look out in time and follow some of the different processes. So I think that's going to be very beneficial. They need to keep in mind that it is a moving thing because things will be added and taken off until you get to the point where you call it "locking it in."

I think as far as the term "lock in" the 45 days, I think that's good in one respect in that it does give people more time to study it, more time to go through all that kind of stuff, but I thought Hope was looking at my notes because I had written the word "flexible" also.

MS. ANDRADE: I do.

MR. NICHOLS: She does look at my notes. I'll remember that.

(General laughter.)

MR. NICHOLS: Anyway, I also want to make sure that we don't -- I know you said that we will have some exceptions and we need to recognize that and the public needs to recognize that and the news media needs to recognize that because there are a number of things that come up at the last minute that the state doesn't want to lose the opportunity on, and just because we internally have the 45-day rule, we don't want to lose that flexibility if something is important, and I think the staff needs to keep that in mind.

I think it was last month we had an example in like Fannin County with that rail abandonment. We had a narrow window in there and it was something the legislature had approved, but we were going to lose it, and because we had a ten-day notice, we were able to get it on our notice and take action, but we would have missed it with a 45-day window.

MR. SIMMONS: Yes, sir.

MR. NICHOLS: So we don't want to lose our flexibility.

MR. SIMMONS: I think it's best to describe this as our guidelines for handling those hot issues and trying to be as responsive as we can, but understanding that we have to build in flexibility.

MR. NICHOLS: The second thing -- and I will say I do have a concern about; we can try it and see how it goes but I am concerned -- there's pros and cons to releasing on the internet three days in advance of the final vote, the actual vote, of the minute order and the rules in their final form. The good side is that we want an open process, we try real hard to have an open process, get input, let everybody see what's going on, have their input and do it fairly throughout the state with all parties. So on the positive side, I know a lot of people are nervous about what is the final going to look like and they don't even see it until we actually vote or right after we vote, and so releasing it three days in advance will either -- well, it will be a much more open process.

My concern is that as you have a critical time line, information seems to accelerate and comments from around the state, and I want to make sure that people know that even though that's out three days in advance, it's not necessarily absolutely the final form.

MR. SIMMONS: Yes, sir. There will be disclaimers definitely on the internet.

MR. NICHOLS: Yes, there needs to be because I know that we've gotten some bad publicity in that we're trying to do things in the dark, keep the public in the dark, so it will free that up. But all of a sudden when we release it and say this is what looks like the final, and then if we have actually approve it and it's different, then somebody is going to think they were misled, so the accusation will change. I don't think it's going to affect most of them but some of these things do get changed. We sometimes change them from the dais right here -- I've seen that happen a number of times. So the disclaimer needs to be real clear on there.

So it is a good attempt by the department to be even more open, make sure the public is aware of what we're doing, eliminate that fear factor because it's important to all of us, so I think it's good, with those two concerns noted.

MR. SIMMONS: And once again, it's a work in progress.

MR. WILLIAMSON: You don't have to comment, Ted; do you wish to?

MR. HOUGHTON: No.

MR. WILLIAMSON: Thanks for those comments, commission members. I know this has been a difficult process for staff and it's difficult for several of us who have been on the commission for a while. There will be exceptions that will have to be followed, and I will tell you that there will come a day where we'll post proposed rules for final adoption and they'll change within that 72-hour period -- that's just something that's going to happen, and when that does happen, the Chair will be accepting the responsibility for that, and no matter who wants the change done, the questions will be directed to the Chair, because the reality is commission members have to feel comfortable enough in their analysis to call staff in, question a particular word -- just as the legislature does -- and instruct staff to make those changes, and it's up to the Chair to defend that decision, and that's the way it will be. All responsibility can get focused in one place, one guy or gal can take the hit, staff doesn't take the hit, and that's the way we'll work it out.

I think this process will work well. It's still in progress, it may be changed, and staff will keep us all advised privately and publicly before anything is done finally, and I thank you for your hard work.

MR. SIMMONS: Thank you.

(Judge Randy Sims, John Happ, Judge Dorothy Morgan, Constance Allison for Senator Ogden, Rep. Fred H. Brown)

MR. WILLIAMSON: Now the Brazos Valley delegation. You guys got to be guinea pigs. It was my wish that delegations spend some time listening to what we deal with every month. Some of my fellow commissioners were not comfortable with that desire because they felt like, rightfully, it causes you to spend some of your time on our business. I don't know that we're going to keep doing it, but my view is -- I've been thinking about Fayette County, John, and that public hearing a couple of nights ago, and the concern that Fayette County and Columbus and that area have over the Trans-Texas Corridor -- and I just really believe that one of the most significant investments of the public trust and time over the next few years will be transportation, and the more we can educate people from Washington on the Brazos -- you didn't think I knew where that was -- and the more we listen to people such as those from Fayette County who have concerns, the more the state talks about transportation, the better off we all are because, Randy, we've got some tough decisions to make the next few years about the future of our great state. And you can go home and advocate for or against the state's policy much better if you kind of get a flavor for what we have to deal with every month.

So we appreciate you being the guinea pigs even though you were involuntarily so.

We now recognize Randy Sims, and please take it away, my long-time buddy Randy.

JUDGE SIMS: Good morning, Mr. Chairman, commission members, and my good friend Mr. Behrens, the director. By way of introduction, I am Randy Sims, Brazos County judge, and with me this morning is a large delegation of elected officials representing the entire Brazos Valley region as defined by the boundaries of the Brazos Valley Council of Governments.

Also with us this morning are representatives of the business, tourist and economic development communities, including the Bryan-College Station Chamber of Commerce, the Research Valley Partnership, and the Bryan-College Station Convention and Visitors Bureau.

This region is well represented by State Representative Brown -- thank you for being here, Representative Brown. It's also represented by Cook, Dunnam and Kolkhorst on the House side and in the Senate by State Senator Armbrister and Ogden.

I would like to ask all who are in our delegation to please stand and be recognized, if you don't mind.

(Applause.)

JUDGE SIMS: Thank you.

As you can tell by our turnout this morning, transportation issues are very important to our region. Also, I would like to recognize the new TxDOT Bryan District Engineer, Brian Wood, and Director of Transportation Planning and Development, Bob Appleton. Thank you guys for coming; appreciate it. We look forward to working closely with the Bryan District for the next several years to accomplish our common transportation goals and objectives.

I would like also to recognize several students representing Texas A&M University with us this morning. A&M is an integral part of our community, as you will hear throughout the presentation. Would you please rise? Thanks for coming. It's always nice and important to have young people getting involved in our process of not only county government but state government also.

This morning I have the privilege of being one of the presenters for our delegation that is here to inform you of the growing transportation needs of the Brazos Valley region. We intend to highlight some of the current and future projects and are here today as a region because we realize our infrastructure challenges far exceed our individual capacities to meet the needs of any one entity.

To properly do this, we have divided our time among three speakers who in turn will discuss those needs and projects. This morning you will also hear from College Station Councilman John Happ, and Washington County Judge Dorothy Morgan. At the conclusion we will be glad to answer any questions that you may have.

The Brazos Valley region is coming together like never before to look at and solve our problems as a region. We are cooperating together, and as I am sure you will hear today, are eager to work closely with state and federal agencies so that all of us can solve our transportation problems.

The Brazos Valley region is the home for approximately 300,000 citizens who live in Brazos, Burleson, Grimes, Leon, Madison, Robertson, and Washington counties. Within these counties there are 27 incorporated cities including Bryan-College Station, and two institutions of higher education, Blinn College and of course Texas A&M University. As such, we experience many of the congestion challenges of larger metropolitan areas, yet at the same time we face numerous rural transportation issues common to the smaller communities.

On a personal note, Commissioner, I would like to take this opportunity to express my thanks for what you have done for county government in the past, having to do with the bridge replacement and repair of county bridges in our area and allowing us a way to finance some of our match in that respect. You really understand the need and have helped us in the past. Thank you very much -- I would like to say that.

The Brazos Valley is a unique area of the state in that we have limited connectivity to the rest of the state, a problem we desire to correct. I do appreciate your taking this time with us today, and I would like to turn over the podium to College Station Councilman John Happ. John, please.

MR. WILLIAMSON: And John, and to all the members of the delegation, if we don't turn and look behind us as your picture changes, it's because we have monitors in front of us, so don't think we're not paying attention to your business; we can look down here and see what's going on.

MR. HAPP: Thank you, Judge. I am John Happ; I serve on the city council for the City of College Station; I am the council's chairman of the Transportation Committee; I'm the director of Easterwood Airport, Texas A&M University's Airport; and I'm vice-chair of the Texas High Speed Rail and Transportation Corporation.

The judge has just mentioned that our area has both urban and rural infrastructure needs, and this is truly amazing considering the significant investment that the state has in Texas A&M University. It is no secret that A&M is the economic engine that drives our local economy, but it needs to be noted that A&M contributes significantly to the economy of the state. In addition to being a Sea and Space Grant university, the 127-year-old institution is the oldest land grant university in the state of Texas. Combined, Texas A&M University and Blinn College serve more than 55,000 undergraduate and graduate students, the majority of whom have a permanent address outside of the Brazos Valley region.

Please note that while A&M ranks among the nation's largest universities, it is unique that it is not directly located on a four-lane interstate highway. There are well over 13,000 faculty and staff working at Texas A&M and Blinn College. Many of the faculty and staff live in counties within the region and use the highways and the city streets to travel to and from work on a daily basis. A&M also has the largest economic development impact which amounts to several billion dollars for the region and the state.

Texas A&M President Robert Gates has recently announced a faculty reinvestment plan that will add 447 new faculty positions over the next five years. Those new faculty positions will also result in additional staff requirements and graduate student activity.

In addition, athletic events, cultural and educational programs, academic conferences and activities at both the Association of Former Students and Bush Presidential Library complexes bring hundreds of thousands of visitors to the community every year, including heads of state and other dignitaries. It is important that they have efficient and safe access. These visitors depend upon access to all modes of transportation.

Entities like the Bryan-College Station Visitors Bureau rely on mobility for their success. The reality is that our accessibility truly defines who we are. The Brazos Valley is a world class region, home to a world class university and research institution with less than world class access. The many entities gathered here today have joined forces to help solve this problem.

With the success of A&M, the Brazos Valley continues to prosper and develop and experience both economic and population growth. With prosperity, the need to move an increasingly large number of people and goods becomes even more important. The region is coordinating efforts to address transportation issues by working with the Bryan-College Station MPO, the Brazos Valley Council of Governments, the Bryan TxDOT District, and by considering other tools and techniques such as discussing the possibility of toll roads and the possible creation of a regional mobility authority.

Without your efforts, we would not have these tools as options, and we want you to know how much your efforts are appreciated. In fact, these will be some of the topics of discussion next month at the Third Annual Brazos Valley Transportation Summit, April 22 and April 23, hosted by the City of College Station, the Texas Transportation Institute, the Brazos Valley Council of Governments, the district, and numerous others. All of the commissioners, as well as Mr. Behrens, have an open invitation to participate in this event.

As mentioned, the Brazos Valley continues to grow and it is imperative that we maintain a strong economy, but our lack of an interstate highway hinders our region's ability to compete for many companies during their site selection process. Divided four-lane highways, commercial air service, and passenger rail are essential economic needs in the region and our lack of a vital multimodal transportation system negatively impacts our ability to fully develop our region's economy.

MR. WILLIAMSON: Councilman, would you go back and read that last sentence about the three modes of transportation?

MR. HAPP: Yes, sir. Divided four-lane highways, commercial air service and passenger rail are essential economic needs to our region.

MR. WILLIAMSON: You said passenger rail?

MR. HAPP: Yes, sir.

MR. WILLIAMSON: Just wanted to be sure that I heard that right.

MR. HAPP: There's more to come.

One important component of this development is our aviation system which is served primarily by Easterwood Airport. Easterwood is owned and operated by Texas A&M University, and as the region's only commercial airport, Easterwood needs to maintain a strong connection to Texas' major metropolitan airports, thus linking the region to the rest of the nation, and like we like to say for our international students at A&M, to the world. Local general aviation airports which benefit from state funding add to the quality of life in those areas by addressing the user's ability to operate from smaller airports without competing with commercial aircraft.

But surface transportation and aviation are not enough. At the inaugural Brazos Valley Transportation Summit in 2002, hundreds of leaders from the Brazos Valley region hosted Chairman Williamson and introduced the concept of high speed passenger rail which has culminated in the creation of the Texas High Speed Rail and Transportation Corporation. This grassroots corporation is made up of cities and counties from Harris County through Brazos County, up to the Killeen and Temple area, and then along the I-35 corridor to Dallas and Tarrant Counties, running south to Austin and San Antonio. This has come to be commonly known -- or affectionately known as the Texas T-Bone Corridor.

This multimodal corridor is proposed to link the Brazos Valley with the rest of the state and would result in our connectivity to the major metropolitan areas of Texas. We are all in agreement that the region should never again be bypassed as did occur in the late 1950s with the interstate highway system. The Texas High Speed Rail and Transportation Corporation is working hard with the federal government and the state to make this a reality in a very short period of time.

Commissioners, our transportation solution must be multimodal if the Brazos Valley region is to continue to be a world class area attracting world class talent. Thank you for your time.

I would now like to invite Washington County Judge Dorothy Morgan to come up and continue discussion of our needs.

MR. WILLIAMSON: Thank you.

JUDGE MORGAN: Thanks, John. As John said, I am Dorothy Morgan and I am the Washington County judge, and I've been an elected official since 1982 as the mayor and now as the county judge, and I have definitely seen the changes in growth and transportation needs of the Brazos Valley during this period of time.

We do believe that aviation and future commuter and passenger rail are not enough for us to develop a dynamic regional economy. If the region is to continue to have one of the lowest unemployment rates in the nation -- thank goodness -- we must not only expand our transit and aviation system, but we must continue to develop our highway and transit system.

As our region continues to grow, mass transit becomes increasingly popular for multiple reasons. The District, formerly known as the Brazos Transit District, will continue to play an ever-increasing role in the mobility of our region. The various entities are reaching out to develop a working relationship with the district, but they in turn must work with all of us, the cities and the counties, to better promote and develop the use of transit in our region.

The Brazos Valley continues to need enhancements for its highway system passing through the region to continue to connect the major metropolitan areas. Continual development and expansion of the state highway system are paramount to the region's growth and development. Our area continues to be enhanced by improving State Highway 6, resulting ultimately in a goal of north-south continuous four-lane divided highway connecting Houston to the I-35 corridor. Continued improvements to State Highway 21 would be similarly productive. A continuous four-lane divided highway in the east-west direction would connect Interstate Highways 45 and 35 and greatly benefit our communities. Internally to our region an important linkage consists of improvements to State Highway 30 and FM Road 60.

Of course, our need to develop our economy takes a back seat to our even greatest concern and that's safety. In 2003 alone, 94 people were killed on Brazos Valley streets and highways, a trend showing no signs of being reversed. Remember earlier it was noted that most of the students at Texas A&M and Blinn College live outside the region, and they go home on the weekends and holidays and they travel back and forth from all regions of the state. The same risk exists for employees of our many state agencies and extension services who are frequently in need of access and connectivity to other parts of the state.

We must improve our infrastructure safety to protect these groups and our young people -- which of course is our greatest resource -- from needless tragedy on our highways within the region. In addition, we must have these people realize too, though, that they are also responsible for their own driving habits.

Commissioners, in conclusion, we have tried to make one primary point today: transportation is critical to our growing economic needs as well as our safety. Like all regions across the state, we have numerous highway and transportation needs, and we realize that we will never have enough funding to make any region satisfied. During our presentation you heard that connectivity to the rest of the state is vital to our economic growth and as such, we desire to have four-lane continuous highways for the region, State Highway 6, 21, 30, and 79, as well as FM 60 and FM 105 -- to Washington on the Brazos -- are our primary linkage to the rest of the state.

Aviation, transit and inner city commuter and high speed rail are all vital to our future development. We seek to solve our transportation needs in a multimodal fashion -- didn't know what that meant before but I certainly do now. We certainly thank you for helping us to begin to solve many of our current needs by funding portions of State Highway 6 and 21 with needed upgrades.

Our intention is not only to let you know of our needs, but to make it clear that we too want to be a part of the solution. We're not asking you to solve all our problems but to be part of the solution as a team. We are working hard on all our levels to take the tools that Senator Ogden has given us in the last legislative session and to use them properly, develop them, and fund our infrastructure needs. We are discussing forming an RMA and are talking about using some of the innovative financing tools, such as toll roads, that are now available.

You've heard the Brazos Valley is a world class region, home to a world class university, world class citizens, and world class Blue Bell Ice Cream -- had to put that plug in too. The Brazos Valley region is working very hard to achieve a world class multi-modal transportation system, and we sure do thank you for listening to our presentation, our concerns. And at this time, we'd like to answer any questions that you might have -- as long as they're not hard -- I'm just kidding.

MR. WILLIAMSON: Well, members?

JUDGE SIMS: Mr. Chairman, if you'll indulge me just a minute, we have Constance Allison with Senator Ogden's office that would like to read a letter, please, if you don't mind.

MR. WILLIAMSON: Ms. Allison is always welcome here.

MS. ALLISON: My name is Constance Allison; I'm chief of staff and general counsel with Senator Ogden, and the senator sends his regrets that he's unable to be here today, but did not want to let this opportunity pass to express his support for the Brazos Valley delegation and their request. So if you don't mind, I'm going to read his specific comments directed to the commission.

