Texas Department of Transportation Commission Meeting

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

Thursday, June 24, 2004

COMMISSION MEMBERS:

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

STAFF:

MICHAEL W. BEHRENS, Executive Director
STEVE SIMMONS, Deputy Executive Director
RICHARD MONROE, General Counsel
ROGER POLSON, Executive Assistant to the Deputy Executive Director
DEE HERNANDEZ, Chief Minute Clerk

PROCEEDINGS

MR. WILLIAMSON: Good morning.

(Greetings exchanged.)

MR. WILLIAMSON: For the record, it is 9:18 a.m., and I would like to call the June meeting of the Texas Transportation Commission to order. It's a pleasure to have you here this morning.

As is our custom, we're going to take comments from each commissioner in a moment, but before we do -- this is very important because it irritates the heck out of me -- take a moment to check your telephone, your PDA, and whatever other electronic device you carry and, along with me, put it on the silent mode or vibrate or whatever you like.

Now, continuing with our custom, we allow all the commissioners to make comments to the public, and we always begin with the man on your immediate left and my immediate right, the infamous Ted Houghton of El Paso, Texas.

MR. HOUGHTON: Pleasure to be in paradise. I had the opportunity last night visiting with some folks from the Tyler area, Smith County, Cameron County, and my fellow commissioners, today will be a whole lot of fun for us, so I'm looking forward to it.

MS. ANDRADE: Good morning; glad to be here this morning. I'd like to welcome all of our out-of-town guests; we thank them for being interested in transportation for Texas, and look forward to hearing their presentations, and it's great to be here today.

MR. WILLIAMSON: Please continue.

MR. JOHNSON: I'll echo the good morning. I hope those of you who have come from the Gulf Coast region find it a little drier when you go home. We've had an enormous amount of rain.

I'd like to, at this time, congratulate the delegation from Tyler and Smith County; what a great job you are doing. As I mentioned last night to many of you, I think you've shown what I would call a mid-size city can think in larger terms in dealing with transportation issues, and so I want to congratulate you on that and I look forward to your presentation.

MR. NICHOLS: I'd also like to welcome everyone here. Hope you feel comfortable. A lot of you have taken time out of your life, taken at least a day in a lot of cases, to come and talk about the transportation issues and dreams and wants of your community. I can assure you that we take it very seriously. We welcome those thoughts, presentations and ideas. Some of you in the room are here to comment on other issues throughout the book; we look forward to those comments; we respect all opinions on issues we're going to vote on.

And I'd also like to say I enjoyed the great Smith County reception last night. Thank you very much.

MR. WILLIAMSON: Thank you, members, and I echo the thoughts about appreciation; good morning to you for being and appreciation for taking the time out of your day.

I was talking with a reporter earlier in the morning, and I made a passing comment to him and I realized how important it is to emphasize it. You know, really all you have is time, and it's the most valuable thing you have, and to take part of your time and come down here and listen and advocate and learn is a compliment to you, to the commission, and to Texas government.

Our meetings over the past two years have become longer -- some say it's because I'm on the commission. I would like to think it's because the governor and the legislature are almost totally focused on transportation infrastructure in this state and the issues we have to take up and deal with every month just take time.

I've been asked by some who participate in this process every month to be a little bit more structured in my schedule, so I'm announcing ahead of time that if we go until 12:30 or so, we will take a break for lunch; we won't break before then. I'll try to assess how much we've got to do, and if we can get done by 12:30 or 1:00, then we'll try to get done, but if it's obvious that we're not going to make it, then along about 12:30 or so we'll take an hour break and all go have a little lunch and relax and finish up business in the afternoon.

I want to personally apologize to Smith County -- and did you say Gregg County also; are they doing a combined thing? -- and to the I-69 group who hung on to the Smith County people to have a joint party. I fully intended to be there; I understand I missed a great time. Unfortunately, God sent a lightning bolt to the telephone system at my house and I've spent the last three days trying to get my phones fixed, so that had to be tended to.

Please note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of Secretary of State at 11:07 a.m. on June 16, 2004.

Before we begin the business portion of our meeting, I need to remind everyone that if you wish to address the commission in any form, there are two speaker cards out in the lobby in the foyer. If you want to comment on an item that's on the agenda, we ask that you fill out a yellow card and identify the item upon which you intend to speak or comment.

If it's not an agenda item but you have an open or general comment you wish to share with us towards the end of the meeting, we ask that you fill out a blue card to offer that comment at the end of the meeting.

Regardless of the color of the card, we do the best we can to attempt to limit everyone to three minutes so that we can get through a sometimes difficult agenda, so please show us the courtesy of attempting to live with that if you can.

We have one delegation appearing before the commission today; that is Smith County. No doubt you've noticed that we've changed our style a little bit; we have elected to space delegation presentations out in the meeting, and I make no bones about why. I wish for you to listen to a difficult or cantankerous issue that we've got to deal with and become an apostle for the problem-solving of this commission and go back to your community and explain why things like toll roads and comprehensive development authorities and combining public transit with health and human services transit -- why those things are important to the fiscal and emotional well-being of the state. So if you'll bear with us, we're going to be going through one of those things before we hear from you.

One additional housekeeping note: We take breaks, so don't be offended if we start and stop four or five times during the day, because we take breaks.

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

MR. JOHNSON: So moved.

MR. WILLIAMSON: Do I have a second?

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

Next we are going to resolve, Robert, what has got to be the most difficult dilemma this commission has dealt with in the last four years, and that is once and for all we're going to decide if it's Bohuslav, Boslav, or Bohosolav; we're going to decide that today, because we have one of those guys graduating into the free world and we're going to let him pick and we're going to live with that pronunciation from now on.

(General laughter.)

MR. WILLIAMSON: Would Ken B, the director of the Design Division, please step forward?

Mike, take it away, Buddy.

MR. BEHRENS: All right. Thank you.

Today we're recognizing the retirement of Ken Bohuslav who has been with the department a long time, and we have put together a resolution and I'd like to read that resolution at this time.

"Whereas, the Texas Transportation Commission takes great pride in recognizing Ken Bohuslav, P.E. as an outstanding dedicated transportation engineer who has served the Texas Department of Transportation for more than three decades, most recently as the director of the Design Division;

"And whereas, Mr. Bohuslav earned his civil engineering degree from the University of Texas at Austin and in 1977 his license as a professional engineer, and during his career was recognized as the winner of the Gib Gilchrist Award in 1991, and the Texas Award for Historic Preservation in 1992;

"And whereas, Mr. Bohuslav has devoted 31 years of his life to public service with TxDOT by holding various positions in the Safety and Maintenance Operations Division, the Highway Design Division, the Environmental Affairs Division, and the Design Division, and during that time served on several professional committees;

"And whereas, Mr. Bohuslav became director of the Design Division in 2001 and was responsible for all roadway design, field coordination, plan development, construction letting management, Professional Consultant Contract Program, the Transportation Enhancement Program, and landscape design;

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

"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 Ken Bohuslav, 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 24th day of June 2004."

(Applause.)

MR. WILLIAMSON: Now, before we come down and give this to you, we're going to give you a chance to resolve the pronunciation problem.

MR. K. BOHUSLAV: Well, actually, Chairman, I like Ken B the best.

MR. WILLIAMSON: You're just trying to maintain harmony for family picnics.

MR. K. BOHUSLAV: That's right. Well, Thomas is taller than I am.

MR. WILLIAMSON: He is; he's taller than all of us, I think.

Well, you've got the podium before we speak.

MR. K. BOHUSLAV: Thank you.

Well, it's been a real pleasure for me to work with the commission, especially during access management.

(General laughter.)

MR. K. BOHUSLAV: It really meant a lot to me personally and the staff to have your support at the public hearings and deflect a lot of the heat from us and to help us get through that.

It's a great commission and a great department. I've had a wonderful career with TxDOT, lots of opportunities, met a lot of great people, and I'm going to miss that part of it. But any successes that I've had in the Design Division are more a reflection of the staff that work in that division than they do of me, and if I may, I'd like to introduce some of the key staff members that are here with me today.

MR. WILLIAMSON: Please. It's your morning.

MR. K. BOHUSLAV: I'll start out with the deputy division director, Mark Marek, and you'll be seeing a whole lot more of Mark since a week from today he'll take over as the division director for the Design Division. Maria Burke is director of Field Section A; Linda Olson is director of Letting Management; Roy Meza is director of Railway Design; Mark Matthews is the director of Landscape and Enhancements, and you will all have a chance to work with Mark on the next Transportation Enhancement call; Tom Beeman is director of Field Section B; and Jean Beeman is director of Administration. I think that's all the staff members I have with me today.

One person is on vacation, Elizabeth Hilton, who is director of our Plan Development section; and Camille Thomason is at training today, and she oversees the consultant office for us.

MR. WILLIAMSON: Members, anything to say to Ken B?

MR. NICHOLS: First of all, I'd just like to thank you for all the years of service you've given to the state. I've worked with you real close on a couple of projects. I think the first time I met you, you were in the Environmental Division, weren't you?

MR. K. BOHUSLAV: That's correct.

MR. NICHOLS: And it's got to be a real personal satisfaction to you to have seen projects develop, go under construction, and to actually be built all around the state, all the things you've worked with, and you can drive and go all around the state and see things you had a touch with to help make the place a better place to live.

I just want to say I enjoyed very much working with you. I thought that you always kept your nose at it and doing the right things for the right reasons, and I very much appreciate what you've done. Thank you.

MR. K. BOHUSLAV: Thank you.

MR. JOHNSON: Ken, as you know, I was at the Bridge and Design Conference last week, and it was pointed out that you started work on January 1, 1973, and that that was a paid holiday and that some of your colleagues in the department have thought that ever since then you've been on a paid holiday.

(General laughter.)

MR. JOHNSON: I say that in jest, because I think the worth or merit or production of many of our people we're judged on not only what has been accomplished while we've been in a position of leadership, but also on the organizational structure and the process that we leave behind, and I'm confident that each division that you have been in, and certainly the Design Division that you've led, on both of those counts you will leave with very, very high marks, and I want to thank you for your years of service to this agency and the state. It's made each a better place, and I'm proud to have gotten to know you over these last few years.

MR. K. BOHUSLAV: Thank you.

MS. ANDRADE: Ken, unfortunately I didn't get a chance to work with you that closely, but you've got a great reputation in this department, I've heard great things about you. Thank you so much for what you've done for us for 31 years, it's admirable, and I truly wish you the best.

MR. K. BOHUSLAV: Thank you.

MR. HOUGHTON: Well, I'm the newbie, according to everyone on this commission, and I also did not get to work with you, but as any successful organization, it's the people -- it's not the concrete on the ground or the bridges in the air; it's the people that make up the organization, good people. I have a question, though: What are you going to do in life after TxDOT?

MR. K. BOHUSLAV: Well, I'm going to go to work for a consultant. That's probably not a big surprise.

(General laughter.)

MR. HOUGHTON: Congratulations.

MR. K. BOHUSLAV: Thank you.

MR. WILLIAMSON: I echo the comments of all four, Ken. I didn't get a chance to work with you as closely as Robert on access management, but I try to spend a lot of time observing the actions and progress of our staff, and I know that you're one of Mike Behrens' all stars. We hate to see you go and we hate to see you go to the dark side, but we understand that's the way things are.

Is it okay with you if we come down and give you this resolution?

MR. K. BOHUSLAV: Sure.

(Pause for presentation and photographs.)

MR. BEHRENS: Mr. Chairman, if I could, we have one other person we just want to recognize that will also be retiring on June 30, and that's Bill Blanton.

MR. WILLIAMSON: When did Bill decide to retire?

MR. BEHRENS: Well, he sort of snuck up on us, but Bill has been involved in audiovisual for almost over 40 years and did part of it in the Naval Reserve, did some over at "The" university, Texas A&M University, and he came to --

MR. WILLIAMSON: Where is that?

MR. BEHRENS: It's in College Station, Latitude --

(General laughter.)

MR. BLANTON: I speak Aggie.

MR. BEHRENS: He came to us in 1989 to the Travel Division and in ten years has been part of the commission meetings in audio-visual support and things like that.

So, Bill, we appreciate what you've done, glad you came and worked with us for a while, and good luck in your future.

MR. WILLIAMSON: Congratulations.

(General applause.)

MR. BLANTON: The tooth fairy left you some Texas quarters up there.

MR. NICHOLS: Those came from you?

MR. BLANTON: The tooth fairy.

(General laughter.)

MR. WILLIAMSON: Thank you, sir.

MR. BEHRENS: We'll continue on with the agenda. I would like to announce that after we get through with the discussion items, agenda item 3(a) and 3(b), we're going to take agenda item 8(b)(2) which is final rules on public transportation. So those of you that may want to comment on that agenda item, just to let you know, that will be taken up after we get through with these discussion items.

So now we'll go to agenda item number 3 where we'll discuss Comprehensive Development Agreements, and it will be led by Phil Russell.

MR. RUSSELL: Thanks, Mike; good morning, commissioners. For the record, I'm Phillip Russell, director of the Turnpike Division.

Today's discussion item, I thought I might give you perhaps a little overview, a little historic perspective, and then open it up for general discussion, if that's your will.

As you know, Chapter 361 of the Transportation Code authorizes the department to enter into comprehensive development agreements. These agreements are with a private entity to develop a turnpike project. Statutorily, those agreements must include design and construction and may include financing, acquisition, operation and maintenance, and generally, the language applies to both the solicited and unsolicited processes.

Currently we have five CDAs that are in various development stages. State Highway 130, that I think you all are familiar with here in the Austin area, that contract was executed a couple of years ago. Of course, the Trans-Texas Corridor 35 element, we have an open procurement now that my division is coordinating. The Austin District has a couple of CDAs that are out there: one to provide toll booths, the design, construction and delivery of toll booths for the Central Texas Project; as well as one to complete the southern link of the State Highway 45 Southeast project. Lastly, we have a request for competing proposals out in the Dallas and Fort Worth districts on the 820/183 projects.

So we're certainly not experts, by any stretch of the imagination, but we are beginning to accumulate some experience and to develop some ideas on comprehensive development agreements in general. So it might be an opportune time to develop a policy on how the department will be looking at comprehensive development agreements in general.

If that would be the desire of the commission and the administration, that policy may contain or probably should contain the sorts of projects that the department will be interested in in utilizing a comprehensive development agreement, and specifically the sorts of projects that really lend themselves towards CDAs.

Generally, those are large projects; specifically in the turnpike area, those are projects that need to be developed in one fell swoop; not in piecemeal fashion but in one large project so that it can be opened and begin collecting tolls.

Some very complex projects particularly lend themselves to CDAs, and of course, if there are schedule advantages where we can save some development time, or if we can save some money, then again, CDAs are a very good delivery system.

Generally, CDAs should not be utilized for a broad range of nonspecific services. From time to time we'll get groups that will come in and say: Hey, we have a great idea here; what if we do this or do that. And a lot of those are more generic design type services that really don't include any construction elements; they really don't include financial elements as well, and so for the most part we said, No, really we'll handle those through a normal professional services procurement; what we're looking for is something that, again, provides some benefit to the state.

As to unsolicited proposals, the policy should reinforce TxDOT's expectations for those sorts of proposals. Typically we focus -- and again, I'm talking about those conceptual unsolicited proposals that come in.

Typically those proposals should focus on the business and the financial aspects, and specifically their ability to leverage state and federal dollars. We typically have not expected a high level of engineering in these conceptual plans, but we do need enough to understand the basic concepts and the validity of the plan.

The project that's included in the proposal would need to be consistent with state and local planning and specifically fit within TxDOT's transportation and financial priorities. Of increased importance, of course, is in metropolitan areas those proposals would need to be closely coordinated not only with the districts but with those metropolitan planning organizations.

The policy may also want to discuss the use of CDAs on the Trans-Texas Corridor. Right now we currently have the opportunity to take unsolicited proposals as well as solicited proposals, and there are pros and cons to both of those. We get a lot of input on unsolicited as well as solicited proposals, and again, I think that's an area for good discussion.

The policy may want to discuss also the RMAs involvement in the Trans-Texas Corridor. There has been quite a lot of discussion in the private sector, I think, about what the role of RMAs have been. TTC obviously has not only regional but statewide and national implications. As such, it may be in the best interest of the state for the department to take more of a leadership role in developing the Trans-Texas Corridor, whereas, the RMAs and the local entities will help deliver those critical linkages between those metropolitan areas and the corridor itself.

The policy should contain a conflict of interest statement. Within TxDOT I think we all have a lot of comfort, in a typical fashion, we understand those traditional conflicts of interest issues. Over the past four or five years, and particularly over the last year, it's really come to a head on all the sorts of new conflicts of interest.

It may be something like can a traffic and revenue engineer provide the investment grade rating and be a member of the development team. The answer is no, in case anybody out there is wondering, but those are situations that I think we kind of have the sense for what's right or what's wrong, and what's black and what's white.

What we're seeing, though, more and more now as we get into the procurement area, procurement engineer, utilizing environmental engineers, should they be working on the developer side as well as the owner, the OT side, and so that's an area that we will need to explore very closely. I have received a lot of informal input, as I suspect you all have as well, from the private sector and it's something that should be included in that policy if that's the choice to go forward.

Parallel with this policy statement, there are existing rules in Chapter 27 that would also probably need to be updated as well. Some of those may be more cleanup, more updating, but there are a multitude of other issues that are out there, particularly on what the commission's view is as far as approvals.

Should the commission continue to approve the solicitation of a project, the issue of stipends has certainly had a lot of discussions over the past few CDAs; is that something that the administration should have the approval authority on. So I think as we develop the policy, our existing rules will need to be touched upon as well and cleaned up.

With that, Chairman, I'd be happy to answer any questions that you might have.

MR. WILLIAMSON: Phil, I think there's going to be quite a bit of discussion about this topic; I'm still formulating how I want to ask my question. I know that each commission member has some dialogue they wish to execute; I don't know what that dialogue is.

I think the best way to start this is to begin with Ted and just say generally take it and take it as far as you want to, Ted, and when you're done, just indicate to Hope and let Hope take it as far as she wants to, and then hand off to John and then to Robert, and then we'll go back through and summarize after we're done.

MR. HOUGHTON: When you talk about size and large, define it.

MR. RUSSELL: It has not been defined, and I would suggest not defining it. I think it's always very, very difficult to put a number value on that. Across the country, everybody has different views on what large is; it's a relative statement, and I think within even TxDOT that's probably a relative term. What's large in Dallas certainly is very, very large in some of the more rural districts, so I don't think we could quantify that and I think it would be very, very difficult to do that.

MR. HOUGHTON: From the standpoint of the proposals that you have seen today, other than the 130 -- let's exclude 130 -- have most of these proposals been bringing equity to the table to these projects, outside equity?

MR. RUSSELL: No, sir.

MR. HOUGHTON: And from an internal standpoint, what set of eyes outside TxDOT look at these CDAs?

MR. RUSSELL: Let me make sure I understand your question. Who puts those CDAs together?

MR. HOUGHTON: Who reviews them, who is the review team?

MR. RUSSELL: Outside of TxDOT?

MR. HOUGHTON: Uh-huh.

MR. RUSSELL: I don't think there is a review team outside of TxDOT.

MR. HOUGHTON: No. We hire consultants to look at these.

MR. RUSSELL: Okay. I misunderstood your question. Right. We typically have put together a team:

We have a special counsel that OGC coordinates -- currently it's the Nassman Law Firm -- that helps with these CDA matters, fairly specialized practice of law, and we typically have hired a procurement engineer. On the 35 TTC it's the HNTB Team; on 130 it was an HDR team, but these are engineering teams that don't delve so much into the legal matters -- obviously they can't -- but they do a lot of heavy lifting for the team, a lot of those technical specifications. So in the past, that's how we put those teams together.

That is an area, Commissioner Houghton, where we are really receiving a lot of interest, it's creating a lot of nervousness, both internally within the department and outside, the role of these procurement engineers, and I think ultimately we're probably better served at developing some core competency within the department and handling that element ourselves.

MR. HOUGHTON: I'll turn it over to somebody else for right now, Mr. Chair.

MS. ANDRADE: Good morning, Phil.

MR. RUSSELL: Good morning.

MS. ANDRADE: Of the five that we have right now, how many were unsolicited?

MR. RUSSELL: Let's see; four out of the five were unsolicited.

MS. ANDRADE: Four out of the five, okay. Well, what's the time frame -- walk me through the process. Once we see the unsolicited proposal, we receive it, how long do we have to get back to the people that submitted?

MR. RUSSELL: Typically, the entire process from inception to the point of executing the contract probably takes anywhere from 12 to 18 months, depending on the time frame, the type of project, the complexity of the project.

In the case of 820/183 -- which is our latest unsuccessful proposal -- that came to us, if memory serves me, at the Waco April commission meeting. At that point you authorized to open it up to competing proposals; that advertisement was placed the end of May, I think May 27; I believe we gave them 90 days to offer those competing proposals; that's put us in the time frame of about mid-August, August 20, August 23.

At that time we'll sit down, we'll look at the competing proposals, we'll evaluate them, hopefully with an internal TxDOT team, and that will probably take around a month or so. At that point we'll make a determination of whether we should move forward with the solicited -- excuse me -- with the detailed proposal stage. In the past that's where the stipend issue has come up, we've brought it to the commission to get your input on what the stipend should be, how much should it be.

Once we're given approval to move forward with that detailed proposal stage, that's where it's a bit elastic. We have what we call an industry review period that in the past I think the industry has found very helpful; we certainly have as well.

That period is anywhere from six to nine months where we sit down with the proposers, let them know kind of our mind set, what we're looking for, if we're talking about financial contributions we really home in on that. We try to move back and forth, and then we begin developing the documents: the instructions to proposers, the CDAs themselves, and we use that as a platform to vet with the private sector those documents. And through that vetting we learn very quickly where those risks should be allocated, should they be on the state side or are they more appropriate to be on the private side.

Typically, we try to push more of that risk and responsibility to the private side; they, in turn, push back a little bit; and through that process, we learn where the most appropriate risk allocation is. And we'll have a lot of those one-on-one meetings where we learn and we craft that document.

Then at the completion of that, we'll issue the detailed proposal, and that will be the time where they really go out and burn that midnight oil and put together their detailed proposal for our review. That typically, if memory serves me correctly, has to be at least -- I think it also says 45 days, but typically it's in the 90 to 120 time line period.

A lot of discussion that's occurred in the past has been what's the proper length of time. On the one hand, the unsolicited proposal would like it truncated down to be just as short as possible because they do have a bit of a competitive edge.

On the other side, we obviously want good competition, and so that would lend itself to pushing it towards six months or a year. And there's a sweet spot in there where we're always striving to get the right amount of time so that that unsolicited proposer who put in a lot of time, effort and money is somewhat rewarded for their diligence, but at the same time, everybody else is given an opportunity to compete.

So again, typically that's been running 90 to 120 days, depending on the magnitude and the complexity of the project. Once those proposers come in --

MR. WILLIAMSON: May I interrupt a moment?

MS. ANDRADE: Sure.

MR. WILLIAMSON: Phillip, I want to take you back to a comment you just made. Thank you for letting me interject. As you were rambling through that explanation, you said the person who makes the unsolicited proposal of course wants to shorten that time frame in order to give competitors the least amount of time because he or she has a competitive edge. And then you said what the department wants is the most competition possible, or something to that effect.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: Now, the purpose of these discussions items on the agenda is for commissioners to dialogue with each other legally and kind of tell each other where they are. More importantly is for you as a staff person and Mike as executive director to understand in a group setting the concerns that the commission wishes to be addressed. All of us are self-employed business people; we don't sit down here and waste our valuable time just to flap our jaws.

And that answer you were given, Hope, is very revealing about the department's mindset -- and maybe I'm alone in this; we're fixing to find out, I think -- for this commissioner, the notion of the most competition possible is nearly as important as getting a piece of infrastructure built as fast as possible according to what we have determined is in the best interest of the state.

For example, Amadeo, are you out there? Can you step forward, please? I'm going to use you as an example. Would you identify yourself?

MR. SAENZ: For the record, I'm Amadeo Saenz, assistant executive director for Engineering.

MR. WILLIAMSON: Assistant executive director for engineering.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: And what was your previous position with the department?

MR. SAENZ: I was a district engineer in the Pharr District, South Texas.

MR. WILLIAMSON: And in the Pharr District was there a bridge that recently got destroyed by a boat?

MR. SAENZ: Yes, sir, the Queen Isabella Causeway was hit by a barge, a towboat that was pushing some barges, and it collapsed.

MR. WILLIAMSON: The causeway collapsed.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: And so did we have to rebuild the causeway fast?

MR. SAENZ: Yes, sir, we did.

MR. WILLIAMSON: About how much money did that cost us?

MR. SAENZ: I think when all is said and done, we spent close to $15 million.

MR. WILLIAMSON: Pretty sizable chunk of money.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Tell me, Amadeo, after the boat hit the causeway and the causeway collapsed, how much time did you spend assuring that we had the most competition possible in deciding to rebuild the causeway?

MR. SAENZ: Not very much.

MR. WILLIAMSON: In other words, you knew what you had to do and you knew generally what the financial constraints were in which to do it.

MR. SAENZ: We knew we needed a capable or competent bridge contractor that had the resources to be able to do the job in the fastest way possible.

MR. WILLIAMSON: So you knew what the goal was, you knew what the objective was, you knew what your budget was, you made a decision, and the department rebuilt the bridge how fast?

MR. SAENZ: We built it in, I believe, 59 days.

MR. WILLIAMSON: Fifty-nine days.

MR. SAENZ: Yes.

MR. WILLIAMSON: Thank you.

Here's my point, Phillip: I've been in government 20 years now, the first 13 on the legislative side, the next three on the political side, and the rest here, and I will guarantee you the best agencies in the State of Texas, the best federal employees, the best city employees, it don't matter, the more time you give yourself to do something, the more time you'll take.

And my point is this commissioner believes what's important is we need transportation infrastructure built in this state. Having the maximum number of people offering their opinions about what they would charge us is not nearly as important to me as having one person who's willing to build that bridge or build that railroad or build that superhighway on the terms and conditions we have previously identified as acceptable to the taxpayers of the state.

That's why we're hired to do what we do; that's why the governor appoints us, that's why we hired Mike Behrens, that's why he hires you: to exercise judgment. And if we already know we need to build a highway, if we know we need to add two lanes to Interstate 35 and we can't afford it and therefore we're going to have to do it with tolls, we don't need 72 engineering firms and 62 construction companies telling us how they individually would do that, supervised by 47 consulting firms telling them how they're going to do it. We need one brave soul to say: You want it done for $85 million, $219 million or $3 billion, we'll do it; here's the time line; give us the specs later, we need to start.

That's what we need; we don't need the most number of people competing to share their opinion -- that's my opinion. Thank you for letting me interject, Hope. And certainly feel free to argue with me, please.

(General laughter.)

MR. ANDRADE: Let me clarify where I was going with this. What I want to make sure that we do, Phil, is we're encouraging firms to submit unsolicited proposals so we owe them the courtesy and respect to respond to them quickly, to let them know what we're doing.

So I want to make sure that we keep communication with them; otherwise, they're going to feel like it's a waste of their time and effort if they submit something and we don't respond to it quickly. You know, that's what I'd like to make sure is we put a process in place that the firm knows that once we receive it, we're going to acknowledge it, we're going to work on it, whether it takes us 90, 120, 180 days, but that they know where we're going so that they know what to expect. Otherwise, they're calling us at times and saying I submitted a proposal and then we have to call you and say where is it.

MR. RUSSELL: Right.

MR. ANDRADE: So that's my concern, is we want to encourage it but we want to give them the respect and courtesy of their effort. Thank you.

MR. JOHNSON: I think what I want to say, Phil, is somewhat along the same lines that Hope was trying to convey. My impression is this has the potential to be a hugely effective tool for this department and the state, and what I would hate to see us do is make it so restrictive or so tight in what qualifications are that we would lose the benefit by excluding the potential of some projects that we might get done. So if we make the box or the door so small that we exclude the potential, I think we've lost a lot of the effect.

The other thing that occurs to me is we are new to this type of doing business and these rules are going to change; we're going to learn more and we're going to learn do to things better and what to expect as we gain a little experience. I think we need to keep that in mind, especially as we're trying to organize our initial thoughts and put them down in some sort of communicable fashion to let everybody who's interested in this sort of the use of CDA, whether they're communities or whether they're the actual consortium of firms that get together to present them. I just don't want us to sell ourselves short and restrict the flexibility that this tool has.

The other thing that I wanted to ask you -- and maybe Amadeo is a good resource here -- is we have a number of new tools. One that comes to mind is pass-through tolls, and do we have the flexibility to use a hybrid tool if you will, a CDA that has a pass-through toll agreement?

I do think with the flexibility of the number of the new things that we've got in House Bill 3588 that there's a lot of potential mergers, use of one or more, two or more of these tools, to get, as the chairman so eloquently said, to get things done and get them done quickly, because time is very precious.

MR. RUSSELL: Commissioner Johnson, those are two separate processes, obviously the CDA process, as well as the pass-through toll provisions. When the pass-through toll comes from a private entity, then there are some opportunities there to seek kind of competing proposals, two different processes, but potentially, especially on the Trans-Texas Corridor, I suppose that both of those elements could be utilized but as two separate processes.

Amadeo, do you have anything to add?

MR. SAENZ: Thank you. For the record again, Amadeo Saenz.

The pass-through toll mechanism is really a financing mechanism; it's a method to be able to pay for the project. We can incorporate that into the way we develop projects, whether it was a simple design-bid-build project and a local entity is going to provide the money up front and then we will reimburse them through pass-through tolling, we can do them through the CDA process.

So we have a lot of flexibility; the tools do that for us now and it's just a matter of sitting down and you look at the project and find out the best way or the most cost-effective way to develop it and roll it out and pay for it. So we can do that.

MR. HOUGHTON: It would seem to me that the developer, if they understand all the tools, would understand that pass-through tolling is a way to finance some of these projects on the front end.

MR. SAENZ: Yes, sir, and we have gotten inquiries from developers, from public entities, cities and counties that are looking at ways to advance and accelerate projects and looking at ways to use the new tools, and then how those projects are then developed where we will finance them maybe through a pass-through tolling mechanism and then they can be built using a CDA. So it can be done and we can combine them; it's just a matter of looking at each project individually.

MR. JOHNSON: Amadeo, I know that several of us have been out encouraging, whether they be counties or RMAs or a group of developers, to consider pass-through tolls, to consider a lot of these tools with the idea that the time is right.

We need to be moving projects as quickly as we can from conception to ribbon-cutting. And particularly on the pass-through toll aspect of that tool, there are several let's call it in the infancy stage, how are we progressing in terms of the response to at least my plea that the time is right now and let's move some of these forward and get some experience utilizing these tools.

MR. SAENZ: Yes, sir. Of course, we have finalized the rules, we have final rules in place, we have been talking to several public entities -- in this case they've all been public. For example, we have gotten one proposal from Montgomery County that -- I'm going to put my staff on notice -- we will try to bring to you all, to the commission next month in July. It's a two-step process to approve a pass-through tolling agreement. The first part is really that the project meets the criteria that you have established, and it gives us authority to proceed with the negotiation of a pass-through tolling agreement. So we hope to be able to bring you Montgomery County's pass-through tolling proposal next month in July.

But we are working with several others. For example, Montgomery County, that's the one that's furthest in the mail or has been cooking a little bit longer; we have been working with the City of Weatherford; we have been working -- later on today you'll have a project in the City of Kyle that involves several mechanisms to develop the project, one of them being pass-through tolls. You'll be considering something on that, not the pass-through tolling element but just the project development and how pass-through tolling could tie into that.

And of course, Grayson County had formed an RMA that was approved a couple of months ago. We're meeting with them because part of their project they want to do through pass-through tolling. So we have several projects that are underway; probably the first one you'll see will be Montgomery County, and we hope to bring that to you next month.

MR. JOHNSON: Thank you. I didn't want to go down too much of a different path, but that's very informative.

MR. WILLIAMSON: It's a discussion item, so it's wherever you want to range.

MR. RUSSELL: Commissioner Johnson, if I could, I need some clarification on your first point. If I understood you correctly, you indicated a desire not to have too much regimentation; I think you said to create a box around that. Were you talking about the types of projects that we might utilize it for.

MR. JOHNSON: Mostly.

MR. RUSSELL: And I guess I wouldn't be doing my job if I didn't convey it. I think from the private sector there is some nervousness that is so broad that they're spreading their forces and their resources pretty thin, and so I think the private sector would -- they're very interested in having the department say, here is a list of projects that we would like CDAs on, and from the unsolicited standpoint, here are the types of projects, so that helps focus their attention.

And I think they worry a little bit, again, expending tremendous amount of resources, and we get back into the issue of stipends and that which has been obviously a great discussion point over several commission meetings. So that would be the counterbalance to that.