"Dear Commissioners: Today many of my constituents are here to address vitally needed transportation improvements in our region and to seek your assistance. I fully support their efforts.

"In my view, we need to finish what has already been started and be consistent with the commission's initiative to complete the Texas Trunk System and Governor Perry's vision of the Trans-Texas Corridor. For example, State Highway 6 is a mix of four-lane undivided, four-lane divided, and two-lane undivided road stretching from Waco to US 290 north of Houston. The two-lane portions of the highway and the four-lane undivided portion from Millican to Navasota need to be upgraded as soon as possible. Similar observations can be made about State Highways 21, 30 and 79, as well as FM 60 and FM 105.

"I also request a focused effort to improve road surfaces and shoulders on many of our two-lane roads with 70 mile per hour speed limits, such as FM 39 from Normangee to North Zulch. These improvements will save many lives at a relatively small expenditure of money.

"Finally, much needed safety improvements are necessary on stretches of State Highway 36 in Burleson and Milam Counties. This highway is highly traveled and deadly.

"Thank you for listening to my constituents and friends today, and thank you for the hard work you do for our state.

"Sincerely, Stephen E. Ogden."

Thank you.

MR. WILLIAMSON: We appreciate you being over here and we obviously understand the senator's schedule. He's got new responsibilities and I'm sure it's taking quite a bit of his time.

MS. ALLISON: Well, thank you for the opportunity to share his comments.

JUDGE SIMS: Mr. Chairman, I know he needs no introduction, but I'll ask Fred Brown to make a comment.

MR. BROWN: I can see why Dorothy Morgan has stayed in office so long. She is smoother than a gravy sandwich, isn't she?

(General laughter.)

MR. BROWN: Mr. Chairman, commissioners, Director Behrens. It's a pleasure for me to be here today. I tell you, being able to come to any hearing that doesn't have to do with public school finance or rising tuition rates at UT is nice.

You know, it's been a long time since I've seen so many communities come together to recognize their common transportation problems and offer solutions that benefit the entire community as is currently happening in the Brazos Valley. Leaders from a nine-county area -- an area that you know is growing rapidly -- understand that our connectivity to the rest of the state is essential for our economic growth, and everything that you've heard today has been said to you with passion from these members.

We look for great things to happen in our region; we look for continued growth, and we just ask that in all of your deliberations that you will give us every opportunity to work with you and work with the federal government and make these dreams come true for our region.

Thank you for having us today; it's been very nice. And thank you for coming out last night and spending time with us; we appreciate it.

MR. WILLIAMSON: We're very appreciative for your support of transportation in the legislature. We always notice who seems to have transportation in the front of their mind, and we appreciate your support.

MR. BROWN: Well, all those barbs that we took earlier, we'll take that back to Appropriations and try to take care of some of those problems. Thank you.

JUDGE SIMS: Thank you, commission members. We do appreciate the opportunity we have to make our presentation to you today. I thank you for your patience and your indulgence. I like the idea that you mentioned early on that you are results-oriented. That's the name of the game. And I think we try to follow in your footsteps at the county level, and we appreciate that kind of attitude for upgrading our transportation system throughout the state of Texas.

Now, if there are any questions, we'll be happy to try to answer them.

MR. NICHOLS: I don't have any questions.

MR. WILLIAMSON: Questions or comments?

MR. NICHOLS: I'll make a comment.

MR. WILLIAMSON: Please.

MR. NICHOLS: I want to thank you for a very good presentation, and it's obvious that the region has been working quite a bit together to arrive at the conclusions that you have, and that's real important from our vantage point for you to be working on a regional transportation plan because we don't have enough funding to go in there and spot, and if everybody is pulling their own counties and not working as a group, it doesn't work. So when you can come together and prioritize the projects in the area, those that have the greatest impact on the whole region is very important to us and it is very helpful.

And I want to thank all of you who have taken the time to come here today, not just for being here and making a presentation, but for working together in support of transportation. I know that you have been working, have a transportation support group, and it is not only very helpful to us and to your district engineer, but to all the local elected officials to see and understand.

I had an opportunity a couple of months ago to go visit your MPO during one of the meetings and make a few comments, and I was impressed with how many people were involved in that process. There were a lot more than just the members; there were Chamber people and all that.

Some of these projects like 6 is on Priority 1 corridors for the Texas Trunk System, and all the sections that are not four-lane are funded and scheduled for construction and we have a schedule.

JUDGE SIMS: Very good.

MR. NICHOLS: I think Amadeo, our assistant deputy, recently they updated that schedule, so you could actually -- I'm sure the district has it available -- can see what those segments are and construction contract dates are, so that is available.

The interest in the T-Bone high speed rail, amazingly enough, the first time I heard about it I was in Houston. Judge Eckels and the Houston community was supporting very strongly the connection in that manner, and I'm sure as we work our way through the Trans-Texas Corridor, not just for roads, for trucks and for cars, but high speed rail and freight rail -- freight rail is also very important -- is probably going to have an impact on how that concept and locations move about.

But I do want to thank you for the work you've done.

JUDGE SIMS: Thank you.

MR. WILLIAMSON: Go ahead, please.

MR. HOUGHTON: I think it's refreshing, and this is the second presentation I have seen where the community has come together as a whole and not have ripped themselves apart throwing rocks at one another. That's what it's going to take, in my opinion, to reach the goals of those stated communities, and taking a 30,000-foot view instead of down in the bushes and saying let's look at just this road, but the leveraging effect that House Bill 3588 and the Mobility funds, the Ogden Bonds, offer taking care of 6 and leveraging that to take care of 21.

We want to make sure that economic development -- and I think it's a hot button in this state; it's obviously hot with the governor -- making sure Blue Bell Ice Cream gets to market in a timely fashion, and for the first time in its history, El Paso will have the opportunity to buy Blue Bell Ice Cream this summer. So how about that, we've become a part of the state of Texas.

(General laughter.)

MR. HOUGHTON: I applaud you all and I look forward to working with your group -- for selfish reasons, because I own property in College Station that three of my boys live in who are voters in the city of College Station and your county, Judge. Thank you.

JUDGE SIMS: Thank you.

MR. WILLIAMSON: Hope.

MS. ANDRADE: Thank you so much for coming before us. I'm sorry that I missed your reception last night -- I got tied up at another meeting -- but I plan to visit your area in the third quarter of this year and would like to see the projects that you've come before us to talk about.

But it's so refreshing, and I echo what Commissioner Houghton just said, it's so refreshing to see all of you here this morning take the time and take charge of what you believe is the future and preparing your region for the growth that we're all experiencing.

I look forward to visiting with you and thank you so much. And congratulations, you seem to have a great community.

JUDGE SIMS: Thank you.

MR. WILLIAMSON: John.

MR. JOHNSON: Well, I think anything I would offer would be very repetitive of what my fellow commissioners have stated. I hope you understand from last night, and that certainly Judge Morgan will realize, I plan on spending a lot more time in this seven-county area. I'm drawn to it for a lot of reasons. This is a great state and has many diverse and different geographical features, but the commonality we have is the people and I think you're typical of the great people of this state, and I plan on spending a lot more time in Washington County in the not too distant future and look forward to that.

And personally, I think we ought to give them everything they've asked for.

(General laughter.)

JUDGE SIMS: Very good, Commissioner.

(Applause.)

MR. WILLIAMSON: You know, the reason I laugh about that is because Robert and I used to do that to him routinely, because the Chair has to say the following: We appreciate very much your being here, but as you know, we don't make decisions about how to allocate money during these meetings.

Robert and I used to always put John in that same position. "Yeah, give it to them, John, go ahead."

(General laughter.)

MR. WILLIAMSON: I do want to thank you all. I have one request of you and then we'll draw it to a close and take a break. I hope you form an RMA. I think it's a valuable beginning point for any region to make some decisions about funding flexibility that we are prepared to help you with.

We have a two-county small urban RMA already off and running, Travis-Williamson County RMA. We have a one-county large urban RMA, Bexar County, beginning, approved and moving down the road of identifying its first project. We have a ex-urban county with a pending application, Grayson County. There are others getting ready to move, but the one application we haven't seen yet -- and if it's not doable, don't take it personal; this is just a personal thing I'm asking of you -- what the governor really thought would happen when he advanced this idea three years ago was that you would form your RMAs along COG lines and begin to do your transportation funding allocations, your public transit and your clean air initiatives along those already recognized COG lines, and so far no one has brought a proposed RMA consistent with the COG lines forward.

If there were an area of the state where that seems to be a possibility -- perhaps the governor already realized it was the area associated with his alma mater, I don't know -- but if that's at all possible, if you have that kind of regional cooperation, I can only speak for myself in these matters, but I think the commission would be very interested in an RMA that was constructed along COG lines and what that would mean to coordinating public transit, air quality, and the highway and rail construction.

JUDGE SIMS: That's a good thought.

MR. WILLIAMSON: The governor always thought that's what would happen; he's been surprised. He asks me about once a month, you know, has anyone brought in a really truly regional proposal. And Mr. Krusee and Senator Ogden would say that the Travis-Williamson County is a regional proposal, and regions are defined by the beholder, I guess. But I think the governor had in his mind it would be almost COG proposals, and if that's possible, I think that would be really nice; if it's not possible, that's okay too.

JUDGE SIMS: We are going to keep moving forward, though.

MR. WILLIAMSON: Randy, it's always good to see you, and I really appreciate the delegation and you're always welcome here.

JUDGE SIMS: Thank you very much.

MR. WILLIAMSON: We're going to take a 15-minute break.

(Whereupon, a brief recess was taken.)

P R O C E E D I N G S (RESUMED)

MR. WILLIAMSON: We'll reconvene the meeting.

I need to point out to the Washington County judge that district lines change a lot and I can't keep up with everything.

JUDGE MORGAN: I understand, I can't either.

MR. WILLIAMSON: But let me assure you that Kenny Armbrister for his entire career has been committed to transportation and this department, and my failure to specify that during the give-and-take was my oversight. He's a close personal friend like Senator Ogden, we served together for many years in the House, but he is also a close personal friend of our executive director and he has been committed to our organization for as long as he's been in the legislature, and I wouldn't want you to leave thinking by my omission I thought otherwise.

JUDGE MORGAN: Well, thank you, and I shall share with him those nice, kind words.

MR. WILLIAMSON: He's a great friend of ours.

JUDGE MORGAN: He's a good friend to Washington County and the whole district too, but we're brand new to his district.

MR. WILLIAMSON: Well, just like I said, I can't keep up with all the lines.

JUDGE MORGAN: We have a congressional district now that's changed too, so we can't keep up either.

MR. WILLIAMSON: Well, my executive director reminded me that your area is now partially represented, and I just wanted you to know that this commission deeply appreciates the senator's contribution to transportation.

JUDGE MORGAN: Well, thank you, and I shall share that with him.

MR. WILLIAMSON: Thank you very much; we appreciate your being here today.

JUDGE MORGAN: Thank you. You're quite welcome. May I leave now?

MR. WILLIAMSON: Please drive safe going home.

JUDGE MORGAN: I have another committee I chair I have to be at. Thank you. Bye-bye.

MR. WILLIAMSON: I understand.

Okay, Michael, it's yours, buddy.

MR. BEHRENS: We go to agenda item number 6(a), our Proposed Rules for Adoption. This proposed rule will lay out our responsibilities in the Quarry and Pit Safety arena which was given to us by the last legislative session.

MR. MONROE: Good morning, commissioners. For the record, my name is Richard Monroe, general counsel for the department.

By adopting the minute order before you, we will repeal certain rules that are now dated and incorporate the same rules or substantially the same rules in our part of the Texas Administrative Code. As the executive director said, the last legislative session assigned the responsibilities for the Pit and Quarry Safety Act which had been with the Railroad Commission to this department. A conscious decision was made, since the Railroad Commission had been working with these rules for many years, to change what absolutely needed to be changed, names, titles, that sort of thing, and to reincorporate them into 43 Texas Administrative Code.

We're still new at this. We think we're doing a good job, and we think the rules as they are suffice. If we do later need to change them, rest assured we will come back to the commission with any improvements we have along those lines.

I would recommend that the commission approve this minute order by which we will publish the rules and re-adopt in our chapter of the Texas Administrative Code.

MR. WILLIAMSON: Questions or comments, members?

MR. JOHNSON: Question.

MR. WILLIAMSON: Mr. Johnson?

MR. JOHNSON: Richard, this is a transition from the Railroad Commission to the Department of Transportation, the oversight of the quarry application process. Predominantly will the rules remain the same that were in place at the Railroad Commission -- in other words, what people have been used to operating under is what we will require of them under these rules -- they're pretty much the same?

MR. MONROE: Yes, sir.

MR. JOHNSON: So there's continuity and consistency.

MR. MONROE: Yes, sir.

MR. JOHNSON: Great, thank you.

MR. HOUGHTON: So will we license new quarries?

MR. MONROE: Yes, that would be a way to put it. Actually, what we approve is their safety measures and then they may move forward with their operations.

MR. HOUGHTON: Regulate existing quarries?

MR. MONROE: Yes, sir.

MR. HOUGHTON: Under state statutes?

MR. MONROE: Yes.

MR. HOUGHTON: And there's hearings going on, as we speak, regarding quarries? Isn't there a committee that the governor appointed to review quarries?

MR. BEHRENS: Commissioner, yes, that first meeting is going to be held this coming Monday, that committee that was appointed by the governor.

Our basic responsibility, like Richard said, is where these quarries are located, there's rules how close they can be to a highway and certain things they have to have in place to protect, say, a car going off the roadway so it doesn't run off into a quarry. I don't know if you remember, several years ago there was a bus accident in the Valley where a school bus had ran into an open pit and that caused some changes to be made in the oversight of the pits and the quarries.

Also, though, a quarry opening or an existing quarry has to also be permitted by TCEQ, the Texas Commission on Environmental Quality, so we're a partner with them in regulating Pit and Quarry Safety.

MR. HOUGHTON: So it's regulation and environmental issues along with that, so anything relating to quarries is our responsibility now.

MR. MONROE: Yes, at least as far as their safety features are concerned, their ability to continue to operate in a safe manner.

MR. HOUGHTON: And the environmental issues are with?

MR. MONROE: Texas Commission on Environmental Quality.

MR. HOUGHTON: Okay.

MR. WILLIAMSON: Other questions or comments, members?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: Do I have a second?

MR. HOUGHTON: Second.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: Motion carries.

MR. MONROE: Thank you.

MR. BEHRENS: Agenda item 6(b) is two rules for Final Adoption, the first being final adoption rule on pass-through tolls, and James Bass will handle that.

MR. BASS: Good morning. For the record, I'm James Bass, director of Finance at TxDOT.

MR. WILLIAMSON: I thought John Munoz was our director.

MR. BASS: Merely when I'm on vacation, so it's about half the time.

(General laughter.)

MR. WILLIAMSON: This will be the first time, Coby, in four months, five months?

MR. BASS: I was with you in San Antonio; I'm glad I left such an impression with you.

(General laughter.)

MR. BASS: This particular minute order adopts new sections to the Texas Administrative Code related to pass-through tolls. These sections will implement the authority granted by Article 6 of House Bill 3588 which authorized TxDOT to enter into an agreement with a public or private entity to provide for the payment of pass-through tolls as reimbursement for the construction, maintenance and operation of a toll or non-toll facility on the state highway system.

A pass-through toll is defined as a per-vehicle or per-vehicle-mile fee determined by the number of vehicles using a facility, and this pass-through toll would be paid by TxDOT to the developer or proposer.

These rules were proposed in the January meeting and subsequently published in the Texas Register and a public hearing was held in February. Oral and written comments were received and have been addressed in these proposed final rules.

Staff would recommend your approval, and I will be happy to attempt to go over any of the comments if you would like us to.

MR. WILLIAMSON: First of all, are there questions for Mr. Bass, Ms. Andrade?

MS. ANDRADE: No.

MR. WILLIAMSON: Questions, Robert?

MR. NICHOLS: No.

MR. WILLIAMSON: Ted?

MR. HOUGHTON: No.

MR. WILLIAMSON: John?

MR. JOHNSON: I'm going to give the poor guy a break. We haven't seen him in so long.

MR. BASS: That's four out of five commissioners recommend; you always wonder about that fifth one.

(General laughter.)

MR. WILLIAMSON: Well, since we don't have any questions, are there any comments that need to be offered?

(No response.)

MR. WILLIAMSON: Okay. Well, I have a comment, and that is that I'm very pleased with how quickly Finance and OGC moved to bring this what I consider to be one of the most important parts of House Bill 3588 through the process and get it on the table where communities who are anxious to try to sell us on their ideas can now move forward. I really appreciate the speed.

One of the criticisms that is sometimes directed at us is that we take too long to do some things, and I think we've certainly proven here that on important matters we can move fast.

MR. BASS: Appreciate that, and most of that credit would go to Mr. Jackson and the General Counsel's office.

MR. WILLIAMSON: We have a lot of good employees, but we are truly blessed with a very entrepreneurial division or administrative headquarters. Even when you don't show up, I think a lot of your work product does.

Do I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: A second?

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Congratulations.

MR. BASS: Thank you.

MR. WILLIAMSON: Grayson County, bring it on.