MR. JOHNSON: Well, I mean, we can basically lead them to water and just paint the path or draw them a map to the project we think are worthwhile. But I mean, to me those are very evident to them anyway, and to fully utilize something of this nature, we need the ones that we haven't thought of.

Not all good ideas originate in this department; I know this department is very capable, but there might be projects out there that we've overlooked or might have been in the center of the screen at one time and now have drifted. So I think this is a way that we can get more attention paid to more potential projects.

And obviously some of them with great imagination just aren't doable, and as Hope said, we need to be responsive and say you know, right now the time is not right for that particular aspect or that concept. But it plants a seed and that seed might come to life years down the road.

MR. WILLIAMSON: Well, John you make a good point about not all great ideas originate here, and there's reasons why.

Department staff is focused on a lot of things; we suffer from the affliction that all government suffers from and that is frequently our employees don't really know who the boss is. You know, is it Mike, is it the Commission, is it the House Appropriations Committee, is it the Senate Finance Commission? Who's the boss? So we have to deal with that.

But my observation, after three years of the business, from this angle is that we tend to, we are forced into looking backwards in planning our transportation investments forward. That is, the Texas Congestion Index has to reach a .7 before we start thinking about spending money there.

And the developer world and the mayor world and the county judge world, they're saying I know that things are stacked up in downtown Cameron County, but the real problem for us in two years is that railroad crossing, and we need it fixed now because it's going to be a problem. Well, we're not geared to do that, and I think what Commissioner Johnson -- the point he's trying to make is maybe we need to be geared to do that.

When it gets my turn to blather, I'll get some things on the record. But, you know, Phil, I understand what you're saying about the engineers and the constructors and the financers and the big-time developers who purport to do all of that. They're always asking us to give them guidance; they're always asking us to hold their hand; they're always asking us to help them limit risk and guarantee profit.

That is the relationship between the private sector and government. If the private sector can persuade government to limit their risk and guarantee them profits, why shouldn't they try to do that through acting in their own self-interest.

My perspective is, as Mr. Johnson said, I think it's pretty easy to point to the water trough and say, We want you to drink from there and you need to figure out if you want to spend the money to get over there. I don't have, myself, much patience for those who say, Gosh, give us some decisions so we don't waste our money. If somebody told me that, I wouldn't drill a well.

John, would you ever build a chemical pit?

MR. JOHNSON: I can't build chemical pits anymore.

(General laughter.)

MR. WILLIAMSON: Would you ever try to develop 16 different ways to do that plastic bag to suck blood out of the air? Ted, would you have ever piped water to the mountain? Hope, would you have ever tried to combine two medical functions into one person?

I mean, that's just silly; it's silly for people to make that complaint.

MR. HOUGHTON: Well, in the financial world, when you talk about six months to a year, that's an eternity. When you get CDAs or developers putting together the financial profile, a week can change that. So the longer these processes go out, I think the least interested these people become. If they say it's going to take a year, well, we're not interested in doing this. There's got to be a quicker resolution to the issues.

MR. RUSSELL: Right. I think, Commissioner Houghton, on that process, as I rambled through that process, that proposal time, that six months or so that I've talked about, we found that the input from the private sector is they want it.

I think on our side we're perfectly happy to compress that down to a relatively little amount of time, but I think they value that ability to sit down and kind of understand the documents and what the sense is.

MR. HOUGHTON: I don't think, in my opinion, if I'm driving the choo-choo, we want that project on the ground; I'm not interested in how long they want it. I think stretching it out -- but that there's got to be a bar and there's got to be a deadline that we say: We're cutting bait; we're fishing and we're cutting.

MR. WILLIAMSON: And, Phil, they take their cue from you. I mean, these are all men and women -- in my movement across the state, I continually try to point out -- as I'll point out to my friends from Smith County -- we've got two pots of money: we've got tax money and we've got our traditional process of distributing that tax money; and we've got all this new debt and these new tools and it's a nontraditional way of doing it.

But these guys who are nibbling at the nontraditional pot are also the same guys that are working for Richard Skopik in Waco at the traditional pot and they take their cues from you and they're supersensitive to what staff says.

So they hear the commission saying, let's go, and they hear you saying that here are 97 more regulations that that consulting firm has recommended to us we make you comply with. And the story I hear -- and I suspect what I just heard Ted say -- is not that they want more of that stuff; they want less. They want us to define the goal and the amount of money we're willing to pay to reach the goal and let them decide how to get there.

Mike, you always tell me professional engineers have standards you have to live by, so all these guys are going to have professional engineers designing this stuff. They're not going to design something that doesn't work; we're not going to approve something that doesn't work.

So I don't know if it's the best thing when somebody says, I want more time; that may be the firm that doesn't want this to succeed anyway and they're just saying, I want more time, but what they really want is for the process to get slowed down where people give up.

MR. HOUGHTON: Do we have any design-own-operate proposals?

MR. RUSSELL: What's that now?

MR. HOUGHTON: Design-own-operate proposals.

MR. RUSSELL: Potentially the 35 TTC will be a long-term concession, more of a European design.

MR. WILLIAMSON: Is that the one that Nichols wants?

MR. RUSSELL: I think that may be the one.

MR. WILLIAMSON: I was just trying to wake you up.

MR. NICHOLS: I wasn't asleep; I was waiting on my turn.

(General laughter.)

MR. RUSSELL: The 820/183 potentially could be as well.

MR. NICHOLS: Is it my turn?

MR. WILLIAMSON: It's your turn.

MR. NICHOLS: First of all, before I make comments related to this issue, I notice that this is the only one -- item number 3 on the agenda is the only one that you're going to be standing there?

MR. RUSSELL: Yes, sir.

MR. NICHOLS: And I wanted to say and recognize how much we appreciate the work that you have done and the TTA staff has done in the last six to twelve months since the passage of 3588.

Because of the explosion of opportunities in tolling, because of the minute orders and direction from the commission to begin much more aggressively evaluating our opportunities, and because of the communities who have come up with so many of their own ideas, most people don't recognize how much you have really cranked out.

You're kind of back there quiet, yet you're everywhere all over the state touching each of the communities on these projects. And I wanted you to know that publicly we recognize that and appreciate it; you have really done yeoman's work on that stuff.

MR. RUSSELL: Really appreciate that. Obviously staff is doing a fantastic job; they're spending countless hours.

MR. NICHOLS: And I think in two years we're going to see some incredible stuff coming out because of that work.

Related to this discussion item, we're talking about comprehensive development agreements, solicited and unsolicited proposals. Now, we already have rules on the books related to these. When we put those together, I recall that we wanted a structure, first of all, to meet the legislation and certain protections in there, but we also wanted to keep these things with a creativity out there. And because of that, we have seen a lot of very unusual things come in.

One of the proposals -- which is not a CDA but it's kind of in that mind -- I think we're going to hear from a delegation today related to toll road, but it's the creativity in this that I think is also important to keep. Yet at the same time, I can see we're getting a flurry of proposals for CDAs that I don't think we want to consider.

I've seen some types that I'm beginning to see that some of the ones in particular where the proposal is, We could build this highway, but you pay us to go do the study to see if it's worthy; if it's worthy, then we'll do a revenue study, if you'll pay us, and if the revenues work out good, then we'll sell the bonds for you and then all the extra money, whatever that happens to be, you pay us and we'll build it. That's not a very good proposal, but we saw a flurry of those.

MR. WILLIAMSON: For us; a great proposal for the other guy.

MR. NICHOLS: Yes.

MR. WILLIAMSON: Probably the same guy that's in there telling Phil to give me more direction. You know, socialists come from both political parties; they're not limited to one.

MR. NICHOLS: So I think, me personally, it is important for us to have some basic guidelines, because I think people are looking -- communities, counties, developers would like some basic feel for what it is we're thinking.

And they've gone to the rules, they've talked to staff, I know many of them have gone and talked to us individually to kind of get a feel for what we're looking for. So I think it would be helpful to try to put together a set of guidelines, and I think that's the intent here: to try to come up with some kind of general guideline. So, yes, I am in favor of that.

But I think it also should be mentioned in that guideline that it is strictly a guideline, not a rigid rule, which is totally different. And it should be explained in there that unusual creative ideas that are exceptions in here certainly are encouraged and should be looked at and evaluated, but generally, this is kind of maybe what we expect.

Now, getting into that, was this posted -- this discussion and these bullet points posted on the internet with our book? He's saying yes; he's saying no.

MR. BEHRENS: Well, the agenda was posted.

MR. NICHOLS: The agenda was posted but this page that's in my book was not on the internet, so everybody hasn't had an opportunity.

MR. WILLIAMSON: That's a staff memo.

MR. NICHOLS: And that's all it is is a staff memo to us with some general ideas and bullet points. I'm obviously not going to go down here; I'm telling you that most of the items I see in here I think are very good; the ones I'm going to discuss are what I think I have a concern about.

One of these things was a bullet point referring to procurement engineering services will be done in-house. Generally, in a comprehensive development agreement, inclusive in that is the engineering itself, so I didn't quite understand what was meant by that.

MR. RUSSELL: Commissioner, the notion of a procurement engineer, they do just that; they help us with that procurement. It's a fairly complex process, perhaps too many regulations, but it's a fairly complex process. It's something new for the department that we're getting into. So besides having legal counsel help us with some of the legal portions, there's just a lot of that technical stuff that is unique to a comprehensive proposal.

MR. NICHOLS: You're talking about engineering to evaluate these proposals.

MR. RUSSELL: Well, to help us put together those documents. Ultimately, TxDOT employees would make those decisions on who is successful and who is not successful, but they provide a lot of that heavy lifting and expertise on how those things are put together, and that's an area that is creating a lot of conflict issues, and what I've suggested to the administration is that we create that core competency within the department and we just start handling that ourselves.

MR. NICHOLS: But you didn't mean engineering as in engineering the project itself.

MR. RUSSELL: No, sir.

MR. NICHOLS: Just wanted to clarify that.

One of the things in here is that TxDOT will focus its evaluation of unsolicited proposals on the business and financial aspects of the proposal. I wanted to make sure we also include in there as well as the benefits to the public.

I mean, it may be financially sound and have some of these other things, but if it isn't beneficial to the public, well, then we don't want to just do it.

MR. RUSSELL: Right. And I think, Commissioner, that's in line with exactly what I'm hearing. At that stage we don't want to get into a lot of the details, not too many regulations; we want them to come in with their idea. They have to give us enough information so that we can convey it to you all whether that's something worthy that the state moves forward, but it does put a lot of emphasis on the financial structure that they're leveraging our state and federal dollars.

MR. WILLIAMSON: Robert, can we have a little dialogue about that?

MR. NICHOLS: Which part?

MR. WILLIAMSON: What you just told him that you were concerned about.

MR. NICHOLS: About the public benefit?

MR. WILLIAMSON: Yes, public benefit looking backwards, or public benefit looking forward as best as we could project.

And let me give you an example. All of us who are from the western portion of the North Texas Metroplex understand that the next housing corridor in our part of the world is probably up 35W towards Alliance Airport and off to the west side of the road. The congestion index is not high enough now to compete with, for example, 183 going across north Fort Worth, but all of us who live in that area rationally expect that that's what's going to happen over the next 20 years.

So two developers walk in with a project: one to add three toll lanes to 183 to address instant congestion -- that's looking back; and one to add four toll lanes up 35W to provide capacity for growth that's fixing to occur.

Is it your viewpoint that you're expressing to Phil that you want the benefit to the driving public to be focused on the 183 or the known 35W, as an example?

MR. NICHOLS: When I refer to benefits to the public, I just want to make sure that we fully evaluate that this is beneficial to the public.

MR. WILLIAMSON: So it could be future or past.

MR. NICHOLS: It could be future or past, yes. You've got a lot of situations in some of the urbanized areas and some of the small urban areas where you're already jammed up. I mean, you could say it's looking backwards, but --

MR. WILLIAMSON: But I'm not saying backwards in a negative term, Robert, I mean looking at you can see that congestion is there.

MR. NICHOLS: You've got some things that you can build toward the future that will eliminate a problem from occurring at that point. But still, my only point there was in addition to just reviewing the financial aspects, that we spend time with the benefit because ultimately with limited dollars we're going to have to choose the ones that are most beneficial.

There was a comment here: TxDOT discourages the submission of unsolicited proposals unless 1, 2, 3, 4, 5, 6. One of those was -- and you and I have had this discussion -- environmental evaluation efforts for the project should already be completed or underway. I circled that thing early. To me, that's almost a whole discussion item in itself.

MR. WILLIAMSON: How funny. I've got to show you this.

MR. NICHOLS: Why? Is that one you circled?

MR. WILLIAMSON: The first thing I circled.

(General laughter.)

MR. NICHOLS: We are going through a learning process; our industry is going through a learning process related to this. What I personally learned when we did the 130 project is when we built and did that big contract, that CDA, we did what I call a what-if matrix, it's a risk matrix -- there's probably a better term for that -- but it's kind of like what-if and there's a long list of things like lawyers put in a contract, and then crosswise was what you actually do and who's going to be responsible for it which is not really part of the project, it's the exceptions of these unusual things that happen.

We already had gone through the environmental process, had a record of decision, and that matrix was huge and scary.

MR. RUSSELL: Yes, sir.

MR. NICHOLS: The basic dollars in terms of the contract seemed to be one thing but until you get into the risk matrix, it could be a whole different thing.

We also knew from that, as we looked at some more unsolicited -- I think it was our very next unsolicited, which was our first unsolicited on 45 Southeast, where we had not gone through the environmental, and as we put that risk matrix together, it wasn't just twice as big, it was like four or five times as big because you can't lock in a route until you finish your environmental, and if the route goes over here instead of over here, it could be longer, may have bridges, what happens if you have cemeteries or archeological sites and who takes the risk.

We kept seeing all these proposals with us taking a risk. So there is certainly an inclination to head toward, Let's only look at the ones that the environmentals are underway or whatever.

But however, if we do that and direct these unsolicited proposals to go only where this environmental work is either complete or is substantially underway, then we are trying to drive everybody on projects we're already working on. These are the projects we are working on, and in effect, we're not out doing environmental projects on projects we're not working on or intend to work on which leads everybody away from the creativity aspect of I've got a great idea over here where TxDOT hasn't thought or considered that should be developed, and here's why and here's our proposal. We drive those kind of ideas away.

So I would be very hesitant to put something related to that in there for that reason, but somehow or another we need to include in there or at least mention, if we're dealing with general guidelines, that if a proposer wants to tackle a project out there, and they're coming in and expecting us to put up dollars and communities to make these commitments, that they're the ones that need to be prepared to take on the risks or the what-ifs in that matrix, and heavy it toward them, not toward us.

MR. WILLIAMSON: But, Robert, we've got a process in place that will let us get there if we'll just use it, and we started talking about this six months ago, and that is the notion that Thomas Bohuslav every month -- well, every day spends a great deal of the taxpayers' money telling you and me and John and Hope and Ted what a highway that we're fixing to let a contract on ought to cost. We already know that; in fact, I'm told we may be the best in the United States in knowing that. Our estimating system is routinely within 6 percent of what actual contract amount is.

MR. NICHOLS: But if you know the miles. In other words, you may draw a line from Point A to Point B and it's ten miles, but by the time you finish the environmental process, it could be 12.

MR. WILLIAMSON: It could be 12. But my point is in supporting what the commissioner said -- because I circled that also and I suspect other members circled that piece, because the alarm that went off in my head was: Okay, now we're going to tell the private sector after all of this imagination; don't work on anything that we haven't already selected as being important to us. But we have the ability to know what something ought to cost today, six months from now, a year from now, three years from now.

And I could tell you as a guy who lays natural gas pipelines under similar circumstances, it's entirely possible to say I can lay your four-inch line, I estimate it will take four years, I'm going to charge you $9, here are the caveats, and I understand that the change order will have to be approved by your costing -- I do that every day.

So I go into a project that I think is going to go this way and it ends up going this way, and my client's cost evaluation team is the one that makes the decision about what I get paid for it, but I'm willing to do that because there's profit in it for me.

And I don't see any reason why most design engineering firms -- well, maybe one or two -- and most construction companies -- well, maybe one or two -- wouldn't be willing to take the same chance. I mean, the commissioner makes a good point.

Using that evaluation, those people in northwest Tarrant County would be waiting three years for us to budget to start the environmental for what's fixing to be the highest growth corridor in Tarrant County.

I'm sorry, Robert.

MR. NICHOLS: Okay. Still related to that issue that if it happens to be a project that we are already working on, working down the path on, if we feel like it should be a comprehensive development group, then we would probably go out and solicit that.

I know we've had a couple of situations, at least one in particular, where we had a district that was working in that direction but before they got a chance to actually go out and solicit, one of the proposals came in and did an unsolicited, kind of tripped up, and then all of a sudden we had to refocus. That's not really what I personally envision as an unsolicited proposal.

To me an unsolicited is that a bit of entrepreneurial, creative, this ought to be built; we've come up with a great way to do it and finance it that you haven't thought of, and therefore I'm going to make an unsolicited proposal.

That's kind of the way I envision it, not, We're probably going to be going out in four months for a solicited proposal but somebody runs in and beats you to the punch with an unsolicited and then it triggers our entire process.

On the process itself, I know there were conversations earlier about trying to speed that process up -- which I always would encourage. I think there are things on our evaluation side, on the front-end and the back-end that we probably can, as we do more of these, figure out ways to streamline them and speed them up.

But at the same time, when we go out -- we are dealing with taxpayers' money -- when we go out and get one of these to the public, I want to make sure that we do allow ample time for other people to give competitive proposals.

I think we do not want a process like this, particularly I remember one project was over a billion dollars and at the time our rule was fixed at 45 days for competitive review.

Well, these people had worked on this for six months and knew our rule and went out and then we would have only allowed 45 days for anybody else who didn't even know that we were going to expect it, and there's no way you can get a reasonable proposal on a billion dollar project in 45 days when you didn't even know until it was advertised that it was coming out.

And we would have been locked into one consortium and that's a factor where time, trying to go on the short side, would have given a competitive disadvantage and in my opinion not been fair to the public and wise spending of state dollars. We have got to be fair on our process, giving fair opportunities to bid on these things.

So when we're squeezing our time, let's concentrate on evaluation and those kind of things and give ample opportunity. I would never argue with the chair but we don't want to give them a competitive disadvantage.

MR. WILLIAMSON: No. That's why we have these damn discussion items so we can air this stuff out. But it seems to me that there are degrees of importance. A billion dollar project certainly should take more than 45 days to look for competitive proposals. On the flip side is an ultimately billion dollar project that is broken up into 15 $85 million tranches, we ought not to take the same amount of time to evaluate as the billion dollar cash project.

And what I fear, and again, what some of us hear -- I don't know if all of us hear -- from the same people that are saying to you take more time is you're hiring consultants that are requiring more time, your staffs require more time, this has become all about control, all about who's in charge, and all about taking no risk and making no mistakes.

And the point is for the first time in 20 years -- and I can speak to this because I was there -- the legislature has given us money and resources instead of taking it away from us, and we've got infrastructure that needs to be built badly.

This is not the time for us to be loading up with more rules, more regulation, more process for the sake of doing that, it seems to me. So your point is well taken: It's taxpayers' money and we're all grateful that you stood up to the dark side and stopped that million dollar charade -- we all remember that.

But there's a difference between a billion and a hundred million; there's degrees in this stuff, and if we spend six months or two years holding up a $100 million project that would reduce air pollution in Austin, Texas, and get people moving faster and promote commuter rail in north Dallas, then have we really benefitted the public?

MR. NICHOLS: And I think the time can probably most efficiently be picked up in the consideration time from the time we get a proposal in till it comes to the commission to see if we want to go out, that time, I think, as we get better at it can be squeezed in. And then the evaluation period, once a proposal has come in, how long does it really take us to evaluate, I'll bet we could squeeze that thing in too.

MR. RUSSELL: Commissioner, if I can, I think on the evaluation time we are doing a pretty good job -- we can always improve -- we're taking originally two months, we're down to a month and we can squeeze that down. That's not where the real time savings are; the two major areas for time savings are, number one, the opportunity for competing proposals is 45 days or 180 days, that will take a bunch of time out; and then those one-on-one meetings -- and again, my opinion is work spent now saves a lot of time as far as claims and disputes and those sorts of things after the project takes off, but easily we can compress that time significantly.

MR. NICHOLS: Since we're dealing with -- and this comment relates to unsolicited proposals that I'm fixing to make -- since we're dealing with some guiding principles here, if we have an unsolicited proposal that's expecting a large amount of money from us as a piece of that proposal and if it's in an urbanized metro type area, everybody needs to be aware that we've gone to an allocation basis on mobility expansion money in metro and urbanized areas.

And unless we as a commission have enough money -- this depends on the size of it -- if it's statewide connectivity, if it's something we can handle with strategic priority money, that may be an exception, but if it's a large enough chunk in a metro area, then all of a sudden we've got the consideration of the metropolitan planning organization because we've given those communities -- we don't want to go into a large community like a Houston or a Dallas-Fort Worth and say, Okay, you have committed your funds and these are your priorities; we've got this proposal so we're going to take a hunk of your money and move it over here. That's a different kind of consideration, and I don't think some of the people have recognized or caught up with our allocation process.

The third thing or last thing, really, is I know that when we first went out with regional mobility authorities and what we have told the public and encouraged communities -- I think we told them to look at everything from a regional mobility standpoint, and I still basically want to encourage them to do that. I'm certainly looking forward to the delegation appearance today.

But I know that as we begin doing that, I started mentally breaking projects into two different categories: you have some projects -- really, this is almost related to toll roads but unsolicited proposals -- you have some projects that are more local mobility, that which is going to relieve congestion, get people from the residential areas to work, to shop and then back.

MR. RUSSELL: Commuter traffic.

MR. NICHOLS: Yes, commuter traffic. And then you have other projects that are more vital statewide corridors, connectivity, 130 being a perfect example of that. It is almost a parallel Interstate 35. Once it's piggybacked, it may expand on into the governor's Trans-Texas Corridor; very well could be that.

I personally have began recognizing it would be very problematic if we have one community here who owns a file-mile stretch of that and regulates, in effect, the tolls and those kind of things, and then the next community.

If you start trying to go all the way across Texas that way, we've got an uncoordinated system and decisions have been made by different people that we probably want to think in terms of vital statewide corridors or national corridors flowing like arteries through the state need to be handled through the TTA.

It can be tolled or whatever but probably needs to stay at a state level as opposed to a regional.

MR. WILLIAMSON: I agree with that observation completely, Phil, except we do want to reserve the corridor in Fayette County for an RMA; we want those people to be able to have their own toll road.

MR. RUSSELL: Yes, sir. I'll make that note.

MR. NICHOLS: And that's it. Thanks.

MR. WILLIAMSON: We'll go through my list, and then we'll backtrack, Phillip.

I want to warn you that what I've already spoken to you about: Socialists occur from all political stripes. We need to be very cautious in developing our rules and our guidelines to not protect those with whom we do business all the time and guarantee their profits.

They're good people; nobody is up here on this podium, including myself, hammering on them, but we don't exist to guarantee any company or any professional group or any trade group a profit. Our purpose is to build transportation infrastructure however fastly, cheaply and legally we can get it built; that's our job.

So please be aware that when all these guys and gals are coming to you and saying you need to tweak your rules here and you need to tweak your rules there, they're operating in their own self-interest. We understand that, there's nothing wrong with it -- Ken is going to be there on the other side of the fence pretty soon operating in their self-interest. Right? But their self-interest isn't our self-interest; our self-interest is getting this infrastructure built.

I am, speaking for myself, not too sympathetic to the cries of larger -- the chair takes a moment to stop and recognize former member Ron Lewis, who is in the audience today. Former Member Lewis, good to see you; glad you came over to attend this. You represent one of those private sector persons now, don't you?

MR. LEWIS: That's how I make my living, Mr. Chairman.

MR. WILLIAMSON: The chair would want the commission to know that Ron is a classmate of the governor and myself and a very close friend, and he needs to cut that beard off.

MR. NICHOLS: What's wrong with the beard?

MR. WILLIAMSON: On you it looks great; we remember him when he was a smooth-faced kid.

(General laughter.)

MR. WILLIAMSON: But the point is that we don't exist -- and those guys and gals are going to be coming here to change this, change that, add this, add that. It's in the public's interest -- that's always the last resort of fools and charlatans -- it's in the public's interest.

What's in the public's interest is getting railroads and asphalt roads and water roads and air roads built in the state as fast and as cheaply as possible; what's in the public's interest is cleaning up the air and getting poison out of downtown Houston; what's in the public interest is promoting economic growth in this state to the detriment of the rest of the states; that's what's in the public's interest.

It's not in the public's interest to guarantee an engineering firm a profit; it's not in the public's interest to guarantee that 72 construction companies get a shot at the same billion-dollar contract. Be cautious about that, please.

I do think that the rules and guidelines ought to be focused more on goals and objectives and less on process. I uphold what's been said by others. I have Mr. Nichols' same concern about being limiting on the environmental evaluation.

And maybe Mr. Monroe can correct me because I don't want to misstate the facts, but is it not the truth that our overriding concern about getting a record of decision is because we don't want to expend money that we can't recover from the federal government if we go out and spend money on science and buying right of way and then find out that we can't get a record of decision?

MR. MONROE: Richard Monroe, general counsel for the department.

That is a consideration.

MR. WILLIAMSON: There are more than that?

MR. MONROE: Another consideration would be what are we going to run into that we may not be able to proceed at all. And you never know until you actually go out there and start doing some of the work.

MR. WILLIAMSON: So in theory -- and I'm not saying that a company would do this, maybe they wouldn't -- but in theory if Mr. Zachry wanted to go out and start a rod process himself and take that chance and spend that money, it's not illegal to do so, it's just that he could run into some cemetery that he couldn't build over and that would be it and he would lose his money.

MR. MONROE: Yes, sir. And one other factor -- I don't know if anyone wants me to raise it -- the fact is that most contractors are very, very reluctant to take that risk. I would love to see them take that risk.

MR. WILLIAMSON: Thank you very much.

In addition, I'm speaking here of in the unsolicited proposal category, the issue I raised earlier about northwest Fort Worth or, even more appropriate for today's meeting, the City of Kyle.

I think that we shouldn't be so restrictive in our guidelines to the private sector world that we don't allow them to bring us proposals in anticipation of growth. I don't want to leave the wrong impression; certainly problems exist and have to be tended to.

Our board of directors across the street, all 180 of them, probably wouldn't smile favorably on us expending every penny on future growth, so we have to recognize that.

MR. RUSSELL: The pass-through toll system really is predicated on that sort of situation.

MR. WILLIAMSON: You took the words right out of my mouth, Phillip.

MR. RUSSELL: Sorry, Chairman.

MR. WILLIAMSON: No. I agree, one of the strongest points about the pass-through toll system is that.

I have one clarifying question on the memo you sent us. In the unsolicited proposals on the Trans-Texas Corridor, your first bullet point said one of your guiding principles you recommend us for discussion is the current developer of a comprehensive development agreement can't participate in the submission of an unsolicited proposal for any element or section of the corridor they are already developing.

That really confused me, Phil. I read it seven times and I didn't understand what it meant, so what does that mean?

MR. RUSSELL: We compressed that down quite a bit to make it more simplified, but essentially what it was on the 35 TTC there's a lot of discussion on just this: we're entering into a process trying to bring on that long-term partner for the 35 corridor and there was a lot of concern/confusion would the commission accept an unsolicited proposal on some other element of that particular corridor.

So contractually we tried to work around it to give the commission the most amount of flexibility, but that's one of those issues, Chairman, that creates a lot of interest in the process.

MR. WILLIAMSON: Well, give us an example; create an example.

MR. RUSSELL: Okay. On the 35 TTC we select consortium A to help us develop that alignment.

MR. WILLIAMSON: You're talking about a Rio Grande to Red?

MR. RUSSELL: Yes, sir, Dallas-Fort Worth all the way down. And at some point in the process, at this time or even after the contract is executed, some other developer comes in and says, Hey, I've got a real neat idea; why don't you let me develop this piece, one of those low-hanging fruit pieces, and I can really do some great things for you. Would the commission be interested in that sort of proposal, would it not? That's kind of a black-and-white piece if it happens to be right on that 35 TTC alignment.

But there may be offshoots from that; it may be a connector facility back to the city of Waco or a connector piece back to Austin or San Antonio. Is that part of that corridor or not?

I mean, it's not a black-and-white issue, and what we're trying to spur that discussion -- it sounds like mission accomplished -- what would be the goals of the commission on the Trans-Texas Corridor; should it be solicited, unsolicited; what are the limits of those unsolicited proposals as it relates to that particular corridor.

MR. WILLIAMSON: I'm sure I would want to think about it and I'm sure the other commissioners would also. I just didn't understand what you were trying to get at.

Hang on a second; I've got just a couple more things. No, I want to rest for a moment. Okay, we're going back through the process now.

Hope?

MS. ANDRADE: I'm okay.

MR. WILLIAMSON: No more?

John, what else would you like to add back and take in consideration in the conversation?

MR. JOHNSON: I have nothing to add nor subtract; everything has been spoken of.

MR. WILLIAMSON: Your turn.

MR. NICHOLS: I've made my comments. I think in principle it's a good idea to lay out at least some guidelines of what we expect but not be so rigid that we discourage creative ideas.

MR. WILLIAMSON: I sure hate to let you off the hook while Ted is gone.

MR. RUSSELL: I've got all the time in the world, Chairman.

MR. WILLIAMSON: I don't want to drag my feet, but we've got about 16 different entities that want to go next.

Okay, Ted, last shot.

MR. HOUGHTON: I'm a big proponent of the equity piece of these unsolicited proposals. The higher the equity from the developer, the more weight to the unsolicited proposal and reducing the equity piece that the agency would put in.

MR. WILLIAMSON: You know, these are intense things; we make Smith County watch them for a reason. Don't mistake anything I've said -- and I'm talking to the audience through you -- I'm not unhappy personally with you; I think you're one of our good employees.

You know, Phil, we can figure out processes that take a lot of time up -- that's kind of what government generally does. We are trying to become a lot more private sector businesslike, and we need to understand that every time we take a day to do something, that's one day longer it took for the road to get finished. And take all those things to heart in your process which you're going to bring back to us.

I don't want to move carelessly but Texans hire their politicians and politicians appoint their administrators, and administrators hire their staff based on sound judgment, and the day that sound judgment leaves and that we can't defend sound judgment to the Dallas Morning News and Fort Worth Star Telegram and Houston Chronicle and the Austin American Statesman is the day we don't need to be in public office. If we can't defend judgment, then we should leave, so let's don't be afraid to defend judgment.

MR. RUSSELL: I think, Chairman, if I can, one of the first things that I commented when I came in here six years ago running the Turnpike Division is my simple comment, We're in the business of selling time. And there was quite a bit of chuckle at the time, and really that has a two-prong meaning.

Number one, toll roads, you're selling people dependability and time, but on the other part of it is time is of the essence, we have to move, move, move; every day counts. So we get it; we're pushing very hard, and I think this has been a great discussion for us and it will help us.

MR. WILLIAMSON: Thank you. Mike, hats off to the entire staff. The whole purpose of deciding to go to discussion items was to do just exactly this, and I'm just well pleased with the way this morning went.

Senator Eltife. We are extremely sensitive to House and Senate members in this body, and your senator has asked us to change our order up some in order to allow you to make it to your lunch, and we honor senators' requests pretty quickly around here.

We are going to take a moment to let everyone go to the restroom, if that's okay. So to announce a change in plans, we're going to defer item 8(b)(2) and go ahead and hear from the delegation and the I-69 group, but after we take about a five- minute potty break. So we'll reconvene in five minutes.

(Whereupon, a brief recess was taken.)

SMITH COUNTY DELEGATION

(Sen. Kevin Eltife, Rep. Tommy Merritt, Rep. Leo Berman, Mayor Joey Seeber, Jeff Austin, III, Becky Dempsey)

MR. WILLIAMSON: Thank you for indulging us on our short break. Our delegation today is from Smith and Gregg Counties, and they're here to discuss Loop 49 in Tyler and the formation of a new regional mobility authority in North East Texas.

Smith County Judge Becky Dempsey, I believe you will get us started. Welcome to the commission, welcome to Austin, and unless the senator is going to start, you're up.

JUDGE DEMPSEY: I believe the senator is going to start.

MR. WILLIAMSON: Then let us recognize -- I believe you're the latest addition to the State Senate.

SENATOR ELTIFE: I believe that's correct; I'm still accepting condolences.

(General laughter.)

MR. WILLIAMSON: Congratulations on your victory and welcome to the game.

SENATOR ELTIFE: Thank you, Chairman. Appreciate all of you, Chairman Williamson, commissioners and Executive Director Behrens.

First of all, something you said at the opening, Chairman, about all we have is our time. I want to thank the commissioners because you put a lot of time in this job for our state, and we really appreciate all you do, and we appreciate the TxDOT staff. We have an incredible office in the Tyler District office, and as a former mayor and city council member, I've worked with them for 15 years and they do an outstanding job and we appreciate the TxDOT staff.

We're very appreciative to be here today to continue our efforts to develop Loop 49 and our regional transportation projects in North East Texas. I've been involved with the Loop 49 project since I served on the Tyler City Council beginning in 1991, and then as mayor from 1996 to 2002; now as senator for District 1, I continue to support the completion of Loop 49.

We are here today to ask for your continued support for our project. This project will provide a relief route around Tyler and provide connectivity from US 69 south of Tyler to I-20 northwest of Tyler. We're also asking to proceed with a study to look at the feasibility of connecting the Tyler Loop to the Longview Loop on the east side of Tyler.

Loop 49 is the proposed outer loop for the city of Tyler and Smith County that has been in visionary stages since the early '70s and planning stages since the mid '80s. The proposed route only encroaches on the city limits of Tyler and Noonday but provides improved connectivity and mobility for many surrounding communities as well as the North East Texas region. The majority of the route falls in unincorporated areas of Smith County.

Loop 49 delegations have appeared before this commission on numerous occasions including '85, '93, '99, 2000, 2001, and 2002. The delegation has requested an appearance before the commission to seek direction for the continuation of Loop 49 and improved mobility for the North East Texas region.

Smith County and the City of Tyler would like to request guidance and direction from the Texas Transportation Commission in addressing the critical transportation needs of the region with continuation of the construction of our loop.

Smith County, in partnership with Gregg County, is ready to assist in the future project development of this regionally significant transportation system, as well as other regional mobility improvements through the formation of the North East Texas Mobility Authority, called the NET, to the extent recommended by the Texas Department of Transportation.

And I have to tell you yesterday was truly an historic day in East Texas. We had a joint meeting of the Tyler and Longview city councils, and most of you are aware there's always this talk of rivalry between Tyler and Longview and Smith and Gregg counties, and we've really focused, thanks to the incredible leadership of County Judge Stoudt, County Judge Dempsey, our mayor from Tyler, Joey Seeber, and the mayor from Longview, Murray Moore, we've really worked on the regional approach.

And it really was a historic day yesterday, and I can tell you the people in our community are extremely excited about these communities coming together to work on a project that really is our future.

If you look at what's happening in our area, we desperately have transportation needs like everyone else, we know you always have limited funds and you do the best you can in allocating those funds, but this is our future, working as a region, and I'm extremely proud -- extremely proud to be the senator from this district as these two communities and counties come together to work to better the quality of life for all of our citizens.

So I appreciate your consideration on this item. We've got some other speakers that will come next. Representative Merritt and Representative Berman are both here; we're pleased and honored to have them with us here today, and they're going to make some comments as well. Thank you very much.

MR. WILLIAMSON: Thank you, Senator.

MR. MERRITT: Mr. Chairman, good to see you. You and I have had a lot of discussions about transportation in the wonderful state of Texas.

MR. WILLIAMSON: Would you unbutton your jacket for a second? I want to admire that tie.

MR. WILLIAMSON: That is a Texas tie.

MR. JOHNSON: Are we on camera?

MR. MERRITT: We just want to make sure your tie has the I-69 and Loop 49 project on it.

MR. JOHNSON: I think it's on the other side.

(General laughter.)

MR. MERRITT: It is good to see you guys, and for the new commissioners, we're proud to expand the capacity for the state to have a broader vision.

The last time I appeared here, we were talking about building the Kilgore Loop, and I told the story about Commissioner Nichols not being a fair commissioner because it was the Kilgore Bulldogs versus the Jacksonville Indians, and we won that football game and we started to name the loop.

I came after the two other commissioners treated Kilgore very fairly and we were awarded that loop and the funding for that loop, but I requested that we name that loop "Loop 2827" to commemorate the victory of the Kilgore Bulldogs.

(General laughter.)

MR. MERRITT: As it turned out, Commissioner Nichols prevailed; we named it the Charles Duval Memorial Loop to commemorate a road hand.

But we're here today to thank each of you and Mary Owen for the great job that you do for our region. We have a great boss over there, very good listener and makes meeting after meeting of any type of staff organization that wants to talk about transportation.

I want to thank Judge Bill Stoudt and Dempsey and the mayors of our region. Ed Smith is not part of our delegation, but the mayor of Marshall is here to talk about I-69. And we support I-69, and the sooner we can develop I-69 in North East Texas, it will add to the outer loop.

My vision is that our outer loop leaving Smith County covers North East Texas, connecting with the outer loop of Shreveport, Louisiana. We want to start thinking outside of the box as we plan in our border region area that we work with other states to make sure that our highways don't dead-end at East Texas but that we move forward and start working to make sure that I-69 and the traffic from our Texas-Mexico Border Region moves very fluid.

I would also like to thank the commission for your vision to expand Highway 59, make sure that it's going to be a cleaner thruway. As we develop I-69, we also need to make sure that Highway 59 is improved as we move along; it's at major capacity because of NAFTA.

Also, your idea of connecting and finishing, four-laning Highway 31 as a relief route off of Highway 35 going through Smith County and Gregg County is part of our overall plan and connections.

I just want to make the commission very aware of what is happening in North East Texas in that we are forming up, and Mayor Eltife, now our distinguished senator, worked very closely with establishing the Texas-Louisiana Border Region.

We established that border region along with the Texas-Mexico Border Region, in, I believe, the 77th Session, and that a border region goes from Texarkana to Paris to Tyler, over to Marshall, and those counties have come together as a region and we're starting to work as a region on transportation projects, telecommunication projects. I'd say for 100 years it was long-distance to call from Tyler to Kilgore; now a person in Tyler can call Kilgore and vice versa, and it's not long-distance anymore.

We're breaking those barriers down, and that's what this hearing is all about, is to make sure you understand that we're going to work together regionally; we're going to work for a program that connects our state with the major metropolitan areas and to make sure that the traffic flows very easily.

But in addition to that, as you all know, if you haven't met our rail advocate, Natalie Robicoff in Longview, if you visit there you will meet Natalie, because Natalie is an advocate of high-speed rail and passenger rail.

We happen to have a high-speed corridor that runs through our border region, and we need to make sure that as we continue the expansion of our loop that we work to put a rail opportunity in there that we can connect North East Texas, Texarkana through Marshall, into Dallas-Fort Worth, connecting with DART that's part of the Trans-Texas Corridor program, and it will allow us to move very easily in and out of our communities and possibly extend the high-speed rail corridor into Shreveport and then on into Monroe and to Jackson to expand that opportunity.

We are very thankful for how you analyze your programs and how you look at areas of our state and the needs of our state, and I think that we are setting an example for the state of coming together as 16 and 17 counties and asking to set up a regional mobility authority is something that is available to us and to have the opportunity to expand that.

You have a great staff here that lends their expertise. We have a vision; we ask that you help our community to expand that vision, to be funded with that vision, and to move forward. I cannot say enough about how the Lindale community, the Kilgore, Longview, all of us are talking regional and thinking about how we connect our communities, not only by highways but by wire and telecommunications, education, and you play an integral role in that.

With that, I want to lend my utmost support for this vision and ask that you lend your guidance and support, and I encourage Commissioner Nichols to bring each of you over, and we'd like to treat you on the County Line to the barbecue ribs over there, and we think they're the best ribs as well our community, so thank you very much.

MR. WILLIAMSON: Thank you; good to see you.

MR. BERMAN: Chairman Williamson, commissioners, Director Behrens, it's always a pleasure to appear before you. I think this is about my tenth time; I've been coming here for six years now.

We appreciate the opportunity to visit with you this morning and I'm going to devote my time specifically to Loop 49. The East Texas delegation, as you can see, is well represented today as we have individuals from state and local government and some of our top community leaders whom some of you met last night at our reception.

I've had the privilege of serving in the Texas House of Representatives for three terms, representing District 6 which includes the entire city of Tyler, 75 percent of the population in Smith County. I've been a longtime supporter of Loop 49. My constituents tell me that traffic congestion is one of their top concerns and that they would like to see this project completed as soon as possible.

The construction of Loop 49 will create a safer and more convenient route for traffic traveling through the East Texas area. It will provide relief for traffic congestion on existing roadways in urbanized areas of Tyler, will increase mobility and provide improved access, including emergency service access to the East Texas region.

Loop 49 will also assist the East Texas region in mitigating air pollution concentration to remain in the attainment area in Texas. In addition, I strongly support the creation of a regional mobility authority that would cover both Smith and Gregg Counties.

My statement is very brief; this concludes my formal statement. I want to thank you all for allowing us to appear this morning. Thank you for the great work that you do for Texas.

And now, Mr. Chairman, I'd like to take about 30 seconds to make an informal statement. I've been coming before this commission now for almost six years. I've told you each and every time that we have the very best district engineer in the state working for us in East Texas, and I'd just like to recognize her this morning, because she is still the very best after six years.

Mary, will you stand up for just a moment?

MR. WILLIAMSON: She knew this was coming.

MR. BERMAN: Well, she may have known this was coming and stepped out. Mr. Chairman, you know how we feel about our district engineer, and maybe I shouldn't be saying this, because you might think that we think so much of her that you'll bring her down to Austin to do some administrative job, and that's not where she should be.

MR. WILLIAMSON: The risk of that is high.

MR. BERMAN: The risk is high. We don't want that to happen.

Again, thank you very much, and I appreciate the opportunity.

MR. WILLIAMSON: And were there any other legislators?

MR. BERMAN: I think I was the last one.

MR. WILLIAMSON: Members, anything for either Mr. Berman, Mr. Merritt or the senator?

MR. NICHOLS: I was just going to wait until I heard everything before I made my comments.

MR. BERMAN: Mr. Chairman, now it's my privilege to introduce to you the mayor of Tyler, Mayor Joey Seeber.

MR. WILLIAMSON: And, Joey, if you'll indulge me, I need to make sure the audience knows we go out of our way to recognize House and Senate members who come before us who we believe are transportation friendly, and everyone in upper East Texas ought to know that Mr. Merritt and Mr. Berman have been outstanding advocates of transportation for the state, not just for their part of the state but for the entire state, and we are deeply appreciative of that support in the legislature.

The governor tells me Senator Eltife will be the same way, and we look forward to that as well.

SENATOR ELTIFE: Thank you, Mr. Chairman.

MR. WILLIAMSON: Is that the picture of Robert they've been telling us about?

MAYOR SEEBER: Thank you, Mr. Chairman. First I'd like to thank you for the opportunity to present our appreciation for the work completed to date on the Loop 49 project, and before I begin, I would like for those who are here in support of the Loop 49 and our delegation to please stand so you will know the kind of support that we have here today.

MR. WILLIAMSON: Very good, excellent.

MR. SEEBER: Thank you. My name is Joey Seeber, and I am the mayor of Tyler, have been the mayor since May of 2002, and a member of the city council in Tyler since 1996.

Although new to some of you, we have been meeting with previous transportation commissions regarding Loop 49 for the past two decades. Loop 49 delegations have appeared before this commission six different times on behalf of the Loop 49 project.

Since our groundbreaking in August of 2003, the corridor has really begun to take shape. The community has realized that the dream is now a reality and we support the earliest completion --

MR. WILLIAMSON: Wait, back that picture up. I think I drove that boom the last time I was in Tyler.

(General laughter.)

MR. SEEBER: Probably did; that's why it's coming along so fast.

But this dream has now become a reality, and we support the earliest completion of the most significant transportation improvement for Smith County in decades.

The article that I left you is an article from this morning's Tyler Morning Telegraph about the joint meeting that we had that Senator Eltife mentioned. I just want to reiterate this is the first time ever that the Longview and Tyler city councils have met together in a session together, and again, for those of you who are familiar with regional rivalries, you may understand just how significant that is.

You also need to know -- as you'll be able to read in the article there -- that the number-one issue that we dealt with was the creation of the North East Texas RMA, and the joint session of the Longview and Tyler city councils yesterday morning at about this time ratified unanimously the creation of a North East Texas RMA.

So we want you to know that we are working regionally, and Smith County and Gregg County, Longview and Tyler, all support the creation of this RMA.

We applaud the commission's assistance in the funding of Loop 49 thus far, and we look forward to working with the commission and with TxDOT to seek funding mechanisms for the corridor completion.

We support the department's evaluation of the toll feasibility of this corridor and we stand firm in our commitment to assist in funding through MPO Category 3 dollars -- which is a significant percentage of the remaining cost -- to complete this corridor.

For more specifics regarding the toll initiative in our region's funding, I want to introduce Mr. Jeff Austin, III. Thank you for the opportunity to be here today.

MR. AUSTIN: Thank you, Mayor.

Chairman Williamson, commissioners, Executive Director Behrens, I appreciate the opportunity to be here today to discuss some of our regional cooperation and some of the specifics regarding our proposal this morning.

In 1999, Commissioner Nichols told a Tyler delegation that TxDOT was only able to fund less than 40 percent of the identified transportation needs. From common elements served by communities successful in obtaining those transportation projects, Commissioner Nichols shared with us the top ten ways to fund a highway project.

Using these ten points -- as you'll see up here on the screen -- we would like to highlight a couple of these as we begin to develop a model for the future specific to our project. And I would like to say I know I appreciate those quarters being passed out, so save them, we may need them on our toll road when you come to visit East Texas.

First, number 1, work with local TxDOT area and district offices. In the early 1980s, the City of Tyler, Smith County, Tyler Chamber of Commerce all requested that TxDOT include the Outer Loop 49 in the project development plan. In 1985, Tyler made its first delegation appearance in support of Loop 49, and we are proud of our partnership with the Tyler office in their continued support of Loop 49.

Number 2, 3 and 4, select good projects for consideration; focus on one project and obtain consensus of support. The Loop 49 record of decision was received on December 12, 1998, and Loop 49 West's record of decision was received on November 29, 2001.

Most importantly, Smith County, Gregg County, the area cities, Tyler and Longview Chambers, and the Tyler MPO all support this project; we have a common vision whereby we're all moving in the same direction.

Number 5, make an effort to understand the project development process. The City of Tyler and Smith County assisted in financing the engineering and environmental studies on the western section of Loop 49.

Smith County and various surrounding communities have also leveraged funds toward the construction process. And furthermore, we completed the project-specific toll and revenue study showing the western section of Loop 49 is feasible. Loop 49 has received approval to move to the preinvestment grade toll and revenue study phase.

Number 6 and 7, economic development involvement and develop regional consensus. Tyler Chamber of Commerce has been TxDOT's partner in supporting delegation appearances.

Our last two delegation appearances have focused on the regional impacts of Loop 49 and the construction of Loop 49: will create a safer and more convenient road for traffic traveling through the East Texas area; it will provide relief for traffic congestion on existing roadways in urbanized areas of Tyler and Smith County; it will increase mobility and provide improved access, including emergency access to the East Texas region; it will assist the East Texas region to mitigate air pollution concentration to remain an attainment area.

In addition to the regional support, we have also received numerous resolutions from many counties, chambers, cities and elected officials in recent years in support of Loop 49.

Number 8, connectivity. We've heard a lot of talk about connectivity this morning. The proposed Loop 49 and the completion of Loop 49, the connectivity does connect with several major roadways in our area which include Interstate 20, US 69, US 271, State Highway 31 and 64, and Highway 110 as well as many farm to market roadways. Loop 49 will allow motorists connectivity between these corridors without having to bisect and I'd say participate in or add to the congestion in Tyler and Smith County.

I understand there's a group here today representing I-69 and we look forward to working with them, and as part of our vision we'll connect with I-69 in North East Texas region. We've also had discussions regionally, in addition to Smith and Gregg counties, with Harrison County for future participation in the RMA.

Number 9, look for a way to leverage the project. In addition to the local match and support by the county and the area cities, during the spring of 2003, the Tyler MPO Policy Committee earmarked approximately $71 million of their allocated $106 million Category 3 funds for urban area non-TMA corridor projects and allocated them towards the future continuation of Loop 49.

And number 10, if you do all of the above, as Commissioner Nichols said earlier, you're still less than a 40 percent chance that you might get funded using the traditional methods.

East Texas appreciates the support that we have received in the past, but we realize there's not enough money of TxDOT's Strategic Priority dollars to complete Loop 49 in the short run. We've heard Chairman Williamson strongly imply and suggest "toll road or no road or keep our slow road." We've also heard that tolling could be fun, so we've come to discuss our proposed toll road.

We've listened to you, the commission; we've listened to your hints, your suggestions. I guess we could add number 11 as, just say yes.

Loop 49 is currently being evaluated for toll viability. Preliminary toll analysis indicates a completion of the southern, western, and northern segments to be partially toll viable. Pending future toll revenue studies, tolling segments of Loop 49 could provide approximately $120 million towards the initial $182 million construction cost to complete two lanes of the ultimate four lanes from US 69 north of Lindale to State Highway 110 south of Tyler.

We support TxDOT and TTA for future tolling of this facility. Traditional TxDOT toll leverage would include planning, design, right of way acquisition, utility adjustments and maintenance. It should also be noted that there are sufficient alternate routes that the public may choose from within the area.

As stated earlier, the Tyler MPO has obligated $71 million of their allocated $106 million of Category 3 funds for the continuation of Loop 49. Acceleration of this funding could be made available through the Texas Mobility Fund or Proposition 14. The preliminary financial plan deflates the $71 million from the years 2015 to 2024 Category 3 funding to approximately $46 million for fiscal year 2008.

TxDOT's Tyler District has also been committed to this project for years. Some District Discretionary Category 11 funding is available and included in the preliminary financial plan that can be made available to address future contingencies.

U.S. Congressman Max Sandlin has emphasized the region's support for this project by submitting a portion of Loop 49 for inclusion in the Federal Reauthorization Bill. The currently proposed version of the Transportation Bill includes $6.1 million for Loop 49. He also worked closely with Congressman Ralph Hall.

Based on the results of the preliminary toll viability study and financial plan, we would like to see the remaining segments of Loop 49 South, West and North included in the Fiscal Year 2005 Unified Transportation Plan.

It is now my pleasure to introduce Smith County Judge Becky Dempsey to discuss and present our regional vision. Thank you.

JUDGE DEMPSEY: Thank you very much. Chairman Williamson, commissioners, Mr. Behrens, it is really a thrill for me to be here and quite an honor, quite frankly, and we appreciate the opportunity, all of us, to appear before you today.

We appreciate the commission's continued interest and participation in Loop 49. It is our understanding that the Tyler District staff is working with TxDOT administration and division personnel to pursue early right of way acquisition authority for the remaining southern and western segments that have already obtained a record of decision. Early acquisition of the needed right of way will provide a project cost savings and lessen the impacts on affected property owners, and we thank you for this effort.

Before you is a new concept for Loop 49. While the southern and the western legs -- which some members of this commission have previously seen in earlier presentations -- remain the same, the eastern leg now reflects a new regional concept we currently envision.

For the last 20 years, the eastern leg, which connects State Highway 110 to the north to State Highway 155, was nothing more than a line on a piece of paper. However, changes in traffic patterns, along with discussions of an outer loop in Longview, have prompted us to look at a more regional approach.

And this leads us to the East Texas Hourglass. This is a concept which provides regional connectivity with the two largest urban areas in East Texas: Longview and Tyler. It then moves north through Harrison County, connects to the proposed I-59 Trans-Texas Corridor.

Judge Wayne McWhorter in Harrison County, along with Judge Stoudt in Gregg County and I have had discussions regarding expanding the RMA to include not only Harrison County but other counties in our region.

There are a number of judges that are here with us today. I'm not sure if they stood when our delegation was recognized earlier, but it's exciting to me as a county judge to see other county judges put aside their own personal interests and want to look together to things that we can do collectively.

I think we all recognize the difficult decisions faced by this commission. We understand and have a desire to partner our resources as a new day dawns on state and local government working together. In that regard, it is our pleasure to submit to you our petition for the formation of the North East Texas Regional Mobility Authority -- we lovingly call it the NET -- to the extent recommended by the Transportation Commission. This initial RMA consists of both Gregg and Smith Counties and has the potential, as I stated earlier, to expand to other neighboring counties as proposed regional projects become viable.

We are very proud to live in a region of the state whose elected officials and community leaders recognize the need and are willing to come together to address transportation needs for the future to help sustain the quality of life we all enjoy in the state of Texas.

We further realize that at such time that the commission deems appropriate and Loop 49 is generating positive revenue, that it will be the RMA's responsibility to provide the future expansion, continuation, maintenance and operation of this toll road.

Thank you again for recognizing this regionally significant project and supporting the NET with the mobility needs of North East Texas. In addition to the petition that we're going to present to you in just a moment which includes resolutions from Smith County and Gregg County attached to the petition, also attached are joint resolutions -- as Mayor Seeber indicated earlier -- from the Tyler and Longview City Councils, letters of support from Senator Todd Staples, Representatives Chuck Hobson, Tommy Merritt and Dan Flynn, and the Longview and Tyler Chambers of Commerce.

With your permission, I'd like to ask at this time for Judge Bill Stoudt to join me, and we would like to jointly come forward and present to you our joint petition for the RMA.

MR. WILLIAMSON: You know, I can tell Nichols has spent some time schooling some folks.

MR. NICHOLS: No, not me.

(General laughter.)

MR. WILLIAMSON: Thank you very much.

JUDGE DEMPSEY: Thank you.

MR. WILLIAMSON: We'll start with you, Ted.

MR. HOUGHTON: I love going first; I can steal some thunder.

I expressed to the group last night from Smith and Gregg Counties, it's just amazing what happens when you work together in these communities and counties, joint counties, and what can get accomplished. And I hope this is a model for the state to emulate across the state, and I congratulate you and look forward to working with bringing this to fruition.

I know that when you're headed down one path instead of being splintered, it just makes life so much wonderful. Thanks a lot.

MS. ANDRADE: Well, I echo what Mr. Houghton said, but I had the privilege of meeting with Jeff in San Antonio. Thank you so much for taking the time to meet with me and kind of briefing me on a more personal level about the project. But it's great when we see communities like yourselves come together. You can be successful but much more successful when you come together.

So congratulations; thank you for being visionary, and I can also tell that Commissioner Nichols has been out there enough to share his thoughts. Thank you so much.

MR. JOHNSON: Has anyone on the dais encouraged you to include Cherokee County in this RMA?

(General laughter.)

JUDGE DEMPSEY: I actually can speak to that, Commissioner. Chris Davis and I have had some conversations in that regard, and he is quite anxious to see the western leg of the loop completed up to I-20, so that's going to get him up to I-20 and to the west faster, and that's a quote from Judge Davis.

MR. NICHOLS: Commissioner Johnson, we still haven't quite established the boundary between Cherokee County and Smith County; there seems to be a border dispute.

(General laughter.)

MR. JOHNSON: Along with some Friday night competition between some of the communities.

I've said it before, it's wonderful to see what I call midrange population areas think in large terms, because we're not going to get to where we need to be, and you're not going to get to where you need to be without that sort of thinking.

I omitted Gregg County, and I apologize for that, Judge. You're an integral part of the hourglass and the thinking and the combination, and it's just very encouraging for me to see.

In one of our earlier discussions we talked about looking backwards and look forward, and clearly you're looking forward because you don't want the congestion index to go over one point -- whatever the critical number is, 1.2 or 1.3, you want to deal with those issues before they arrive and I think that's marvelous.

MR. NICHOLS: I'm not going to try to take any credit for what they've done, because I really didn't have any part of coaching them on this. What I did back in '99 -- they asked me, as many other communities around the state ask me, you know, what can we do to try to accelerate our project, and I went over the list that Jeff was showing.

I've made it the same presentation all over the state, but I will say that I'm absolutely thrilled that Tyler, Smith County, Longview, Gregg County took it to a level way beyond what I even expected that you would do.

We've had so many communities to come in, ask for things, have their hand out, some kick in some extra money or something to help leverage it, but you have taken this thing to a much higher level than I ever would have anticipated, truthfully.

You heard us talking in the discussion period earlier about us not wanting to take our programs and restrict creativity of ideas, and I remember when you were working on the Loop 49 in Tyler when somebody -- aggressive as I have been and the commission has been on tolling, when somebody starts tolling there, I thought that's -- in my own mind I thought that will probably never fly; I just didn't think the volumes -- I was thinking much larger communities. But you have proved me wrong.

What you have done is taken a realistic evaluation of what is going to be required to come up with resources that you know we don't have and complete something that is needed by agreeing, looks like wholeheartedly, to take all those segments of the loop and convert them to a toll, pool them together to make that work, the way I understand it. And you've done it in a total cooperative spirit.

You've got the chamber of commerce that seems to be overwhelmingly supporting this, the city council. I don't remember any large split votes. You've got a commissioners court, you didn't have split votes and you are just overwhelmingly for it.

I have seen no public outcries, and you're taking segments of a loop that are under construction, agreeing to pool all that together to leverage it to complete that loop.

In other areas of the state who have even better opportunities to toll than you do are still feuding among themselves in some areas of the state, trying to decide what's necessary.

You then took it to a level that I don't think any of our staff even considered, except maybe Mary Owen -- there she is -- to come up with the hourglass or S-curve or whatever you call it, to connect Tyler, Longview, Gregg and Smith together, because everybody in East Texas north of Lufkin knows that those two cities are the hubs for the whole area, whether it be medical, retail, education, whatever.

Tying the two of you together and both of you pooling in to do a regional mobility authority that ties your communities together and benefits the public in a very forward-thinking way. And Longview City Council was, as I understand it, it wasn't a split vote, and same thing with the Gregg County Commissioners Court.

Anyway, I'm amazed. When Ted said a model or someone over here said it was a model -- it truly is a model. I wish we could take it, shape it, advertise it and put it all over the state how you have done this thing. So it's truly regional. I can't say enough good things. Congratulations on a great presentation.

Judge Dempsey, they gave me some trick questions to ask you but I'm not going to ask you. That's all I had.

MR. WILLIAMSON: Of course, one way we can advertise it is they've spoken with their actions, and when we have the opportunity we'll be able to speak with our actions, and that's the best advertisement.

There are a couple of things I wish to add. This is precisely what the governor had in mind when he advanced the notion of regional mobility authorities. He had a vision that common goals unite people in accomplishing things that help themselves.

He had a vision that local control and local reward was very important. In other words, if you can get people to go think regionally and give them control regionally and then let them keep the money regionally, then you've advanced the notion that regions can create their own tools and be creative in solving their own problems. The governor, to his credit, also has the notion that someone has to stand up and offer alternatives to status quo which would raise taxes or don't do anything, and he's done that.

We frequently, as we advocate the toll road system in the state -- and I in particular because I am aggressive about it, "no road, toll road, slow road" -- we catch criticism from those who would like to leave the impression that we take some great joy in going to Tyler and Weatherford and San Antonio and El Paso and saying we just can't wait to make you guys pay those tolls.

So go forward and go back home knowing that we all understand none of us want to pay tolls, we understand that; none of us want to pay taxes, we understand that. But the press in the need to improve our own lot in life is beginning to overcome that which we don't want to do, and our own lot in life in this case is the improvement of our transportation infrastructure.

So when I say "no road, slow road, toll road," what I mean is we have a tax road system -- do you know, Mike -- I'm going to bring this up later on -- do you know that the gasoline tax receipts in the state -- I want you to think about this -- the gasoline tax receipts of the entire state now just equals the maintenance cost of the state's highway system.

So if we're going to build new, if we're going to expand capacity, we have one of two options, and that is to raise taxes or institute a toll road system. We can pull off the toll road system and let consumers make a choice about what they do where no other state can do that, because we have a robust, healthy state tax road system in place.

Every citizen in the state can choose to take their tax payments and drive their tax roads, or take their cash in their pocket and drive a toll road. We're the only industrial state in the nation that can do that; no other state has that alternative because we've built such a remarkable system of tax roads to date.

And I know that Ted being from El Paso -- and we've dealt with some El Paso issues the last few months and it's very, I think, contentious -- or has been; perhaps it's moving towards resolution -- in the El Paso area one of the arguments advanced by the opponents of tolling or the skeptics is that well, you know, if we need to raise taxes, we just need to raise taxes. I want to put it in perspective.

We have something like 61 major interchanges to build in this state right now -- backwards build, not forward build -- and each one of those interchanges would cost the equivalent of a nickel increase in the gas tax. People have very little concept of how little the gasoline tax generates in proportion to the state's transportation challenges. So it's not just a matter of saying we just need to raise taxes, it's a matter of who out there in the state of Texas is ready for a 30-cent gas tax increase. I don't think anybody is.

Well, what's the alternative to the "no road or slow road"? The alternative is the "toll road"; none of us want it, none of us look forward to it, but that's life, move on.

In closing, I want to echo exactly what my colleagues said: the vision, the broad-mindedness, the working together is an example to the entire state. We had a presentation by the North Texas, the urban part of North Texas -- I think I think of you as the eastern part of North Texas and I'm the western part of North Texas, but the leadership of urban North Texas made a presentation in the recent past that was an example, we think, of the urban approach to solving our problem. As Mr. Johnson has pointed out, yours is the example for the midrange cities, and we encourage others to do the same thing by our actions.

And while we don't make decisions about delegations on the day you appear, I think you can infer from the comments that you've heard at the podium today the North East delegation will be pretty happy with the outcome over the next few months.

We wish you wouldn't pump Mary up so much; raises are coming up and now she's going to use that with Mike to negotiate a higher salary.

(General laughter.)

MR. WILLIAMSON: Mary is pretty good, but don't get used to her; you never can tell about these things.

Anything else, members?

(No response.)

MR. WILLIAMSON: Mike, is it your impression that the I-69 people would like to come right on the heels of this, or do we want to take a short break and let the room clear. What's your counsel to the chair?

MR. BEHRENS: I think they're ready to go.

MR. WILLIAMSON: You think the I-69 people are ready to go?

MR. BEHRENS: I think they're anxious and willing.

MR. WILLIAMSON: Let's just say thank you once again; good presentation.

P R O C E E D I N G S

MR. WILLIAMSON: And let's just move to the I-69 folks, and I've got about 75 questions that I've just been waiting to get him on the record to answer.

Judge Eckels, former colleague Eckels, good friend Eckels, how in the world are you, Buddy?

JUDGE ECKELS: Good to see you, member of the Class of '83.

MR. WILLIAMSON: He is a member of the famous Class of '83 that included Toomey, yourself.

JUDGE ECKELS: We'll let that one slide, Mr. Chairman, but there were a number of talented members.

MR. WILLIAMSON: Was Temple in your class?

JUDGE ECKELS: Temple was part of that class, Chairman Heflin was part of that class.

MR. WILLIAMSON: Was Lee Jackson part of that class?

JUDGE ECKELS: Lee came in shortly before that.

MR. WILLIAMSON: He was a special election member; he was part of your class.

JUDGE ECKELS: I don't remember when he came in; he was in when I was elected, had seniority on me, at least.

MR. WILLIAMSON: I would say the Class of '83 is second in impact on this state only to the Class of '85.

JUDGE ECKELS: We were much improved when '85 came in and added direction and focus, and we accomplished great things for the State of Texas.

MR. WILLIAMSON: I was visiting with a journalist of note -- whose name I won't mention so he won't be mad at me -- but those really were GT -- that was a turnover, a generational turnover, the '83 and '85 class; the two classes that came in were 180 degrees different from any two classes prior to that, not the least of which is because Judge Eckels led the way.

JUDGE ECKELS: It was a tremendous learning experience for me and laid the groundwork for greater things for all of us.

MR. WILLIAMSON: As the journalist observed -- I didn't realize this -- he did an average age for our two classes, and it was like 21 years below the previous average ages.

JUDGE ECKELS: I was 24, and I was a candidate for the legislature.

MR. WILLIAMSON: I was 29; Jackson was 26.

JUDGE ECKELS: Although I did sit with a representative who was 83 years old, and so we kind of balanced, we averaged out and did all right.

MR. WILLIAMSON: Okay, we're formal now, Judge.

JUDGE ECKELS: I'm honored to be here. I think we've got our screen up for you, but I will start out, and we have two new commissioners, since I haven't had an opportunity to be here, and I'm honored to be here with you this morning as well. I appreciated the comments you made earlier, Commissioner, about amazing work that happened when we work together because you will see in the I-69 presentation that not only are we working together in our respective communities, but we are working together to connect the NET that you were recently talking about in North East Texas with the Port of Houston, the Rio Grande Valley of Laredo, the ports and the communities all up and down the corridor in between, and it's a very broad coalition.

We have a number of people, and while we're setting up our PowerPoint, I'll introduce the group that is here. Again, Senator Eltife and Representative Merritt, who were here earlier on the previous coalition, are here with our group; Judge John Thompson from Polk County; Judge Helen Walker, now retired but our chair emeritus of this group; Mayor Wyndham; Judge Glasner; Commissioner Mickey Reynolds; former Representative Holly, now Port Commissioner Gene Holly -- there's places to move back into local government, move up into local government.