MR. BEHRENS: Agenda item 6(b)(2) is our final adoption of rules for the issuance of bonds. These were bonds approved by Proposition 14, sometimes referred to as Ogden Bonds.

MR. LOPEZ: Good morning, commissioners. My name is Carlos Lopez and I'm director of the Traffic Operations Division.

The minute order before you proposes final adoption of the rules covering the issuance of bonds for transportation improvement and safety construction projects on the state highway system. These bonds will be secured and payable from the State Highway Fund.

The rules implement the provision of Article 5 of House Bill 3588. The rules were published in the January 2, 2004 edition of the Texas Register, and the department received public comments from three groups. Comments from two of the groups were accepted or clarified; we proposed to not implement the comments given by a city. The city wanted to submit several site-specific projects, allow future direct submissions from the city, and requested the commission to issue safety bonds first. The actual submission of projects is beyond the scope of the rulemaking process, and the timing and types of bonds to be issued is a policy decision to be made by the commission.

Regarding the direct submissions by cities, the rules are silent on this issue. The bonds are only eligible for work on the state highway system and the districts will be able to analyze and submit projects both inside and outside of cities. This silence will not preclude cities from suggesting projects to their local district offices as a result of a call for projects or through existing planning processes. The silence could also eliminate potential confusion among cities that all system projects could be funded.

We think these rules are ready and we recommend your approval.

MR. WILLIAMSON: First, are there questions for Carlos about this proposed rule?

(No response.)

MR. WILLIAMSON: Are there comments that need to be directed towards Carlos or his division?

(No response.)

MR. WILLIAMSON: Very well. This is the second of several most important changes as a result of House Bill 3588 and related legislation, and I would direct the same compliment to you and your staff as I have -- and again to OGC, as I have the others, and that is the speed with which you moved is most appreciated. We will forever refer to these as Ogden Bonds in honor of the senator who advanced this idea, and with that, I will ask for a motion.

MR. JOHNSON: So moved.

MR. WILLIAMSON: And a second?

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: Opposed, no.

(No response.)

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

MR. LOPEZ: Thank you, commissioners.

MR. BEHRENS: Next we go to agenda item number 7. We have three discussion items, the first being item 7(a) which will be discussion of rules that would be establishing a formula for allocating funds for the individual eligible public transportation providers, and that will be presented by Sue Bryant.

MS. BRYANT: Good morning again, commissioners, Mr. Behrens and Mr. Simmons.

I'd like to introduce the public transportation discussion item, first starting with the authorizing legislation which is included in your briefing books. This is Section 456.022 of HB 3184. It is an extremely short section; therefore, with your permission, I'd like to read it into the record.

That section reads as follows: "The commission shall adopt rules establishing a formula allocating funds among individual eligible public transportation providers. The formula may take into account a transportation providers performance, the number of its riders, the need of residents in its service area for public transportation, population, population density, land area, and other factors established by the commission."

This section reflects the long-standing wishes of the commission to have, as you said, Mr. Chairman, a results-based allocation of funds.

The current formulas are based largely on history. Your briefing books also include both a chart and narrative description of the formulas for federal rural funding, state rural funding, and state urban funding, and in each case the allocation is based primarily on what was allocated in the previous year.

To get where we are today, we did the following: we convened a meeting of the Public Transportation Advisory Committee -- this meeting was primarily an organizational meeting, so another meeting to focus very specifically on the formula allocations is scheduled for April 7; we held one video conference through the 25 districts, plus six additional listening sessions; plus we solicited comments in writing and via the internet. I'd like to take just a moment to describe some of the results of those listening sessions for you.

The listening sessions plus the video conferencing throughout the 25 districts, these were held in Houston, Waco, Tyler, San Angelo, Fort Worth, and Edinburg. The listening sessions plus the written and Internet comments, we received a total of 202 comments and a total of approximately 400 people attended those sessions. If we subtract TxDOT employees who attended certainly all those sessions, plus we did have TTI staff, we contracted specifically with the Texas Transportation Institute to assist us with those sessions, plus write a report which will be available very soon, then we had a total of 312 individuals that attended the video conferencing plus the listening sessions.

We did achieve through those really four items that could be considered as consensus items. There was consensus on the following: there is definitely a high need for public transportation in the state of Texas, the resources are not sufficient to address the need; number two, participants were very complimentary to the department's listening sessions and particularly the first session conducted by video conference through the district offices; third, there was consistent support for greater coordination of health and human services and other public and client transportation; and fourth, there was general consensus that the use of any performance measures be based on verifiable criteria.

We also had, as you would expect, a good deal of diversity across the state of Texas, and not surprisingly, I think, we did not have total consensus on the following: that many, but not all of the participants expressed the need for a change in the formula; the providers who have built up a system over the course of many years with these funds did express concern over any potential reduction in service; other providers consider that a static formula does not appropriately adjust to local need and performance. There was not consensus on any one specific formula or on any one specific approach. This was certainly reflective of the state as a whole in which each part of the state expressed their needs differently in terms of land, population, special population groups, ridership and cost.

That brings us to where we are today in this discussion item. Where we are continuing in terms of simply the process and the schedule remaining on that -- and that's also included in your briefing books -- that in order to meet both legislative intent and to have funds available for next fiscal year, that again on April 7 will be another Public Transportation Advisory Committee meeting. Again, this meeting will focus very heavily and almost solely on discussing various formula options.

April 29 is the scheduled date where draft rules will be prepared for the commission to consider. In May, following that commission meeting, there will then be public hearings. The previous were public meetings and listening sessions; now we get into a very formal rulemaking process, so there will be public hearings and additional Public Transportation Advisory Committee meetings to consider the drafts, make additional comments. And then on June 24 the intent is for the commission to consider final adoption of rules that will allow funding to go forward for next fiscal year.

If I can answer any questions or open it up to discussion.

MR. WILLIAMSON: Let's have questions from the commission first and/or comments, questions and/or comments at this time.

MR. NICHOLS: I think mine may be more -- partly comment, partly question, and some of it may be a legal question on the process. I know that the advisory committee is working and dedicated to trying to meet as often as they need to arrive at a conclusion so that we can have our recommended proposed formula -- if that's what we end up with next month -- and then go out, but I also think that with the time frame as constricted as it is, that very possibly that once we go out with a proposed formula that they still will be meeting.

MS. BRYANT: Yes.

MR. NICHOLS: And that during the public comment and public review period, they may make some changes in their original recommendation.

MS. BRYANT: Yes, very much so.

MR. NICHOLS: And so that in our response to comments that come in -- which theirs would be one of them -- we might end up in the final adopting a formula that was different, possibly the same, possibly significantly different than what was proposed, and I know from previous experience on proposals that if we have a -- is the term substantial?

And this is the point I'm not quite sure: what would be substantial. If you have four like categories of consideration with an original percentage weighting of each, if the percentage weighting changes a little bit, would that be substantial, or if a category is dropped or a category added, would that be substantial?

MR. MONROE: The rule about rules is that you propose something to the public and they are supposed to have an opportunity to comment on that. Then the judicial language is if as a result of that comment you have a substantial change in the rule, then you need to go back and republish because the public has not had an opportunity to comment on that. We're dealing with a very delicate subject here and I would think that if you had a new formula that came up, my advice would be to republish and let people comment on that.

MR. NICHOLS: So if the advisory committee had like four categories with a percent weighting in each category, you're saying if they took one of those categories and modified the percentage a little bit, that that would be a substantial change and we'd have to throw it out and start over?

MR. MONROE: That would be my advice, yes, sir.

MR. NICHOLS: That's what I was concerned about. So in effect, if they have any changes in the formula whatsoever after the original proposed, then it's start over again?

MR. MONROE: If the commission wants to change it in response to those suggestions. Remember, the commission could always keep it as it started.

MR. NICHOLS: I understand. And if we --

MR. WILLIAMSON: I'm sorry. This is on point with your question.

MR. NICHOLS: Okay.

MR. WILLIAMSON: Is it the case that we could call an emergency meeting of the commission to approve those substantial changes to start the clock faster than waiting till the next 30-day committee meeting?

MR. MONROE: You can call an emergency meeting of the commission under certain very limited circumstances. The Queen Isabella Causeway not only fell but it needs to be rebuilt in two days and therefore we need an emergency order and rule change doing away with all of our procurement rules and instead doing this -- that's what emergency is supposed to address. Whether this qualifies, I would have a grave doubt about whether or not that justifies an emergency meeting.

Now, you could have emergency rules which you could substitute, but once again, that's a rather iffy proposition, and although this isn't my call, you're dealing here with people getting money, and if you do very much that's outside some very narrow limits of the law, if you're going to cost anybody any money, that gives them a great target to shoot down the whole thing.

MR. WILLIAMSON: Sorry. Continue, Robert.

MR. NICHOLS: What's interesting to me in this is that in effect what we're doing is proposing a formula, and we're looking for comments on that formula, and if there's substantial information that comes in from the comments where the formula really ought to be changed, then we in effect are prohibited from recognizing those without throwing the whole thing out and starting all over again.

MR. MONROE: That would be my advice, yes, sir.

MR. NICHOLS: So it's kind of real strange having a public hearing on a formula that you can't really change from the proposed. It's kind of a catch-22.

MR. MONROE: Well, look at it this way: as a result -- I mean, that's what public meetings are all about and that's what rulemaking is all about. It gets the public to come forward and say you've made a mistake, you're wrong, it ought to be this way. And you say, by George, I think you're right, it ought to be that way. But this way is the way we presented it to everybody else, so if you're going to change those formulas, and particularly if substantial numbers of people are going to see their allocations changed substantially from what they commented on in the first place, the law takes the position that it's only right that they have a chance to come back again and say nope, you had it right the first time, or tell you what, why don't you change it another way. That's the whole idea.

MR. NICHOLS: And so we in effect are locked in because of a timetable in which we have to do the formula.

MR. WILLIAMSON: What's the worst that can happen if we delay it?

MR. MONROE: I don't know. You just keep doing business as before.

MR. JOHNSON: You start the fiscal year without a formula in place for that.

MR. NICHOLS: But what you might could do --

MR. WILLIAMSON: But the worst that could happen is one month of no funding into the next fiscal year. Right?

MR. NICHOLS: Well, which would be pretty bad if you're trying to buy gas and pay bills.

MR. JOHNSON: Well, two months or longer. You've got a 45-day period. That takes two meetings. They're not congruent.

MR. NICHOLS: But it's possible if the commission, if you wanted to lock in a formula, one of the things we might could do to allow more time -- and I think the commission wants to make absolutely sure that we've had adequate time for everybody's input and all the review and all that and not to rush this thing and end up with a formula that everybody is not pleased with. But we could consider a formula without changing the formulas but only accept it for six months of the year or a quarter of the year.

MR. WILLIAMSON: Or one month.

MR. NICHOLS: Something like that.

MR. MONROE: Yes, sir.

MR. NICHOLS: But wouldn't we have to put that in the proposed rules that we may be considering it for a whole year or a fraction of a year?

MR. MONROE: You can put that in the preamble, yes, sir.

MR. NICHOLS: We might want to make sure that we do that to give us some flexibility in there. Thank you.

MR. MONROE: Surely.

MR. NICHOLS: The second part of it has to do with the fact that we're trying to review this whole thing which is pretty significant -- it's really more to her -- but we also recognize that this coming year we're going to be tackling the Health and Human Services portion of it.

MS. BRYANT: Correct.

MR. NICHOLS: Which could be, once all the forces come together and the ideas come together, a matter of programming dollars. It may be a matter of programming dollars with these transit providers but expecting certain results, and it could be a matter of creating a different type of structure that's user friendly so that the users of this system, rather than having to work through the process, it's simple from their standpoint and we adopt backwards.

But it has concerned me -- and I have expressed it -- that here we are dealing with this formula for transit, yet one of the big pieces of the puzzle, the Health and Human Services, hasn't been worked out yet.

MS. BRYANT: That's correct.

MR. NICHOLS: So here we're going to try to work out a formula, adopt it, put it into place, and immediately this next year begin working on the Health and Human Services portion of it, and when we do that, we may realize that that really, when we blend these two together, might dramatically affect or impact the original formula. In other words, once we see the two blended together, that might impact that formula, and so in effect, even though we have something we're going to adopt -- propose, adopt, incorporate, once we get into the second half of this, we may end up coming back and reviewing it.

MS. BRYANT: Oh, absolutely.

MR. NICHOLS: So we're almost in a transitional for really another year. My point is that the public and the Transit Association needs to recognize that we are. All right, thanks.

MS. BRYANT: Thank you.

MR. WILLIAMSON: Ted?

MR. HOUGHTON: I don't have any questions.

MR. WILLIAMSON: John?

MR. JOHNSON: I have a question of counsel and then also an observation to Sue.

Richard, Robert started with the concept of what does substantial mean and we talked about substantial modification, and that is very important to this discussion and the determination of what is substantial, and I find when we're talking about objective issues that substantial probably has a lot of different views, it just depends on where the viewpoint is coming from, so it becomes a word that has meaning or measure in a lot of different ways, so I think that's very difficult to ascertain.

And so I'm assuming that what you're saying is if there's any change and certainly any change that has financial impact on any of the providers, that you would recommend review.

MR. MONROE: Yes, sir.

MR. JOHNSON: Just as a side, is it also your recommendation that people or institutions like this always follow the advice of counsel? Operative word there "always."

(General laughter.)

MR. MONROE: I once worked for a lawyer as his counsel and he had wised up and gotten out of law and gone into business because it was much more lucrative, and he had been for many years a practicing attorney and a very good one, and he would sometimes say to me: Richard, I agree with everything you've said but I'm not going to do it. That's the best answer I can give you.

MR. JOHNSON: Thank you for that admission.

(General laughter.)

MR. JOHNSON: Sue, this is a very complex area because to use probably a worn-out expression, there are a lot of moving parts. Some of this is very new to us, and just by the breadth of the comments that we've received and what we've done so far, you can see that there are a lot of different angles that are being put into the equation, if you will, certainly opinions that are put into the equation, and it's going to take the wisdom of Solomon to try to come out with something that at least you can draw consensus from all the varied groups.

I have two observations. One is I find that when government is involved through the subsidization process that the incentive to provide excellence or to expand is lessened, and private enterprise, I think, needs incentives in order to stay on the edge -- and competition is a good incentive; I don't suggest that here -- but what I do suggest is the most important aspect of this is the service that is provided, and in essence, the people are utilizing these services and if there's some measure that we can get and it's difficult to put in an objective formula, but I think incentive is one thing and performance is another thing that needs to be considered.

Obviously there are a number of objective criteria that also need to be considered: geographical size, passenger miles, a myriad of them, population, and those need to be components of the equation or formula. But we need to incentivize these providers and make sure that they know that we're watching that the type of service that they're providing and the quality is going to be one of the uppermost criteria in the judgment, because we cannot year after year after year subsidize their operation at the same rate and watch their service deteriorate. And back to the wisdom of Solomon, I think it takes a Solomonic approach and ability to arrive there, but that's my impression.

MS. BRYANT: Thank you.

MR. JOHNSON: Thank you.

MR. WILLIAMSON: We're going to have several witnesses and I'm going to have some questions and comments of you afterwards. But I've got one prior because one of the witnesses -- if he's still here -- is Mr. Ellis, and I will share with you Representative Ellis and with my colleagues and Sue and anyone else who is listening, I was first on the Appropriations Committee with the governor in 1987. The governor and I both represented edge rural districts served by rural transit providers, and I shall never forget the intense lobbying of those transit providers to be sure that the formula we were going to adopt in the Appropriations Bill that year didn't change.

And I shall never forget it because the governor and I and 15 other members were charged that year and the next with reducing general revenue appropriations to almost every category of government, and I was struck by the fact that I had an important component of my district asking a very conservative -- at that time -- Democrat appropriator to don't change anything, don't change anything, and it's stuck with me now for 17 years.

I have several commission members who are very concerned that whatever we do in the next six months we don't disrupt life for House and Senate members to the point that we cause discomfort, and I recognize the importance of that. But I will tell you -- and I'm speaking to these transit providers through you -- we simply cannot continue to distribute money based on the way it was distributed last year; we just can't do it. We have more and more transit providers incorporating and coming to us and asking us for money, we have a lot of transit providers who are serving fewer people now than they were. We have a limited amount of money, and the only way I know to do it fairly is to define the performance and the results that we think the legislature expects and start directing our funds in that direction.

And fortunately, we have the Health and Human Services cash flow -- that we didn't know we were going to have a year ago -- out there on the table to tell to transit providers -- I'll use my home area, Parker County Transit -- you have the opportunity to not only stay hold harmless but actually increase your cash flow if you're willing to compete for servicing those providers, so if you're afraid of a change, then accept it as a positive and go out and figure out how to expand your business and your customer base.

But I can tell you this has been around at least since 1987 and probably before we got there -- I don't know; Sam Russell could probably tell us about that.

So having said that, Sue, we're going to let you step back and we're going to begin to recognize those who want to testify on the agenda item, beginning with Representative Ellis.

MR. ELLIS: Good morning, Mr. Chairman and members. As always, it's good to be here with you today.

I've stood before you before on many issues, including the Highway 190 corridor, the I-69 corridor, other issues that are related to my district, and today I'm here for a little bit different one than what I've been before, and that's a concern over the issue of the way we allocate the money for rural transit.

Serving on the House Appropriations Committee this year was interesting, to say the least. Having been a freshman member of that budget cycle, it's a committee I've always begged to be on because I think there's probably three or four committees in our legislative chamber that if you ever want to move up, if you ever want to have a full understanding, I think there's three or four committees you have to serve on. Appropriations is definitely one of them; I think Ways and Means is another; probably Sunset is another.

And so I was excited about getting put on Appropriations Committee until I found out that instead of a $5 billion budget shortfall, we had a $10 billion budget shortfall. And I immediately went to the Speaker and said, What did I do to you?

(General laughter.)

MR. ELLIS: But I think we passed a budget this year that no new taxes was significant to the people that I represent in my district. It was a difficult assignment, and I know, Mr. Chairman, you went through the same thing so you understand exactly where I'm coming from. And I appreciate your years of service in the legislature.

I'm particularly concerned today about rural transit. A common phrase we're all hearing a lot of these days is "fair and equitable." I had a meeting with school superintendents the other day. You know, that's one of the big things being used in school finance is "fair and equitable" and one of my school superintendents gave me an illustration that I think probably pertains to what we are talking about here today with rural transit dollars.

He took a chair very similar to what we've got here and he set it in the middle of the floor, he walked around behind his school board table and he took a chair very similar to what you're sitting in and he wheeled it around and set it beside the metal chair, and he said, Which is equitable? I mean, if you stop and think about it, the metal chair works, it accomplishes the situation, it's adequate, but for my schools I want the nice comfortable office chair. And I think it's the same situation when we're talking rural transit and we're talking the services that we provide within our district, and that's what I'm here asking for today.

We passed a budget this year that increased funding for transportation by a significant amount, roughly $7 million, if I'm not mistaken, about 7-1/2 percent, and the funds for rural and urban transit also saw increases of roughly approximately 6 percent, and I think those are significant.

You are aware of three pieces of legislation really I think that affect these issues this year: 3184 which was a Fred Hill bill, and 3588, but also House Bill 2292. And when we were going through the appropriations process with 2292 and Representative Wohlgemuth laid that bill out, I expressed concerns then of what it was going to do within the district that I represented because a huge number of my constituents utilize rural transit to get to the VA hospital, to get to UTMB in Galveston, to get to their local medical providers as well. We have local routes that they go to our local medical providers in the hospitals and the services that the poorest people and the most needy people in my district require are valuable, valuable service in my area.

When we were discussing House Bill 3184, I kind of got Chairman Hill and kind of took him over to the side and I expressed some concerns about him, and we ended up going to the back of the chamber so we could discuss it a little bit better without interfering with what was going on, and some of my concerns was what are we going to do to service this within the district that I represent. I think that's my number one priority are those 149,000 people that live within District 18; that's my job is to look out for them and then to look out for the rest of the state secondary to District 18, and I firmly believe that that's my job.

And as I visited with Chairman Hill about the situation and about 3184, a few issues came up, and one of those issues that was a major concern of mine was if we passed the bill as written, we're changing the rules and we're changing the funding formulas and we're saying we're going to do all this within about a four-month period, and it's going to be hard for these guys to look at setting a budget for the next fiscal year. I mean, if we did this in April and it took effect September 1 of 2003, what were we doing to them, how were they going to set a budget?

And it's the same situation we're looking at with school finance now. If we come and pass a major educational funding reform bill, what happens to our school districts, how do they write a budget for the next fiscal year. And I think once again we're faced with that exact same situation because of the time frame that we're looking at now. If a rule gets passed in May or June, these guys have two months to completely rework their budgets, and it's going to be real hard for them to figure out what services they're going to do without, what services they're going to add, how are they going to serve the people of my district, and as I said, that's my concern.

I offered an amendment to 3184 that offset the date of implementation of that bill until September 1 of this year, and that amendment was accepted by the author and by the other members of the legislature, and one thing that I'd like to really point out is nobody ever said we're not going to adopt the same rules that we've got; nobody ever said we're going to completely change the rules, we're going to completely change the issue. So conceivably, we could adopt the same rules we've got on an interim basis.

And Mr. Nichols, I appreciate your comments a while ago because I think that's exactly what you were saying was let's don't interrupt the flow before we know what we've got and before what we've got in front of us, and I appreciate that.

We gave you huge authority this year with 3588 to look at the way we fund transportation and to look for new venues for funding and to coordinate the transportation dollars so that we all went toward the same place, we all worked toward the middle, and I think that's exactly what the legislature is asking you to do.

Part of 3588 was a report back to the legislature, and I would ask that maybe we look at can we incorporate possible rule changes here in that report back to the legislature so that the members of the legislature once again have an option of looking to see what's going to be in front of us before we actually do it.

TxDOT, and under this board specifically and under you as commissioners specifically, you've always looked at results, you've always looked at long-term outcomes, and that's very, very appreciated. I mean, in the designing, the planning, the building of highways you've always looked at that, and that makes good sense, and I think this is another issue where it's going to make good sense.

I understand that you plan to consider revision formulas in the April commission meeting, yet neither the providers, you, or the Public Transportation Advisory Committee have seen those formulas and those proposals.

In summary, I'd like to make a few recommendations -- and guys, I've always been supportive of transportation and I'll always be supportive of transportation, it's too important to my area -- but let's slow down a little bit. Let's adopt current formulas if possible as an interim so that our providers do know what they've got available to them at least through those several months.

Let's conduct a study or a survey to determine which providers are providing which services, and once again, Mr. Chairman, that goes right back down to what you said, let's do it based on results. Let's determine how to integrate those funds that are going to be coming over from 2292 and from Health and Human Services. Let's slow down and look at how we can integrate those funds and utilize those the best within the districts as well. And then let's develop funding formulas that are fair and equitable to all the providers that are providing services in the area.

Mr. Chairman and members, thank you very much. I will take you up on your request this morning, I will call Congressman Turner this afternoon and fuss at him about the transportation bill. Anybody got any questions?

MR. WILLIAMSON: First of all, we appreciate your being willing to call Congressman Turner. He had great public service here at the state level and he is a good public servant. And you and Mr. Brown both were staunch supporters and we do appreciate that and don't take lightly your words. We listen when House and Senate members come and talk to us.

Questions or comments?

MR. NICHOLS: My comment is thank you for what you have done for us and I thank you for being here today to express your concern. It's obviously a concern of ours, but we also recognize it's something that needs to be addressed, it has got to be addressed, and we're certainly going to try to do the best job we can and not be inflexible in making a final decision. I think we're willing to jump in and work with it, and if it needs to be adapted or adopted or changed or modified, we'll work with whatever, and we're going to keep working at it until we provide a system that is beneficial to the public. It's the public we're trying to benefit, and that's the same people that you're talking about, so we're on the same page as far as that.

MR. ELLIS: I think we are.

MR. WILLIAMSON: Any other members? John?

MR. JOHNSON: Representative, thank you for taking the time and making the effort to be here. Most of us up here are business people and in business you hate surprises, and I think you're exactly right on the idea of as much knowledge of what somebody is to expect in their budget cycle is very important because you know the shorter the notice, the more difficult it is to adapt.

I feel that we all have had business experiences where we have gotten surprises. Some of them, fortunately, have been good surprises, but others have been ones that were negative and we've had to deal with those. Hopefully we will be able to create not such a negative surprise that has a timing aspect to it that makes it impossible to operate, and so I think your point is very well taken in regard to the timing of all this and making sure that people have the ability to adapt and change according to the circumstances.

MR. WILLIAMSON: Other questions or comments, members?

(No response.)

MR. WILLIAMSON: Representative Ellis, thank you so much.

MR. ELLIS: Thank you so much. You all have a great afternoon.

MR. WILLIAMSON: Kay Dorman. Kay, thank you for being with us today.

MS. DORMAN: Thank you. I'm Kay Dorman and I'm executive director of Mini Bus, Incorporated, and we cover a 13-county area in East Texas.

At the beginning of the session this morning, I think one of you made comment that you expressed your gratitude for us coming in and sharing our dreams and wishes. As a small rural public transportation provider, that's exactly what I'd like to do is share my dream and my wish that the rural funding formula would be very fair for all regions of Texas, and in order to do that, my opinion is that it should be based on population and the land scenario where it would give some accountability to the areas like West Texas. Also, I know you're aware that the funding, the 5310 funding for the elderly and disabled is based on population and that seems to have worked well in the past.

Mini Bus and myself is taking charge in East Texas and we're in the process of educating our taxpayers and our county officials, our judges, et cetera, in the fact that this funding formula is very, very unfair to the taxpayers within all regions of the rural Texas areas. It's very difficult to go to a taxpayer and explain to them that most of their tax money for rural transportation is actually going to a resident of another county. That's going to be hard to explain. To make it fair, that's why we need to change this formula.

I realize the difficulty in the existing providers having this money and providing the services that they do for their residents, but I think you have to consider the fact that it's more difficult to go to the residents and explain why they don't have these services.

And speaking of program performance or performance-based funding, me personally, I think that that would be very welcome after we're up to 100 percent of our funding, and until then I don't think that would be fair. In all rural public transportation providers, small ones have had to be extremely creative and innovative with the tiny amount of funding that we have received, so if we were up to 100 percent, go ahead and do that on a performance basis because we'll just knock your socks off. Thank you.

MR. WILLIAMSON: Wait. Members, questions or comments for this delightful witness?

MR. NICHOLS: I really didn't have any questions. I appreciate you coming here.

MR. WILLIAMSON: Yes, we really do appreciate it. It's important for us to hear from people further extended from Austin than sometimes we are. Thanks.

Roxanne McKinley. It says here she's from East Texas Council of Governments.

MS. McKINLEY: Good morning. I'm Roxanne McKinley; I'm the rural transportation manager for the East Texas Council of Governments.

I have a formula that TxDOT had put together and it was based on 75 percent population and 25 percent population density. And just as an example, ETCOG is 20 percent funded based on what we should get. Based on that 75 percent and that 25 percent -- I know that's not what you're going to end up with, but just as an example -- we should be receiving $907,000 and we're receiving $183- of federal funds, and that's 20 percent of where we should be so that we can serve our entire region.

MR. WILLIAMSON: I've just got to ask you, Roxanne, what you mean to say is you're receiving only 20 percent of what you need. When you say should be, you're not implying that we're not funding you, the funds aren't available.

MS. McKINLEY: It's the formula that's in place, the current formula.

MR. WILLIAMSON: So the formula is not 100 percent funded.

MS. McKINLEY: Right. And if a formula was based on 75 percent population and 25 percent land, then we would be funded at 20 percent with the current money that's available in the federal portion.

I know that the 5310 Elderly and Persons with Disabilities Program is based on population within the districts. Now, those funds come to the districts based on the elderly/disabled population. The federal funds are allocated to Texas based on the rural population for the state of Texas. ETCOG feels that population and population density needs to be one of the major parts of any new formula.

Performance, if we're getting 20 percent of what we should get and there's people who are getting 100 percent or more based on their population and population density of their area, we can't compete with that type of performance. We could compete with a cost per mile because everybody's mile is the same, but we cannot compete on percentage of population that we serve or the number of trips that we serve based on our population. If a performance measure is a part of the new formula, it needs to be on something that everybody can fairly compete on that formula.

MR. WILLIAMSON: Makes sense. Mr. Nichols?

MR. NICHOLS: East Texas Council of Governments, that happens to be the area that I fall in. In most areas of the state, we're dealing directly with the providers, TxDOT is. In several areas of the state, we deal through the council of governments. East Texas Council of Governments is one of three or one of four.

MS. McKINLEY: We're one of eight COGs that are direct operators with TxDOT for rural public transportation.

MR. NICHOLS: We have actually eight?

MS. McKINLEY: Yes.

MR. NICHOLS: The federal government allows for a total of 15 percent of the funds to go for administration fees; I know that TxDOT, because we're trying to get as much of that money out there as we can, we only take, I think, about a 3 percent or 3-1/2 percent administration fee. The council of governments don't directly provide the service. You turn around and contract out with a provider.

MS. McKINLEY: For operations. Right.

MR. NICHOLS: Do you take an administration fee, and if so, about what percent?

MS. McKINLEY: I don't have that amount with me but we do take an administrative part to administer the programs.

MR. NICHOLS: Do you know if it's 5 percent or 10 percent? You don't know?

MS. McKINLEY: No.

MR. NICHOLS: I'm really kind of curious and have asked the staff to try to find that out right now.

MR. HOUGHTON: Is there a standard?

MR. NICHOLS: That I'm not real sure; Sue may know.

MR. WILLIAMSON: The question is is there a standard by which the council of governments or any other intermediary distribution system is told how much administrative fee they can retain before they do their grants with their providers.

MS. BRYANT: Not currently.

MR. NICHOLS: I know the feds say no more than 15 percent; we do 3 percent or 3-1/2 percent. What I'm trying to find out is what percent do the council of governments take. Do they take the difference between 3 and 15, or do they take a portion of that?

MS. BRYANT: TxDOT usually takes actually a number, it's about $500,000 for administration; that runs between 3 and 4 percent. For 2004 it was about 3.6 percent. We're going to have to look and see because the COGs don't charge always the same indirect cost rate, and that would also equal a different number, a dollar amount, and so we are looking that up for you, sir.

MR. NICHOLS: Okay, thank you.

MR. WILLIAMSON: Other questions or comments for this witness, members?

(No response.)

MR. WILLIAMSON: Roxanne, thank you.

MR. JOHNSON: The next person who has asked up to speak on this issue is Dean Danus, the deputy director of the Alamo Area Council of Governments. Dean, thank you for coming; we're delighted that you're here.

MR. DANUS: Thank you, sir. Commissioners, I know it's lunchtime and I'll try to be brief. I am Dean Danus, the deputy director for the Alamo Area Council of Governments, and through our Alamo Regional Transit, ART, Program, we provide services to over 400,000 people within Comal, Guadalupe, Bandera, Kerr, Gillespie, Wilson, Frio, Karnes, Atascosa, Medina and Kendall Counties.

I'd like to commend and take the opportunity to thank Sue Bryant and Bobby Killebrew and the entire TxDOT staff for the service that they provide, not only to our COG but throughout the transit providers within the state of Texas.

We provide service, 5311, TDOA, Texas Department of Aging, and Medicaid transportation to our constituents within the eleven-county region. Historically under-funded formula based has been an area of concern for us. We have gone out and tried to find other funding sources, being entrepreneurial, in order to meet the needs of the citizens of those eleven counties. It has been a struggle and it continues to be a struggle.

Therefore, being under-funded, we request that the funding formula needs to be changed, changed based not only on population density but areas of performance, proven performance, and we'd like to take that into consideration. I know the advisory committee is working on it. They have a tough job; you have a tough job. It's not going to be easy, but it needs to change, and I'm here to advocate a change. Thank you.

MR. JOHNSON: Does anyone have questions?

MS. ANDRADE: Do you have any idea what you charge administrative?

MR. DANUS: The operation is charged 5 percent.

MR. JOHNSON: Any other questions or observations of Mr. Danus?

(No response.)

MR. JOHNSON: Again, thank you very much for being here. Just as an observation, I noticed that the Chair presented himself the opportunity to introduce the ladies and I get to introduce the gentlemen. I don't know if there's a message there or not.

(General laughter.)

MR. JOHNSON: The next speaker is Robert Stephens, the director of transportation for the Concho Valley Council of Governments. Robert, welcome.

MR. STEPHENS: Thank you very much. I'd like to thank you for having me here. My name is Robert Stephens and I'm here on behalf of the Concho Valley Council of Governments and its member county and city governments and the residents of the Concho Valley region which encompasses 13 counties in central West Texas.

We'd like to applaud the commission and TxDOT staff for their efforts in facilitating these funding formula meetings, and their commitment to try to make a change in distributing these funds based on need, whether they be strategic or otherwise, performance and maybe possibly other demographic criteria.

We'd like to encourage the department's Public Transportation Division to work toward development of a new funding formula for rural transit providers, a simple approach that addresses regional needs in a predictable, equitable and understandable manner.

We'd also hope that in constructing this formula, we'd remain true to the intent of the enabling federal legislation to improve mobility and thus the lives of the economically disadvantaged, the elderly and the disabled in rural areas, and to, hopefully, the intent of state legislation, House Bill 3184, that prompted this process. We believe the principal justification for the rural formula program lies in that national mobility goal to serve the economically disadvantaged, the elderly and the individuals in those rural areas.

The Concho Valley region is one of several isolated areas in the state, and our region covers roughly 15,000 square miles, a population density of four people per square mile. We've lost most of our small town medical facilities; three counties in our region don't even have a pharmacy. This requires a commitment to rural public transportation to allow these people to remain in their homes, remain independent.

Our local cities and counties have helped make that commitment with us by contributing 20 percent of our total budget to operate these services in our region. Without that commitment and equitable funding from the state, many of these people would be forced to leave their homes and lose their independence. Fortunately, we're not in that situation, never been close.

The Concho Valley region supports a formula that considers the socioeconomic composition of beneficiaries of rural transit services and makes an effort to focus state assistance to those less densely populated transit-dependent isolated rural areas of the state.

The formula that was presented at this time last year by the TxDOT staff which had several demographic components to it with several different percentages, including performance, we think is a good start, and we applaud their efforts in getting that done. We encourage the department to establish viable rural mobility goals and standards that are reflected in a formula that establishes unbiased census criteria for allocating monies to rural transit providers.