We have Mayor Smith of the City of Marshall; Commissioner Tamayo from Cameron County; Commissioner Dios from Cameron County; Oscar Ortiz from Nueces County; Rose Hernandez from Harris County; Jody Giles from the Greater Houston Partnership; Garrett Nolan, Brian Wolfe, and Adell Ervin from the Greater Houston Partnership; David Pena from the International Bank of Commerce; former Mayor Roy Blake, who I'm sure will be joining you, former mayor of Nacogdoches is currently a candidate for the legislature, but has been a longtime supporter and advocate for building these coalitions across Texas to better serve the areas of East Texas.

The president of the Carthage Economic Development Corporation, Charles Thomas; Pete Sepulveda of the International Bridge System; Billie Jones of the Wharton Chamber of Commerce; John Crutchfield from the Harlingen Chamber of Commerce; a large contingent of folks. I hope I have not missed anybody from our group.

Why don't I ask you to stand up so you can see kind of the scale of this group. It represents a broad spectrum of people across the state, and we're proud to be here representing the group from Interstate 69 Alliance.

I am Robert Eckels, the county judge of Harris County, for your record for those of you I've not had an opportunity to visit with. Our concept on the ten years that this has moved forward -- and we have been in existence ten years now. Again, Helen Walker, Judge Walker was our chairman for many years and has worked very closely with us here today, but I'm hoping that ten years from now we will be driving on Interstate 69.

The concept has evolved from a transportation infrastructure built to interstate standards into the more ambitious Trans-Texas Corridor project with passenger, dedicated truck, utility and rail components.

In February of 2002, the I-69 Alliance was the first organization in the state to support the Trans-Texas Corridor concept as an aggressive and innovative transportation solution. We are pleased that the Interstate 69 Corridor has been incorporated by the commission as an element of the Trans-Texas Corridor system and has been made one of four priority routes.

Let me be very clear about this: the I-69 Alliance understands that toll revenues will be a major element in the financing and construction of the project. Understanding the importance of toll revenues to this project is why our organization supported HB 3588 in the 2003 legislative session, why we are supporting toll flexibility in Washington on the Federal Reauthorization Program, and in the back of this book you will find -- the presentation book that has been given to you, you will find a list of the members of the I-69 Congressional delegation and copies of our recent communication with members of the U.S. House and Senate. Judge Thompson from Polk County will say more about our Washington efforts in a few minutes later in this presentation.

We want to thank the commission for the aggressive scheduling of the eleven scoping meetings for the environmental routes studies completed in April. We have had a representative from our organization at each of these meetings. We understand that the TxDOT staff plans to begin a toll feasibility analysis for the I-69 route by fall. We applaud this schedule and we look forward to working with your team on that effort.

I think it is important that we do establish those routes on the Trans-Texas Corridor in the toll feasibility studies. Urban development has spread throughout north Harris County and that area can no longer accommodate the 1,200-foot right of way anticipated by the Trans-Texas Corridor.

Grand Parkway has a 400-foot right of way, and the local communities and are concerned that the Trans-Texas would follow the Grand Parkway or Highway 99 route, and while we know that is not possible, the discussion of that possibility and the misinformation that is out there leads to confusion and undermines public support for both Trans-Texas and the Grand Parkway.

I want to thank you this morning for working so closely to accommodate us and the large group here, and with that, we'll turn it over to Judge Thompson.

MR. WILLIAMSON: But you'll be available to answer questions?

JUDGE ECKELS: Mr. Chairman, whatever you need, I'm here.

MR. WILLIAMSON: That's good, because we're going to be talking about Spur 249.

JUDGE ECKELS: I'll be happy to visit about that as well.

JUDGE THOMPSON: Thank you. Good morning. It's great to be standing in front of you today. February a year ago, I broke my leg the evening before we were to be here in front of you, and I know much more about ADA now than I did prior to that, and I'm a big proponent, by the way.

Again, as Judge Eckels said, my name is John Thompson; I'm county judge in Polk County and vice chair of the Alliance for I-69.

The alliance believes that one of the collateral benefits of building the Trans-Texas Corridor system and of building I-69 as a part of that system will be the improved air quality in the metropolitan areas. By providing the alternative routes for through truck and passenger traffic outside of these metropolitan areas, will not only reduce the congestion but will improve or reduce the emissions in the air shed.

The Texas Transportation Institute study determined that if 80 percent of the through trucks, just the trucks that didn't have an origin or a destination inside the Houston area, were to be diverted, that approximately 1.7 tons of NOX per day would be reduced out of the airshed.

The Greater Houston Partnership has testified before the House Transportation Committee stating that it supports alternative routes around the metropolitan area and that would help to improve air quality.

However, if we're to build the express route outside our metropolitan areas, we must also provide good access to our Texas ports; for example, Brownsville, Corpus Christi, and Houston. While the alliance of I-69 supports the Trans-Texas Corridor concept of building new right of way outside of these existing metropolitan areas, we also support continued improvements on the existing federal and state highways which link our metropolitan areas.

The through traffic which is not stopping in these communities for pickup or delivery need to travel on the express routes, as envisioned by the Trans-Texas Corridor Program. The result is some of these segments of I-69 will have both a regional and an express component.

An example would be in my part of the world where the Trans-Texas Corridor, or I-69 Express, would be for the long haul and then you'd have US 59 or I-69 Regional which would serve the local areas, and with TxDOT's support, we can continue to improve US 59.

The Alliance for I-69 Texas is proud to be a partner in Washington, and we've been working on several fronts to advance I-69 there. We're seeking changes in federal law so that Texas can take full advantage of House Bill 3588. The Alliance supports funding equity, project streamlining, innovative financing, tolling existing federal highways, and improving the Borders and Corridors Program.

With regard to project streamlining, the Alliance is pleased to be working closely with TxDOT on two specific provisions that could dramatically accelerate the development of I-69. They include provisions that would enable individual sections of the corridor, whether it be I-69 or other parts of the Trans-Texas Corridor, to move at their own timetable. These provisions would also enable TxDOT to advance the independent segments of utility with their own timetable. For instance, again in my area north of Houston where some advance work has been done, if that could move faster than some other parts, it gives TxDOT a whole lot more flexibility. We know we can't build it all on the same timetable, so we think that that would help.

The second project streamlining provision that we're advocating in Washington, in collaboration with TxDOT, would be to enable the same contractor to simultaneously conduct environment and location studies and to undertake design work, and that would move the design-build projects along much faster.

In addition to the policy changes, the Alliance is advocating for $1.5 billion for I-69 Texas in the Transportation Reauthorization Bill, and the Alliance applauds TxDOT's aggressive reauthorization request that could result in construction of some parts of I-69 Texas in the next six years. And we're doing all that we can to see that I-69 Texas is included in a very bold way in the Reauthorization Bill.

Finally, we're seeking $40 million in FY '05 appropriations to advance the environment and location studies, and we're pleased to say that those studies are underway and that we're helping build a strong case for TxDOT so that we can continue to get the money.

That concludes my remarks; I'll be glad to answer any questions now or later, but if not, I'd like to introduce Judy Hawley, one of my fellow Alliance board members, to conclude our presentation. Thank you.

MR. WILLIAMSON: Another great former colleague.

MS. HAWLEY: Good afternoon; delighted to be here again and to be part of this board. It's a great project and I'm proud to join them.

Commissioner Houghton, we're looking forward to seeing you in Corpus Christi on Monday; and Commissioner Andrade, thank you for your visit; and the rest of you, just keep on coming, we love to have you come down there. You're wonderful, wonderful allies; it's great to be able to work with you.

I'd like to just talk a little bit about the trade with Mexico, the through trade, the international trade that comes through there. We continue to believe it's a tremendous opportunity for toll revenue that will help support the I-69 system.

We also believe and understand that as TxDOT continues to study the toll feasibility of a potential freight-only corridor for the Trans-Texas Corridor linking the inland ports of Laredo to the Port of Corpus Christi for heavy trucks. We think that this may be a real option for the Trans-Texas Corridor dedicated freight element that could provide some real alternatives and some options for the Port of Los Angeles and the Port of Long Beach for moving containers from the Pacific Rim. I've heard most of you address that as where we think a lot of the international trade projections for the future, you're very aware of those trends.

The ports are now forecasting, unbelievably, a tripling of container trade from that region over the next 20 years. I just got back with the Port of Corpus Christi visiting some of the major shipping lines, Evergreen, Hajin, the Korean shipping lines and the Japanese and the Chinese shipping lines -- we were in New Jersey and New York.

They are just overwhelmed with the increased container trade market that's going on, and without exception they said the Gulf of Mexico is going to be a huge piece of that container trade, and with the tangent inland trade that goes into Mexico, comes through Mexico, and even perhaps across a land bridge from the ports of California. So the whole dynamics are changing, and even they were amazed at how quickly it has been changing which presents some real opportunities and some complexities for us and for your commission.

The strikes by the West Coast Longshoremen have demonstrated a significant vulnerability -- we've talked about that before -- which has the trade community looking at long-term growth options. A study assessing the global trade assumptions would be a sizable undertaking, but we, this group, I-69 recommends that it is essential for planning for I-69 and other major corridors.

We think it prudent for TxDOT to undertake a scoping study to examine existing trade basis and trends and to determine what our opportunities and what our necessities are to accommodate the additional multimodal trade, international trade for the years ahead.

We have attached in these papers a memorandum providing a potential outline of some of those outlines which could be included in a scoping study as we incorporate our future international trade needs into our transportation planning.

And that concludes my remarks, but if you'd like to go to the back of your booklets, you do have that scoping study and we may want to answer some questions about that as well. So thank you for your time and look forward to answering any questions as we have an opportunity.

MR. WILLIAMSON: Does that conclude your formal presentation, Judge?

JUDGE ECKELS: That concludes our formal presentation.

MR. WILLIAMSON: Okay. Members, we have these young people available to us to create dialogue or answer questions, if you want to collect your thoughts. Ted, are you ready to go?

MR. HOUGHTON: Well, I was quite interested in the alternates to the LA/Long Beach ports, where we just finished a tour of southern California, mainly transportation systems. But one of the consistent themes out there was the competition and they're in a retaining mode, retaining their industry, not going out and recruiting industry, and their biggest competition is the state of Texas, and they're very fearful and they have seen these companies being recruited by Texas, moving to Texas.

But I do think the alternate port issue and the Port of Corpus Christi, Port of Houston and the others down in that area are going to be essential in the future where 45 percent of our trade now is with Mexico. So I'm quite interested.

My question, I guess, after that long-winded statement, is what is the cooperation with Mexico on their corridors? I know we build up to a bridge, I know they have toll roads down to Monterrey and Chihuahua and those areas. What is going on with Mexico as to their ports and their infrastructure?

JUDGE ECKELS: We meet with their ports, with their officials that are working on the I-69 Corridor connectivity into Mexico. We also have major -- as you mentioned, competition with the West Coast ports, major shippers like Wal-Mart which ships 2-1/2 million containers a year -- they're probably the largest single shipper in the region, in the nation with 2-1/2 million containers a year on their own, have opened major distribution centers in the Houston area. Home Depot, other major international shippers that bring containers into the country are working to diversify their access into the nation, so I think you'll see continued growth.

We continue to meet, through our coalition, with counterparts in Mexico so that we're coordinating our activities, and TxDOT is a part of those discussions as well.

MS. ANDRADE: Judge Eckels, I want to first thank you and commend you for your staff. I participated in a conference in Houston and your staff was great, so thank you so much.

JUDGE ECKELS: I'm glad it worked well for you.

MS. ANDRADE: Judy, thank you. I certainly enjoyed the hospitality during my last visit, and I join you in saying that I think there's tremendous opportunity for a freight corridor between Laredo and Corpus Christi and I think it's going to do great things for Corpus Christi.

In my discussions throughout, I'm talking about your container park, and I think there's great opportunities there. So I think as we visit and learn more about the needs of the communities, we can also be able to spread the word and spread the concern and opportunities that there are. But I want to thank you for the work that you're doing on I-69 because, again, as I travel I see the need for it. So I'm excited about working with you and thank you very much.

JUDGE ECKELS: We appreciate the support, and we have a great team in place here and we think it's stronger with the new commissioners here.

MS. ANDRADE: Well, you've got three commissioners that are very experienced and two that are very enthusiastic right now, so we're going to get a lot done this year.

(General laughter.)

MR. JOHNSON: I have a personal question of the judge. How is Jen?

JUDGE ECKELS: Oh, she's fine. We were having lunch the other day, and my wife had had a traffic accident, called and was panicked with a traffic accident, a very minor scratch. The other party in fact had left the scene and it was a driving thunderstorm, and we don't know if they just thought they hit a bump and never saw her, but the damage was minimal and everybody is fine. I appreciate your concern.

MR. JOHNSON: It was just an isolated thunderstorm; we haven't had any of those in the last few days.

JUDGE ECKELS: Not that there have been many, no, sir. It was not raining upon us, but it was poor visibility and the traffic lights were out. Unfortunately, it was a county road, so I can't complain to TxDOT about the fact that the signal was out.

(General laughter.)

MR. JOHNSON: Well, a couple of observations: One, Judy, it's great to see you here and in your new capacity. It probably goes without saying what a great supporter you were of this agency and this commission in your days across 11th there, and I for one, and I know Robert for two, and David Laney for three, and I know Ric is very aware of it, we'll never forget how helpful you've been and all of Texas has benefitted from it.

Judge Walker, it's great to see you again; and Judge Thompson to see him ambulatory, the last time he was a little ill at ease in moving around.

You know, the I-69 Corridor is sort of morphing into shape and that's great to see. The last number I saw, Mike, if my memory serves me correct, we had moved the estimated cost from 5 to north of $6 billion just in the state of Texas, and right now we still are not sure what the components are going to look like and so that number is anybody's guess.

And if you look at the magnitude of spending that much money under the "no road, slow road, tax road" approach, it's somewhere between now and eternity in terms of getting this done, and as you pointed out, there's so many benefits that are not just related to people getting from where they are to where they want to go, but the ancillary benefits and the economic vitality benefits are just huge to this entire state.

So I mean, it's so incumbent upon all of us to work together because, as I like to use the pig and the python analogy, north of $6 billion is a huge swallow and we're not going to be able to do it without being creative, without being innovative, and without working together both along the corridor here in Austin and certainly in Washington. And you are doing a great job of sort of quarter-backing and I appreciate it.

You know, the Smith and Gregg County delegation had the David Letterman or Robert Nichols ten ways to get things done; I mean, this in terms of increase or magnitude just dwarfs most of what we consider.

JUDGE ECKELS: I used to believe this was a big number until we started the Katy project there in Houston, Commissioner. It's getting closer and closer all the time.

(General laughter.)

JUDGE ECKELS: We do have a group here that understands the need for tolls on the system; we are fully supportive of that. At least in the urban areas coming through Houston, it makes a big difference. And quite honestly, last night I was able to visually see the demand for this kind of system.

There was an accident on Interstate 10 at the Brazos River going towards Houston, eastbound on I-10. Traffic was stopped from I-10 to Sealy, but not only was it stopped with cars but it was a solid line of semis for five miles, semi trucks that were just lined up waiting for that accident to be cleared.

You could see the demand for not only the safety benefits of this road and the ability to separate the cars and the trucks, but the need for this corridor to move the trucks into a high-efficiency lane that would avoid those kind of accidents on the other freeways and also provide better access into the urban markets and the ports along the route.

MR. JOHNSON: Since that's a very conceivable route for me to return home this afternoon, have they cleared that accident?

JUDGE ECKELS: It should have been cleared by now, but it was one that you would have been just as well to spend the night in Sealy as opposed to trying to get through. After you get past Sealy, there was no way to even turn around. There were cars stuck in the esplanade; without frontage roads in some of those areas -- some of the areas do have frontage roads, but people had diverted to the frontage roads and were backed up just as bad as the interstate.

MR. WILLIAMSON: But in Columbus and La Grange and all through there, they tell us we don't need to build any more throughways or expressways or interstates?

JUDGE ECKELS: Well, if you were going to Columbus or La Grange, that was fine, but if you were going past Columbus or La Grange, it was stuck between Sealy and across the river; there was just no alternative to I-10. You could divert at Sealy, move south and come in Highway 90, come 36 and up Highway 90 through Richmond-Rosenberg. In fact, I stopped there and encouraged some people when I was buying gas to do just that. You could go north and come in through Bellville and ultimately up 529 to the west side.

MR. WILLIAMSON: But one of the difficulties -- and if you'll allow me just a second, John, and I'll reyield the floor.

MR. JOHNSON: Robert told me to allow the chair whatever they want.

(General laughter.)

MR. WILLIAMSON: One of the difficulties I think the commission faces in advancing such a broad program designed to address today's problems and tomorrow's problems sort of falls into the category that those folks from Fayette County and Columbus and that area have raised, and it's legitimate.

They're Texas citizens; they have every right to raise these issues. In fact, we kind of believe that discussing and cussing things is a good thing, not a bad thing. But it's the conflict, the clash between the explosion of urban Texas pressing against the beauty and the grace and the quietness of rural Texas, it's the airshed problems, and if we don't do things for the entire state that unfortunately have some pain associated with it, there's not going to be any growth in this state. It's the whole notion of what do you do with your infrastructure.

You're close to the governor; you know these conversations occur all the time. They occurred under Governor Bush; they occurred under Governor Richards: what do you do to encourage economic development in your state?

Well, the truth is very little tax policy influences that. I suppose if we went from the very average public schools to the very best in the world, that might have some impact in 20 years.

The truth is economic growth occurs because Gary can move to Texas and make money; that's why economic development occurs: people can move to an area and make money. They don't really care what the tax structure is if they can make money; they don't really care what condition the schools are in if they can make money. That's why people move, they move to make money, they don't move for all these other things. And you ain't going to make any money if your semis are lined up 500 deep waiting on the wreck to clear.

So it's a difficult thing we all face together, the I-69 Corridor, this commission, the governor, the legislature, how do you work through growing this infrastructure in a way that people at least feel like it was the right thing to do if not maybe the most comfortable thing to do.

JUDGE ECKELS: And again, we'll be happy to work beyond the I-69 Corridor with this commission. Many of the members here have overlap into areas along it. And I have met with the city manager in Columbus and we have talked about the issue there, and I'll be happy to work with you on that and other hats that I wear.

MR. WILLIAMSON: I think sometimes, from looking at the words, they perceive we're the enemy. We're not the enemy, we're Texans just like they are. They have a different viewpoint and we understand that.

Sorry, John.

MR. JOHNSON: You were right on the same thought path that I was, and the dimension in what we're trying to consider here is huge. I mean, it's just not concrete; there are so many varied areas that we've got to take into consideration and benefits to the pig and the python here.

People don't take that into their own frame of reference when they're thinking of this, they just think this is a road going from Mexico to Canada and how does it impact me, and the bottom line is you might not ever drive on it but it impacts you a great deal, whether it's the air you breathe or your job or getting goods and services to the store or whatever.

JUDGE ECKELS: Ultimately, I believe, Commissioner, you'll see that coalition people understanding that the state -- we have learned in Houston that we rise and fall together; we have learned on this coalition that there is more that unites us than divides us, and that ultimately the economic vitality of the urban centers will provide the funding that will keep schools open like the Fayetteville High School that is very small and marginal but has to have the state revenue to be able to operate and that will come out of the economic vitality of the rest of the state. And there are things in an interest and we have to personalize it for those folks to understand that the strength of the Port of Houston is important to Fayetteville or to Columbus or LaGrange or Laredo.

We're partners with Laredo in our Juvenile Justice Alternative Ed Program. I signed an agreement yesterday with Laredo schools. All of us across the state are linked together much more than we would ever realize, whether it's transportation or education or other projects.

MR. NICHOLS: I think most people in the rural areas -- most, not all, obviously -- in the rural areas do understand how the metropolitan areas affect the rural areas because in the '80s when Houston shut down, you could not sell refrigerators and cars in Cherokee County; it was that bad.

And I think most of the rural caucusing groups and stuff do recognize that there are different issues on different things, but they certainly understand the importance of economic development.

JUDGE ECKELS: I would hope the urban areas also understand the needs of the rural community. I believe the days of that rural versus urban, Commissioner, hopefully have passed and we understand that the things that we're doing in Houston and the Metroplex and other areas -- and particularly you're seeing that along this corridor -- are mutually beneficial for all of our areas.

MR. NICHOLS: On the I-69, I appreciate you as a group taking the time to work on this and to update us today. I recognize you volunteer your time to do this, and I want you to know that I think unquestionably this commission fully supports Interstate 69, and want you to know it is very important from our standpoint that you have this coalition and that you keep this coalition heading in a direction working together -- I really do believe that.

I don't think it's so much to try to convince us as a commission but to the impact that you can have with, I think, the Texas delegation to Washington is very important. And your cooperation with the other states as the I-69 Coalition are very important because as Texas and the other states that I-69 impacts, it's us working with them who is going to have to convince Congress to actually fund this thing.

Historically, the interstate program, the construction of the interstates were funded in the Federal Highway Bill. It is the bill -- they're a year behind, a year and some months behind now, that's the bill. Somebody says sometimes it takes an act of Congress to change something, that's the act, that is the one, and it's not in there.

As I understand it today, although we're requesting certain flexibility and stuff like that, federal authorization, the actual funding of new interstates which has historically always been a separate identified item in the Federal Reauthorization Bill, it is not in there.

And if we can get 40 more million or however many more million to do more studies, that's very important, but the true construction of this thing is an identified item in that federal bill. And we, working as the Texas delegation, driven with the I-69 Coalition, working with the other delegations from the other states on that federal bill is what's going to drive that thing.

So it's very important that you continue doing what you're doing.

JUDGE ECKELS: We appreciate those comments, Commissioner. We are active up in Washington; Judge Thompson represents us on the board of the National Conference, and we will continue those efforts. And we appreciate the partnership with TxDOT because we are working with TxDOT very closely on those issues.

MR. NICHOLS: The way they did that interstate system before, they'd pick an interstate, whether it be I-10, I-20 or whatever, and that bill would say X number of dollars, they'd tag out $400 million a year or half a billion and they'd say we're going to hammer that particular interstate year after year after year until it's complete.

Different segments may or may not jump ahead of each other; one state may get ahead early and one may come in late; eventually everybody gets their share, but that's how it was done before.

I can assure you when that balance and funding does come through that this state agency will -- I almost hate to use the word "first hog at the trough" but we're going to be there ready to grab that money with both fists and build that thing.

Do I call you Commissioner Hawley now?

MS. HAWLEY: You can call me Judy, Robert.

(General laughter.)

MR. NICHOLS: You made a comment that I wrote down that has to do with the port, and I know you had Port of Houston, Port of Corpus and we have other ports, but you said you are anticipating an increase of threefold?

MS. HAWLEY: Just ports in general are anticipating a threefold increase in container traffic in the continental United States over the next 20 years. But that's huge.

MR. NICHOLS: In what period of time?

MS. HAWLEY: In 20 years, and it's already started. There's not even ship capacity now it's getting so huge.

MR. NICHOLS: Is that overall imports/exports, or is that just the containerized portion of it?

MS. HAWLEY: The container portion.

JUDGE ECKELS: We've seen tremendous growth in the container portion, and you will likely see a higher number than that on the Texas upper coast. The Port of Houston has become a load center port for the Gulf Coast, the largest driving point on the Gulf Coast; tremendous opportunities between the Port of Houston, Corpus Christi, Freeport, Brownsville, up through Beaumont is load centers where we ship back and forth and load the massive vessels out of the Port of Houston and have continued growth in all the ports along the coast.

MR. NICHOLS: Is that primarily coming in or going out, or both?

MS. HAWLEY: Coming in is where we're really seeing it, but the whole dynamics -- why we bring this up to you, in the last six months the dynamics of that industry has just changed.

MR. WILLIAMSON: But there's reasons why that's happening and there's reasons why our staff has started to focus more and more on a high speed truck corridor from the Port of Houston to the Port of Corpus Christi to the Port of Laredo. The population center of the country is actually shifting south and west and it's starting to show up in demand for product finally.

MR. NICHOLS: My next question, the containers on the Texas side of the port, are those on rail or are those containers on trucks?

JUDGE ECKELS: Both, we have tremendous truck and rail; we would like to move more to the rail. TxDOT is working with Harris County and the Port of Houston on freight rail studies right now in the Houston area to improve freight rail efficiencies a la Alameda. But the truck growth is tremendous and we need to have alternatives.

MR. NICHOLS: Yes, tripling in 20 years of that, especially if it's a combination of those containers and stuff going truck and rail, it will have a big effect on our system. I know the administration is updating a NAFTA study; the last update was really too long ago, I don't even want to say when it was; it's time to update it.

But I think in that updating they're going to be looking at truck traffic and rail traffic, and I think it would be very important to take into consideration not just that which is connected with Mexico on our NAFTA. I don't know if we need to come over and do a separate study or do it as a separate section of the updated NAFTA study, but to take a look at that growth and the impact on road and rail so we can make sure that we're looking forward and not trying to react when we get behind when all that stuff hits.

JUDGE ECKELS: You'll find, Commissioner, that there is a tremendous growth not only in the NAFTA trade but also in the European and Asian trade into and out of the Gulf Coast, and a lot of that will be serving the NAFTA market, coming through the Texas Gulf Coast into Mexico and Central and South America.

MR. NICHOLS: So if we get shipments from China coming into Houston or Corpus that's going to Mexico, it passes through Texas, we still have a traffic problem, is that considered NAFTA? It's trade going through Texas into Mexico.

JUDGE ECKELS: You can see a lot of the cross-continental trade coming into Mazatlan and other Mexican ports too.

MR. JOHNSON: NAFTA is to Mexico and from Mexico.

MR. NICHOLS: Yes, but if it's coming from China, hitting the Houston port and then going to Mexico, that would still be considered --

MR. JOHNSON: North American free trade.

(General talking.)

JUDGE ECKELS: You also see, I believe, continued growth, as Commissioner Hawley pointed out, on the cross-continental trade coming up from Mazatlan and the other ports in Mexico to Texas through Laredo and the Valley and into Corpus and Houston and other ports on the coast.

MR. NICHOLS: Anyway, my point is that caught my attention, your comment, and I wrote that down and I wanted to make sure, and since we're going to be in the process of updating that NAFTA study, I think it would be very important, because all of that may not be NAFTA, some of it may be coming in and heading in a different direction, but we may want to do a separate section or something, but pull in all the impacts of that port trade and its impact on rail and trucks, origin, destination, volumes and that kind of stuff.

JUDGE ECKELS: Commissioner, we tend also to underestimate the importance of our domestic market for this trade. A large percentage of the products moving into and out of the Port of Houston and the other ports on the coast are delivered within a 500-mile radius.

It's a huge market between Houston, the Metroplex, San Antonio, Austin and the rest of the state, into Louisiana, up into Oklahoma and Arkansas that is a massive market for many of these containers, and a high percentage are serving that domestic market.

MR. NICHOLS: That probably just needs to be a totally different study then.

JUDGE ECKELS: Well, it would dovetail with because it's the same issues that you have with NAFTA.

MR. NICHOLS: Anyway, I wanted to touch that, because it is obviously real important, to thank you for the time that you have spent on that. Judge Walker has been working on this for years.

Thank you very much. That's all the comments I have.

MR. WILLIAMSON: As I was saying earlier, the key component of economic development, a guy or a gal moves to Texas because they can make money, they don't move for any other reason, all the other stuff is stuff that newspaper reporters and chamber of commerce people and special interest people cook up. I mean, you boil it down real simple: can I make more money in Texas than I can in California; I'm gone to Texas.

I think one of the things that needs to be said is, speaking for the governor, the governor appreciates the support of the I-69 Corridor in moving towards a toll system.

The governor should receive credit for recognizing four years ago that we can sit here and wait and wait for the money, and if it never shows up, I-69 is not being built, meanwhile somebody needs to have an alternative plan, and that alternative plan is the Trans-Texas Corridor, specifically and generally conversioned to a corridor tolled system in order to advance our state's infrastructure. But that stuff isn't possible without people such as yourselves who are willing to advocate for that locally as well.

I believe that the state is uniquely suited to a toll system because we have a robust tax system in place. I do recognize that there are problems with any kind of infrastructure growth because you're taking private property and converting it to public use.

The flip side is by converting private property to public use and expanding your economy, you're attracting more private sector economic job generators in your community, so it's a constant trade.

Robert, I appreciate you pointing out the confusion between the Grand Parkway and the Corridor. We do all have to work harder to make sure people understand that's a separation. It does us no good to move from 800 to 1,200 feet of right of way right back through the same urban environment we're trying to avoid, and certainly we don't stand for that.

JUDGE ECKELS: Twenty years ago it might have made sense to run Trans-Texas through what is now 99, but today it's not going to happen.

MR. WILLIAMSON: Can't do it, can't pull it off. We are concerned in the Harris County area, though, that as Gary and our staff become more aggressive on advancing state or partnership toll roads with yourself, we're going to have to do some conversions.

I know there's one in particular that's kind of a problem for the court right now. We hope the court understands that we haven't told Gary that he should suggest that you just out of the clear blue.

JUDGE ECKELS: We've had that discussion with Gary, and in fact, I believe that there are some tremendous for partnerships with TxDOT on the toll system. I think too, though, that we will find that there are places for free segments that feed the toll system, and particularly on 249 you have a massive commercial core that is on that free section, and I think there will be places for tolls on all or part of that system and certainly on all the new construction going through and around Tomball and north and tying into what will ultimately be the Trans-Texas Corridor and on up towards ultimately College Station.

MR. WILLIAMSON: We told Gary that we felt like that since you're the swing vote, you would keep an open mind about it.

JUDGE ECKELS: I am and I've had the discussion with Gary, particularly on the high occupancy toll lanes, but that is a discussion probably beyond what we're here for today.

MR. WILLIAMSON: No, can't pass a chance up, Robert.

(General laughter.)

JUDGE ECKELS: I will tell you that we have found with the toll road authority that those areas that have free access open frontage roads fronting on the toll roads provide a greater market in toll road than areas that don't have the free alternatives that are adjacent to and part of the toll system, and that on 249 particularly, a high occupancy toll lane down the middle or something might make sense but that he free road access to the beltway on the south and to the tollway north, past Spring-Cypress on up towards Tomball and again Navasota, would potentially, in our mind, provide more revenue than a pure toll system would.

MR. WILLIAMSON: Well, actually, I pegged on 249 actually to make the point that as we progress not only on I-69 and not only in the Houston area but across the state with final plans on different toll projects, inevitably we're going to have some conversion issues that we're going to have to deal with that are going to be extremely uncomfortable for local leaders, regional leaders, state leaders, for ourselves, for the governor.

It's going to be uncomfortable for all of us, and it does well in the public forum for us to remind ourselves that the goal is what benefits the state. None of us have bad ideas, none of us have good ideas, we all have ideas that just need to be hashed out.

JUDGE ECKELS: We would love to work with the TxDOT team, and again compliment the TxDOT on the partnership on our experiences in toll systems and what generates revenues which is counter to what most other toll systems would say.

Most toll systems don't want free alternatives, Jersey Turnpike, others up on the East Coast particularly. Again, we find people will pay 75 cents to go around a traffic light on that beltway, and that frontage road is a revenue stream.

MR. WILLIAMSON: And I think we actually share the Harris County experience.

JUDGE ECKELS: You helped construct that system.

MR. WILLIAMSON: I think we share that viewpoint that free tax road alternatives actually make the toll road system work better. Like I said, we go out of our way to say all the time we don't cheer tolls just because we like hearing that, we cheer tolls because we think that's kind of the only solution right now.

The I-69 stuff is good, the report is good and your work is good, and we really do appreciate it and we're particularly start to focus in on that overweight truck, high speed truck, freight corridor from the inland port of Del Rio -- the inland port of Laredo to Corpus Christi to Freeport to Houston and the connector down to Brownsville. We think that's real important to the state's future.

JUDGE ECKELS: We appreciate the work that the commission does.

MS. ANDRADE: Chairman Williamson?

MR. WILLIAMSON: Please.

MS. ANDRADE: Two things. I need to add to your comment about the reason why people move to Texas is because they make the most money, and I agree with that.

JUDGE ECKELS: I thought it was because of the great county judges.

MS. ANDRADE: But I'd like to add that I think people also move to Texas because of our quality of life, and that a good transportation system is key to quality of life.

The second thing I'd like to ask is I notice that Bill Summers was on your program. Is he all right?

JUDGE ECKELS: I'm sorry, ma'am.

MS. ANDRADE: Bill Summers was on your program. Is he okay?

MS. HAWLEY: He had another board meeting.

JUDGE ECKELS: I am right now also at a County and District Retirement System Board. Most of us serve on many other boards; this is one I chair so I slipped out from that one to come here.

MS. ANDRADE: I just wanted to make sure he was all right.

JUDGE ECKELS: As far as we know, yes.

MS. ANDRADE: Thank you very much.

MR. WILLIAMSON: Anything else we need to talk about, Robert?

JUDGE ECKELS: I'm sure there is but I don't want to take this whole commission's time. Thank you, Ric.

MR. WILLIAMSON: Good to see you, Robert; Judge, good to see you; Judge, good to see you; Judy, good to see you; Gary, good to see you, sir.

Mike, I really think that we have an employee who wishes we would move on, but I think we need to take a little time. What do you think? I think that employee's business is going to take more than a little bit of time. What do you think?

MR. BEHRENS: That's fine.

(Whereupon, a brief recess was taken.)

MR. WILLIAMSON: As previously announced, we're now going to take up item 8(b)(2), I believe it is.

MR. BEHRENS: That's correct.

MR. WILLIAMSON: And then we're going to stop. I previously announced 90 minutes for lunch but we're going to cut that back to about 45 minutes. There's just not any way we're going to get through this without taking lunch, and I understand John may have to leave, and so John, we completely understand. We'll make lunch as short as possible.

Mike?

MR. BEHRENS: We're going to agenda item 8(b)(2) which is Public Transportation, discussing the State Formula Program, the Discretionary Program, and the 5311 Grant Program. Sue?

MS. BRYANT: Thank you. Good afternoon, commissioners, Mr. Behrens. My name is Sue Bryant and I'm Public Transportation Division director.

Before you for your consideration are final rules for public transportation funding formulas. By way of background, these rules have been more than a year in development, beginning with discussions held a year ago. Over the last few months we held six listening sessions and one statewide video conference, received comments over the internet, and held a Public Transportation Advisory Committee meeting which then resulted in the draft rules.

Following the commission's approval on April 29, 2004 to release the draft rules for public comment, we held five hearings around the state in Austin, El Paso, McAllen, Tyler and Lubbock, held a Public Transportation Advisory Committee meeting, and accepted written comments by mail until June 14.

The department received comments from 46 individuals or entities: four indicated they were in favor of the proposed rules; four indicated they were opposed; the remaining commenters discussed both advantages and disadvantages to them to different elements of the formula or they commented in general about local transit services and the importance of these services to the community.

There is significant consensus over some of the most critical areas, and these areas of consensus include: a strong belief in and determination to getting people where they need to go and providing access to all; compliments and appreciation of the commission and the department for its leadership, the outreach efforts, and listening to concerns; support and understanding for using performance measures; the need to seek new and innovative ways of funding; and understanding that the current effort is just one small step in a long road to formula development and the larger effort of coordination.

There's also some level of discomfort with change: a belief by some that it is not enough, while others believe it to be too much; a belief by some that it is too soon and by others that it is way overdue. And the devil is definitely in the details.

There's no entity, of course, that wants to experience a reduction in funds and be faced with the potential of cutting service; however, without a total funding increase, no provider can be increased without a decrease elsewhere. Also, any funding reductions can be somewhat mitigated by several factors. Within the rules there are built-in caps and bases in which no provider would have greater than a 10 percent reduction or a 20 percent increase. There is also an expectation of increased federal funding and the opportunity for greater local participation.

What should be considered as performance measures and how should they be measured? There is general agreement that coordination and administrative costs should be factored into overall performance, though there is not an agreement on how this would be done.

On July 6, 7 and 8, TxDOT is hosting a meeting of the districts, transit providers and health and human service agencies to wrestle with those questions surrounding identifying, defining, and measuring performance.

The funding formulas for your consideration proposes to allocate funds on the basis of population, land area and performance. I would like to take just a moment of your time and show you a visual rather than a narrative of how those rural funding formulas would be allocated. If we can, please.

The first visual divies out the state appropriation for grants. The expectation is that there would be $28.7 million. These would be split between urban and rural providers based on population at 75 percent, land area at 25 percent. The small urban allocation then would be approximately $10 million; the rural allocation would be $18.68 million.

These would be broken out then almost the same: the small urban on an 80-20 breakdown between population and what is currently considered performance measures, and the rural allocation by population/land area and again by the same performance measures.

If we can go to the next slide, please. The federal rural apportionment then is broken out the same way as the state rural apportionment, and the Public Transportation Advisory Committee recommended pretty strongly that the breakdown would mirror each other so that there's not a totally different formula breakdown.

MR. WILLIAMSON: I know you're trying to speed it along but I need to ask one question.

MS. BRYANT: Sure.

MR. WILLIAMSON: When you were displaying what we call currently performance measures, some of those don't view those as performance, we view those as process.

MS. BRYANT: That's correct.

MR. WILLIAMSON: And is PTAC or staff or both focused on converting from a process system to a performance system?

MS. BRYANT: Yes.

MR. WILLIAMSON: So we're not losing sight of that.

MS. BRYANT: No, we're not. In fact, that is going to be the primary focus of the meetings that are going to occur the 6th, 7th and 8th.

MR. WILLIAMSON: Thank you.

MS. BRYANT: Again, if we can just move down the sheet very quickly. The breakdown again is the same: process measures, funds per capita, operating expenses per mile inverted where the negative becomes the positive, ridership per capita, and vehicle revenue miles.

And also, a Public Transportation Advisory Committee recommendation is that the systems would be compared to themselves so that they themselves can improve and that would be considered a positive in terms of the formula.

The rules have not been substantively changed from the approved April draft version, and there have been some typographical corrections, and at the request of the Public Transportation Advisory Committee, the term "in good standing with the department" has been further clarified. This was something that they asked for.

The Public Transportation Advisory Committee also reiterated its intention to revisit the formula and voted in favor of continuing to cap those urban areas located within the boundaries of the transit authority.

The rules presented are not perfect, are not intended to be in place forever, and are not expected to address all public transportation funding needs throughout the state. They are intended to be a small step in the right direction toward greater funding equity, to initiate the concepts of need and performance -- which we are still working on -- into funding consideration, and to move toward greater accountability of all the systems.

As one commenter did observe, there's nothing wrong with the formula that more money wouldn't solve.

With a great deal of appreciation to the members of the Public Transportation Advisory Committee, to the advocates and providers who have invested a great deal of time in this process we've just completed, and with the understanding that this is but one small step and we have a great deal of work before us, staff does recommend approval of the proposed rules.

MR. WILLIAMSON: Members, we have one affiant, Edna Johnson.

Edna, we want to extend to you our appreciation for your patience.

MS. JOHNSON: Good afternoon. My name is Edna Johnson; I am acting executive director of the Texas Transit Association.

MR. WILLIAMSON: Texas Transit Association. So this is a recent change?

MS. JOHNSON: Yes.

MR. WILLIAMSON: Who is the former person?

MS. JOHNSON: Michael Plaster has left the association.

MR. WILLIAMSON: Michael Plaster has? When did that happen?

MS. JOHNSON: About a month and a half ago.

MR. WILLIAMSON: Really. What's he doing now?

MS. JOHNSON: I'm not sure. He's going to go build the I-69 Corridor for you.

(General laughter.)

MS. JOHNSON: At the TTA board meeting earlier this month, TTA engaged the services of Sam Russell to act --

MR. WILLIAMSON: Who?

MS. JOHNSON: Sam Russell.

MR. WILLIAMSON: Former member Sam Russell?

MS. JOHNSON: Former member Sam Russell.

MR. WILLIAMSON: And he was my first chairman.

MS. JOHNSON: Long time ago, huh.

MR. WILLIAMSON: Long time ago, 20 years ago.

MS. JOHNSON: He is going to act in the capacity of general counsel and to assist with our governmental relations.

MR. WILLIAMSON: He didn't tell you he had his license to practice law, did he?

MS. JOHNSON: Well, you've got to let me finish my story.

(General laughter.)

MR. WILLIAMSON: Go ahead, Edna.

MS. JOHNSON: You're going to get me confused, and then my stomach is going to start growling at you.

Mr. Russell had intended to be here. Unfortunately, he became very ill last night, and with your permission, I have his written testimony.

MR. WILLIAMSON: He became very ill at the thought of having to answer all these questions?

MS. JOHNSON: Well, he said -- no, but he did become ill last night, so with your permission, I'd like to hand out the testimony that he would have presented to you which saves you from having to listen to him for 20 minutes.

MR. WILLIAMSON: I'd have enjoyed it.

MS. JOHNSON: He is a great guy, isn't he.

We do appreciate you and I know that everybody in Texas that gets a ride every day and thousands and thousands of people, I don't know what they would do without transportation, so we do appreciate it. And with that, if it's perfectly okay, I'd like to hand this out to you.

MR. WILLIAMSON: Sure, Edna, whatever you think.

MS. JOHNSON: You're easy today.

(Distributing documents.)

MS. JOHNSON: That's all I have today, if you'd like to take a look at it, and we appreciate you.

MR. WILLIAMSON: Well, what does this say?

MS. JOHNSON: You have to read it. He did submit written comments by the time the comment period was due, but he said he was sorry he wouldn't be able to be here. But I will tell him you were laughing about him.

MR. WILLIAMSON: With him.

MS. JOHNSON: I'll tell him you were laughing with him. Thank you.

MR. WILLIAMSON: Thank you.

Members, any questions of Ms. Johnson?

MR. NICHOLS: I don't have any.

MR. WILLIAMSON: Okay, thank you very much.

MS. JOHNSON: I do have 23 years in providing rural transit, and have just come up to the association.

MR. NICHOLS: Where are you located?

MS. JOHNSON: We're down the street here on Brazos, our office is.

MR. NICHOLS: Well, you said you had 23 years of rural. Where?

MS. JOHNSON: With CARTS, Capital Area Rural Transportation System. So I can remember the days we drove Checker vehicles and life seemed to be simpler back then. I do have people that really over the years have appreciated the services.

MR. WILLIAMSON: Yes, I think so.

MS. JOHNSON: Thank you.

MR. WILLIAMSON: Thank you.

Sue, anything else you wish to add?

MS. BRYANT: No, sir.

MR. WILLIAMSON: Members, you're open to ask questions or have dialogue with Sue Bryant.

MR. JOHNSON: Sue, this is an incredible journey, and I think you've caught most of the baggage-handling aspects of it. I want to thank you for what you're doing; I want to thank the PTAC members also.

You're extremely conscientious and you're pulled in so many different directions and you're trying to do the right thing, and I just happen to notice on the short course that Mr. Russell asked us to freeze the '04 levels everybody is funded. But when you have the same pool of money and you're bringing new participants in -- which means the pot gets spread out even farther -- that's a financial and mathematical impossibility, so you have to work within all those parameters.

I notice that we have had difficulty landing on a consistent page on the interpretation of a statute and the enclave cities were frozen, were not, were, which has sort of added to the challenge that you and especially the PTAC members have had to face. It's a very long and arduous journey, and I just want to thank you.

MS. BRYANT: Thank you.

MR. JOHNSON: And in your preamble you said this is not a perfect solution; if we had divine wisdom, we might be able to come up with a perfect solution, but we are, after all, only human.

MS. BRYANT: Thank you very much.

MR. NICHOLS: I also want to echo part of what Johnny said, congratulations to you and thank you and your staff who worked on this. I think you have done an incredible job of trying to cover the state, trying to get input from all over the state, trying to react to that, and I think you have done a great job.

Comments regarding this, number one, as you said people need to understand how much money they're going to have so they can depend on it, but we have acknowledged publicly -- at least members of the commission have -- this is an evolving process. We're going to be tackling over the next 12 months some more issues related to health and human services, and I think we'll be going back and addressing some of these areas in this formula, maybe fine-tuning it or evolving it or whatever.

MS. BRYANT: That's correct.

MR. NICHOLS: Number two, more specifically, the issue of capping or not capping on those particular communities, the more I have thought about it, I think one of the things that PTAC needs to look at, we as a commission need to look at, and possibly your staff needs to make recommendations on, and possibly we're going to have to go out and just do it, is that you've got a definition for small urban and we have a number of those communities that aren't small urban, they're much larger than that, and they have chosen not to file directly, as I understand it, like the big metros but they certainly have that opportunity to.

In effect, by their lack of decision in that direction, they've chosen as communities to stay in the small urban which is almost not fair -- that's probably not a very good word for it. You're having communities of 100,000 or 50,000 or whatever compete against somebody that's 350,000 on a competitive thing and a pot of money that really wasn't built for that. I think those communities over 200,000 need to be encouraged to directly apply which would be the solution to the caps -- much like the metros have.

I think -- and I may be wrong -- to directly work on transit like the metros -- I keep calling it the metros -- don't they have to have like a local vesting or something, local source of revenues for transit?

MS. BRYANT: It depends on what size they are.

MR. NICHOLS: I'm just referring to the ones over 200,000.

MS. BRYANT: Right. The statute is such that they are eligible for our funding.

MR. NICHOLS: Under small urban.

MS. BRYANT: Right, but if they also are not participating in some kind of local taxing authority, and I'm going to probably refer that to our general counsel because that's statutory.

MR. NICHOLS: Well, I don't want to get into it to that depth. My point is that a number of the much larger cities have opted to apply directly and do their program which I think these communities, many of them over 200,000, qualify for. That's something we need address, study, get recommendations on.

MS. BRYANT: Yes, it is.

MR. NICHOLS: And if it's a matter of us over the next year -- you certainly don't want to make any changes without giving people fair warning, but over the next year I think we need to work toward that. If that's what the recommendation ends up, then we can go work with community leadership, cities, the mayors, county commissioners courts, whatever, and work with them. They need to be very much aware ahead of time of any changes in that direction, if that's where we end up going.

Number three, the PTAC is staying together?

MS. BRYANT: There are three members that are due to be reconsidered in a few months, and we will be working with you all to determine.

MR. NICHOLS: I'm working on the assumption that we're going to have an advisory committee that's going to continue over the next year or so working on this.

MS. BRYANT: Oh, yes, that's correct.

MR. NICHOLS: And one of the other items, as we work toward that in the future, that I think needs to be considered that was not in these before is the issue of administration costs.

MS. BRYANT: Correct.

MR. NICHOLS: I know there's a technicality and then there's the spirit of legislation. Federal government, in passing the funds down to us to be passed n for transit basically put in a stipulation that no more than 15 percent be spent on administration. We only take three, but we pass that on, and in an analysis of some of the entities that we've looked at, I know that some of the councils of government, for instance, pull off for administration 20 percent?

MS. BRYANT: On our grants, that's correct.

MR. NICHOLS: And maybe up to 25 percent in some cases?

MS. BRYANT: In some cases.

MR. NICHOLS: And that's not even a consideration in our formula.

MS. BRYANT: Not at this point, but it's obviously a major point of discussion that's going to be addressed.

MR. NICHOLS: I think it's a major point of discussion; it ought to be considered in there and that we seriously take a look at putting a cap on that.

It's amazing when you have a cap, people have a tendency not to exceed it, but if there is no cap, strange things happen.

Other than that, I think it's very good and I'm going to support it when the comments are through.

MR. WILLIAMSON: Ted?

MR. HOUGHTON: You said the vote was four to four -- did I hear you right -- in the advisory committee? What was the vote of the advisory committee?

MS. BRYANT: The vote in the advisory committee previously in the draft rules which are now before you as the proposed final rules, was unanimous with one person absent.

MR. HOUGHTON: I remember that, but on this, on the allocations what was the vote -- the statement you said about a four-to-four vote.

MS. BRYANT: There was a split vote on whether or not to continue to support the caps, but the advisory committee did not revote on the entire set of rules, they only voted on those specific instances that I mentioned, for example, clarifying "in good standing with the department" -- that's considered a technical correction, and that vote, for example, was unanimous.

MR. HOUGHTON: All right, that's what I needed; I needed to see what kind of support we had statewide. Thanks.

MS. ANDRADE: Sue, I just want to also thank you. I know this has been an incredible challenge, but your staff has helped us understand, and as I've mentioned to you in our previous meetings, there's a great need and unfortunately not enough funds, but that's the kind of message we have overall.

But I just urge you to keep getting community input, keep working with organizations that understand these needs and that we just do the best we can and that we remain flexible and we'll just stay committed to this.

So thank you very much, and please tell PTAC thank you very much.

MS. BRYANT: Thank you.

MR. WILLIAMSON: Thank you also for your hard work, and I hope you express to the committee the entire commission's appreciation. They've been a working, thoughtful, willing-to-take-a-shot advisory committee, and we so much appreciate and respect that.

Three words of warning: one, I think we do need to focus on performance, I think the legislature will expect that of us in six short months; second, I think we need to do whatever is necessary, and if we need to give you resources, Sue, you need to tell Mike what they are to advance the combining of these public transit agencies with health and human services contracts as soon as possible -- I know many of them view that as being a potential godsend of cash flow to support operations; and third, we need to be mindful of the objections raised. I read everything that Mary Anne sent me; some people I never much agreed with, some are people I agree with; there was a lot of observations and objections that we need to be mindful of.

MS. BRYANT: Yes, we do.

MR. WILLIAMSON: And keep emphasizing to them nothing is written in stone; we're becoming a public-transit-focused commission; everybody just stay cool and we'll get it right. You did a good job, an excellent job. Sorry we couldn't get you on the road quicker.

MS. BRYANT: That's fine. I appreciate being before you right now.

MR. WILLIAMSON: In the TxDOT world, family comes first. You could have sent someone else up here to take this.

MS. BRYANT: I think this was my job.

MR. WILLIAMSON: Members?

MR. NICHOLS: So moved.

MR. WILLIAMSON: I have a motion; do I have a second?

MR. HOUGHTON: 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, no.

(No response.)

MR. WILLIAMSON: Motion carries.

Thank you and enjoy the rest of your several days. I hope you're going to enjoy it.

MS. BRYANT: Thank you.

MR. WILLIAMSON: Now, as I said in my memo earlier in the month and a couple of times on the microphone, I know it's nice to press ahead but I don't think some of us can make it to four o'clock, and I think it's going to probably be another couple of hours, so we're going to take a recess and reconvene at two o'clock; that's 42 minutes from now.

(Whereupon, at 1:20 p.m., the meeting was recessed, to reconvene this same day, Thursday, June 24, 2004, at 2:00 p.m.)

A F T E R N O O N S E S S I O N

MR. WILLIAMSON: We're returning from recess. For the record, it's 2:07 p.m. Michael.

MR. BEHRENS: We'll go to item number 6. We have a discussion item concerning utility accommodations involved in our right of way, and John Campbell will make that presentation.

MR. CAMPBELL: Good afternoon. For the record, I'm John Campbell, director of the Right of Way Division.

I'm going to present for discussion today and I'm going to attempt to make that balance between rambling and winging it, so tell me if I struck the right balance.

I've got a couple of topics to present on utilities. The first is going to be we're at the end of a pretty lengthy process of reviewing, doing a comprehensive review and update of our utility manual and our utility rules.

The second topic is associated with traditional department practice with regard to reimbursement of utilities on interstate highways, and I wanted to just visit that situation and see if there might be an opportunity that we need to consider to change our procedures.

The course of us reviewing the utility manual has now been underway for about 18 months. We convened a multi-district group that also included representatives of the Right of Way Division and the Maintenance Division, and since May of 2002, this group has been meeting periodically towards the end of updating the utility rules.

What we are attempting primarily to accomplish through the update of these rules are: first of all, a new organization of the rules to make them more logically track to the sequence of things as they occur; we wanted to incorporate the ability to update those rules and allow for new construction methods and materials to be incorporated and to give some flexibility to those new construction methods; we wanted to also, very importantly, establish an asset management focus in the utility realm.

And what I mean by that asset management focus is for the longest time TxDOT's practice and procedures with regards to utilities was fairly reactionary. We had projects to build, utilities get in our way, we react to the situation and resolve it.

We need to look at the right of way as the asset that it is, and in order to properly manage that asset, you've got to have a clear understanding of what you have and what other individuals have occupying that. So that's an important feature of what these rule revisions are attempting to do.

Going at that asset inventory focus through starting to create the need for us to be able to identify what types of entities occupy our rights of way, what kind of interest they hold when they're out there, so that we can more effectively make the best decisions for transportation in general.

And there could be a growing role with the Trans-Texas Corridor coming on for utilities to start to be looked at not in the traditional sense of being a third-party facility but also a potential new avenue of transportation.

So I think those are the reasons that explain why we wanted to take this kind of view at utility policy and utility rules at this time.

We did, at the commission's urging, knowing that this rule review could be something that would be controversial or at least be open for discussion with industry, we took the proposed draft of rules out to informal listening sessions, four regional sessions conducted across the state in December of this last year, to give the utility industry an opportunity to provide some initial input as to what they thought about the things we're proposing to do.

MR. WILLIAMSON: Let me just say, John, how visionary I thought that decision was; that was smart. I've had several people, members that I did business with when I was in the legislative side comment that that was unusual for us, and that was a good decision that we made. If it was you, hats off to you.

MR. CAMPBELL: Thank you, and I only made the decision at the urging of the commission. I pride myself on being able to understand what it is you wanted us to do.

The utility industry's most common comment and areas of concern that they identified in these rules that went forward, one of them was the requirement that we ask for an engineer's seal and certification on utility plans that intend to occupy state right of way. The other was their concern for the applicability of federal environmental requirements applied to utility work that they perform on TxDOT right of way.

They offered some concern for control of access and the effect that access management policies would have on utility occupation. And they also were concerned about our proposed requirements for documenting abandoned lines, facilities which are left out there and no longer operating.

The fundamental summary to the discussion about this is that there are very limited resources; the types of projects we take on now tend to have more complicated, more expensive interaction with the utility industry than in the past; the utility industry's statutory authority to occupy public rights of way, of course, is subject to us using that transportation right of way for their primary purpose first, so consequently there is less and less space for the utility to occupy on rights of way; all that leading to the conclusion that we've got to have an ability to understand what we have, who is out there in order to more effectively manage the asset.

I really just wanted to put this out as a discussion topic because we are going to no go into the formal rule-making stage and probably the next thing that I would be doing would be coming to propose rules for the update of utilities. And I'll offer an opportunity to take any questions now before I go on to topic two, if you desire.

MR. WILLIAMSON: Please.

MR. NICHOLS: Question. Define utility industry. It may sound reasonable to some people.

MR. CAMPBELL: It's a very difficult thing to define. From the context of who has a statutory authority to occupy TxDOT right of way, that's the easier way for me to define the utility industry, those that are of interest to us. That's going to include public utilities that are recognized as such, or common carriers. Both of those types of entities have a statutory authority to occupy public rights of way.

MR. NICHOLS: In other words, the reason I asked that question was I assumed it would be like oil and gas companies that might have lines, it might be --

MR. WILLIAMSON: I think they've got to be a common carrier.

MR. NICHOLS: Common carrier. Excuse me. Let's just say telephone lines, electric lines, things of that nature. But did you in your group sessions get groups like the Texas Municipal League, because cities run water lines and things like that, because these decisions impact city governments quite a bit.

MR. CAMPBELL: Absolutely, and that is one of the largest areas of the types of utilities we deal with are the municipal utilities.

MR. NICHOLS: So was it the Texas Municipal League?

MR. CAMPBELL: I believe it was because we sent the notices out to a long list of associations. We didn't try to target the attendance to individual utilities but the associations that were members of, and I believe the Municipal League was one of those.

MR. WILLIAMSON: Opportunity to ask questions?

MR. JOHNSON: John, in terms of timeliness, clearly when we're doing or considering a project, the relocation of utilities becomes a major issue, and the timeliness of those being relocated can affect the duration of the overall project. In the old rules and in the new rules that you're contemplating, is that question addressed or is there focus on that?

MR. CAMPBELL: I would say in the rules themselves, no, specific to timeliness because I personally don't believe that creating a rule actually results in that timely progress, I believe it's more a matter of turning the focus on internal practice/procedure.

In the utility realm, success is really about getting them involved and getting them in the dialogue as early as possible, and that really becomes the true means of meeting that timeliness requirement is to make sure that we're not hitting them at the last minute when our letting has become critical.

So a rule, I don't think, would be the proper vehicle to try to accomplish that end of timeliness, but it would be more a matter of us taking our rules, make sure that they're not incompatible with our practices, and then focusing on our practices being more efficient and starting sooner. Long answer to a simple question.

MR. JOHNSON: Well, I think it's an important issue. I mean, it's come up in several other discussions here that time is one of the primary considerations that we're trying to focus on and drive a lot of these projects, and any component which might delay the completion of a project or add length to its completion is something that we're all striving to achieve that those be eliminated, and utility relocation is one of those subsets that could rear its head and delay a project.

MR. CAMPBELL: And it frequently does, and there's a big disparity between the anecdotal evidence. When you go and ask stories, just about any area engineer is going to tell you nightmares of the conflicts in construction they had with utilities.

It's at odds with our ability to officially tie a delay claim or a delay on a project back to the cause of a utility because typically what happens is they're last in the sequence and so they become the obvious target for problems with the project moving forward but maybe not necessarily the appropriate target.

MR. JOHNSON: Well, if we do it afterwards, the cow is out of the barn and the project has been -- what I'm trying to get to is that we have the consideration before it happens, and as you say, we need to manage our business appropriately that that doesn't happen, but I think history tells us that it has and it might continue regardless.

I mean, there are a lot of moving parts in all these projects that we consider across the breadth and width of this great state, and they get even more complex the closer we get to the more populated areas because there are more utility crosses and relocations when you're doing something.

My sense is that we need to focus on that area because it's one of the subcomponents of the project completion which is one of our internal goals.

MR. CAMPBELL: Absolutely. And I think one of the fundamental ways that we're tending to that is we're looking at utility processes and looking for opportunities to do things concurrently rather than the traditional sequence of events.

I think we'll always continue to have conflicts with utilities just because of the nature of the business, but I think we as a department can come a long way toward solving our own problems.

And if there are no other comments, it's a nice transition into the other topic.

MR. WILLIAMSON: I'm going to have a question.

MR. HOUGHTON: I've got a question. Your largest customer -- for lack of a better word -- would be probably municipalities or counties. Correct?

MR. CAMPBELL: Mostly municipalities.

MR. HOUGHTON: Water, Sewer?

MR. CAMPBELL: Yes.

MR. HOUGHTON: In state rights of way, and so if you boil all that down and all this is -- as they say politics is local, this is all at local level type of relationships that you have with municipalities or the local utilities. Correct?

MR. CAMPBELL: This is correct. And our relationship with them is an iterative relationship; we can't do anything that and pretend we're not going to live with the consequences of how that went the next time down the road.

In addition to those local interests, there are a good portion of the utilities that are common carriers or long-haul carriers, so we really do have two distinct populations of utilities that we deal with: those that utilize the right of way to get from long haul Point A to Z, and then very frequently the local distribution networks. So it just makes a complicated situation more complicated.

MR. WILLIAMSON: Hope?

MS. ANDRADE: No questions.

MR. WILLIAMSON: John, during your discussion, your listening session, were opportunities presented or did you pick up on any opportunity to propose statute that would benefit us and benefit perhaps regulated carriers and common carriers, and at the same time penalize both of us?

In other words, is there some way to -- should be advocating to particularly common carriers and regulated utilities some statutory changes that would give us something and give them something, and cost us something and cost them something, but overall make sense for both of us?

MR. CAMPBELL: We didn't, through the course of these discussions, identify anything of that nature. The utility industry was basically in the position of presenting what would be good for them.

We, of course, drafted and laid it out as to what TxDOT wanted. The one area that we did get some success to that end was in the last legislative session with Senator Ogden's bill which we passed rules on a couple of months ago, and that was the closest thing to that kind of compromise between TxDOT and industry because we went into that effort with a very clear idea of what we wanted to enforce utilities to enter into agreements with us more timely.

What we got out of it, after industry had their input, was: Okay, we'll agree to cause ourselves to move more timely, but in return, you TxDOT, are going to have to be more forthcoming with a better level of design plan to let us know where we're going to have to be.

So that really did kind of tend to what you're pointing at, a win for both. I think we didn't consider it necessarily a booming win because we didn't get everything we wanted, we had to concede a little bit, but more characteristic than not.

The next topic, and it relates very clearly to what other kinds of things you can do to make utilities move quicker. The traditional answer to that question has always been money. If the state will carry the cost versus the utility having to carry the cost, that's obviously their preferred situation. If the utility will carry the cost versus the state, we have more funds to dedicate towards the transportation projects.

I'm going to ramble just briefly on the second topic to lay out how we typically determine eligibility for utility reimbursement, and what we do in the general sense is a utility is treated much like any other property owner that is impacted by a transportation project.

What we do differently in the utility business is that we don't want to be in the business of buying their interests and their improvements and then being in the position of actually having responsibility for the utility and their customers, even in the short period. So in the alternative, we don't buy utility interests, we reimburse them for the required adjustment costs of those facilities when they occupy some type of property interest that we've impacted.

And that's the case throughout the state system with the exception of the interstate system. The interstate system is an automatic 100 percent eligibility for reimbursement to the utility industry, and that's by virtue of the state law that exists that allows us to do that.

The point that I was going to raise is that that state law is discretionary, meaning it essentially says that TxDOT may participate 100 percent in the cost of utilities on the interstate system. That law was created back when we were building the interstate system in order to allow us to build the interstate system without the resistance of the financial struggles that utilities would go through.

I don't believe it was ever intended to be a perpetual free ride on interstate system right of way, and today the practical application of that with the interstate system mostly built, is that a utility can come in by statutory authority, occupy interstate right of way, and then when our improvement to that portion of interstate requires that utility move, they're automatically reimbursed their costs by TxDOT. It's a different standard than we apply to the rest of the system. The rest of the system, a utility has to prove up that they own a property interest and then by virtue of us damaging that property interest, we reimburse them eligible costs.

I wanted to bring this topic up because I think it's very timely. I think with this next session coming up, the next legislative session, I think we can all anticipate being accountable for: Okay, we gave you these new tools for financing, we've made more revenues available to you, you've delivered more transportation projects. And one of the glaring exceptions to that is going to be our practices, more appropriately, with the interstate system.

The Katy Freeway project in Houston now represents our biggest interstate system project. Right now the reimbursable utility for that project are estimated at about $300 million, and $300 million is going to be payments essentially made with transportation dollars directly into utilities. Not to say that that's a wrong thing, that's the way practice has been, but it's a very difficult question to answer when we're starting to be held accountable for the need for additional funds.

And that's the reason I wanted to put this in front of the commission, to know that it's an area where we have an opportunity to revisit our practice, an ability to revisit our interpretation of the state law, and just have some discussion over whether we want to revise those practices.

MR. NICHOLS: I was just sitting here thinking the $300 million on the Katy doesn't really solve the problem; it moves them over but it basically moves them over until we need to expand again.

MR. CAMPBELL: That's correct.

MR. NICHOLS: And then we're going to have to do it again.

MR. CAMPBELL: Absolutely.

MR. NICHOLS: So we just bought some time.

MR. CAMPBELL: And it's a scenario that will continue to present itself on interstates because our improvements, of course, 635 and other facilities like that are going to be in the metropolitan areas where the right of ways that are available now are already clogged with existing utilities, so we will confront the situation again.

I think the argument ultimately boils down to who should be held responsible for the cost of the utility adjustment: the rate-payers that receive the benefit from the products with the utilities, or the taxpayer in general that's essentially committing transportation dollars to these things.

MR. HOUGHTON: It's being borne by the citizens of the state of Texas.

MR. CAMPBELL: True.

MR. HOUGHTON: A hundred percent.

MR. CAMPBELL: Yes. The citizens of Texas in general for the utility adjustments that generally are serving a very small portion of that population.

So I think there's room for discussion of the item; I'm sure that this would be a highly controversial notion to visit to the utility industry.

MR. WILLIAMSON: Right up our alley.

MR. CAMPBELL: I figured you might be excited by the notion.

MR. WILLIAMSON: Could we call this utility management?

(General laughter.)

MR. HOUGHTON: What utilities have been the recipient of the $300 million?

MR. CAMPBELL: Right now we haven't really started to pay.

MR. HOUGHTON: But we've identified $300 million.

MR. CAMPBELL: The electric facility there in Houston is the largest right now; I think we have a single utility adjustment for their transmission facilities that's in the neighborhood of $60 million. We're also just now reviewing and approving the agreements from the City of Houston for the municipal work, and I think that's coming in at somewhere about $25 million. So it's the traditional utility entities that are incurring these.

Another feature on the Katy Freeway was the decision to take the electric transmission underground which, of course, multiplied the cost.

MR. HOUGHTON: Who decided that? That's the utility that decides to put it underground.

MR. CAMPBELL: It should be that it was a TxDOT decision to go underground.

MR. HOUGHTON: It was our decision.

MR. CAMPBELL: Yes, because that utility would generally say I'm going to use this public right of way and I'm going to do it in the least expensive manner possible, and that would be an overhead facility.

MR. HOUGHTON: Overhead?

MR. CAMPBELL: Yes. And I believe it was the features of the project and TxDOT's determination that we should convert these to underground transmission.