We in Concho Valley and West Texas do not gain any significant amount by applying this type of formula, and if predictions of a continued decline in population in our area is correct, we'll possibly see a decline in total funding in the future. However, this type of formula and the resulting level of the funding would always reflect an unbiased reality of our service area and reflect an equitable distribution of the scarce resources available to provide those services to the citizens in all our respective regions.

The Concho Valley Council of Governments, its member governments and the citizens of the region support TxDOT's formula development presented this time last year and is grateful to the commission and the Public Transportation Division for their efforts in addressing this area of concern. Thank you for your time and your gracious consideration and your leadership.

MR. WILLIAMSON: Thank you, Robert. Members, questions or comments for Robert?

MR. NICHOLS: I don't have any.

MR. JOHNSON: Robert, you mentioned support of performance basis. What performance criteria do you think are gradable that could be inserted in this process?

MR. STEPHENS: Well, Commissioner, there's lots of different types of performance measures you could use. I would only suggest that you use the ones that are verifiable, something that all can use, that all providers are -- verifiable information that can be used across all the state between all regions. Trips per capita, possibly, passenger trip counts -- there's several ones. I don't have any favorites but I think they're all good. We'd welcome the challenge; with most of the performance measures I think we've done pretty well. I think you'd be impressed with our numbers; we do a good job in West Texas.

MR. JOHNSON: The two preceding witnesses -- is that the appropriate term -- speakers who have represented councils of government have been asked about their administrative charge. What is Concho Valley's?

MR. STEPHENS: Concho Valley actually forges a partnership with our counties and cities and we actually run the programs ourselves, and when I said the 20 percent that they put in to secure that these programs remain and are viable and strong, they're actually partnerships that they help us with salaries for drivers, dispatchers and other operations costs, but we actually run those programs ourselves.

MR. NICHOLS: Let me ask one question; a comment Johnny made made me think of one. Some of the areas kick in local money. It might be city; it might be county, but locally there is money from one of the entities put into the transit system to help support it, shore it up. I refer to that as a vested interest.

MR. STEPHENS: Yes, sir.

MR. NICHOLS: We have some areas who kick in nothing.

MR. STEPHENS: Yes, sir.

MR. NICHOLS: I realize that some areas are economically really disadvantaged and just can't, but I'm not talking about that, I'm talking about let's just say everybody is equal there, some kick in and some don't. So there's a big difference in local support of what the local officials think the importance of that is. In a distribution formula, would local vesting have any influence on our formula or not?

MR. STEPHENS: I think it's a consideration you might, as a commission, take a look at. I think if you look at most systems, they probably have some form of local support, whether it be in cash or in-kind services, but it's something that we think we can't do without. The local investment that our cities and counties have made, our local officials have done for several years now.

MR. NICHOLS: I know that sometimes, you know, if you want to lead somebody in a direction, then you put a carrot out there and you work that way, and many of the programs we deal with, like aviation funding, some of the grants from the federal government, 90 percent-10. The locals have to put in 10. On our state contracts we have to put up 20, and my guess is if the feds didn't do that around the country, there's a lot of people that wouldn't put up their 10 or 20 percent if they weren't required.

If in our formula we did a survey of who's kicking in and who's not and what percent they were, we'd put a carrot out there, would you be supportive of that or would that be penalizing areas?

MR. STEPHENS: Sure, I would be supportive of it. It works real well in our area. Like you said, it's a vested interest, our elected officials and the citizens in each of our counties, and we have a responsibility to respond to them directly, we're partners in this thing.

MR. NICHOLS: Okay, thank you.

MR. WILLIAMSON: Robert reached down and looked at my notes, he stole my question.

MR. NICHOLS: Was that yours?

MR. WILLIAMSON: I had two and that was one of them. The other one is you're aware that we are assuming the responsibility for Health and Human Services transit?

MR. STEPHENS: Yes, sir.

MR. WILLIAMSON: One of the things I'm interested in, Sue -- and by the way, Sue, have you enjoyed this discussion approach we're taking where you're getting direction from the commission? I think it's very helpful.

I would be interested in not only rewarding local participation, as Robert suggested, but I would also be interested in rewarding or incenting transit providers to search for those who qualify for the highest amount of federal reimbursement in our Health and Human Services transit as a way. Since we've got a market and we can generate a market response by saying to Robert: The mentally indigent reimbursement rate is $48 per provider, we want to be sure you reach out and look for those, and in order to encourage you to do that, that's a component of our results-based incentive program. How would you react to that?

MR. STEPHENS: I think it's a great idea.

MR. HOUGHTON: How many cities are in your region?

MR. STEPHENS: Our major urbanized city is San Angelo which is in Tom Green County.

MR. WILLIAMSON: You might not be familiar, it's a suburb of Abilene.

(General laughter.)

MR. STEPHENS: We're fairly isolated out there; if you go any farther west, you won't find anything until El Paso probably.

MR. WILLIAMSON: Which just recently entered the state of Texas via the Blue Bell route.

MR. STEPHENS: But some of our counties are some of the poorest counties in Texas.

MR. WILLIAMSON: Ballinger, Winters.

MR. STEPHENS: We have -- Kimble County is one of the poorest counties in our region, and I think in the states, and they find a way to contribute to this program and they are a vested partner in it and they are very proud of the system that we run. And I think it's an awesome opportunity to do that.

MR. WILLIAMSON: Your testimony has obviously elicited quite a bit of discussion amongst the commissioners. You did well. Anything else?

MR. STEPHENS: No, sir. Thank you for your time.

MR. WILLIAMSON: Anything else, members?

(No response.)

MR. WILLIAMSON: Thank you very much, and I thank all discussion participants for participating in this new approach to the department's decision-making.

Sue, you may close it out.

MS. BRYANT: At this point we will be continuing, unless given other direction to do otherwise, with the schedule and we will look for mechanisms to transition, and look for ways that we can avoid any significant changes, hopefully, and also avoid any significant disruptions in service. And I appreciate the commission's support of this effort, and yes, it is a challenge and so we will continue to work with you, with the providers, and I think most importantly, with those who need our service.

MR. WILLIAMSON: Anything else for Sue, members?

(No response.)

MR. WILLIAMSON: Thank you, Sue.

MS. BRYANT: Thank you.

MR. WILLIAMSON: For the members and for the audience, we're going to go ahead and take up the discussion item on right of way and toll credits and then we'll take just a real quick break and finish up our agenda and try to avoid breaking for lunch. Mike?

MR. BEHRENS: Who's going to be first? This is going to be a tag team between John and Amadeo.

MR. CAMPBELL: I'll tag Amadeo as necessary.

Good afternoon.

MR. BEHRENS: John, before you start, for the audience's benefit, this topic is going to be talking about advanced right-of-way acquisition, something new that we're looking at that we have the opportunity to do and try to obtain right of way as quick as we can to curb inflating costs and also have it available for the needed projects.

MR. CAMPBELL: Yes, sir. My name, for the record, is John Campbell, the director of the Right-of-Way Division, and I am here, as Mr. Behrens pointed out, to enter into this discussion topic on advanced right-of-way acquisition.

I'd like to take this opportunity, particularly given the public format and the discussion nature of it to make the statement that I make on behalf of TxDOT regarding our acquisition of property in all venues, and that's that the power of eminent domain is an extremely serious power that the state of Texas has entrusted to TxDOT.

And we, particularly at TxDOT, and those of us in the right-of-way acquisition profession, maintain very serious concern for pursuing what we do in strict accordance with those powers because we understand that that is the protections that have been put in place to the private property rights of the citizens of Texas. We have a very clear understanding of how serious we do impact a very small portion of the citizenry with our projects.

With that said, the serious part, let me bring to your attention, we've provided in your briefing books a short summary of the authorities that TxDOT has for the acquisition of right of way and also to include some discussion of the authority that we have for advanced acquisition of right of way. And while it's there, I will take this opportunity to just point out some of the subtleties, because, as you can see, there is a very complex fabric of federal and state laws that designate how we pursue the acquisition of property, and legitimately so.

Given that fact, just the subtle turn of a phrase or the twist of semantics can largely change what is people's impression of what we're doing, so I'm going to endeavor to clarify some of the common misperceptions that people have as we go through this.

It is a state constitutional provision that we can only acquire property for a public use and that public use starts to play into the how we go about it, the timing and the types of interests that we can acquire. In addition to the constitutional provision -- and of course, that's the provision that says that we will not take any property without providing just compensation. And that's probably the key and the most important commonly misheld perception is that when we acquire we pay for property and when we condemn we somehow just take property, and that's absolutely not the case. We at TxDOT pay fair value for every property that we acquire, whether that's through condemnation or through actual acquisition.

Case law has also pointed out that those public purposes that we have, have to be defined explicitly, have to be defined by the Legislature.

So getting to the point where we can acquire, and then particularly when we get into a discussion of acquiring in advance, just that definition of what does advanced acquisition mean. We have existing TxDOT authority for advanced acquisitions in very limited circumstances and limited to a parcel-by-parcel consideration of the specific situation.

Those three types of advanced acquisition that we already enjoy the use of are for hardship. That's an advanced acquisition that is usually initiated by a citizen that has property that we've targeted for acquisition and generally they'll make a case regarding the status of their health or other disproportionate burdens they might bear as a result of our project that justify us going ahead of, in this case, completion of the environmental process. In our traditional realm, advanced acquisition is in advance of completing the environmental process.

The second of those three is protective purchase, and this is an advance acquisition that is generally initiated by TxDOT and that's when we have an established alignment of a project that's progressing and there's imminent development on a property that we know that we may need. This enables us to step out and make an acquisition effort in advance, again, of completion of the environmental process.

And finally, the third and one that's rarely recognized is that a donation is another area that we're able to accept an acquisition in advance of the environmental process. Most people don't realize that a donation isn't just accepting something that's being given to us, but it's another form of acquisition that we can only accept if we have an established and justifiable need for the property.

That's what we have currently and that's what we do use routinely on a case-by-case basis. There are new tools for advanced acquisition and there's a new public perception of this growing authority for TxDOT to acquire properties in advance, and that was largely presented through 3588 and the notion of our new authority to buy an option to purchase.

This new tool will give us the opportunity to actually do advanced acquisitions in advance of establishing alignment, so again, it's a very subtle but significant difference between what we do traditionally, which is just in advance of completing the environmental process, and what this proposes is that we would be doing some actions in advance of having established an alignment.

The other subtlety to understand about an option to purchase is that it is not any type of investment in or purchase of a real property right; it's actually the purchase of the right for us to do a couple of things to retain a future right to purchase the property. So the money that we pay for an option does not contribute to the ultimate cost of the property that we may eventually buy, and it doesn't secure for the department any interest in the real property that we exercise the option on.

Options can be exercised for a number of reasons, but primarily for us to predetermine perhaps the future cost that we'll pay or perhaps for us to buy the right of limiting development on a property that we may or may not need in the future.

The other advanced acquisition tools that we have or that we've been considering the development of is internally to move our traditional advanced acquisition ability beyond just the parcel-by-parcel specific ability and also to look for circumstances in a project where we might exercise advanced acquisition on a more general basis.

That would be in advance of completion of the environmental documentation, but when things have progressed substantially and we know that there are not going to be our traditional concerns for habitat issues or the other types of environmental concerns, environmental justice issues, those types of things that we know could jump up and cause concern for predetermining an alignment.

We've been working with the FHWA with the Environmental Affairs Division here at TxDOT for the last couple of years trying to identify criteria of a project that would afford our ability to step in without upsetting that sensitive balance of private property right protection and still get some of these properties in hand earlier in the process.

The types of things that we'd look for in those criteria for an advanced acquisition is: first of all, that the environmental process has proceeded far enough that we won't be predetermining alignments if we go out and make these types of acquisitions; that there is no major identified public opposition to the project; and that there are no significant environmental justice or other environmental 4(f) type issues in the project.

The final point I wanted to make in just laying this out before I ask for your discussion or questions is what would be the likely outcome in terms of we come to see you today in a discussion topic and what would we likely be bringing forward later for consideration by the commission.

We will write rules to implement the specific features of 3588 on options and those have been drafted and are under consideration now. The other thing that we would likely need to look at is that in order for us to actually use the option and be able to get out in front of projects when we're still considering multiple alignments and possibly reserve our right to pursue properties will be the funding mechanism by which to fund those options.

Right now, even though 3588 will create an authority for us to go out and buy an option interest, I still won't have the ability to tap into the appropriation for right-of-way acquisition until such time as we develop maybe a limited authority in the PLAN stage of project development for right-of-way acquisition.

So those are the two types of things we'll likely come back and be presenting to the commission associated with this advanced acquisition topic. And with that, I'll leave the discussion open for your questions and comments, and Amadeo can answer all of them.

MR. WILLIAMSON: Go ahead, members.

MR. JOHNSON: I'm curious, John and Amadeo, of some examples where we would utilize this process, and especially the option route. How prevalent do you see that in our utilization of advanced purchase, and then what are some examples when we would utilize the ability to advance purchase, both by traditional acquisition and also by option method?

MR. CAMPBELL: Well, I'll start with some scenarios because we've been looking at option scenarios exhaustively, so that's probably the easiest for me to start with. The kind of situation that would occur where we might make use of an option, they're always going to be very project-specific, very locations-specific, so I would never anticipate some sort of across-the-board application of options.

But say we have a project that is out there, a Trans-Texas Corridor type project that is still considering several different alignments. We can look at the nature of use of property today, a good example would be property that's maybe an agricultural use and it might be bringing in $1,000 an acre versus the value that property will have in reality and in the impressions of the public as those alignments are more specifically determined. Even though it's officially not supposed to be taken into consideration, project impact does affect the cost of property along the routes, and that's where an option can be a useful tool.

If you can go out there, identify these are likely areas of development should we pursue this alignment, if we can secure for ourselves an agreed-to price with the owner today that we'll pay upon execution of that option, we can save the state from incurring the cost of those escalating land values. And that would be one of the typical ways that we would make use of an option to purchase.

Right now, in the traditional sense of advanced acquisition, those that are initiated by TxDOT most frequently are those protective purchases where we see imminent development occurring, perhaps as specific as a developer that has a plan on the ground, wants to begin construction, starts to get frustrated or impatient with the pace with which the project gets developed, and then they go forward, they start to do work, we still need the property, we come in after the completion of all processes and now the value of that property has escalated because they've made improvements, they've changed the use of the property, and in cases like that, we will step in.

It's usually a much shorter term; we're talking six months to a year usually when we do a protective purchase, and you've got identified imminent development for a particular property.

MR. JOHNSON: But when you say changed the use, is that the actual change of use or is that what they can just plat as a change of use?

MR. CAMPBELL: It's actual change of use. In the business of valuing property for acquisition, of course, we do that through the use of an independent fee appraiser, and the fundamental basis of a fee appraiser's methodology is to look at the highest and best use to which a property can currently be put. If time goes by and things are allowed to develop, that highest and best use can legitimately change, and when that happens, that changes the entire basis for valuation and can result in much higher prices to pay.

If you have the opportunity to act earlier, in almost -- I hate to say the word -- speculative nature, this option to purchase does in fact create a tool that TxDOT could use to go out and speculate on decisions associated with investing in real property that we know we'll need for a project eventually.

MR. JOHNSON: I just have one question, and it just ran across my mind -- you mentioned the Trans-Texas Corridor. For clarification purposes, several of us were at a meeting in LaGrange, Fayette County the other evening. Are you aware of any parcels in either Fayette or Colorado County that are being considered for purchase for utilization in the Trans-Texas Corridor?

MR. CAMPBELL: No, sir.

MR. JOHNSON: And in your position as head of the Right-of-way Division, you would be aware if any activity were being undertaken. Is that correct?

MR. CAMPBELL: Yes, I would.

MR. JOHNSON: Thank you.

MR. WILLIAMSON: Members, this is the time to give staff some ideas of what you might be thinking in the back of your head, so please take advantage of it.

MR. HOUGHTON: It seems problematic to me, writing in the dark of night, buying up an option, but when most of our business is public on right of ways or we have multiple right-of-way options. It seems like there needs to be an element of surprise in an option purchase.

MR. CAMPBELL: Yes, there does, and because in order for it to have the effect that we would desire, it would have to be something that you can't just put out there without advising all others along the corridor that there's work in progress.

MR. HOUGHTON: And word gets out.

MR. CAMPBELL: And that's a very practical consideration that you raise, and what I would propose as a scenario that might allow us to still make use of an option would be say where we had a new location facility that's going to tie into an existing facility and there are several locations for that tie-in established or described. In order to make use of this option appropriately, we would have to go out simultaneously and make that offer of an option to all property owners that had an interest along any one of those two, three or four different alternative routes.

But you're correct, we would have to exercise something like that simultaneously in order to avoid the spread of the word. And an option wouldn't be necessarily appropriate for all the properties on an alignment, maybe just those that are at a critical location, those that have evidence that there is the potential for increasing development, exponential development, the kinds of things that would give us the opportunities to save the state some money by acting sooner. And yes, it's very problematic, and we're up to a difficult challenge more so than the simple ones.

MR. NICHOLS: I had three or four. First of all, I'm thrilled that we have the opportunity to do options because I think it is going to be beneficial, and I've seen too many properties on things we knew we were going to build but it takes so long waiting for the funding, getting through the cycles, that somebody puts in a shopping center or a business office and then we have to buy it by the square foot instead of by the acre.