MR. WILLIAMSON: That was a large transmission line and would require significant amount -- if on the surface, it would have to be moved and still would take up quite a bit of the right of way and we're very limited -- right of way is so expensive there anyway, we're very limited in the width of the footprint that we can utilize so we can save some space by burying it. But it's very expensive to bury it, so you're caught between a rock and a hard spot.

MR. NICHOLS: Let me ask a question while we're at that point, and I thought I understood this once but now I think I don't understand. Legislature made the decision that the utilities could use the right of way because it benefits the public. I understand that.

The cost of moving those utilities I always assumed or thought that the utilities had to pay for the cost of relocation. In other words, if it's beneficial for them to put it in there, fine, they can use it; but they're at risk that if we have to expand, they may have to relocate.

I'm really now kind of learning that that's not always the case, particularly on the interstate program.

MR. CAMPBELL: That's correct.

MR. NICHOLS: You can say the feds reimburse it or pay for it if it's on the interstate, but in effect, it comes out of our construction budget.

MR. CAMPBELL: Yes.

MR. NICHOLS: So we ended up paying for it, not the feds; it's all our money.

MR. CAMPBELL: Right.

MR. NICHOLS: The decision of who bears that cost I thought was a legislative decision. Are you sitting there telling us that we can make the decision who bears that cost?

MR. CAMPBELL: I'm saying that it's my interpretation that is open for interpretation because the law that exists -- I'll go back real quickly. The federal rules right now determine the conditions under which the feds will participate in our eligible costs.

One of their criteria for eligibility is that if a state law exists that legitimately allows us to pay for those, they'll participate. The state law that exists is specific to the interstate system, the Texas state law and it says that for the interstate and defense highway system that we will bear 100 percent of those costs or that we may bear 100 percent of those costs.

MR. NICHOLS: The legislature says that we may; we've always taken the interpretation that we will.

MR. CAMPBELL: Yes.

MR. NICHOLS: But that was a commission decision?

MR. CAMPBELL: I think it was just a developed practice over time.

MR. NICHOLS: I always get nervous when a lawyer tells me that's his interpretation of the law. Hopefully it's clear enough that I could read it and understand it. Is it that clear?

MR. CAMPBELL: And I'm not a lawyer and that's my interpretation.

MR. NICHOLS: I thought you did have a law degree.

MR. CAMPBELL: No, I don't.

MR. WILLIAMSON: We all thought you had a law degree.

MR. WILLIAMSON: I've just spent a lot time around lawyers. That is an engineer's determination.

MR. NICHOLS: One of those gray enough areas that if I hired one lawyer to say give me this interpretation and another one that interpretation, you'd get in a big squabble over what it really said?

MR. CAMPBELL: Well, we generally have those squabbles internally in TxDOT and I haven't seen that with this issue. It's been relatively unanimous that it appears to be discretionary, and of course, practice developed during the years of building the interstate system when there was no reason for us to reconsider practice, we wanted to pay for these things and get them out of the way.

MR. WILLIAMSON: So would that legitimately be something that we could take away that the utility companies would say don't do that?

MR. CAMPBELL: I believe it would be something you could take away.

MR. WILLIAMSON: So we could create a crisis in order to trade?

MR. CAMPBELL: Sure.

MR. WILLIAMSON: Sounds like government to me. Do I have a motion. Can we do that, Mr. Monroe?

(General laughter.)

MR. MONROE: You have an item for discussion, I will remind you.

MR. WILLIAMSON: Richard's life was dull until we came along.

MR. NICHOLS: I notice he attends all the meetings.

So really and truly from our vantage point, this is the first time that I had heard that we can open that door, or we may have the option to open that door. I certainly would suggest that we do get some legal interpretation of that so that there is -- I guess, Richard, you're going to look into it or have somebody look into it? I want to make absolutely sure I understand what our options are.

MR. CAMPBELL: I appreciate your concern, and it was our concern for bringing this to you at this point in advance of the legislative session where we think this would legitimately be something to discuss. Just as a point of illustration, last session I started to get some inquiries coming out of the Legislative Budget Board asking about payments to specific utilities, and it just seemed curious to them that TxDOT was paying large payments to utility companies.

MR. NICHOLS: When we start writing $300,000 checks, I bet they get really excited -- $300 million checks -- excuse me.

MR. CAMPBELL: Our ability to pay for utilities is also complicated by another feature of practice and that is the non-timely payment of these things. We never get to pass a statute of limitations on our requirement to reimburse them if they've been determined to be eligible, but what has happened is if a utility doesn't bill us timely and then those payments fall out of the current fiscal year plus two back, we then have to go approach the Legislative Budget Board for a special appropriation to make payment to that utility.

Another feature that is probably going to present itself more clearly this session because we have unearthed a lot of these and we've pro-actively tried to start clearing the books of them, so the Legislative Budget Board is going to be maybe a little bit more attuned to utility issues based upon these special appropriations we'll be requesting.

MR. NICHOLS: I'm not sure if I should be asking you or Mike, but let me just kind of throw this question out. If we went back -- and I'm really shocked about the $300 million to move that stuff -- if we went back, hopefully it's identified separately in our expenditures, relocation costs of utilities, so we ought to be able to go back over a ten-year period or something like that, or take a good clean ten-year period and see what our annual expenditures are for that, I think that might be a real eye-opener.

MR. BEHRENS: We could do that.

MR. CAMPBELL: And I can give you an off-the-top-of-the-head, it's typically been about 10 percent of our right of way budget -- which is $300 million this year -- that is a pretty close estimate of what our utility costs are going to be, about $30 million a year in the last couple of years, and before that it was more in the $20 million range. So this big bulk of costs coming in with the Katy Freeway project is going to be a dramatic increase.

MR. NICHOLS: And if we tackle the LBJ?

MR. CAMPBELL: We would have very similar costs.

MR. NICHOLS: When we did the Central Expressway project, we had the same thing?

MR. CAMPBELL: No. The Central Expressway project was not on the interstate system so it didn't.

MR. NICHOLS: It wasn't on the interstate. Okay.

MR. BEHRENS: And John, like on the Katy Freeway, it was probably 1995 or so when we bought the railroad right of way that we're utilizing, there were utilities on the railroad right of way which we're having to pay to get adjusted.

MR. CAMPBELL: Yes, sir.

MR. BEHRENS: In other words, anything that comes into the right of way falls under this rule.

MR. CAMPBELL: That's correct.

MR. BEHRENS: And I think the transmission line was on the railroad right of way or was on the edge of ours or something.

MR. CAMPBELL: Yes, I think it was sharing -- it was joint using the right of way.

MR. WILLIAMSON: The reason I asked the question about opportunity to make deals, is it not the case that some of these major transmission lines have right of ways wide enough that some of our assets might fit under them?

MR. CAMPBELL: I would say I'm not a transportation engineer, but yes. I mean, they have substantial rights of way, and in most cases where we do have above-ground transmission lines, they are in effect sharing our highway rights of way. So they are a compatible use if you can keep the above-ground hazards away from the travel ways.

MR. WILLIAMSON: Other questions or comments, discussion items for John about so far? Continue, John.

MR. CAMPBELL: That pretty much brings my comments to a conclusion about this. I will go back to the first topic; I wanted to make an extra point of some to the things that the utility industry brought up as concerns on the proposed plans.

The area that they're most concern is indications from us that we intend to require a higher level of quality in the plans that they prepare. We've verbalized that in terms of saying that we're going to want to request signed and sealed engineer plans for utility installations to come onto TxDOT's rights of way. And of course, we're getting response back from the AGC of Texas, the CEC and the various utility industries, and you can predict how they fall out on this issue.

I think one of the points of discussion, preliminarily we approach this thing to say how do we get good quality plans; we have an engineer prepare them and sign and seal them, so that works well for us, why don't we require the same thing of the utilities. And they're, of course, quoting the additional costs that it would require for them to bring that to the table, and then making the somewhat logical point that, okay, does that really address the problem that you, TxDOT, are trying to address.

And this has given us some room to sort of step back and reconsider our original position because what we really need is a sense of confidence as to the location of those facilities once they're on our right of way, and would a signed, sealed set of plans do that, or would some activity to provide record drawings after the fact or provide more inspection by the utility to give us a better idea of where they went. So there's probably some room for us to map out a concession point there with the utility industry on what we'll require to meet our need of getting a more specific idea of where they area.

And I mentioned that because I know you've probably been in recent receipt of a letter from the CEC where they're of course --

MR. WILLIAMSON: Complimenting you on your directness.

MR. CAMPBELL: Thank you.

MR. WILLIAMSON: That's what they were doing.

MR. CAMPBELL: But I do think that there's some avenues, the things that we've plotted out. We've had good cooperation from the utility industry on this effort to review the rules.

I've been in the utility business my entire career so back as far as '95 I've been encouraging the utility industry that when we revisited these rules we would ask them to be a party to it and give us some sense of how to make them more practical and more applicable, really at the time thinking that we're not in the business of keeping up to the current technology of industry practices, materials or installation methods, that's really legitimately their area and that they should be able to bring those kinds of issues to the table with us and let us incorporate that into the rules.

So that, again, is probably the concession that can be a win to them. They get more say about how they install what they install and what they install on the right of way, and we maybe get the concession of a higher level of confidence with where they are and the quality of the work that they do.

So if there are no further comments or questions.

MR. NICHOLS: I've been waiting for the comment section.

MR. WILLIAMSON: Please. Comment time.

MR. NICHOLS: We're starting to the left and going right? Thanks for bringing this whole issue up. Sometimes it's a lot easier to leave these things alone, but they do need to be brought up, reworked, and this is a good way to get input.

The first comment I have is one of the problems that -- there's two problems, one has to do with relocation and the other has to do with running out of space for utilities, particularly in urbanized areas where everybody is wanting to run more stuff and there's no place to put it and we're not sure where everything is.

The Trans-Texas Corridor, that's one of the reasons when you're looking out 50 years plus, there's a utility provision, an actual area to put not only public utilities but also you call them common carrier type distribution so that we can eliminate that. The problem doesn't go away, it increases with time, our space diminishes, and so that's going to be a good long-term way to work with that stuff.

In the meantime, although this has got to be addressed, I would like to caution that we try to do it in a way that doesn't drive the cost up too much. California is seeing death by a thousand needles, rules and regulations, and things that touch and cost business. We don't want to unnecessarily add something to the cost of doing business, whether it be a utility or whatever that it's one more needle stuck in a boat. So we certainly want to watch that.

As far as the physical location, I don't really know what we would get so much by a sealed set of plans. I would assume that if a utility company is going to lay out a system for their wires or whatever that they know what they're doing. I think our primary concern is where it is, not where they intended to put it, but where it physically went, and I think that's probably best done by a series of surveys as they lay them or after the fact -- immediately after the fact but probably as they do them, and that could be done probably relatively inexpensively with a survey crew just identifying where it physically is so that you could find it.

That's pretty much it.

MR. WILLIAMSON: Other comments or questions?

MR. HOUGHTON: What is the technology -- and I can't remember it -- where you have maps, layers that defines all the utilities.

MR. CAMPBELL: Are you talking about he subsurface utility engineering?

MR. HOUGHTON: Yes. That's not the word for it.

MR. CAMPBELL: GIS?

MR. HOUGHTON: GIS. Are many communities around the state using GIS?

MR. CAMPBELL: Well, specifically for utility applications, don't see a lot of them yet. I think a lot of the pipeline companies are starting to do GPS-type locating.

MR. HOUGHTON: Municipalities?

MR. CAMPBELL: Some of the municipalities we have started to see some that are taking that kind of approach, to have a graphical view of where their utilities are.

MR. HOUGHTON: Right.

MR. CAMPBELL: One of the traditional arguments against that kind of representation by utilities is the proprietary nature of the information and they don't want it to be general public knowledge where they are. I don't know if that's a legitimate concern.

MR. HOUGHTON: We at the water utility in El Paso spent several million dollars putting that system in and it's housed at the water utility for all the utilities.

MR. CAMPBELL: And was the water utility open to sharing that information?

MR. HOUGHTON: Have to; it's a public agency.

MR. CAMPBELL: And we're starting to do some things too specific towards the end of putting a graphical tool in place so that we can see a picture of our own rights of way. So there's a lot of movement in that area.

MR. WILLIAMSON: Hope? John?

(No response.)

MR. WILLIAMSON: Thank you, John.

MR. CAMPBELL: Thank you.

MR. WILLIAMSON: We'll be all sending you suggestions.

MR. BEHRENS: Going to agenda item number 7, Aviation, improvement projects for the month of June. Dave?

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

This minute order contains a request for grant funding approval for 12 airport improvement projects. The total estimated cost of all requests, as shown on Exhibit A, is approximately $12.2 million, $10.2 million federal, approximately $500,000 in state funds, and approximately $1.5 million in local funds.

A public hearing was held on May 21 of this year; no comments were received. We would recommend approval of this minute order.

MR. NICHOLS: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

Dave, a couple of things, Buddy. Are you familiar with the Texas Mobility Fund?

MR. FULTON: Yes, I am.

MR. WILLIAMSON: Gosh, don't you know he hates this.

MR. FULTON: I had to think about that a little bit.

MR. WILLIAMSON: In your mind, are proceeds from the Texas Mobility Fund available to build air roads?

MR. FULTON: I believe that's correct, by the law, as I understand it. It is something we have never explored.

MR. WILLIAMSON: Now, we haven't finished adopting all our rules, we're going to distribute them on the Mobility Fund. Is that correct, Mr. Behrens?

MR. BEHRENS: Correct.

MR. WILLIAMSON: In the rules we're contemplating, those would be the rules everybody in the state is so comfortable with and are ready for us to adopt have to do with funding toll roads. You recall those rules? Do we prohibit small urbans from using part of their allocation for air roads?

MR. BEHRENS: I don't think so.

MR. FULTON: We're certainly receptive.

MR. BEHRENS: And legal counsel has confirmed that we don't prohibit.

MR. WILLIAMSON: Thank you, Richard.

Now, all these are city-run airports?

MR. FULTON: Let me get my list out; not necessarily. Some are county, some are city; they're all publicly owned.

MR. WILLIAMSON: Who owns the Texas State Technical College Airport?

MR. FULTON: TSTC owns that.

MR. WILLIAMSON: Are they a division of the state, or do we know?

MR. FULTON: They are, they're a public entity.

MR. WILLIAMSON: Is that a former airbase?

MR. FULTON: It is.

MR. NICHOLS: Good airport. It belonged to the college, now it's owned by the state.

MR. WILLIAMSON: More to come. Thank you, Dave. That's all I had. Anything else, members?

(No response.)

MR. BEHRENS: Agenda item number 8 is our Proposed Rules for Adoption; agenda item 8(a)(1) will be deferred until later.

Going on to agenda item 8(a)(2), proposed rules on Employment Practices concerning the Sick Leave Pool Program.

MS. ISABEL: Good afternoon, Mr. Chairman, commissioners, Mr. Behrens. For the record, my name is Diana Isabel and I'm the director of Human Resources.

This minute order proposes the adoption of amendments to Sections 4.51 and 4.56 of the Texas Administrative Code which concerns the department's Sick Leave Pool Program. This amendment is to revise existing definitions, to clarify requirements, and to more specifically tailor the program to the department's needs.

The program allows agencies to grant paid leave to employees who have a catastrophic illness or injury which has or will cause them to exhaust all of their personal sick leave. The maximum amount of time that can be granted per catastrophic illness or injury is 720 hours or one-third of the pool balance, whichever is less.

Sick Leave Pool hours are donated by employees whose separate or retire from the department or as a good will donation. We propose to change the current Sick Leave Pool rules to increase the number of weeks an employee must be off work for a qualifying catastrophic medical condition from ten weeks to twelve weeks.

We're also clarifying that the leave must be connected to the illness or injury that is keeping the employee out of work, the type of information that needs to be provided if the leave is for the employee's care for an immediate family member, and when recertification of a medical condition may be necessary.

This change will result in more hours being available in the pool, which will benefit those employees who seek Sick Leave Pool hours for a truly catastrophic illness or injury. Your approval of this minute order is requested.

MR. WILLIAMSON: Discussion, members, or questions to be directed?

MR. NICHOLS: So moved.

MR. JOHNSON: 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.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BEHRENS: Agenda item 8(a)(3) and this will be proposed rules concerning right of way and options to purchase right of way or real property so we can get advanced acquisition. John?

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

I'd like to present for your consideration minute order item 8(a)(3) which proposes adoption of Section 21.16 to 43 Texas Administrative Code, concerning the use of options to purchase for advanced acquisition of real property.

This is a new authority which resulted from HB 3588 passed in the 78th Legislature and effective as of September of 2003. What this does is it makes the distinction that didn't previously exist of a new right of way acquisition authority tool for use in advance of final project alignment determination. That's typically going to be a product of our environmental process.

The anticipated benefits to the department by use of this new tool include determination of the purchase price at a current market rate, establish a methodology for determination of future purchase prices at the time that you execute the option, or probably most frequently will be the restriction through purchase of development rights of development and critical parcels, thus reducing the time and the overall costs required for property acquisition.

Staff recommends your approval of the proposed minute order.

MR. WILLIAMSON: Comments, members; questions, members?

MR. NICHOLS: I had some, three. One, this probably is a question more to administration. Has the administration or our districts developed a proposed list of projects or corridors that we might want to consider to use to save time?

MR. BEHRENS: Yes, we're working on that.

MR. NICHOLS: So we'll probably have it by the time we get to final?

MR. BEHRENS: I would hope that we'd have a recommended list.

MR. NICHOLS: In this methodology, have we sought counsel or advice from the field of experts into helping develop that methodology?

MR. CAMPBELL: For the actual determination of an option?

MR. NICHOLS: Yes. In other words, there's a lot of ways to write options and figuring out all these kind of things, and there's people out there who are really smart that work with this kind of stuff all the time and they're probably going to be very helpful in working with us to determine what that methodology ought to be.

MR. CAMPBELL: That's a good point, and we'll pursue some additional outside counsel. Up to this point, we've been developing the rules with our in-house legal resources. We have some very good actual attorneys in the right of way division that have been carrying the major portion of developing the methodology for determining the price as well as the option agreements that we'll utilize.

MR. NICHOLS: Point being there are people that are experts at all kinds of things and people who deal with this kind of stuff often who can probably give us some very good advice on how to structure that so that when we do go out, we're not experimenting with a lot of dollars.

And then the third part of that, have we planned, once we've developed that methodology, are we planning on setting up any type of training? We're going to have a certain number of people who are going to be riding and working and negotiating with these property owners for these options, are we going to have any type of training program for our people who are going to be dealing with that?

MR. CAMPBELL: I think we'll definitely have to put together some educational module with this. Right now, what we're anticipating doing is keeping this decision-making for the options at a very high level, and putting it with the district engineer.

The way we're proposing to proceed right now is that from the Right of Way Division we will help them work through the criteria that make a particular situation attractive for a potential option; then when it gets to the point of sitting down and working out the details of what are you going to pay for this option and how does that balance with the benefits you'll get to the transportation project, that's when we'll want that conversation and that decision to be at the district engineer level.

Don't anticipate this to be a mass acquisition tool, that they're going to be relatively infrequent opportunities to make the best use of an option to purchase. So right now we haven't looked at it in terms of the need to send out training across the board because we hadn't anticipated that this would be something you put into the hands of every right of way negotiator out in the districts.

Another one of the points is that any money we pay on an option is money above and beyond what's anticipated for the actual purchase of the property, so it's not a financial decision that can be made lightly because it's completely unanticipated costs.

MR. NICHOLS: Yes, but think the intent is that that option money we pay is going to save us many fold in the future because we can lock in a price by putting up a percentage now as opposed to paying three, four or five times when they've gone in there and developed it.

MR. CAMPBELL: That's true. And those circumstances are going to be very, very specific to the situation at hand which is why we felt that that has to be a decision at the district engineer's level because he'll have the best take on it.

MR. WILLIAMSON: Other questions or comments, members?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: Motion carries.

MR. BEHRENS: Agenda item 8(a)(4) Proposed Rules concerning our Logo Sign Program, Traffic Operations, Carlos.

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

The minute order before you proposes various amendments and new sections to the departments Logo Sign Program. The proposed changes would: allow for the use of dual logos; allow the department to use a best-value approach when contracting; increase the percentage of program revenues returned to the department to at least 10 percent of the rentals; and further clarify the conditions under which a contractor will be paid for signs that they have installed should the contract be terminated by the department.

These changes will complete implementation of House Bill 1831, House Bill 2905, and House Bill 3330. We believe the proposed amendments and new sections will be beneficial to the department and the program and recommend approval of this minute order.

MR. NICHOLS: I'm going to ask our counsel a question, but maybe he can just nod instead of getting up here. This is a proposed rule, we go out in the world; if people make comments, for instance, that the rental rate is too high and should be lowered, that is considered a substantial change, or if they said it ought to be higher and we chose to make it higher, is that a substantial change?

MR. MONROE: Assuming that someone doesn't decide it ought to be a million bucks or something really outrageous, no, sir, that would not be a substantial change. We are putting before the public the issues and the people who will be affected, so barring some really egregious, way-out figure, no, sir.

MR. NICHOLS: So change in a rate from a comment then is not considered a substantial change?

MR. MONROE: No, sir.

MR. WILLIAMSON: Are we going to be able to let radio stations buy logos now?

MR. LOPEZ: No.

MR. WILLIAMSON: I thought you were going to change that for me, Carlos.

MR. LOPEZ: The law didn't cover that.

MR. WILLIAMSON: We had a lot of comment about this earlier in the month.

MR. NICHOLS: I sent a pretty extensive e-mail and he's addressed most of my e-mails. The primary comment I was just going to make was that I don't understand -- I do know the industry is moving toward dual logo -- not so much dual logo but dual franchising; you're seeing more and more and more KFC/Taco Bell, Exxon/Taco Bell -- same thing, not picking on any particular one -- but the entire industry is going that way because it's so much more economical and efficient to run a business and get credit return on the same investment.

Our locations at these intersections only have a limited number of signs. I mean, we have situations now where we have more people wanting a logo than we can allow on the highway, so we have a lottery for those signs.

MR. LOPEZ: Correct.

MR. NICHOLS: So that little space for their logo, whatever size that is, we rent.

MR. LOPEZ: Right.

MR. NICHOLS: We have a contractor who gets that rent we're now hopefully getting 10 percent of that, but it's not so much a revenue source as it is to have the controlled benefit for the public.

The dual logo which we started out with the pilot thing and then the legislature put in legislation that we will do this, all makes sense to me. I know you've expressed your concerns, and I understand that, but what I don't understand is that space which is now going to have two logos instead of one, I'm assuming these people will come up with reasonably attractive -- they're pretty good at signage, that's kind of their business -- I don't understand why we're charging them 175 bucks for the same space we were charging them 100 bucks when they're doing single log. It's basically silkscreen the sign, boom, and that's it. It's like a quarter-page ad in the newspaper; you can put whatever you want to in that quarter page, it's the same cost.

So I'm going to be one that I guess in the comment period -- I don't if it would be in the comment period or right now -- I'll say it right now, I don't think that rate ought to be jacked up just because they went to a dual logo.

MR. LOPEZ: And I can probably explain our rationale. Of course we'll do whichever way the commission wants, whatever rate they want to put on it. The reason we picked 1.75 percent of the regular rate is because they're getting about twice the advertising in a little bit less legible form because it's going to be a smaller amount of the logo in the same space, so we figured that would be a fair price to charge for that.

MR. WILLIAMSON: I thought it was generating money for your division.

MR. LOPEZ: No.

MR. NICHOLS: We only get 10 percent.

MR. LOPEZ: Money for TxDOT.

MR. WILLIAMSON: Ten percent of 175 is better than 10 percent of 100.

MR. NICHOLS: That's a good benefit for the contractor; the contractor gets all the money.

MR. WILLIAMSON: Is the prison system the contractor on this deal?

MR. LOPEZ: No. Right now the contractor is Texas Logos, Incorporated.

MR. WILLIAMSON: Who is Texas Logos, Incorporated? I bet they're out there just wriggling right now.

(General laughter.)

MR. LOPEZ: I think they may even be in the audience today?

MR. WILLIAMSON: Who is Texas Logos, Incorporated?

MR. LOPEZ: They're part of a larger company called Interstate Logos, and they have various logo programs throughout the country, and whenever they're in any given state, they tend to incorporate under that state name.

MR. WILLIAMSON: How did they get the franchise?

MR. LOPEZ: This contract? We let this contract back in 2000, and they were the low bid for this particular contract.

MR. WILLIAMSON: So low bid is defined as what: the cost of the sign?

MR. LOPEZ: Well, it's going to be a different process than what we go through next time because of this legislation, but it was basically based on the lowest rental that could be provided to the business; that's what it was basically based on.

So anyway, as I was saying, we figure they're going to get twice the advertising in a little bit less legible form. We also didn't want to encourage the use of dual logos when there was space on a sign, so if there was a gas and food space available, the preference from the department from a legibility and safety standpoint would be to purchase a KFC and a Diamond Shamrock logo versus having it in a smaller form that people tend to have a harder time reading at higher speeds.

So fully understand, the part where the sign is full, there would be a lottery, but there's also going to be situations where the sign is not full and it would be better from a legibility standpoint that two logos would be purchased. That was our rationale.

MR. NICHOLS: And I understand your rationale and I respect it.

MR. WILLIAMSON: He just disagrees.

MR. LOPEZ: He just disagrees, right.

MR. WILLIAMSON: It looks to him like it's kind of an automatic pay increase of LSI.

MR. LOPEZ: Well, and also for TxDOT.

MR. WILLIAMSON: Well, that was my point, but only 10 percent. Did you negotiate that?

MR. LOPEZ: Well, we haven't negotiated that because we're going to let that when this contract expires, and it's going to be a minimum of 10 percent. We obviously hope to do much better than that.

MR. WILLIAMSON: Did Amadeo negotiate that?

MR. LOPEZ: I'm sure Amadeo will be involved.

MR. NICHOLS: I'm going to put that down as my comment.

MR. WILLIAMSON: I think we've all heard it, and I'm gambling LSI, whoever they are, heard it.

Ted? Hope?

(No response.)

MR. WILLIAMSON: Well, John had to make a phone call and check on his lovely wife, so he won't be here. Is there a motion?

MR. HOUGHTON: So moved.

MR. WILLIAMSON: Move this forward as proposed, there is a motion. Is there a second?

MS. ANDRADE: Second.

MR. WILLIAMSON: We have a motion and a second. All those in favor of moving forward to the next step, signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: Opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. LOPEZ: Thank you, commissioners.

MR. BEHRENS: Agenda item 8(b)(1) Rules for Final Adoption, the first being some rules concerning Quarry and Pit Safety.

MR. WEBB: Good afternoon, commissioners, Mr. Behrens. My name is Zane Webb; I'm director of the Maintenance Division.

The minute order you have before you has to do with the transfer of the Quarry and Pits Act from the Railroad Commission to the Department of Transportation. House Bill 2487, under the 78th Legislature regular session, transferred that law which had been in effect since 1991 from the Railroad Commission to the Department of Transportation.

Now, what we've done up to this point with these rules is we've not done any substantive changes; we've only made changes that would highlight things like where they had definitions in there that said the Division of Mining for the Railroad Commission, now says the Maintenance Division of the Department of Transportation.

The reason we didn't make substantive changes is we felt like we needed to operate this program for a while within TxDOT so that we would know what kind of changes needed to be made in these rules.

So I guess what we're saying is at this point no rule changes have been made in the program; we're still operating it the same way it was operated by the Railroad Commission; the same individual that was operating the program at the Railroad Commission is operating it for us.

There have been no comments during the public comment period and we recommend approval.

MR. WILLIAMSON: Does this primarily cover small quarries and small pits adjacent to our roads, or does it cover big ones too?

MR. WEBB: No, sir. It covers all pits all over the state; right now we have identified some 1,868 of them. Some 1,100 of those have been actually certified as safety.

MR. NICHOLS: So that big surface mine in operation in Rockdale falls in that?

MR. WEBB: If it's got a pit that's located within 200 feet of a public roadway, then it would fall under this law.

MR. HOUGHTON: A public roadway?

MR. WEBB: Yes, sir.

MR. HOUGHTON: Municipal or otherwise?

MR. WEBB: City street, county road, or state road.

MR. HOUGHTON: Oh, okay.

MR. NICHOLS: I'll so move.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. WEBB: Thank you, sir.

MR. BEHRENS: Moving on to item 8(c), our Rule Review, Richard will present this for us.

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

If the commission approves this minute order, what we will be doing is saying a need for certain rules still exists. Under the Government Code, each state agency has to periodically republish its rules for public comment. We did this on April 9 in the Texas Register pursuant to law.

No comments were received, and since we're talking about rules having to do with Finance which we'll probably be continuing to do, and Transportation Planning and Programming which we'll probably continue to do, and Toll Projects which we will definitely continue to do, the divisions concerned have verified that the need for these rules still exist and therefore, I would urge readoption of them through approval of the minute order.

MR. WILLIAMSON: Members, you heard the motion. Are there questions or comments for Mr. Monroe?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MR. NICHOLS: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BEHRENS: Agenda item number 9 is our Transportation Planning minute orders for this month. There are six of them and they will be presented by Jim Randall.

MR. RANDALL: Good afternoon, commissioners. My name is Jim Randall, director of the Transportation Planning and Programming Division. You notice I kind of sashayed up here today.

MR. WILLIAMSON: Don't you remember the almost-heart attack from three months ago? He sashayed in.

(General laughter.)

MR. RANDALL: Item 9(a), this minute order authorizes the department to expend a total of $138,960 as cost participation for two beneficial use projects located in Aransas and Calhoun Counties. Chapter 51 of the Transportation Code authorizes the commission, acting through the department, to administer the State's responsibility as a non-federal sponsor of the Gulf Intracoastal Waterway, including cooperating with the U.S. Army Corps of Engineers in maintenance of the waterway.

Transportation Code 51.009 also authorizes the commission through the department to enter into an agreement with the Corps to participate in the cost of a project for the beneficial use of dredged material from the waterway. Pursuant to this authority, the commission has adopted rules that establish eligibility criteria for this type of project and limits the department's financial participation. The department's participation for each individual project is limited to 50 percent of eligible costs, up to a maximum of $125,000.

The dredged material will be used to create wetlands along the waterway as it passes through the Aransas National Wildlife Refuge. The projects are being built by the Corps to address previous wetland losses caused in part by the waterway.

For these two projects, the Corps has asked the department to buy marsh grasses to plant along 7,200 linear feet of exterior levies and to vegetate approximately 21 acres. Approximately 210,000 cubic yards of dredged material will be used to build the wetland habitats.

The department has participated in the early coordination, investigation of disposal alternatives, federal coordination, public involvement and commission action requirements for beneficial use projects for the Gulf Intracoastal Waterway.

Staff recommends approval of this minute order.

MR. WILLIAMSON: Discussion, questions or comments, members?

MR. NICHOLS: I had no questions.

So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RANDALL: Item 9(b), this minute order tenders a proposal to the City of Kyle for projects to extend FM 1626 from FM 2770 to I-35, a distance of approximately three miles, including the construction of overpasses at Union Pacific Railroad and Bunton Creek, and the construction of a new I-35 southbound frontage road between County Road 210 and the I-35 Bunton Creek Overpass.

This area of Hays County is one of the fastest growing in central Texas. The proposed project will improve the north-south mobility and will also offer a safer and more accessible route for area school buses. Additionally, the new frontage road from County Road 210 to the Bunton Creek Overpass will greatly enhance the department's incident management capabilities in the Hays County I-35 corridor.

If approved, this minute order will tender the following proposal to the City of Kyle who will provide: a State Infrastructure Bank loan application up to $25 million to fund 100 percent of the construction of FM 1626 from FM 277 to the western I-35 right of way line, and the construction, right of way and utility relocation for the segment of the new southbound frontage road.

The city would then create a tax increment finance district with Hays County to repay the SIB loan. Additionally, the city will submit a proposal for a pass-through toll agreement that would provide for the department to reimburse the city for its cost in constructing the Union Pacific overpass. The city will also provide all environmental clearance, right of way, utility relocations and construction plans for the FM 1626 extension.

In turn, the department will fund 100 percent of the design and construction of the I-35/Bunton Creek Overpass and related improvements involving ramps and two-way to one-way frontage road conversion. The department will provide all environmental clearance, right of way maps and construction plans for the new southbound frontage road. In addition, the department will assist the city in the preparation of the SIB loan application and the pass-through toll proposal.

Staff recommends approval of this minute order.

MR. WILLIAMSON: This is a pretty involved and detailed plot.

Well, members, we just so happen to have three people who wish to testify on this matter, so we'll allow them to testify and then we'll discuss it amongst ourselves. We have County Commissioner which is always important, but more important, we have a House member, so Mr. Rose, where are you?

MR. ROSE: Good afternoon.

MR. WILLIAMSON: You have not been in the legislature long but a staunch supporter of transportation and we appreciate it.