You said something about the funding of the options, that we could not use traditional right-of-way money for that?

MR. CAMPBELL: Today I could not use appropriated right-of-way funds. Right now the commission makes the determination of need by moving projects into the DEVELOP level of program authority, and that's where I get the authority to spend the appropriated right-of-way funds. So in order to make a practical use of an option, which would be exercised far in advance of a project actually being in DEVELOP, we would have to create for ourselves some authority, limited authority to spend right-of-way appropriation in the PLAN stage.

MR. NICHOLS: Is that an internal thing to our agency?

MR. CAMPBELL: Yes.

MR. NICHOLS: It's not part of the appropriations process?

MR. CAMPBELL: No.

MR. NICHOLS: So that's something we can take care of?

MR. CAMPBELL: Yes.

MR. NICHOLS: Okay. You said that we would not utilize it -- you had a series of criteria that we might could utilize it under, one of which said no major public opposition. I think we all know what you mean by that, but could you be a little more -- are you talking about an actual resolution by a county or a city opposing it, or are you talking about 20 or 30 people really upset, or what are you talking about?

MR. CAMPBELL: What I was speaking of when I made that comment was the traditional use of advanced acquisition and expanding that use to a project basis rather than a parcel-specific basis. In that context, project development has already progressed to where alignments are determined, public hearings are being held in the environmental process, so we would have had the experience of conducting public hearings and been able to identify is there a major or significant opposition to the project, are there major or significant environmental, historical resources issues for the project.

I was not talking in terms of the use of an option to purchase; that was more along the lines of our traditional rights to go in and do advanced acquisition.

MR. NICHOLS: Next point, I had always thought, as you had described, that once we've gotten pretty far down the line on environmental, we pretty much know where that alignment is going to be, and then all of a sudden, if we know that somebody is going to sell that property, they're either going to put a mobile home park on it or something or we might have a chance to go pick it up, an option on it, then that's certainly where this would become very valuable to us, but that's only after we've pretty much locked in the alignment.

I recall situations in the past where -- and this is an environmental thing -- let's say you get down to the point where you have two alignments, we're way along on the environmental but we're down to two possible alignments and we're weighing this one, we're weighing this one, and these people want it over here and these people want it over here kind of thing -- kind of like we did on 130, the east route and the west route -- if all of a sudden a major tract of land right in the middle of one of those corridors came up and it was fixing to be sold for development or something but we might could have an opportunity to purchase an option on it and keep the option, in effect, open for two alignments until we can determine which one we're going to do, is that feasible?

MR. CAMPBELL: Yes.

MR. NICHOLS: Okay, because a while ago you said when we pretty much know where the alignment is, this would be a situation where we might still have two alignments, haven't determined which alignment yet.

MR. CAMPBELL: Yes, and again, what I was speaking to earlier is our existing advanced acquisition. That's one of those subtleties on the turn of a word, what we call advanced acquisition now is just in advance of completing that environmental process. What we're proposing with options is in advance of an alignment determination, so that would be more the scenario that you're talking about where an option would be the appropriate thing to try to utilize.

MR. NICHOLS: But we still haven't settled out which alignment?

MR. CAMPBELL: That's correct.

MR. NICHOLS: We could utilize it in a situation like that.

MR. CAMPBELL: Yes.

MR. NICHOLS: Okay. I think that's important.

MR. HOUGHTON: Can we use third parties to represent us?

MR. CAMPBELL: I think for the option we could use a third party, and the reason is that the legislation specifically excludes our exercise of the power of eminent domain in the purchase of these options, so since it is a purely negotiated transaction, then I think that we would have the liberty of hiring a third party or an agent.

MR. HOUGHTON: To represent us?

MR. CAMPBELL: Yes.

MR. HOUGHTON: Where they don't show up in a TxDOT truck.

(General laughter.)

MS. ANDRADE: Some of my questions have been answered, but what about public perception?

MR. CAMPBELL: Public perception is, I think, one of the highest concerns that we have because we don't want to do anything that puts out there the impression that we have already made up our mind and are just going through the motions on public hearings and so forth. The kinds of protections that are in place to compensate for that public impression is that even in our traditional advanced acquisition, we go forward with the knowledge that if this is not the alignment selected or if there are problems that jump up and stop the project, that we always have the authority to surplus that property.

The worst risk for TxDOT is that we are now in possession of property that we're not going to use for a project and we have existing authorities and procedures to surplus sell that property. Those are the types of things we have to protect or to use as our arguments against a claim that we've already predetermined an alignment, but it's probably the most real concern when we go into the decision as to whether to do something like this.

And that's why I mentioned that we wouldn't do it in circumstances where we've identified that there's public opposition or that there are legitimate environmental justice or other kinds of public perception opposition to it.

MR. WILLIAMSON: Amadeo, I have several questions, if you want to go ahead and offer your comments.

MR. SAENZ: Thank you, John.

For the record, Amadeo Saenz, assistant executive director for Engineering Operations.

John was talking more about options and something in advance of right-of-way acquisition. The other thing that we're looking at now is we have, of course, our ten-year project development plan, our ten-year UTP, and we have the different authorities: we have PLAN authority, and as it gets into the UTP it gets DEVELOP and CONSTRUCT authority. And as far as right-of-way acquisition, I think John mentioned that until we have DEVELOP authority or CONSTRUCT authority, we don't have authority to purchase any right of way.

One of the things that we're looking at is that we have quite a few projects, quite a few high profile projects that we're working on that normally you do the environmental and you get into the PLAN authority, and of course, you clear your environmental and then sometimes those projects have to wait a year or two or three to get into our ten-year UTP so that they can get the authority for DEVELOP.

One of the things that we're looking at is coming to you to get some kind of a special authority, a special permission that would authorize us to continue a project and start buying right of way. In other words, it's not giving it DEVELOP authority because we have a financially constrained document, but to get authority to start doing some right-of-way purchasing in advance of that project coming in to DEVELOP authority.

I think now with the new tools that we have with our Ogden Bonds and possibly the Mobility Fund, we should be able to carve out or get some dollars so that we can go out there and purchase this right of way and have it there. And I guess it does several things: to the public it shows that the project is continuing; it also allows us to, I guess, purchase it earlier instead of waiting around and let people that are speculating go out there and maybe develop this property; we certainly can use the options also, but this will allow us to also buy some right of way much cheaper than what it would cost us if we wait until it gets the authority and we move forward.

Of course, there's a balance because we do have a limited budget, but I think there are some projects that will lend themselves and we'd like to be able to come to you with maybe some projects on a project-by-project basis to get authority for that.

We have done that in the past where we work with local entities, be it counties, where we have given them authority when they are deciding to buy the right of way, we may not have the project funded but we do give them right-of-way acquisition authority, so this is something that we have done in the past.

MR. BEHRENS: Amadeo, we can also start moving utilities.

MR. SAENZ: Yes, this will also allow us, by having the right of way in place, now we can get the utilities moved out and save a lot of headaches during our construction process.

MR. WILLIAMSON: Questions or comments for Amadeo?

(No response.)

MR. WILLIAMSON: Well, for both of you, primarily for John, I actually -- Johnny and Ted had exactly the opposite thought about the appropriate place to use options versus Amadeo's description you just used to going ahead and buying right of way, and that is we know throughout the state pretty much which existing footprint some day will have to be expanded. An example of that might be several of these Hays County roads, not the ones that I was interested in along the interstate in advance of the retail establishment that might come, but the ones they brought to us a year ago.

If we had have sat back three years ago and asked the Hays County commissioners and our district engineer and his staff to pick the roads in Hays County that we're likely going to be asked to expand, they could have gone right to the roads and said, Right here we're going to have to add a lane or two or three lanes within ten years. In my mind, that's the best place to use the option.

And as you said, John, to not hide anything, to not create the wrong public perception, but rather to go to those existing landowners who, for the most part, are still going to have frontage after they've sold us an option on the 300 feet next to the existing footprint, and go to them and say we don't know when we're going to get to you but we know someday we will, and if you wish to sell us an option on 300 feet of your land right now, we're willing to pay a price for it in order to incent you to not develop this 300 feet knowing that some day you might have another 300 feet to develop further back off the road. That was my idea of where the option would best be used.

My idea of where advanced acquisition in the context of the PLAN and DEVELOP sequence that Amadeo laid out, was more the building of roads that we didn't know for sure were going to be built today but we suspected would be built some day. And again, not condemning them but just going out and saying: Ted, don't know if we're ever going to build this road across your place, don't want to frighten you, but if you're interested in going ahead and selling us this piece of property, we'd be interested in paying a fair market value for it just to protect ourselves in case, and who knows? -- maybe someday we will build a road through this property and if so, you'll benefit, and if not, you've cashed out a little bit and we've allowed you to continue to use the land until we're ready to use it or whatever. That's how I kind of saw the advanced acquisition or the options working.

But either way, the governor's intent in advancing this idea was the notion that because of our own rules and because of the law, we were constantly putting ourselves in the position of waiting until a piece of property was worth its most before we began to try to acquire it and in most cases we're forced to condemn instead of working out ahead of time cooperatively with property owners and reaching an agreeable arrangement before the fighting time ever came.

And I think as we urbanize in this state, particularly in the Golden Triangle from Denison to Beaumont, San Antonio, if we don't take advantage of some of these tools, it's just more money we're putting into right of way and less money we're putting into concrete, railroads, canals and aviation.

MR. CAMPBELL: And I appreciate the comment and I would make one statement because we have an existing authority to purchase the development rights -- and that's, if I understand it, what you're referring to -- the problem with our existing authority is it's limited to no more than seven years and so it greatly reduces the time frame that you could get out in front of a situation like that and buy those development rights. So that might be a future legislative enhancement to expand that.

MR. WILLIAMSON: I have two other items in this regard that I want to raise for purposes of your further thought. One is somehow in any proposed rule that you advance, I wish we would find a way to incent or at the very least convince local government about this tool and recruit them to help us use it. I know traditionally we communicate through our district engineers; I don't mean to circumvent that process necessarily, but I think it would be of value if particularly the high growth counties knew we had this tool and intended to use it and went out and actively solicited them to help us use the tool.

In other words, Hays County, if you know this road's footprint is going to have to expand in ten years, the Legislature has given us this tool and the commission is willing to invest money, help us to identify these areas to save us all money down the road.

A second discussion item is actually a question and I already know the answer but I want to establish it for the record. Is there anything that would prevent us from entering into a long-term agreement with another state agency along the following lines: State Agency, we have suspicions of where we might need to own right of way, we're limited in our advanced acquisition approach and our funding, we would like for you to go purchase for us or purchase for yourself and we will agree to purchase from you property in areas that we think we're going to have to have some day -- again not by condemnation but by private treaty arm's length negotiation with the landowner. There's no reason why we couldn't do that, is there?

MR. CAMPBELL: I'm not aware of any reason we couldn't enter into such a contract. Of course, the details of that contract could steer us into some areas of concern.

MR. WILLIAMSON: If, for example, we were aware of a tract -- and people frequently bring us tracts and say, you know, I need to sell this, I know you guys are going to want it someday, I'd rather sell it to you than sell it to the market; do you want it? It would be interesting to see if we could develop a relationship with, say, the Permanent University Fund -- is A&M part of the Permanent University Fund? It is, I forget.

A&M or UT, go to the Permanent University Fund and ask them to purchase property for us and we agree to rent the property until such time as we're ready to convert it. I realize there are some issues with the federal reimbursement, but we have some people working on that on our behalf right now. It seems to me that that might be a --

MR. HOUGHTON: Permanent School Fund.

MR. WILLIAMSON: I was hoping you'd say that -- a logical transaction for us to pursue.

MR. CAMPBELL: And I think it would be a logical necessity then too because then we would be able to tap into agencies whose business is the management of property as opposed to ours which is building transportation projects.

MR. WILLIAMSON: Members? Yes, ma'am.

MS. ANDRADE: I have one question, one comment. Can an RMA use this tool also?

MR. CAMPBELL: I would believe an RMA would be able to use an option to purchase, again, because it's a negotiated agreement between an owner and the compensation you pay doesn't take them into that realm of a taking or something under the threat of eminent domain, so yes, I think they would be able to.

MS. ANDRADE: And I'd like to reiterate I'm very much for communication, if that's what we're going to use a property for in the future, that we let them know that.

MR. WILLIAMSON: You know, when we were talking through this during the session, I kept hearing from different areas: Well, you're just going to drive the value of the property up if you do this. But that's what we do now. It seems to me that rational people speak rationally. If somebody comes to them and says I don't know if we're ever going to need your land but we might, we'd like to buy it or buy the option now, there are going to be a lot of people that will take that opportunity to do that, if for no other reason than the hopes that it will help influence that a road be built along the frontage of their remaining land.

Okay, I think you've got good discussion from your commission members and you know kind of where we're all headed, what our concerns are. I hope you've benefitted from this new tool; go forth and produce some great ideas.

MR. CAMPBELL: Absolutely. Thank you very much.

MR. WILLIAMSON: Sure. One more, Mike, and we'll take a quick break.

MR. BEHRENS: We'll go to agenda item 7(c) which will be our last discussion item today on the agenda, and this will be discussing the utilization of toll credits for commuter rail or other modes of public transportation, and Wayne Dennis will lead that discussion.

MR. DENNIS: Good afternoon, commissioners, Mr. Chairman.

As discussed at the last commission meeting, staff researched the following three questions you had regarding federal commuter rail funding and the use of toll credits. You asked: whether federal funds were available for the conversion or addition of rail for commuter services; whether access to those federal funds will depend on the state or local match requirements; and whether toll credits will qualify as a state or local match commitment.

First, there are several different federal programs through FTA, FHWA and the FRA that may be used to fund and finance commuter rail projects. The most promising FTA source is the Capital Program or New Starts Program which provides funding for design and construction of fixed guideway systems. FTA writes recommendations to Congress for project funding in the Annual New Starts Report. Recommendations are the result of an extensive evaluation process based on project justification and local financial commitments.

Once a New Starts project with an estimated cost greater than $25 million has been approved into final design, the FTA may recommend it for a full funding grant agreement that details the scope of the project and provides a dedicated federal source of funding for a specified number of years.

There are other FTA programs that can assist with the funding of certain aspects of commuter rail projects but more on a piecemeal basis. Some can be used for planning and research, while others may provide for capital and operating assistance.

Some FHWA programs, such as the Congestion Mitigation and Air Quality Improvement Program, can be used for commuter rail development in areas of air quality non-attainment. Other programs, such as the Surface Transportation Program, National Highway System Program, and Interstate Maintenance Program, may be used to facilitate rail projects but not fund the rail facility directly.

Project funding approval through these programs would key on strategies that would improve transportation efficiency, promote safety, increase the flow of intermodal travel, and reduce transportation-related emissions.

Other funding sources would be either to obtain a congressional earmark for specific projects or utilize the State Infrastructure Bank if the SIB fund could be capitalized with Title 49 transportation funds.

MR. WILLIAMSON: Stop, Wayne.

MR. DENNIS: Yes, sir.

MR. WILLIAMSON: Coby, to your knowledge have we asked that the SIB fund be capitalized using Title 49 funds in reauthorization? Coby, where did you go?

MR. DENNIS: It looks like James is going to step up.

MR. WILLIAMSON: Fast Jimmy Bass is stepping up to the plate.

(General laughter.)

MR. BASS: For the record, I'm James Bass, standing in for Coby Chase.

My understanding of when the SIB was initially set up, going back to 1997, that option was available as well. In order to capitalize the SIB using federal transit dollars, we wanted agreement from the transit providers in the state of Texas to, if you would, take off the top or take some of those federal transit dollars to use to capitalize the SIB. At that time there was not interest or agreement on their part to do that, and so to date we have not utilized any federal transit dollars to capitalize that portion of the SIB.

MR. WILLIAMSON: Now, wait a minute. When you say transit providers, is that the metros as well as the rurals?

MR. BASS: I'm not 100 percent sure on that.

MR. WILLIAMSON: Does anyone know? Shall we add that to our list of things to get cracking on and see if we can't talk them into it?

Continue, Wayne.

MR. DENNIS: The Federal Railroad Administration sponsors the Railroad Rehabilitation Infrastructure Program to provide financing to private railroad companies at competitive rates with states providing a credit risk premium. The USDOT's TIFIA Program can also be used to finance such a venture.

This brings us to the second question: Does access to federal funds depend on state share? The majority of federal transportation programs require a funding match that's typically an 80-20 split. The required local match can be provided by the state, a local government or transit agency, or a combination of any of these. Theoretically, the match can be provided in actual dollars which we refer to as a hard match, or a credit for work or property, a soft match.

And finally, you asked: Will toll credits qualify as the state/local match? According to federal regulations under Title 23 Highways, a state may use toll credits towards the non-federal share of most transportation programs. Toll credits are a credit provided by the federal government to the estate based on the revenue generated by toll authorities within the state, if the revenue is used to build, improve, or maintain highways, bridges or tunnels that serve interstate commerce. So rather than using Fund 6 as the match for federal funds, we could use toll credits. This would cause us to obligate additional federal dollars to a specific project.

For example, if you were providing traditional federal financing for a $10 million transportation project using 80-20, this would require $8 million in federal and $2 million in state funds. A $10 million project financed with toll credits would require $10 million in federal funds and $2.5 million in toll credits. The $2 million in state funds no longer needed for match would then be available for another project.