MR. ROSE: Yes, sir. Appreciate your work.

I'm here to just say our local leadership with our county and our city --

MR. WILLIAMSON: House Member Patrick Rose from south of Austin.

MR. ROSE: -- has done a wonderful job putting this project together, and I think not only is it needed for safety for our school kids and for our economic development there in that region, but it represents the kind of partnership with local entities that is a TxDOT of the 21st Century kind of project.

MR. WILLIAMSON: It has been kind of neat, hasn't it.

MR. ROSE: Yes, sir.

MR. WILLIAMSON: Everybody kind of pitched in a little bit.

MR. ROSE: I appreciate your thoughtfulness and all your hard work.

MR. WILLIAMSON: Questions or comments for Mr. Rose?

(No response.)

MR. WILLIAMSON: Thank you, sir.

MR. ROSE: Thank you.

MR. WILLIAMSON: Our good buddy Mr. Burnett -- if he's still here. Are you still a commissioner?

MR. BURNETT: As far as I know.

MR. WILLIAMSON: I thought you were running for something else.

MR. BURNETT: No. I just decided not to run for re-election.

MR. WILLIAMSON: Oh, that's what it was.

MR. BURNETT: Unless you've got better plans.

I just wanted to come speak; we had visited about this project before. I'm just here to speak briefly about the commissioners court support of this project. We adopted unanimously a resolution in support of this minute order and are working with the city, county, state, private industry to make this project work in the new realities of TxDOT. I personally believe this is going to be a model for other projects not only in our county but throughout the state of ways to be innovative to get things on the ground as opposed to just planning them.

There's a number of people that came up from Hays County to support this and have been here for quite a while, and I was told what you ought to do is the obligatory, get everybody to stand up that's here, so I'll change it a little bit and say everybody that's here in support of this project just remain seated, and I knew that would show the support from throughout the entire state for the wiseness of this project.

(General laughter.)

MR. BURNETT: My comments are brief: the commissioners court supports this project; we support the City of Kyle; it just makes sense; it's one of the fastest growing parts of the entire nation; it just makes sense and I think it's a win-win for Central Texas and actually anyone that's in South Texas that would be congested by I-35, this will, in effect, be a reliever off I-35 if you're going through Austin.

MR. WILLIAMSON: Questions or comments for Mr. Burnett? I have a couple of questions. I notice part of the plan is for a pass-through toll proposal later on, and we're glad to hear that, we like those kinds of things.

Is this going to also involve, to your knowledge -- you're going off the court -- will this also -- will we end up, Amadeo, talking about some of the other Hays County issues as we resolve all this stuff?

MR. BURNETT: We're meeting with Amadeo at eleven o'clock on July 1.

MR. WILLIAMSON: Oh, that's right, July 1, that's correct. But will this help make that work, or is that a kind of separate deal?

MR. BURNETT: I hope so; that's your decision. But yes, that is the hope that this could show good will and partnership on things that make sense, and help us -- we were in a delegation appearance a while back bringing three projects to the commission, ones that make sense to us and hopefully this will be a way to get us off center and moving forward on all projects for Hays County.

MR. WILLIAMSON: Well, I think, as Mr. Nichols said today, we are properly concerned about addressing the state's existing congestion problems, but this is a pretty good example of a forward congestion problem we can fix.

MR. BURNETT: And then when I was here the last time, you asked me about pass-through tolls and I made up some answer because I had no idea what they were, and I do now and I do think that it is something that we're going to be using a lot of, hopefully with the work and support and partnership with the state.

MR. WILLIAMSON: It's a good concept. It kind of puts everybody on the tee to think about is it a smart move or not before you go hock your local funds.

MR. BURNETT: If you've got money that you can put forward, I think it makes sense to get stuff on the ground immediately. Thank you.

MR. WILLIAMSON: Thank you.

MR. BURNETT: Thank you.

MR. WILLIAMSON: Tom, is it Mathis or Mattis?

MR. MATTIS: Thank you, Mr. Chairman. My name is Tom Mattis; I'm the city manager of Kyle and I appreciate this opportunity to address the commission today.

If you'll indulge me, I would like to ask the people here from Kyle to stand up in support of this project, just because it does represent, as we've talked about, about half the group that was here this morning, and through attrition we lost about half of them.

MR. WILLIAMSON: I was going to say it's about half the city.

MR. MATTIS: Well, not anymore; it used to be. We have three city council members here, but it's a real cross-section of representation here of landowners, developers, city and county officials, and we don't find a lot that we agree on sometimes in Kyle, but this is one project we're all in full agreement about. What's interesting for me in my 20 years of government service is I've never been part of a road project where there wasn't any opposition. I think that's what the commission needs to know about this road: there literally has not been a single word in opposition to this road; everybody supports the road. Now, when it comes down to paying the bill, there's difference of opinions about how we build it, but what's key to us as the first step, as you know, is there's no opposition amongst the property owners, developers, city, county.

Hays County has been a big supporter of this project from day one; it's a project that's important to the city from an economic development standpoint certainly, and economic development is going to support the project financially, but its key is it's a big traffic and safety improvement for our community. We're excited about doing the project, we're excited about being an example for others to follow and how you can bring the public-private partnership to TxDOT and TxDOT can be partners with cities to get these road projects done in a timely manner.

So we appreciate all the work that Bob did and his staff has done in supporting this effort and be glad to try and answer any questions.

MR. WILLIAMSON: Questions or comments, members?

MR. NICHOLS: I had no questions.

MR. WILLIAMSON: Thank you. Nice to see you again.

That's all the commission testimony. Is there anything else about this one, Mike?

MR. BEHRENS: No.

MR. WILLIAMSON: Members, what's your pleasure?

Jim, anything else you want to add?

MR. RANDALL: No, sir.

MR. HOUGHTON: I have a question. When do you propose turning dirt on this project?

MR. RANDALL: We don't have an estimate yet. As is outlined in the minute order, there are several things we have to accomplish: we have to get the SIB loan approved; we have the proposed pass-through toll proposal there, so we don't have an estimated date right now.

MR. HOUGHTON: Well, that begs a second question. SIB loan, $25 million, do we have it?

MR. RANDALL: I get to turn that over to Mr. Bass. There he is.

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

Yes, Commissioner, there are various options. We discussed some yesterday with Commissioner Nichols and members of the administration that if we look at the balance within the State Highway Fund and the other pending applications that have already been submitted, the math would not work out to support a $25 million potential loan to the City of Kyle.

However, when you look at the next six or seven months of loan repayments coming in over that time, as well as when the applications that are already pending may need the money, we think the cash flow will work out and be able to support this type of project.

MR. HOUGHTON: It's down to timing. Right?

MR. BASS: Yes, sir.

MR. NICHOLS: I think it's a good project, good proposal, well thought out, well supported, meets all the qualifications for any project I've ever seen, so I so move.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Congratulations, Kyle, and here comes Cabela's.

MR. RANDALL: Item 9(c), the Transportation Equity Act for the 21st Century, or TEA-21, designated the Ports to Plains Corridor as one of the 43 high priority corridors on the national highway system. This corridor designated as Corridor 38 extends from the Mexican border via I-27 to Denver, Colorado.

This minute order authorizes the executive director to transfer 20 percent matching state funds to the state of Colorado for the purpose of developing a corridor management plan for the Ports to Plains Corridor. The states of Colorado, New Mexico, Oklahoma and Texas participated in the development of the Ports to Plains feasibility study in order to determine a preferred route for the corridor.

The states are now working together to study the development of a corridor management plan. Colorado is now the lead state in managing this study as well as procuring the engineering services and any other service necessary for the completion of the study.

The study is going to cost approximately $1.7 million with federal funds covering 80 percent of this cost. The states will pay the remaining 20 percent which will be divided among them so each state's prorated share will be based on the length of the corridor in that state. Our share of the 20 percent match is $221,024. Staff recommends approval of this minute order.

MR. WILLIAMSON: Discussion or questions?

MR. NICHOLS: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RANDALL: Item 9(d), this minute order approves the proposed Strategic Plan for the Texas Mobility Fund and directs the department to obtain additional public comment on the proposed plan.

The Texas Mobility Fund established by the 77th Legislature and approved by Texas voters allows the department to issue bonds to accelerate mobility projects throughout the state.

The fund also allows the state to participate in a portion of the costs of constructing and providing publicly owned toll roads and other public transportation projects in accordance with the procedures and standards and limitations provided by law.

Transportation Code Section 201.947 provides that the commission may not issue obligations before the department has developed a strategic plan outlining how the proceeds of the obligations will be used and the benefit the state will derive from use of the money in the fund.

At its February 26, 2004 meeting, the commission posted the Strategic Plan on the fund as a discussion item. Subsequently, letters seeking public input were sent to the Texas Legislature, county judges, metropolitan planning organizations, and other transportation stakeholders.

Additionally, the department posted a notice on our website. The comment period ran from March 15 to April 16, with the department receiving 68 comments via e-mail or by letter. Exhibit A contains a summary of those comments.

Based on the public input, staff has drafted a proposed Strategic Plan, subject to additional public review before a final plan may be adopted. The plan will be released to the public for a 20-day review and comment period from June 25 through July 15. Staff recommends approval of the proposed Texas Mobility Fund Strategic Plan as attached as Exhibit B to this order.

MR. WILLIAMSON: Members, I'm going to have several points that I need to get onto the record, and I happily begin with Ted and you ask and say what you want to do first. We have, oddly enough, no testimony on this, none, zero, zip, which is a shock.

MR. HOUGHTON: I'm in absolute support of the exhibit and the resolution, support the exhibit move forward for the public comment. I think it's time we put the stake in the ground and move on.

MR. WILLIAMSON: Hope, anything you need to ask or talk about?

MS. ANDRADE: No. I agree.

MR. NICHOLS: I'm overwhelmingly in support of it. Are you going to mention this rewording in this one paragraph?

MR. WILLIAMSON: You go ahead.

MR. NICHOLS: On Exhibit B, Texas Mobility Fund, you have: Objective, Background, Guiding Principle, and then Implementation Plan. The reason I'm even going through this is beginning, I think, a few months ago we started posting all of this on the web so if there were any changes between action time and the time it was posted, it probably needs to be brought up and pointed out.

In the Implementation you have Number 1, Number 2, under Number 2 you have (a) through (h) and then there's a paragraph just above 3. The wording in that paragraph was changed. The previous wording in effect showed an allocation to the metros and then if they didn't accomplish a certain thing within a period of time, then their allocation was removed and given to other areas who did and had exceeded leveraged projects.

The rewording on this, the net result is the same but rather than it being approached as a punishment -- because it was never intended to be a punishment -- it's more of an incentive. In effect, the department will lay out an opportunity to participate on those funds with leveraged or tolled projects if they so choose. If they do not do that and others do, well, then the other communities would get that after a period of time.

So the number of years has not changed, the allocation has not changed, the actual wording on the third line says: "Metropolitan areas have the opportunity to utilize the bond proceeds for use on tolled/leveraged mobility projects within a three-year period." I'm not going to reread the whole thing; that's the primary change. The old wording: "If after three years there are metropolitan areas...then the money would be removed." So putting it over there and removing it, it's extending an opportunity.

MR. RANDALL: Yes, sir.

MR. NICHOLS: It doesn't change the math, the numbers or the intent, it just is an incentive as opposed to a punishment.

MR. RANDALL: That's correct.

MR. WILLIAMSON: Amadeo, may I speak to you, please? Not that I don't want to speak to Jim, but he sashayed and Fast Jimmy Bass sauntered, and you've been sitting all day, so I thought you might want to stand up.

MR. SAENZ: Thank you. For the record, Amadeo Saenz, assistant executive director for Engineering.

MR. WILLIAMSON: An interested citizen pointed out to me earlier in the day that there might be an inconsistent message being delivered in these words in that we've told our district engineers for the last year what was coming on the mobility fund, that there would be an emphasis on toll projects, go into your districts, talk to your MPOs, talk to your transportation leaders, help them understand that this will be the emphasis of the commission.

And some of our engineers have been very aggressive at our request and we commend them for being aggressive and bringing their MPOs along, some less than aggressive but that's okay, they're making progress. We have a few, most notably El Paso, Austin, and perhaps Dallas-Fort Worth, who have been most aggressive, and the message that perhaps is out there is TxDOT wants a decision on this business by the end of the summer, by September, and if you're not prepared to make a decision, they're going to take the money and allocate it to someone else. That's been the message we have conveyed.

Now, we come along in our layout here and it seems to give the impression that you've got three years to make a decision as opposed to we need a plan of action as soon as possible.

Now, the way I answered that question to this interested party was I said, Well, perhaps it is a little bit confusing but here's what we're trying to do: we're trying to say to all the metro areas we want you to map a plan and present it to us so we can apportion this money as we want to apportion it; the longer you take to map a plan and send it to us, the harder it is for us to apportion it, and if we have areas where the congestion index is equal to or worse than others and those areas are prepared to move forward with the plan and the other districts aren't, then because we're a statewide panel, because we're charged with the entire state, it's only logical that we would move funds allocated or scheduled to be allocated to one area away from that area to districts that are being aggressive and seizing the moment to move forward.

In other words, we have no intention of sharing the money regionally for the sake of sharing it, our objective is to tell each of the metropolitans you have an allocation that we really want you to use, but if you can't advance a plan fast and we've got other parts of the state that are and the ozone relief and the congestion relief and the improvement in mobility is equal to or better, we have no choice but to make that option.

We don't want to punish anybody because remember we have a pool of tax money and we have a pool of other money, and our tax system continues on, it rolls on. Nobody is being punished, everybody is receiving their share of the funds based on the old system by which we've been doing things. This new system is sort of optional if you want to seize the moment and if you don't, that's okay.

Now, I want you to address the wording issue first. Is there any confusion in your mind about the words that appear here, giving them three years? If so, should we clarify that for the record?

MR. SAENZ: We put the wording on the three years because we understand all the metropolitan areas are going to put a plan together and that plan is due by September, so that would be their first opportunity to put the plan. Some of these projects may be a little bit complicated, they may not have all of their other funding available so it may take them a while to develop that project, but they may identify the project and say yes, this project but I cannot contract this project for three years.

And that was the intent, was to give you three years and not to put out something I have to go out there tomorrow or next year and let out all this work, so I'm going to give them three years to in essence identify and move the project forward.

MR. WILLIAMSON: This interested citizen said, Well, does that imply that, for example, the City of El Paso, the El Paso MPO could say well, I'm not going to submit a plan by September, I've got three years to submit a plan and you guys aren't going to punish me anyway.

MR. SAENZ: The plan is separate and independent and will need to be submitted by September.

MR. WILLIAMSON: It's separate and apart from the three years with which to implement the plan.

MR. SAENZ: That's correct. Now, if somehow they do not -- their plan does not identify any leveraged projects, then this project would not be included in the plan. So they would be able to put their plan together based on the other Fund 6 money or the other transportation dollars that they have but it will be much less. This is additional money that they can get to enhance their plan and do these additional projects.

MR. WILLIAMSON: So it was fair and accurate for me to say to this interested citizen: You've got till September to submit a plan which is a plan to address your problems.

MR. SAENZ: That's correct.

MR. WILLIAMSON: You can incorporate into your plan using the Mobility Fund and tolling in which case you've got three years to finalize that tolled aspect, or you can choose not to incorporate that and just use your traditional tax funds plus whatever other funding we come up with.

MR. SAENZ: That's correct.

MR. WILLIAMSON: No punishment, but if you're not going to submit a plan that takes advantage of that, then we must go to areas that will have projects that are equal to or greater in resolving the problems of the state.

MR. SAENZ: That's correct.

MR. WILLIAMSON: And the key here is -- this is real important, Amadeo -- if we can't stand up and say this all across the state, then we need to re-examine our position, because I think this is one point Pickett was trying to make that we should listen to.

It's not fair to take a dollar from a project in El Paso and send it to Houston if the congestion index result isn't equal to or greater than the El Paso project. In other words, we can't just say we want you to do toll projects with the money, we should say we want you to do toll projects in order to do more and we don't really want some other part of the state to use your planned allocation, but if you can't do a toll project and we can solve the state's problems elsewhere, that's how we'll do it. We need to be sure we can say that in order to be fair to everyone -- maybe the better word is in order to be equitable to everyone.

MR. SAENZ: This will be going out for public comment and we will rehash to make sure that it is very clear that that is exactly what we're trying to say.

MR. HOUGHTON: I would hope so because I don't believe that that is what is being received in the public. I think they believe, Mr. Chair, what you said at the onset is they believe they have three years to put a plan together, maybe six years before that plan hits the ground. And I'm looking at El Paso's resolution that they're supposedly supposed to pass tomorrow, and this kind of begs the question do they understand, and I'm not sure they do.

MR. WILLIAMSON: And Amadeo, I want to say I think we understand it, I think our staff understands it, I think our DEs understand it, I think we think we've explained it, but we had a saying in the legislature: I can read it to him but I can't make him understand it. We can read it all day long, but if people don't understand it, they're still going to stand up and say well, you didn't explain it that way.

So we just have to be real sure that our partners at the regional and local level understand we're on this September time frame because we've got to have people's ideas now about what projects they want in their plan and how they want them financed so that if we have certain metropolitan areas that do not wish to take advantage of the tolling and the Mobility Fund, others will have the opportunity to take advantage of that on a timely basis. And it's not about regional allocation, it's about getting the most money for the investment dollar.

Now, in that context, I have a point I want to make. We have taken over the last six months, staff and commission, and to a lesser extent the governor and the legislature, have taken some water for the notion that we're going to be tolling tax roads. Just so the listening public clearly understands the dilemma, I want you to take me through one example.

If we were to allocate this money on a straight-out regional basis and if Dallas, for example, were to take $100 million of their Mobility Fund money and add a high speed lane to Interstate 30 in between Dallas and Fort Worth as a tax road, with that $100 million they could probably build four miles, five miles?

MR. SAENZ: Five miles.

MR. WILLIAMSON: Five miles. The same $100 million they could use as their equity with a $400 million loan, toll loan, and with $500 million build the entire stretch from the west side of Fort Worth to the west side of Dallas as a toll project.

MR. SAENZ: Five times as much, yes.

MR. WILLIAMSON: And pay for the project with the receipts collected by the construction of that lane.

MR. SAENZ: You pay for the project with the receipts collected from the lane, but more importantly, you also create an additional revenue source that will pay for the operation and maintenance of that facility.

MR. WILLIAMSON: So the commission's decision to initially move down this path is not rooted in our love for tolls and debts; it's rooted in our sure knowledge that this is the best way to get as much infrastructure constructed as soon as possible.

MR. SAENZ: It's exactly that: we can build more infrastructure and we can also put in place a future funding source to build more as well as, more importantly, to maintain the infrastructure that we have.

MR. WILLIAMSON: Now, second point I really want to make, the gasoline tax and the motor vehicle registration fee are constitutionally restricted revenues which have to be spent on the building and maintaining of roads.

MR. SAENZ: Yes.

MR. WILLIAMSON: Asphalt and concrete roads. The Mobility Fund, both the taxes pledged to the fund and any debt associated with the fund and any revenue subsequently generated by the investment of that debt related to the Mobility Fund are not restricted to roads, are they?

MR. SAENZ: No, sir. They have a lot more things we can do.

MR. WILLIAMSON: So if you believe big-time in railroads or air roads or water roads as an asset your community needs to address congestion, mobility, economic development or air quality --

MR. SAENZ: Then you can use the Mobility Fund.

MR. WILLIAMSON: -- you are perfectly open to use Mobility funds.

MR. SAENZ: That's correct.

MR. WILLIAMSON: An interested citizen -- isn't it nice we have so many interested citizens, Robert? -- an interested citizen has posed the question to me: Under Guiding Principles the last one says, "Success should be measured by how quickly and efficiently a project reduces congestion," and this person said, Doesn't that automatically commit the dollars to building roads because that's the only thing you can measure that reduces congestion.

MR. SAENZ: No, because if you build a public transportation system, for example commuter rail or light rail, it will move people out, it will move people away from the highway onto the rail system, so you will have a measure of congestion.

MR. WILLIAMSON: And that's how I answered the interested citizen. The interested citizen was told: We don't care how congestion is relieved, we just want congestion relieved.

If we can take part of this money in the Houston area, for example, and convert the Katy Line through Houston to a commuter rail line and prove ourselves that we're taking 35,000 cars a day off 90A, then that's reducing congestion. What do we care, right?

MR. SAENZ: And that is what we're asking the metropolitan areas, as they put together their plans, they are identifying projects on a multimodal basis, not just highway projects, but we want them to look at all modes, and based on that they will see what gives them the best impact in reducing the congestion within their area.

MR. WILLIAMSON: So is it possible, Robert Nichols, for the first time the Texas Department of Transportation is moving towards alternative sources of travel faster than the local communities? Maybe these guys just haven't caught up with us yet.

MR. NICHOLS: I don't know, but I know the legislature when they changed the name to the Texas Department of Transportation encouraged multimodal.

Anyway, it is moving faster, and I think the point not only do you build five times as much and do it quicker by tolling, the point you were making that most people miss is that if you only had $100 million to spend and you spent it on that road, you'd build one-fifth of the road if it wasn't tolled, but you would still have to come up with more than twice that amount to pay for the long-term preservation over a 40-year period of time.

We've seen over and over and over that the maintenance costs and preservation costs over 40 years is many times more than the actual construction cost. So as we expand we need to make plans for that long-term preservation.

Anyway, this drives it in a direction very hard as an incentive to encourage communities, which is what we want. And Mr. Chairman, I think the confusion on the three years to implement is because of the way this is worded. We mentioned three years to implement but we don't actually say what the deadline for getting your plan in is; that is not in here.

MR. HOUGHTON: I would make that clear.

MR. NICHOLS: If somewhere in here we said, We want this by October 1, or something like that.

MR. WILLIAMSON: James Bass, I just want you to confirm one more time for me something I was told earlier. What's the estimated '04 collections from the state gas tax?

MR. BASS: Estimated '04 is about $2.1 billion to the State Highway Fund.

MR. WILLIAMSON: $2.1 billion, and what are we scheduled to spend on maintenance of our existing system only in Fiscal Year '04?

MR. BASS: Slightly over $2.2 billion.

MR. WILLIAMSON: So for the first time, or probably the first, maybe the second year but first time we've noticed it in our history, the cost to maintain our existing system -- not that new five miles we're going to build with the Mobility Fund, our existing system, now exceeds what we take in in gasoline tax receipts.

MR. BASS: Correct. It exceeded it as well in the actual expenditures, actual revenue and actual expenditures for 2003 had the same relationship of maintenance expenditures exceeding revenue from the State Motor Fuel Tax.

MR. WILLIAMSON: Some excellent little factoid for people to carry around and remind themselves about, I think. Thank you, sir.

Members, other questions of our staff about these matters?

MR. NICHOLS: The point on the clarification of the deadline, it can be put in here? That's not considered as a substantial change?

MR. MONROE: It would be a clarification, sir.

MR. NICHOLS: Clarification. Do you want to put that deadline date October 1?

MR. WILLIAMSON: I think I'll leave it to Mr. Saenz and staff, Jim, to handle that problem as we've instructed, please.

MR. RANDALL: So as I understand, we'll make those adjustments to the plan and then go ahead and put it out for public comment.

MR. WILLIAMSON: Yes. I think the commission clearly wishes to be crystal clear about that.

MR. HOUGHTON: Very clear.

MR. WILLIAMSON: Because if an interested citizen notices it, certainly MPOs and such are going to notice it. This is way too important and we've got governors and legislators hanging out with us on this one and we've got to be real clear about what we're doing.

MR. RANDALL: So our plan is to make those adjustments and then we'll send it out for public comment tomorrow.

MR. WILLIAMSON: Yes, sir, assuming we have a motion and a second and a vote.

MR. HOUGHTON: So moved.

MR. NICHOLS: Second.

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

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries four-zip.

That was a toughie, boys; good job, staff.

MR. RANDALL: Item 9(e), this minute order authorizes the department to acquire --

MR. WILLIAMSON: That was a toughie, boys and girl. Excuse me.

(General laughter.)

MR. RANDALL: Okay, sir. This minute order authorizes the department to acquire right of way for various projects and PLAN authority as listed in attached Exhibit A.

Texas Transportation Code Sections 203.051 and .052, and 316.131 and .132 authorize the commission to acquire an interest in real property if the commission determines that the acquisition is necessary or convenient to a state highway or turnpike project that is to be constructed, reconstructed, maintained, widened, straightened or extended.

PLAN authority means that the projects are in the initial stages of development. This development authority is reserved for projects where the route studies, environmental impact studies, and right of way determination can take a substantial amount of time. PLAN status authorizes the districts to complete the necessary right of way determinations including: drafting the right of way maps, studying routes, performing environmental impact studies, and holding public hearings.

Under normal circumstances, acquiring right of way does not occur until projects are approved by the commission in DEVELOP or CONSTRUCT authority. In order to timely preserve for future infrastructure improvements, several projects in PLAN authority need to be authorized for accelerated right of way acquisition prior to being formally moved to DEVELOP or CONSTRUCT authority.

Staff recommends approval of this minute order.

MR. WILLIAMSON: Members, we have one person who wishes to comment. Is this the guy who raised all the cane about access management when we were up in Irving?

MR. NICHOLS: I don't know.

MR. WILLIAMSON: We'll see, we'll ask him. Jim Cline, City of Irving.

MR. NICHOLS: It was such a large group.

MR. WILLIAMSON: I know, and they all had ropes, they were trying to hang you. Were you one of those guys?

MR. CLINE: I was at the meeting, Mr. Chairman.

(General laughter.)

MR. WILLIAMSON: Were you fir him or agin him?

MR. CLINE: We're always in support of the members of the commission. We did have comments on the matter but it seemed to be very successfully resolved.

My name is Jim Cline; I'm the director of Public Works and Transportation for the City of Irving. On behalf of the City of Irving, I want to thank you for your consideration of item 9(e) regarding the authorization of right of way acquisition for projects in PLAN authority and do respectfully request your approval.

The City of Irving is particularly interested in this item due to the location of State Highway 183 and Loop 12 within our city limits. Specifically, these projects provide clear regional benefits and have both achieved environmental clearance -- we have FONSIs on both projects.

183 particularly is located in the heart of Irving, kind of goes through our livingroom, it has very significant right of way needs to include many structures. It basically takes our one row of buildings on whichever side of the highway we're widening to. The right of way needs have been identified to the public and the property owners as part of the environmental process.

Without this authority, we're concerned about the decline of the corridor and maintenance of code requirements. In addition, we're finding, particularly in the permitting process, that folks want to come in and put in a building within the future right of way area, we know where it is, they know where it is, and we need the opportunity to be able to -- we can't do a taking with that, we would actually have to purchase the land and do it, but we need that authority to be able to make that happen to work in conjunction with the Dallas District.

Also, with the three-year time window on the environmental clearance, action moving towards completing the project is necessary to maintain that environmental clearance to avoid having to revisit the issue. So this would be an excellent opportunity to do that.

Several small businesses are going to be impacted, and we would then have the opportunity to better make business decisions earlier, so we would be serving those citizens by doing that.

Loop 12 which was, if you'll recall, part of the AASHTO environmental streamlining project -- which we saved quite a bit of time on that project -- would allow an interim project that we're working with the Dallas District on to move forward to provide not only improvements to the highway mobility but also to expedite the construction of the DART light rail line connecting the Dallas CBD with DFW Airport and it would come underneath Loop 12 just north of 114.

The last thing is it would save money for both TxDOT and the City of Irving. As a partner on a non-interstate facility, we do have a percentage that we're required to pay into that process. By making strategic purchases -- I've got my eyes on a gas station that's empty right now and would be logical to do and there are other sites that make sense -- to do those things when it's most advantageous to purchase. And it also would allow the faster implementation of a CDA type project in the future if that becomes feasible.

The Loop 12 project in particular is part of the Partnership Program that Michael Morris briefed last month, so we're certainly in support of that. And I'd be remiss if I didn't express my thanks to the Dallas District for their help and support, particularly Bill Hale and Bob Brown did a great job. They presented this item and we greatly appreciate it.

MR. WILLIAMSON: As well as Linda Harper Brown who is an outstanding transportation House member.

MR. CLINE: And one of my former council members.

MR. WILLIAMSON: Oh yeah? Well, let me ask you something.

MR. CLINE: Yes, sir.

MR. WILLIAMSON: And if you can't answer the question, maybe bulldog can. If we didn't have some sort of right to manage the access to our right of way, how much more difficult would this be, this project that's before us?

MR. CLINE: I'm not sure. I'm a traffic engineer by trade; I've been recently moved into doing both public works and traffic. From a traffic engineer perspective, the access management is very necessary.

We're facing one particular area on 183 where we've got homes that people pull their boats and motor homes back out onto the frontage road, not a good deal, and clearly an area where we're pursuing the control of access through that area with the district, and we'll be pursuing that, particularly a sound wall in that area.

MR. WILLIAMSON: I might have made the wrong assumption. Maybe you were with us on access management originally; maybe you weren't part of the howling mob that threatened to string up Mr. Nichols.

MR. CLINE: Sir, majors in the National Guard don't participate in outright mobs. That would be unbecoming an officer in that fine institution.

(General laughter.)

MR. CLINE: I will say, to be quite candid, I'm in support of access management, I did have questions about some of the extent to which some of the things were being taken. That was my position on that.

MR. WILLIAMSON: But you see now that we were doing it more as a defensive posture for exactly the project you're talking about than anything else.

MR. CLINE: I think where we ended up on the access management is good, and we're working on getting our --

MR. WILLIAMSON: He'll agree with me under any circumstances; he's good, I like that.

MR. CLINE: I won't say that I agree with you under all circumstances, Mr. Chairman, but in this particular instance I can say, sincerely, that we landed in the right spot.

MR. WILLIAMSON: I know, I just never can pass up the chance to remind people because, you know, we keep logs on these things where people go threaten our colleagues.

(General laughter.)

MR. CLINE: Now, I would say a few brief comments go far from a threat, and we were proud to have the commission meet in Irving and we'd be happy to have you come again anytime.

MR. WILLIAMSON: Linda Harper Brown is an excellent transportation member.

MR. NICHOLS: And I appreciate the police escort out of the building to my car.

(General laughter.)

MR. CLINE: We also had the fire department involved in that, as I recall; I think we did have a fire alarm at one of those.

MR. NICHOLS: I came back, too.

MR. CLINE: Yes, sir, and we appreciate it.

Any other questions you have for me?

MR. NICHOLS: No, I didn't have any questions.

MR. CLINE: Thank you very much; appreciate your consideration.

MR. WILLIAMSON: If we do this, Jerry Jones is going to build that damn football stadium in Irving after all; we can't do this.

MR. CLINE: Well, now you're getting on ground I don't want to tread on.

MR. NICHOLS: We're talking about buying right of way.

MR. WILLIAMSON: I know, but we're buying right of way so Jones can do his football stadium. That's the rumor I'm going to spread.

(General laughter.)

MR. WILLIAMSON: Ted, did you have any questions of that guy?

MR. HOUGHTON: No.

MR. WILLIAMSON: Hope?

MS. ANDRADE: I do not.

MR. NICHOLS: The only questions I had I already had answered and it was related to changing the appropriation level and all that kind of stuff, and I'm totally satisfied.

MR. WILLIAMSON: What else do we need to know about this one, Jim?

MR. RANDALL: I think that's it. Go out and start buying right of way.

MR. WILLIAMSON: What's your pleasure, members?

MR. NICHOLS: I so move.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, say no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RANDALL: Okay, sir, the last item, item 9(f), this minute order presented for your consideration authorizes $750,000 in Federal Discretionary Funds as approved by the Federal Highway Administration.

The department annually submits candidate projects to FHWA for funding consideration. For Fiscal Year 2004, the department has been notified the two projects identified in Exhibit A will receive federal funding.

In order to remain eligible to receive these funds, the department must obligate the funds by September 30, 2004 to meet the FHWA requirements. We recommend approval of the projects identified in the FY 2004 Federal Discretionary Program.

MR. WILLIAMSON: We don't have a choice about this: it's either approve it and spend the money, or not approve it and the money doesn't get spent.

MR. RANDALL: The funds lapse.

MR. NICHOLS: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BEHRENS: Okay, Jim, just change your notes and stay up there and lead us in a discussion item on possible amendments to the new international bridge application process.

MR. RANDALL: I'd like to give some background information first, please, sirs.

Senate Bill 1633, enacted by the 74th Texas Legislature in 1995, provides that a political subdivision or private entity authorized to construct or finance the construction of a bridge over the Rio Grande must obtain approval from the Texas Transportation Commission. Furthermore, House Bill 1653, enacted by the 78th Texas Legislature in 2003, allows the applicant to concurrently seek approval from the commission and the United States via presidential permit through the U.S. Department of State.