Regarding the FTA New Starts Program, our staff discussed the utilization of toll credits with the program management office of FTA in Washington, D.C. to determine any impacts for the use of toll credits and what they would have on the application and recommendation process for a New Starts project. In that staff of the FTA's opinion, toll credits will no longer be considered as an adequate local financial commitment and they will consider an application to be not recommended for the New Starts Program if the local match is provided entirely by the use of toll credits.

In the current Congressional Conference Report, the DOT Appropriations Act instructs FTA not to sign any new full funding grant agreement after September 30, 2002 that have a maximum federal share of higher than 60 percent. So in other words, at least 40 percent of the funds need to come from state or local match.

The bottom line is that large scale commuter rail projects --

MR. WILLIAMSON: Which part has that, the Senate, the House? Did you say Conference Committee Report?

MR. DENNIS: The report that was a DOT Appropriations Act, that instructed FTA that they should not sign any of these contracts.

The bottom line is that large scale commuter rail projects will likely require a large development of a diverse financial package. The toll credits may be best used as match in Federal Highway Administration funds that are allocated to Texas and not necessarily for use with FTA funds that require an evaluation of our local commitment.

MR. WILLIAMSON: Did we find Coby?

(No response.)

MR. WILLIAMSON: Well, who's going to speak for Coby? I think it will be Steve Simmons. Hang on a minute, Wayne.

Steve, I think that we would want to contact our federal people and see if there was any opportunity in the Reauthorization Conference Committee to perhaps direct FTA -- if that's possible, if it's germane -- that toll credits are not a bad thing in terms of local share for rail projects.

MR. SIMMONS: I'll take care of it.

MR. WILLIAMSON: I believe we're fixing to accumulate a pretty big pot of toll credits in the state and we would probably like the ability to use those toll credits for a major portion of our state's share for conversion of commuter rail projects.

I think because my first question, Wayne -- and then I'm just going to ask the one and yield for a minute -- imagine the Union Pacific track parallel to US 90A in Houston, for whatever reason, we're able to strike a bargain with Union Pacific to build them a new line and take them around to the north side of Houston and they completely abandon that track from Rosenberg through Sugar Land to downtown Houston, and then we turn to Houston Metro and HCTRA and say we want to do a joint project and convert this to a commuter rail serving the Richmond-Rosenberg-Sugar Land-Westbury Village communities, that would be a conversion as you have described it in this document.

MR. DENNIS: Yes, sir. And unless FTA feels differently about toll credits, it would be difficult to do by using toll credits alone. That funding source, the New Starts Program, is the best way to get the biggest influx of financing to get a commuter rail project off the ground. If the project were already constructed and FTA continues with the way they feel about toll credits, you could use toll credits in a manner to maintain what you have, to provide additional capital for what you have, but it would be very difficult in piecemeal fashion to construct such a project without either an influx of cash or use of those FTA funds.

MR. WILLIAMSON: I'm going to stop for a moment. Members, this is the discussion item on some rules and regulations that the department staff will probably be preparing for us on the use of toll credits, so please ask questions or make comments to give staff some direction.

MR. NICHOLS: In this discussion item there was a series of questions that was asked of the staff which they answered all the questions. I did not get the impression that we were in the process of writing up a set of rules on the distribution of toll credits.

MR. WILLIAMSON: No, sir. We are, as you're aware, been engaged in a protracted discussion about how to use those toll credits for the last six or eight months.

MR. NICHOLS: Okay. And I know that there are a lot of entities, particularly small transit/large transit operators out there who desperately would like the opportunity to use those toll credits because they know they can put them to work. Not knowing until the federal reauthorization is done where we're going to be on toll credits is a major hindrance on our ability to be able to answer that question of how we're going to distribute those toll credits. So for anyone out there that's interested, until we get through this federal reauthorization and find out if -- well, welcome back, Coby.

(General laughter.)

MR. NICHOLS: I think we need to kind of hold back on how we're going to -- we're either going to get a lot more or we're going to get very little more, and that's going to have a big impact on how we distribute them.

MR. DENNIS: And there is some discussion in the reauthorization, it is my understanding, that FTA is starting to lean toward a 50-50 type match. So again, if they were going 50-50, you would burn a lot of toll credits quickly.

MR. HOUGHTON: They're going the other way is what you're saying.

MR. DENNIS: Well, again, if you're doing 80-20 on your match, for every $10 million, you're going to use $2-1/2 million in toll credits. So if you go 50-50 for every $10 million of federal funds, you're going to use $10 million in toll credits.

MR. HOUGHTON: Yes, that's my point, you just went the other way.

MR. WILLIAMSON: Which it seems to me is not such a big deal unless you look up and realize that the state is probably fixing to spend $10- or $12 billion on toll roads over the next ten years, and it certainly would be nice to have the advantage of using that tool if possible for something other than buses. Again, the commission obviously does not have a formal opposition to buses; I personally think commuter rail is a more appropriate strategy for public transit than commuter buses.

MR. HOUGHTON: I share that.

MR. WILLIAMSON: Information is important to the distribution of these funds.

Other discussion and questions, members?

MR. JOHNSON: I have an observation or two. As I discussed with Wayne yesterday and I've had the discussion with James on prior occasions, I think it's extremely important that we make sure that we have applied for and received all the toll credits that we're eligible for, and I want to salute the Chair and the staff for the vision of looking forward of the ways that we can utilize this asset -- which I believe these toll credits are -- to work on mobility challenges that we face, especially in our larger cities.

And I think this is a great step in that direction in trying to ascertain how we can utilize what we hope to be an increasing pool of toll credits that will help people get from where they are to where they want to go, and it becomes a multimodal challenge.

I do -- and I think Robert was on this drift -- want to say I still believe that we should maintain a portion of our toll credits for the use of the smaller areas who are not as able to come up with their portion of the match for the acquisition of vehicles, part of their fleet under the premise that: one, the consideration be that they be alternatively fueled; that secondly, we emphasize this in the non-attainment areas; and thirdly, that there be a relationship somewhat -- it doesn't have to be a strict relationship -- that consideration be given from where the toll credit originates or is earned, that those areas or those agencies in those areas be considered for toll credits under that mechanism.

I recognize that this is a small portion in the use of toll credits and when compared to the use for commuter rail and others -- which are what I would call big ticket items -- that the preponderance of the toll credits are probably going to go to the commuter rail, but I do think we still need to reserve a portion out for these areas that need to utilize toll credits as their match, and we can carve out either a small percentage or just take it on a case-by-case basis. I think it's important for many reasons.

MR. WILLIAMSON: Other discussion or questions for Wayne? Coby, we wish that you, as the master federal legislative manager that you are, that you would direct the various and sundry support staff in Washington towards a problem that Wayne has identified in the use of toll credits, where you've got an effort going to be sure we get full credit for our toll credits, but we also want to be certain that the FTA's decision to limit toll credits as part of the local share for certain projects is broadened back out a little bit to not purposely shut out states like Texas from using its toll credits for conversion of commuter rail -- which is no doubt why they did that knowing that we're fixing to change our focus in the state.

So would you get with Wayne, if you would, please, and direct our staff and support group in D.C. to do what they can, emphasizing that the first big ticket project would probably be US 90A beginning in the Richmond-Rosenberg area and going through Sugar Land, Texas on its way to downtown Houston.

Other discussion on this matter, members?

I did not wish -- and I apologize to you, Robert -- to convey to you that we were doing rule changes. We've just been arguing/discussing this for months.

MR. NICHOLS: But some of these other items were discussion items in preparation of a possible rule thing, whereas this one is not.

MR. WILLIAMSON: I think that would be it. Thank you.

We're going to take just a real brief five-minute break, members, to let some of the audience do some of the things they need to do.

(Whereupon, a brief recess was taken.)

MR. BEHRENS: We'll return to our agenda with number 8 which is our State Infrastructure Bank item, and where we're going to be looking at a SIB loan for Bexar County to do some improvements in the Toyota plant area.

MR. BASS: Good afternoon. Again for the record, I'm James Bass, director of the Finance Division.

Agenda item 8 would cancel a December 2003 minute order that approved a loan of up to $9.1 million to Bexar County for a period of 15 years, the first two of which would have been interest only, at an interest rate of 4.3 percent. That loan was to be used to partially fund reconstruction costs of Zarzamora Road from Interstate 410 to Applewhite Road and also reconstruction of Applewhite Road from Zarzamora Road to Watson Road.

Refinement of the costs estimate for the reconstruction project has resulted in a determination that the county needs to borrow no more than $4 million, making a term of 15 years for this particular borrower seem unreasonable. We are now recommending a loan of up to $4 million for the same projects at an interest rate of 2.4 percent with payments being made over a period of five years, the first two of which would continue to be interest only. And staff would recommend your approval.

MR. WILLIAMSON: Members, we have with us today, for the first time in a few months, good friend and fellow Texan, Roger Baker, who wishes to comment on agenda item number 8. Roger, it's always good to have you here.

MR. BAKER: Thank you, commissioners.

I'm a little bit concerned about the long-term financial prospects of the State Infrastructure Bank. I think one reason is that it's supposed to be a solution to so many big problems facing transportation. I believe that one thing that it's for is to help finance toll roads, and I don't think this is a toll road project, but I think we ought to hold off on using these kind of monies for toll road projects and protect projects in which these guys are going to pay money using more certain forms of revenue.

The reason I say that -- and I will pass out some of what I passed out earlier, and this sort of is, I think, the reasons why toll road bonds are very risky and why the financial community is looking on them with increasing skepticism and why I'm dubious of state agencies using toll road funding.

And I believe, if I'm not mistaken, one of the sources of funds for the Texas Infrastructure Bank is to be the Texas Mobility Fund. Is that one of the sources of revenue?

MR. WILLIAMSON: Let's have one of our staff speak directly to that. Did you understand the question, James?

MR. BASS: Yes, I believe so, and no, at the current time any proceeds from the Texas Mobility Fund, nothing that I've heard would direct those to the State Infrastructure Bank. Currently the funds in the State Infrastructure Bank, it was initially capitalized with 80 percent of Federal Highway dollars and then matched with state funds out of the State Highway Fund. Of course, as we loan that money out to the applicants and recipients, they repay it over time from various sources, maybe utility fees that they charge, or in most cases, ad valorem taxes that they assess.

MR. WILLIAMSON: Have we made any SIB loans as toll equity or an investment in toll roads?

MR. BASS: There is a significant SIB loan to NTTA with the George Bush Turnpike. Williamson County received a couple of SIB loans for right-of-way acquisition associated with the SIB loan, but in Williamson County, the repayment of that SIB loan is not dependent upon traffic on the toll road, it's one of the Williamson County revenue streams. And then along the border, a toll bridge in Laredo, they're repaying, and we made, I think, around a $30 million loan to them for that bridge.

MR. WILLIAMSON: Thank you. Okay, Roger.

MR. JOHNSON: You might also clarify as to the balance left in the SIB; there's not a whole lot of money left to lend.

MR. BASS: Correct. The current balance right now is around $15 million, and we actually have pending applications, as I stand here today, of probably around $18 million. Today we could not fund all of those. That is not a huge concern to us right now because every month we're receiving loan repayments from all of our outstanding loans and we think as those projects move along in their life cycle and they're ready for the loan, that there will be money available in the SIB if the commission chooses to select those projects.

MR. WILLIAMSON: Thank you. Okay, Roger.

MR. BAKER: I am still concerned about the Texas Mobility Fund because Mr. Bass told me the other day that the total account only amounts to $44 in the whole fund -- I think a couple of people bought license plates or something. So I was going to offer you a dollar to increase the total security of that fund by over 2 percent.

MR. WILLIAMSON: James Bass will take that dollar and we appreciate your contribution to the Texas Mobility Fund.

MR. BAKER: So thank you.

MR. NICHOLS: Before you go, Mr. Baker, I've heard you make similar testimony to the House Transportation Committee and over on the Senate side, your concerns about funding toll roads and running out of oil and that kind of stuff. I think your concerns about running out of oil are good but I think your thought is a little off, and the reason I'm going to throw this out is that toll roads are unit count per-vehicle charge, whereas, our traditional funding is on a per-gallon basis.

As we run out of oil and gas, unless our funding sources changes -- and we're already seeing major trends trending down on our fuel tax revenues coming in because gasoline is going up, and as we run out, then we're going to have to replace that.

Replacement is a per-vehicle charge; a toll road is a per-vehicle. Cars, although right now, are primarily funded either by gasoline or diesel, and you're dealing in terms 20-30 years from now, the industry is spending a fortune, billions of dollars, generating/developing alternate fuel and electric cars, hybrid cars, fuel cell driven cars, and as one source depletes, the other will rise. And a toll road that's on a per-unit count doesn't care what drives it as long as something is going down it.

MR. BAKER: Well, if you look at the official statement on the SH 130 bonds, they gave a number of provisos saying that these bonds were good investments, assuming that the price of gasoline doesn't go up over $2.50 a gallon, and that's within the next 40 years we're talking about, the life of the bonds. Now, that is a pretty explicit number tied to the sort of funding that you're sort of depending on to make your toll road bonds pay off; they're being very precise.

MR. NICHOLS: Well, the financial advisors and the investors and the rating agencies that studied those bonds came to a different conclusion than you did, and quite the contrary, they rated those probably about the highest ever issued in the nation and we sold out over $2 billion worth in about two hours. So there are a lot of people who invest heavily who reached a totally different conclusion than you, and I was trying to point out some differences in unit counts versus gallon-driven revenue sources.

MR. BAKER: Well, those bonds probably wouldn't have been investment grade without a lot of TxDOT guarantees, and with the TIFIA loan and without being insured, and they did not rate terribly highly even with all that.

MR. NICHOLS: I thought they rated pretty high.

MR. BAKER: They rated BBB-plus, and that's a couple of grades above junk but it's not terribly high. But what is the concern is that with municipal revenue bonds, many governmental bodies all across the United States are in debt so they're all turning to municipal revenue bonds simultaneously and toll roads have one of the worst reputations amongst municipal revenue bonds.

MR. NICHOLS: They're doing quite well over in the Houston area right now. They've not only paid all their interest and debt and operations and maintenance and administration, they've generated probably about a half billion in surplus and continue to rise. So your prediction of doom there kind of is just the opposite.

MR. BAKER: Well, if you read on the second page down at the bottom right-hand corner -- this is from, I think, Business Week, if you look it up -- there's a little analysis of the problems with bonds, toll road bonds in particular amongst all the municipal revenue bonds. Now, you're also looking at the fact that interest rates are probably going to spike within the year and that's going to really affect the financial projects of all toll roads, I believe.

MR. NICHOLS: Sure.

MR. BAKER: So these are some red flags associated with toll roads, but thank you.

MR. WILLIAMSON: Roger, it's always good to see you. We appreciate your taking the time to share your comments with us.

James, anything else?

MR. BASS: I'll be available to answer any questions on the agenda item. I would like to make a couple of comments that the underlying rating without insurance on the Central Texas Turnpike bonds was BBB-plus, and I think, Mr. Nichols, what you're referring to as far as a new startup toll road, a green field in an area where it does not exist, that was one of the highest if not the highest ever.

Mr. Baker is also correct in that the project would not have been financially viable or feasible without the toll equity provided by TxDOT and the help of the TIFIA loan. I think the commission has understood that for a number of years and is looking to do more of that in the future so toll roads in Texas do not fall into situations, as some of the ones Mr. Baker was referring to, where those tolling authorities did not have as strong a partnership with their state DOT and they were having to 100 percent solely rely upon revenues of the traffic from the project to fund it 100 percent.

I think the department in Texas there's an understanding that there are very few of those projects that exist and the way to increase mobility and to help the transportation crisis is through a partnership through state DOT tolling authorities and anyone else who is able to help.

Back to agenda item 8, the SIB loan to Bexar County, I would recommend your approval and be happy to answer any questions you may have on it.

MR. WILLIAMSON: Members, do we have questions of or comments directed to Mr. Bass on agenda item 8?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: Second?

MR. NICHOLS: 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 carries.

MR. BEHRENS: Agenda item 9, Phil Russell will have two items, the first giving the quarterly report for the Central Texas Turnpike Project, and next presenting a minute order pertaining to the I-35 corridor and the proposals we have.

MR. RUSSELL: Thank you, Mike. Good afternoon, commissioners, Mr. Simmons.

Item 9(a) seeks your acceptance of the general engineering/consulting report for the Central Texas Turnpike Project. The project is on schedule and will be open to traffic on or before December of '07. Since I last visited with you, a couple of things have occurred. The last two sections have been let to a contract: Section 5 in January and Section 6, although it's outside this quarterly progress report, it was let this month, and with any luck, you all will be approving that award here in a couple of minutes.

MR. WILLIAMSON: Where do Sections 5 and 6 go?

MR. RUSSELL: Sections 5 and 6 are those pieces between 35 and State Highway 130, and I pulled out a couple of power point slides that should show that. Sections 5 and 6, Chairman -- and I apologize for the script; it's obviously a little bit difficult to read -- but Sections 5 and 6 are those sections between I-35 and State Highway 130.

Let me go through, and again, I know it's late in the afternoon and I will try to go through these fairly rapidly. As far as State Highway 45 and Loop 1, all design activities are complete, right of way, all 234 parcels are available for construction, and we've suffered no delays due to utility relocations either.

The big news here and what everybody always looks at, assuming that you all approve Section 6, we've really come out very, very, very well from a pure construction letting standpoint. We are approximately $168 million under our estimate, under our budget just based upon the construction elements of the traditional projects, i.e., State Highway 45 and Loop 1.

Just to give you a couple of little quick snapshots of what is really going on out there, it's rewarding, I know for me and I'm sure for Commissioner Nichols that have looked so long at these projects and seen a lot of paperwork and discussion about what's really going on, and it's really gratifying to go out there and see caps and columns and dirt moving and everything else.

This is a view at the connection of State Highway 45 and Loop 1; it's on the north side looking back towards Austin. Loop 1 is going off back towards MoPac and of course to the right is west heading out towards 183.

A little different view at the State Highway 45 and I-35 intersection. Just to orient you, on the bottom of the page would be south; that's the Farmer's Insurance building there on the southwest quadrant; La Frontera would be on the left corner of the slide; of course, Dell and all of their complex would be on the other side of the interstate to the right.

A couple of things, no, we're not digging for gold. We're looking very closely for all revenue sources but it has nothing to do with gold mining, as some people have alluded to. One of the issues that's been out there, of course, our karst species. That's the little fellow on the right corner that we've been working very diligently to protect, that's the Bone Cave Harvestman.

As you all know, we very well knew that there were many, many of these karst features, these cave features throughout the project. We had a number of those that were discovered during the environmental process; we worked toward mitigating those. We also knew that the chances for discovering more caves was very high, very great, and in fact, I think the district has discovered another ten or twelve caves, some of which do contain the endangered species.

And I'm really delighted that the hard work that Bob Daigh and Tim Waite did, not only during the design phase but certainly during the construction phase, is really paying dividends. When these caves have been discovered and uncovered, they've been able to adjust their workload and move their equipment to another part of the project, but probably more importantly, through really, really great partnership with Fish and Wildlife, Parks and Wildlife and any of the other resource agencies that have been involved, they've been able to on the spot come in, right there make an assessment, and the bottom line is construction hasn't been delayed a single day.

We're all fond of talking about, well, wish we could get better partners, we could do more, and this is a perfect example of what a lot of great discussion and a lot of diligence is doing for us, and Bob and Tim I think are continuing to, and it really is paying great dividends.

Let me very quickly talk about State Highway 130. Again, just to orient yourself, Georgetown on the north side, Segments 1 through 6, all the way down to Seguin on I-10 a little bit east of San Antonio. We've issued notices to proceed, essentially authorization for design, right-of-way acquisition, and construction on Segments 1 through 4. Of course, we have ongoing discussion with the Austin District and San Antonio area on Segments 5 and 6.

Just a very quick right-of-way summary report. We have exactly 410 parcels on State Highway 130 that will be required. Just to give you a little sense of the progress that I think the guys are making, they've completed their surveys and actually completed the appraisals on roughly half of all the parcels that will be required. We've actually made offers on roughly a third or slightly more than a third of those parcels, and we actually have in possession 47 parcels available for construction.

One other thing that I might point out, just from a design standpoint, we're ranging anywhere between 50 and about 80 percent design complete on all four of those segments, so they're making good speed on them.

To give you a little snapshot of what's going on, Segment 1 is where we had our groundbreaking with the governor and many of you in October. It of course doesn't show up in those 410 parcels, it's a very wide median where we'll be building the interchange on State Highway 130, so we have the benefit of being able to get in there very quickly and begin construction.

Helen Havelka and I, of course, both live up in that general area so Helen and I, we do a lot of windshield inspections on the way home. I'm sure Tim Waite is very appreciative of the words we give him, the words of wisdom on our way home. It's always great to have people looking out for you, I'm sure. But they really are making good strides there, and again, that gives you a little sense for some of the activity.

Cutting down to the chase, what interests people the most from a construction standpoint on State Highway 130, we show it to be slightly under budget from that standpoint. And cutting to the chase, what everybody really wants to hear is what the delta is. In August, if memory serves me, the numbers I brought to you reflected about a $250 million underrun essentially at that point, and in December when I came to you, that number had ballooned to something over $300 million, and now I'm happy to give you the information that it's up to $366 million.

As I've always done, though, a couple of things --I think I can actually hear mouths watering all across the state of that large sum of money -- two things -- number one -- and I think Commissioner Nichols has been very consistent about this -- that our discussions with the bond market have indicated that they want that money to stay on this project till we complete the constructions. And number two, I wish I could stand up here and say that every time I come up here I'll keep showing that that number is getting larger and larger, that it's going further and further under budget. That obviously won't be the case; we'll suffer through some of those where it drops and hopefully there will be other times where it moves up, but it will vacillate up and down on these reports.

We've also, I think, tried to caution people against being too disappointed or too excited about these quarterly reports. It's a long project, it's a five-year project, and I think on 130 we had four or five months now of construction activity, we're on time, and it's still pretty early to have any sort of definitive conclusions.

However, on State Highway 45 and Loop 1, we're over a year into construction now and I think we can at least begin to assess or to make some conclusions on our construction schedule. We are on schedule for the September-December '07 completion date which is in our bond indenture, but as to 45 and Loop 1, there are several elements now that my instincts tell me that will be completed well before that September-December '97 completion date. I think it will be several months. A lot of things could still occur, we could get some rainy weather over the next two or three years, but I'm beginning to get more and more confidence that we'll be able to complete those projects well ahead of time.

So again, I think the news continues to be very good, I think the district is doing an outstanding job of monitoring this, and I'd be happy to address any questions you might have.

MR. WILLIAMSON: Members, do we have questions of Mr. Russell on his report?

(No response.)

MR. WILLIAMSON: Do we need a formal action to accept this report?

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: Do I have a motion?

MR. NICHOLS: So moved.

MR. WILLIAMSON: Second?

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BEHRENS: Phil, go ahead with 9(b), please.

MR. RUSSELL: Thank you, Chairman. Thank you, Mike.

Item 9(b), this minute order would authorize the payment for work product for the unsuccessful proposers who submit responses but unsuccessful proposals on the Trans-Texas Corridor I-35 element.

As you know, on October 29 of last year, the department short-listed three teams submitting proposals and qualification statements. Those three teams are Trans Texas Express, Fluor Enterprises, and Cintra. We anticipate that on or about April 30 of this year we will be issuing a request for detailed proposals to these three teams.

Payment for work product would allow the department to use the work product for the benefit not only the I-35 element but for any other projects without further payment to these proposers. The bottom line is by paying a stipend on this particular project, we would be able to use that intellectual property on other projects as we see fit.

We would recommend that the payment for work product to each of the responses but unsuccessful proposers be limited to no more than $750,000. We recommend approval of this minute order, and again, I'm happy to address any questions you might have.

MR. WILLIAMSON: Questions or comments, members?

MR. JOHNSON: I have a question or two.

MR. WILLIAMSON: Please.

MR. JOHNSON: Phillip, this is specific to the 130 project?

MR. RUSSELL: To the I-35 Trans-Texas Corridor element, yes, sir.

MR. JOHNSON: And it's specific to the three entities/enterprises that are the finalists, if you will.

MR. RUSSELL: Yes, sir.

MR. JOHNSON: Is the intent here to try to reimburse them for all of their costs?

MR. RUSSELL: No, sir.

MR. JOHNSON: The two runners-up, if you will.

MR. RUSSELL: No, sir. As we've talked before, they do get into a fair amount of cost developing these proposals. Clearly the issue of a stipend is not to reimburse them for all of their costs but to defray some of their costs.

MR. JOHNSON: In your estimation, by some of their costs, they would have a substantially greater amount invested in their proposal than what they're being returned with the stipend?

MR. RUSSELL: I think our analysis, our belief --

MR. JOHNSON: There's that word "substantial" again.

MR. RUSSELL:  -- would suggest that this would reimburse them probably about a third of their costs incurred.

MR. JOHNSON: The other issue or question that I had was what are some examples of the intellectual property that we are purchasing in this case where we can utilize those on either this project or other projects? What might be a good example of that?

MR. RUSSELL: Typically on a traditional project like 130 or State Highway 45 where we're actually leading towards a construction contract, those things are limited more to engineering type analysis. Let's redevelop this bridge; instead of a five-level interchange, we think can value engineer this, build a three-level interchange, and utilize a certain technology and save the taxpayers money. It might be technology that we can export to another project and utilize as well.

I think on this project, again, since it's not leading, at least within the next couple of years, to a construction contract, typically, or at least what I would anticipate we'll get are some solutions on how to phase that entire corridor, both from a development and engineering standpoint, but also from a financial standpoint. I would anticipate that we may get some ideas on how to bring the private sector in and blend it with revenue bonds, with TxDOT money or any other funding sources, so I'm hopeful that we'll get some very innovative interesting ideas that we can then utilize to other projects.

MR. JOHNSON: To your knowledge, are other DOTs utilizing this stipend method to incentivize or encourage consortia to provide proposals?

MR. RUSSELL: Yes, sir. We've looked all across the country and we've kind of done a poll of different DOTs that are utilizing design-build or public-private partnerships. The range typically runs somewhere between .1 to about .2 to .25 of the ultimate construction cost. There are a few folks that don't, but largely most do offer a stipend.

MR. JOHNSON: Thank you.

MR. WILLIAMSON: Other questions or comments, members?

(No response.)

MR. WILLIAMSON: Have we used this same approach to encourage responsive proposals on State Highway 130?

MR. RUSSELL: We did use a stipend; the calculation was a little different, but yes, sir, we did use a stipend.

MR. WILLIAMSON: The theory being it's hard to get people to propose on these things if they think there's a chance that they're going to lose all their money?

MR. RUSSELL: Yes, sir. The bottom line, each one of these individual firms have the opportunity to bid-propose on several different projects, and I would assume and my understanding is a stipend is one of those elements that they assess before they choose to go ahead and propose.

MR. WILLIAMSON: Further questions or discussions, 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 carries.

MR. RUSSELL: Thank you, commissioners.

MR. WILLIAMSON: Thank you.

MR. BEHRENS: Agenda item number 10 is our contracts for the month of March that will be recommended for approval, both Maintenance and Building Construction. Thomas?

MR. BOHUSLAV: Good afternoon, commissioners. My name is Thomas Bohuslav, director of the Construction Division.

Item 10(a)(1) is for consideration of award or rejection of Highway Maintenance contracts let on March 9 and 10, 2004, whose engineers' estimated cost are $300,000 or more. There are 13 projects; we had four bidders per project; staff recommends award of all projects. Do you have any questions?

MR. JOHNSON: My only question is this number looks very small, $7.3 million of total awarded.

MR. BOHUSLAV: Yes. These are just our maintenance contracts that are over $300,000. We are letting every month contracts less than $300,000; some of those are statewide let, some of those are let locally by the districts.

MR. JOHNSON: Most months are two or three times this $7 million, are they not?

MR. BOHUSLAV: They vary, it depends on the time of the year. For instance, mowing contracts typically let a little earlier, maybe now we let our mowing contracts, so they bump around a little bit due to that.

MR. JOHNSON: Thanks.

MR. WILLIAMSON: We're not mowing any wild flowers, are we?

MR. BOHUSLAV: We try not to, try to hold off as long as we can.

MR. WILLIAMSON: Questions, members; discussion, members?

(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 will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BOHUSLAV: Item 10(a)(2) is for consideration of award or rejection of Highway and Building Construction contracts let on March 9 and 10. We had 80 projects; average number of bidders was 4.28 per project. We have one project we recommend for rejection; it's in Burnet County; it's Project Number 3240. We had five bidders and the low bidder was 89 percent over. This is funded by a developer through the county there and they're not willing to participate to that amount. Therefore, we recommend rejection. Staff recommends award of all projects with the exception noted. Any questions?

MR. NICHOLS: Are there any speakers?

MR. WILLIAMSON: Sir?

MR. NICHOLS: I was just asking if anybody had signed up to speak.

MR. WILLIAMSON: I was just fixing to ask if a Mr. Cathey with Texas Tree and Landscape, is he here? Does Mr. K wish to say a word or does Mr. K wish to stay silent?

MALE VOICE: I decline to comment.

MR. WILLIAMSON: Mr. K declines to comment.

Do we have anyone else who wishes to offer comments on how to pronounce Thomas's last name, or on the thing that Thomas has before us right now?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor -- Mr. Nichols is going to abstain.

MR. NICHOLS: I'm gong to abstain on any contracts in Cherokee County.

MR. WILLIAMSON: Mr. Nichols is abstaining on any contracts in Cherokee County, and the record will reflect that Mr. Nichols is abstaining on all votes related to things matter of Cherokee County. I have a motion and a second from members other than Mr. Nichols. All those in favor, please signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: Motion carries with Mr. Nichols abstaining on matters related to Cherokee County.

MR. BEHRENS: Commissioners, agenda item number 11 is our routine minute orders. I missed 10(b). I'm sorry, Amadeo. Agenda item 10(b).

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

Item 10(b), the minute order before you approves a contract between the Texas Department of Transportation and Halff Associates, Inc. Halff Associates, Inc., employs Charles W. Heald, a former executive director for the Texas Department of Transportation. Government Code 669.003 requires that in order to enter into a contract with a company that employs a former executive director, in this case Mr. Heald, within the first four years after he has served in that position, the Texas Transportation Commission must approve this contract in an open meeting.

The department advertised for acquisition service and Halff Associates was chosen to be the provider in accordance with the competitive selection and negotiation procedures set forth both in the Government Code and Administrative Code. The contract is a standard $1 million contract for acquisition services to be performed throughout the state. Staff recommends approval of this minute order.

MR. WILLIAMSON: What happens if we don't approve it?

MR. SAENZ: Then Halff Associates doesn't get a contract.

MR. WILLIAMSON: Does that mean they get to send Mr. Heald up here to explain why? That may be the only way we'll ever get Wes to come back in here.

MR. JOHNSON: He was in the building earlier.

MR. WILLIAMSON: But he won't come in this room.

(General laughter.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. WILLIAMSON: Second?

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BEHRENS: Now we'll go to item 11 and it's our routine minute orders as posted on our agenda. They're listed there for you. If you would like any of them discussed, we'd be glad to do so; otherwise, we would recommend approval of the routine minute orders.

MR. WILLIAMSON: Mike, I neglected to ask you when Thomas brought the maintenance and construction contracts forward -- and I notice Robert abstained -- do we have any reason to believe, to the best of your knowledge, that any of those contracts might have directly affected any of the commission?

MR. BEHRENS: Not to our knowledge?

MR. WILLIAMSON: And is the same said for the Eminent Domain Proceedings?

MR. BEHRENS: Same would be true, yes, sir.

MR. WILLIAMSON: And we know that you can't know everywhere we're active; we just ask if there's anything you know about.

MR. BEHRENS: Yes, sir.

MR. WILLIAMSON: I've thumbed through; members, have you had a chance to thumb through? Do I have a motion?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: Do I have a second?

MS. ANDRADE: Second.

MR. WILLIAMSON: 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. NICHOLS: I was just going to make a comment on one of the items in there. That's the US 69 Beaumont District, the settling of that lawsuit from I guess you call it a Rails to Trails rail banking. I'm just very pleased that the department was able to resolve that thing, get it settled, because that has gone on -- it was going on for several years before I got on the commission.

MR. WILLIAMSON: I'm also glad it's resolved.

Okay, Mike, are we into section 12?

MR. BEHRENS: Yes, sir, that concludes our business. Agenda item number 12, Executive Session.

MR. WILLIAMSON: Members, at this time we will recess in order for the commission to meet in executive session, as provided in the public notice posted for the meeting agenda filed with the Office of the Secretary of State.

Please let the record reflect that at least one matter we will take up in Executive Session affects a sometimes business associate of or business partner or business contact of one of our commissioners, and Commissioner Houghton wishes to not be included in the Executive Session in any shape, form or fashion for the purpose of that part of the discussion dealing with that business associate or partner. So that being the case, when we recess for executive Session, we will do so without Mr. Houghton.

We will recess to the conference room on the second floor.

(Whereupon, at 2:10 p.m., the meeting was recessed, to reconvene following Executive Session.)

MR. WILLIAMSON: The meeting of the Texas Transportation Commission is reconvened. For the record, the time is 2:42 p.m.

The commission has concluded its Executive Session during which no action was taken on any matter. We will now enter into the open comment period of the meeting, and I understand Coby Chase wishes to comment. Mr. Chase? No?

(General laughter.)

MR. WILLIAMSON: And the Chair recognizes former Engineer Director -- I'll never call you executive director while I'm at this mic -- former Engineer Director Bill Burnett is present, and probably puking because we decided to take no action in our Executive Session.

Does anybody wish to open comment?

MR. BEHRENS: There's no one signed up.

MR. JOHNSON: Just for the transcript, how do you spell that word "puking"?

(General laughter.)

MR. WILLIAMSON: Is there any other business to come before the commission?

(No response.)

MR. WILLIAMSON: There being none, I will entertain a motion to adjourn.

MR. JOHNSON: So moved.

MR. WILLIAMSON: Do I have a second?

MR. NICHOLS: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed?

(No response.)

MR. WILLIAMSON: We are adjourned. Please note for the record the meeting stands adjourned at 2:43 p.m.

(Whereupon, at 2:43 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: March 25, 2004

I do hereby certify that the foregoing pages, numbers 1 through 202, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by J. Ben Bynum before the Texas Department of Transportation.

__________03/30/2004
(Transcriber) (Date)
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731