The bill also states that if the commission denies approval, the applicant must withdraw the request for the presidential permit. If the commission fails to make a determination before the 121st day after the day the commission receives a request for approval, the request is considered approved.

Title 43, TAC Sections 15.70 through 15.76 prescribes the procedures and conditions by which a political subdivision or private entity may obtain approval of the commission. Most importantly, Section 15.73 describes the preliminary studies that are required prior to submitting an application to the department for approval. The applicant shall conduct a detailed study of the design, financial feasibility, and the social and environmental impact of the project.

Section 15.74 states that the application must be in a form prescribed by the department and must be accompanied by the applicant's financial statement, preliminary studies prescribed in 15.73, and written commitments from both sides of the border demonstrating adequate roadway connections to the proposed bridge.

Section 15.75 outlines the department's actions, including coordination with other state agencies, application process and analysis, public hearings and reporting to the commission.

Section 15.76 describes the commission's action including commission analysis, consideration of comments and commitments of other entities, project requirements, financial requirements and final action.

To date the commission has received three such applications: on March 27, 2003, the commission approved the application for the Tornillo Guadalupe International Bridge in El Paso County; the Webb County International Bridge application was approved by the commission on April 29, 2004; followed by the City of Laredo International Bridge application being approved on May 27, 2004.

The Transportation Planning and Programming Division is designated as the department's liaison for accepting and analyzing international bridge applications. The steps are summarized in your briefing book.

One scenario that was not foreseen when the original rules and processes were adopted in 1995 involves competing applications. This occurred in September 2003 when an international bridge application submitted by Webb County and the City of Laredo were determined to be complete.

In this particular case the department received two separate applications for proposed bridges to be located within five miles of each other. Although it was apparent to the department these two bridges would be competing for the same traffic and resources, the analysis of this situation is not addressed in the current rules.

Also, neither application provided a scenario depicting the competing application and its impact on their submittal. Therefore, the department reviewed and analyzed the applications as stand-alone documents. The county and city eventually met the requirements for the application and the commission approved them.

In order to address this issue, the department needs to revise the international bridge rules. One possible revision would require resolution support from all impacted government entities, including the city, the county and metropolitan planning organization. Without such an endorsement, an application would be deemed incomplete.

Another might be to issue a public notice to allow other interested parties an opportunity to submit competing applications. This public notice would state the department has received a complete application and would accept for simultaneous consideration any competing applications.

Competing applicants would be required to demonstrate how their application is superior to the other applicant by including a scenario depicting both projects. This analysis would show whether two or more international bridges are feasible, and if not, why one is superior to the other. One drawback to this approach is the statutorily mandated 120-day review period. Under current law, this period cannot be extended by the commission.

This ends my presentation and I'm available for any comments or questions you may have.

MR. WILLIAMSON: Hope.

MS. ANDRADE: Jim, we want to encourage communities to work together, we can't force them to work together. Is there anything that we can put in our rules that would protect the department from being placed in a situation where we had two competing applications where we can that at the end only one application will be approved or accepted?

I mean, I think it puts the department in a very difficult position and we still have to continue working with those communities. I just feel like if it was clear from the beginning, it wouldn't encourage multi applications to be submitted, but they know from the beginning that only one application will be considered.

MR. RANDALL: Yes, ma'am. The staff tends toward the one where we would have to have a resolution from the city, the county and an MPO along with the application. Our internal process is that when we receive an application, we date-stamp it and that begins the 120-day time period.

Internally we give ourselves ten days to review the application, and we run it through design, environmental, finance, right of way, and our international relations office to determine whether the application is complete. And what we mean is there are several items that are outlined in our rules, as well as statute, that we review.

This might be one of the requirements, that when we get the application if there's not a resolution from those three entities, then we would deem it incomplete and send it back to the applicant.

Now, we did that -- it wasn't the issue but on the Webb County we sent it back twice before they finally got what we considered a complete application. So that would be one methodology but we're open for any suggestions from the commission.

MS. ANDRADE: In other words, we're not restricting ourselves so much that we can't move forward, but I just want to make sure that we protect ourselves from ever being faced in that situation. So if we make it clear from the beginning, I don't think that we encourage that anymore.

MR. RANDALL: Yes, ma'am.

MR. NICHOLS: Still along the same lines, I think that the reason it was difficult to reject one was our rules never anticipated that two bridges would be applied for in the same community.

MR. RANDALL: That's correct.

MR. NICHOLS: I don't think anybody anticipated that, and since in our rules we did not have a basis for denial, we weren't able to kick one out. So asking kind of the same question a different way: Will we -- I think the only thing you've got in here is if in that application, advertise, find out if there's more than one, do an analysis why theirs is superior to the other application. Is there an assumption there that if one can argue that one is superior than the other, then that becomes a basis for denial? I guess that's a legal question.

MR. MONROE: Richard Monroe, general counsel for the department.

The commission certainly would have the right to put into its rules that if the commission, for instance, made the determination that the area would only support one bridge, that therefore you could pick between Bridge A and Bridge B. I hasten to add you would obviously have to have something in the rules that gave you a basis to do that: looking at factor 1, factor 2, and factor 3, Bridge A is a better bet than Bridge B.

Obviously -- to take a ridiculous example -- you can't flip a coin and say, Okay, Bridge A wins, but within those restrictions, having certain criteria that you would look at, that could certainly be put in the rules.

MR. NICHOLS: Okay, I'm not sure I got my question answered. You said it could be put in the rules so that implies to me that we still do not have a basis for denial in the rule?

MR. MONROE: To deny an application from the very first?

MR. NICHOLS: We're trying to, hopefully, set up a situation where we don't end up approving two bridges in the same place or almost next door to each other. The only thing I could read in here was that if somebody is applying, they advertise, find out if anybody else is interested, and see if they're going to be the only applicant for the area or if there's several. And if there are several, the way this reads, then they are supposed to show why theirs is superior.

MR. MONROE: That would be a possibility also that could be done in the rules, yes.

MR. NICHOLS: I thought that's what that actually says, that theirs is superior to the other application.

MR. MONROE: That is one of the possibilities you could follow.

MR. NICHOLS: But we still do not have a category in here, Basis for Denial, or does there need to be a category?

MR. MONROE: Well, do you mean --

MR. NICHOLS: Okay, let's just say they did advertise.

MR. MONROE: We do have a criteria for denial. I mean, if you don't have this and this in your application, we can deny it.

MR. NICHOLS: Well, if there was two, there was no basis for denial.

MR. MONROE: Right.

MR. NICHOLS: I mean, if we'd had five applicants, there was no basis for denying any of the five.

MR. MONROE: Right.

MR. NICHOLS: If they met the criteria, we would have ended up having to approve five bridges in the same spot.

MR. MONROE: Right. I was talking about denial of the application just based on itself. Obviously we can deny an application without comparing it to others if you don't have all of the things you're supposed to have in your application.

Now, as I understand what the division is proposing, one way to get out of the situation where you've got to if you have that situation, then you would have Bridge A would have to show why it's superior to Bridge B, and Bridge B would come back and say it's superior to Bridge A, and then the commission would have to make a --

MR. WILLIAMSON: Richard is saying if we adopt rules that incorporate a basis of denial, we can deny.

MR. NICHOLS: Yes. I thought that's where we were headed -- it's a discussion item, and that is where we need to head.

MR. MONROE: Yes.

MR. WILLIAMSON: Maybe what Jim is looking for is some guidance from us as to what things that we wish to be a basis for denial, either now or in the next few months.

MS. ANDRADE: I'm more comfortable with setting up a criteria for approval and for denial. The thing that concerns me is I think "superior" can be argued, and how do you defend that. I mean, it's okay that you're saying that the MPO has to have a resolution that supports it, the city, county, but what if it happens that they support both, and there we go again. I just want to make sure that we've got -- that communities understand that there's criteria there that this should never happen again.

MR. WILLIAMSON: That's the very thing that staff wants us to say, members, is these things. I think from my standpoint, Amadeo -- go ahead, Mike.

MR. BEHRENS: Richard, when we talk about criteria or a basis for denial, do we have things like: cost benefit of the bridge; connectivity to say our existing system; one of them is two miles, the other is one mile; what costs we might bear as far as the department if that bridge went in; and things like that?

MR. MONROE: Yes, as long as it's reasonable -- and all those things are certainly reasonable -- they could all be plugged into the rules. What Jim has presented here as one option, but one of the things we're here seeking is commission input as to any other ideas or any other criteria you can think of.

MR. NICHOLS: Then I think what we're saying is if the situation occurs where we have multiple applications in the same general location, there should be a specific category under "Reason for Denial" and I know the way these have been worded before, in establishing a basis for denial of one or more of these bridges, the commission may consider the following items: one, two, three, four. It may be the amount of infrastructure the state has to build; it may have something to do with the mobility on our side, or determination of long-term -- and you can put multiple things under there, but it should be spelled out separate.

MR. WILLIAMSON: In addition to the things that Ms. Andrade and Mr. Nichols are interested in, I think we ought to at least consider the impact on the United States side school district.

MR. RANDALL: Okay, sir.

MR. WILLIAMSON: Not that I think a school board ought to approve it like a city does, but I know that in the most recent case of our bridge experience, some land was taken off of the tax rolls in order to make that bridge work, and I think that school district was kind of looking around saying: Wait a minute, you have just whacked our local share in order to get your bridge approved, and maybe we need to consider things such as that. And I don't know, I sort of think we ought to consider lawsuits filed against the state, but maybe we can't do that.

We don't really want this just to affect the case where there's two bridges, we really want these criteria to be every bridge application from now on, because one of the things one of your commission members was concerned about when this all started was the cost in time and money on us analyzing these things and then having to connect to them and spend the money to build a public road once the bridge was built. It wouldn't do any good for the bridge to be built and us not connect to it. There's a whole host of things.

MR. RANDALL: We have two bridges on the horizon: one in Del Rio and one in Presidio that are being discussed right now.

MR. WILLIAMSON: We don't want to be unreasonable with any of these communities, and we didn't want to be unreasonable with the Laredo-Webb County thing. We want to encourage trade and commerce, we just need to understand what the impact on us and the other units of government are going to be.

MR. RANDALL: Okay, sir.

MR. WILLIAMSON: Have you received the kind of guidance you need?

MR. RANDALL: Yes, sir.

MR. WILLIAMSON: And of course, you'll interview everybody individually and you'll do extensive work on this because it's pretty serious stuff.

MR. RANDALL: Yes, sir. Our GC will be right by our side.

MR. WILLIAMSON: Further discussion with Jim on this discussion matter, members?

(No response.)

MR. WILLIAMSON: Okay, Mike.

MR. BEHRENS: Agenda item 11 under Traffic Operations, this will be consideration of the 2005 Highway Safety Plan. Carlos?

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

The minute order before you seeks approval of the FY 2005 Highway Safety Plan, which is designed to reduce the number and severity of traffic crashes, injuries and fatalities through enforcement, training, and education efforts.

The 2005 program consists of a budget of approximately $51 million for 280 traffic safety projects that cover areas such as occupant protection, selective traffic enforcement grants, DWI countermeasures, and roadway safety. The plan includes approximately $1.5 million in additional federal funds that we recently received as a result of our safety belt use rate.

These funds allowed us to draw the funding line a little lower and pick up projects such as TABC's Shattered Dreams Program, the Eagle Pass El Protector Program, TEKS's project that provides injury assistance to smaller cities and counties, and the implementation of an upcoming work zone safety initiative.

We recommend approval of this minute order.

MR. WILLIAMSON: Now, we don't have any projects in here that are anticipating the issuance of Ogden Bonds, do we?

MR. LOPEZ: No. This is strictly the human factor side; there's not road construction at all in here.

MR. NICHOLS: It keeps the safety program going, basically, while they're working on reauthorization.

MR. LOPEZ: Yes, this is right. It will only use what is being allocated through the continuing resolutions, that is correct.

MR. NICHOLS: I think it's great; you do a fantastic job on safety.

MR. LOPEZ: Thank you.

MR. NICHOLS: I think Texas' reputation on I always call them the accidents that didn't happen -- I know there's often focus on the ones that did -- no one can really measure, you can estimate the accidents that didn't happen.

MR. LOPEZ: Yes.

MR. NICHOLS: You do a great job. I so move.

MS. ANDRADE: Carlos, I commend you for what you're doing on safety and this is very important for me and for all of us, but do we have any way of measuring how successful our programs are?

MR. LOPEZ: Yes. In fact, for each of these projects in our Highway Safety Plan, we set out goals for what we'd like to accomplish, and every year we do an after-study, and we'd be glad to provide that for you for past years what we've done with some of these projects.

MS. ANDRADE: Good. Thank you.

MR. WILLIAMSON: We have a motion?

MS. ANDRADE: So moved.

MR. WILLIAMSON: We have a second?

MR. NICHOLS: I thought I moved a while ago. Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. LOPEZ: Thank you, commissioners.

MR. WILLIAMSON: Thank you once again, Carlos.

MR. BEHRENS: Agenda item 12, this will be to consider TxDOT's 2005-2009 Strategic Plan. Coby?

MR. CHASE: Good afternoon. My name is Coby Chase, director of the Legislative Affairs Office. Unless I wasn't clear last time, I only go about halfway through my presentation last month, I'm here for the second half -- I'm just kidding.

(General laughter.)

MR. CHASE: What the commission has is a draft of the agency's 2005-2009 Strategic Plan. Let me speak briefly about the next steps as far as procedure is concerned, and then I'll discuss what's in the draft.

Procedurally, we need to have a Strategic Plan across the street by Friday, July 2, a week from tomorrow. It doesn't need to be fancy or particularly detailed, it only has to have some required elements. All of those elements are in the document before you. They are the title and signature sheet; the mission vision -- and that's on the first page -- the external assessment, which is in Part 1 and in Appendix G; goals, objectives and measures, that's in Part 1; and the appendices, and the appendices comprise all of Part 2.

The appendices contain volumes of information that include: our planning process, organizational chart, projections for outcomes, measure definitions, workforce plan, survey of organizational excellence, and key external and internal assessment details.

With a few minor edits, that will be ready to go next Friday. Where we need more time is to polish it up as a public document. There are some new developments not contemplated when this exercise started, like the Supreme Court's decision to allow the border to open, our new status as the number one export state, Governor Perry's visit to Mexico where he talked extensively with officials about the Trans-Texas Corridor, and very importantly, the Texas Mobility Fund Strategic Plan, or as we've dubbed it, the strategic plan within the strategic plan.

And if I may be extremely optimistic -- I'm generally extremely pessimistic -- we may actually have a federal reauthorization bill by the end of next month, maybe, but we're getting closer every day.

While not necessary for the few copies that we have to send across the street next week, I think these are absolutely vital for what we present to the public.

Now, as far as the contents are concerned, I'll touch briefly on what's inside -- very briefly, as a matter of fact. Part A is an introductory statement that discusses the agency's history and where it is going under the new leadership and new legislation.

Part B focuses on Commissioner Johnson's five goals, the challenges we face in getting there, and the progress to date. He uses Chairman Williamson's "plan it, build it, use it, maintain it and manage it" structure to detail the resources we have brought to bear on our challenges so far.

Part C is perhaps the boldest statement. It contains the commission's strategic direction for the next five years, it reiterates the challenges I discussed at length at the last commission meeting, and it shows how the commission expects to meet those challenges.

Part D consists of charts, numbers, graphs and other data that help make the case. The section either survives on its own or the visual information, the charts, graphs, et cetera, will be placed in other parts of the document closer to explanatory text, and that will be a layout judgment call we'll make towards the end.

That concludes my comments; I'll take any questions.

MR. WILLIAMSON: You were moving too fast; we couldn't keep up with you.

MR. CHASE: I felt I overstayed my welcome a little bit last time; it's the least I could do.

MR. WILLIAMSON: Oh, you mean the marathon.

MR. CHASE: Yes. I was kind of hoping Phil Russell was going to break my record this morning. He got close but he didn't get there.

MR. WILLIAMSON: Well, I having gone through it all, I'm pretty comfortable with it and I don't have any questions or comments to make; it's pretty much what I would expect.

Ms. Andrade or Mr. Nichols?

MR. HOUGHTON: It's great. The only thing I have is that you extended my term. I think we need to get some approval before that.

(General laughter.)

MR. CHASE: You're exactly right, we extended your term and there are some typographical errors in there. That's why it's not quite a public document.

MS. ANDRADE: It looks great.

MR. CHASE: Thank you.

MR. NICHOLS: I think conceptually it's good and I agree with what's in there. There are some little typos and stuff like that.

On that Safe Routes to School thing, we specifically appropriated five, but I know in the Transportation Enhancements we're up to what -- you can just nod, Carlos -- $33 million or something like that? Yes, we're over $30 million in that category. Part of it was combined with Transportation Enhancements, and those approvals, we did an analysis of Safe Routes in there.

Are we going to officially call them Proposition 14 Bonds in this document?

MR. CHASE: Well, that's a question.

MR. WILLIAMSON: I'm for it.

MR. CHASE: I referred to them both in there, you know, also known as Proposition 14 Bonds.

MR. WILLIAMSON: Did Pickett carry it on the House side?

MR. CHASE: Yes.

MR. NICHOLS: Yes.

MR. WILLIAMSON: How do we give him credit for it?

MR. CHASE: We could call it Ogden-Pickett Bonds, Pickett-Ogden Bonds, or just Prop 14 Bonds.

MR. NICHOLS: I've seen documents with Pickett-Ogden Bonds or Ogden-Pickett Bonds.

MR. WILLIAMSON: Which bill survived: Senate or House?

MR. CHASE: The Senate bill survived.

MR. WILLIAMSON: Let's call them Ogden-Pickett Bonds; let's ask our bond counsel to do that.

MR. CHASE: It was Ogden's legislation, it was Pickett's constitutional amendment, remember, that got it on the ballot.

MR. WILLIAMSON: Let's call them Ogden-Pickett Bonds and let's tell our bond counsel to memorialize those guys for a great thing. I mean, it truly is a significant thing.

MR. CHASE: Oh, it is, it's monumental.

MR. WILLIAMSON: Hope, what do you think?

MS. ANDRADE: I agree, let's give Pickett credit for it.

MR. WILLIAMSON: Give the guys that did it, they get credit.

MR. CHASE: Okay.

MR. NICHOLS: Are you looking for a motion?

MR. WILLIAMSON: Any other questions for Coby? We don't want to let him off this easy; he rattles so easy, we ought to take a shot at him, it's late in the day.

MR. NICHOLS: We have the official word from you, the federal transportation reauthorization will be done in less than 30 days?

MR. WILLIAMSON: You're standing behind it?

MR. CHASE: Oh, absolutely not. Like I told people before, just be a pessimist because you're only ever two things: you're either right or pleasantly surprised. No, I have no idea; if I were that good, I'd work on Wall Street if I could predict things that well. But every time this thing is dead, everybody thinks there is no way they can do it; well, then they start doing something.

Yesterday they actually plowed through a number of titles. It's some of the easier things but we've been able to get into the middle and start changing a few things, and what people tend to forget is we are only 4-1/2 weeks where this bill was signed into law six years ago.

I mean, sure it's late, but this is a game that's always played in overtime, and they could play it by the end of July; they could be finished.

MR. NICHOLS: Mr. Chair, I think you need a motion on this. I so move.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you, Mr. Chase.

MR. BEHRENS: Agenda item 13 is our contracts for the month of June for consideration of award.

MR. WILLIAMSON: You know, Thomas had lunch planned with the AGC, and he had to cancel that; then he had 18 planned with Carter Burgess and he had to cancel that; then he had nine planned with Gary Pate and he had to cancel that. We've just ruined his day.

MR. T. BOHUSLAV: I think you're talking about Ken Boslav and not Thomas Bohuslav.

(General laughter.)

MR. T. BOHUSLAV: Good morning, commissioners. May name is Thomas Bohuslav, director of the Construction Division.

Item 13(a)(1) is for consideration of the award or rejection of highway maintenance contracts let on June 8 and 9, 2004 whose engineer's estimated costs are $300,000 or more. We had 14 projects, an average of 3.4 bidders per project. Staff recommends award of all projects.

MR. WILLIAMSON: First, members, do you have any questions or comments directed to or about any of these projects before I ask for a motion?

MR. NICHOLS: No.

MR. WILLIAMSON: Thomas, did you listen to the earlier testimony about our need to understand perhaps what projects are going to cost in the event that Phil Russell accelerates his comprehensive development agreement world?

MR. T. BOHUSLAV: I may not have been in here but I did hear part of that conversation.

MR. WILLIAMSON: Mike, is there anything you need to say about these?

MR. BEHRENS: No.

MR. WILLIAMSON: Can I have a motion?

MR. NICHOLS: So moved.

MR. WILLIAMSON: Do we have a second?

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. T. BOHUSLAV: Item 13(a)(2) is for consideration of award or rejection of highway construction and building contracts let on June 8 and 9, 2004. We had 73 projects, an average of 4.4 bidders per project. We actually have an overrun this month of about 9 percent.

We have one project recommended for rejection; it is in Atascosa County, Project Number 3206. We had two bidders on the project. This project has a materially and mathematically unbalanced bid; there is an error in the quantity for item 512 and the contractor's price for that was mathematically unbalanced, and therefore it makes a materially unbalanced bid. We recommend rejection for that reason, and we may have a speaker here for that.

MR. NICHOLS: The only comment I had is probably just overall, even though we had a good number -- I look at the average number of bids. For the last couple of years, I think it's important to point out, we have had a period where our cost estimates and actual bids were running under 3 percent, 5 percent, 7 percent, those kind of numbers in the last few years, and just in the last few months it's starting to cross the line and go back the other way. I remember way back there when we had similar periods where they consistently ran over, so this is the first one I've seen with a substantial number of bids where it was substantially above 5 percent.

MR. WILLIAMSON: I guess the cost of steel and the cost of oil and gas have finally caught up.

MR. NICHOLS: Concrete and all that. All these oil and gas guys are making so much money over here.

MR. T. BOHUSLAV: One other aspect that added to the increased cost, we will have new wage rate requirements in our contracts beginning with our November letting, I believe, expected, but that will influence contracts that are already underway because the employees, those new rates will be available to them so they'll want to be moved up on all their projects, so that may have some impact as well.

MR. NICHOLS: The second there is there's almost a half a billion dollars in contracts issued. That's a very good month.

MR. T. BOHUSLAV: I've looked at that issue in regard to how big are our lettings in regard to the cost overruns, and haven't found a relationship to that. This is the first case where we've had a big bump and a large letting, but I think it's more due to other factors.

MR. WILLIAMSON: We have a couple of speakers, but I want to be sure I understand what they're going to speak about, Thomas. One more time, give me a practical example of the mathematically unbalanced bid. Give me a normal person's explanation.

MR. T. BOHUSLAV: Okay. There are two types of mathematically unbalanced bids. The first type, I might explain, is not this type. It is a bid that a contractor front-loaded their bid; in other words, their pay items that pay out early in the project have high prices on them and they would get a lot of money up front in the project, and we apply an interest loss to the state to the difference in their bid and another bidder that bid a level bid throughout the project. We would apply an interest loss that they would be paid early to that extra money, and if determined through the loss in interest to the state it could change the ultimate cost to the state. That's one way.

The other way is we would have a bust in a quantity, and that's this case here. In this case the estimate in the plans is about 5,100 feet of median barrier and the actual quantity is probably more around 30,000 feet. In this case the contractor has a price that does not represent the work and a reasonable profit and the overhead cost and they've given us a price that is just not a reasonable price for that; it's way below that.

And it could be our bust would be either we have an overestimated quantity or an underestimated quantity and they give us a much higher price, it way exceeds what we would expect that price to be for. And when we go in and put in the new real figure for what the quantity should be, it changes who the apparent low bidder would be, who the low bidder is. In this case that is what happened. The second bidder, because we put the new quantity that should have been in the plans in there, the second bidder becomes the low bidder because the first low bidder's price is so cheap.

MR. WILLIAMSON: I just want to be sure I understand, if we accepted the first low bidder, even with the busted median barrier, and she got out there on the job and discovered that she had underestimated the amount of material needed for the median, would she be coming back to us and asking us for more money, or would we be holding the contract up saying finish the job?

MR. T. BOHUSLAV: Most of our prices are not a lump sum price, they're a linear feet or a unit price per foot, so their price should be reflective of the work to do a foot of work or a square yard of work, and so what would happen is we'd adjust the quantity. There are provisions in the contract that address --

MR. WILLIAMSON: But Thomas, I want to make sure you answer my question. So you're saying you would adjust the quantity as you went.

MR. T. BOHUSLAV: We would adjust the quantity for the actual work performed.

MR. WILLIAMSON: And that would make him not the low bidder.

MR. T. BOHUSLAV: And what happened would be was at this stage we have a materially unbalanced price and it would change the low bidder. So yes, we would adjust the quantity and that would change the price.

What normally happens is the contractor may recognize that and they move that money into another area, so if they had given us a reasonable price for that item and it was maybe somewhat lower, we wouldn't consider it necessarily to be mathematically unbalanced, but because the price at 3.1 cents is not even reasonable for that item in this case, we consider it to be mathematically unbalanced.

MR. WILLIAMSON: So will this particular company be knocked out from bidding the next go-round?

MR. T. BOHUSLAV: In accordance with our rules, we would not allow them to bid if we rejected based on a materially and mathematically unbalanced bid.

MR. WILLIAMSON: Will we also not allow the apparent second low bidder to bid?

MR. T. BOHUSLAV: They would be allowed to bid, yes, because they didn't unbalance their bid.

MR. NICHOLS: We're going to hear from a contractor that bid it, I think, in a second. I wanted to get even more specific. This is on the median?

MR. T. BOHUSLAV: Median, it's a concrete median barrier.

MR. NICHOLS: Okay. And just get me in the ballpark, what is the typical cost per foot or what typically did several people bid per foot?

MR. T. BOHUSLAV: For this item it's going to range from $4 to $10 a foot.

MR. NICHOLS: From $4 to $10. And what were you saying they put in there that you thought wasn't material?

MR. T. BOHUSLAV: The price that we had here from the contractor here is 3.1 cents per foot.

MR. NICHOLS: 3.1 cents per foot.

MR. T. BOHUSLAV: Yes, sir.

MR. NICHOLS: For a piece of concrete about how big?

MR. T. BOHUSLAV: It looks like the median barrier, the concrete median barrier that you see out here, and it's per-foot of that piece. They come in 25-30 foot pieces.

MR. NICHOLS: And the contract had 5,000 feet in it?

MR. T. BOHUSLAV: 50,000.

MR. NICHOLS: 50,000.

MR. T. BOHUSLAV: 51,000 feet, I believe, yes.

MR. NICHOLS: And we found out that it was really going to be more like 30,000?

MR. T. BOHUSLAV: Yes, sir.

MR. WILLIAMSON: Did somebody not measure the road right?

MR. T. BOHUSLAV: I don't know how the error came about; it was a consultant's set of plans and it wasn't until after the letting that we found the error in the quantity.

MR. WILLIAMSON: Does that consultant have a bond that we can go back and collect on for having to go through all this nonsense?

MR. T. BOHUSLAV: If we determine that would it be the case that we need to go back to the consultant, we would pursue them and ask them to reimburse the state for any losses.

MR. NICHOLS: I would think their errors and omissions insurance would cover whatever our costs are.

MR. T. BOHUSLAV: Yes, sir, it would.

MR. NICHOLS: Have we ever filed on a consultant?

MR. T. BOHUSLAV: Yes, we have. For this type of case, exactly this type, I'm not sure that we have, but we have for several others around the state and the number is probably in the 20s.

MR. NICHOLS: Steve was here a while ago; I don't see him.

MR. WILLIAMSON: He probably saw this coming and he left.

MR. NICHOLS: Probably so.

(General laughter.)

MR. WILLIAMSON: We have two people who would care to share their wisdom with us, one Tim Word and one Forrest Word.

Forrest, let's do you first.

MR. F. WORD: Can we reverse that?

MR. WILLIAMSON: We can do whatever you want to do.

For the record, sir, we all know you, but please identify yourself.

MR. T. WORD: For the record, sir, my name is Timothy Dean Word, P.E., Aggie, and I'm pleased to appear before the commission. I have visited and done business in this room for 55 years, and this is the first amplified speech I have ever made here.

Our submittal was a well studied, competitive, responsive and balanced bid on a project with a large quantity error, complicating the process of submitting a balanced bid. Our bid cleared the department's multi-stage computer screening without raising a flag. There are computer screens in the department to look for errors, and none were found.

Through 80 years we have made major mistakes on a number of jobs; we never forfeited a bid check and constructed every one; we bore our costs. I think it is highly unusual to reject this job and I submit that it should be awarded. Failing that, we should be allowed to rebid it.

The number of feet of barrier on this 3-1/3 mile project was ten miles of barrier. That's an error that jumps out at you before you go to the plans and check every sheet to see what happened.

The next thing, our figures of what was really needed on the job was 27,000 feet, or about 52 percent of the quantity that we were asked to bid on. Our bid was, before adjustment, $3.10; we divided it by 100 and bid 3.1 cents on that barrier. We took a chance and we moved the money to the construction of the detours and the roadway excavation which followed after the transport and erection of the barrier, so we avoided any materiality in the area of prepayment or front-loading.

I'd like to ask my engineer son, Forrest Word, to come forward, because he estimated the job, please. Thank you.

MR. F. WORD: Members of the commission, for the record, my name is Forrest Word; I'm manager of Dean Word Company.

As I understand the procedure, in order for the project -- for one reason for the project not to be awarded, it must be deemed both mathematically and materially unbalanced, not just one.

From our perspective as a bidder, as a responsive bidder, we must assume that there is enough accurate information presented in the plans to estimate a number that "reasonably reflects the actual cost to do that work." You will find that quote many times in the documentation that TxDOT has prepared with regard to mathematical and material unbalance.

We submit that based on the gross error, it is impossible for a reasonable bidder to present a price that is reasonable or reasonably reflects the actual cost of that item. Furthermore, we are the individual that notified the department of the error; we notified the department before the bid and the date of the bid in order that any action might be taken to remedy the situation. We did not hold this secret.

There were two errors in the plans as we see them, the first error being the statement in the general notes that there would be approximately 21,770 linear feet of barrier available at a specific stockpile location for use on this project. The plan quantity was 51,900 linear feet. So immediately you see the disconnect. Our first question to the department was, if you need 51,900 feet of barrier, where's the rest coming from? You've got 21,000 in the stockpile; there is a difference here.

So if this available quantity is correct -- which the department has as yet not told me that it is not -- the shortfall to the plan quantity is a shortfall of 30,130 feet; the shortfall to our takeoff, our internal estimate of what it's actually going to take is 6,000 feet. The shortfall to the state's recalculated amount is 8,360 feet.

Now, the issue to us with mathematical unbalance is we must be able to calculate what the cost is to move that barrier and place it on the job and return it. I can tell you or give you a fairly close estimate of what it's going to cost to move the 21,770 feet that is ostensibly in the stockpile at a given location 12 miles, more or less, from the project. Where is the rest coming from: from a manufacturer, from another stockpile? If so, where is the other stockpile? -- because for me to give you a reasonable cost for that item, I have to know how far it is from the job because the cost is a fixed plus a variable.

The fixed cost is essentially the crew on either end loading and unloading barrier; the variable cost is how far it is, how many miles is it, how many trucks does it take to place X number of feet in a given mile in a day. Those are all items that we did not have.

So either one of these errors preclude us -- the error in the general note and the error in the plan quantity prevent us from calculating a reasonable actual cost. So what did we do?

The general counsel I heard earlier made a statement about accepting risk; he'd like to see somebody accept risk. The Dean Word Company accepted a risk. The construction engineer stated that there is a process for changing a plan quantity -- or prices on plan quantities. Those typically are dependent upon whether this is a major or a minor item of work. At the bid price the bidder number two bid it, the item is a major item of work; that contractor would be entitled, under the specifications, to request a price adjustment up or down.

And I would submit that you have three prices. There were only two bids turned in; there were five proposals sent out. The engineer's estimate was over $14 a foot; second bidder's bid was $5.22 a foot, I believe; and my bid was 3.1 cents. Now, who is right? I think it's arguable, and I think that bidder number two might be hard pressed to justify their bid as to whether it's unbalanced or not.

So I feel like I can make an argument against mathematically unbalanced. If you accept my argument against mathematically unbalanced, then the failure to award in my view fails because if you cannot prove material and mathematical, those specifications, as I read them, provide that the project can be awarded. That decision will be up to you.

Assuming that you do not accept my argument as to mathematical, the fact is if a reasonably accurate quantity is provided, the necessity of our placing costs in appropriate items to protect against potential damaging losses to us is precluded.

MR. NICHOLS: Would you repeat that last statement?

MR. F. WORD: Yes. If a reasonably accurate quantity is provided to us, then the necessity for us to place costs in other items to protect ourselves against potential losses is avoided.

What we have done is, to the best of our ability, examined the plans, estimate the actual number of feet that will be required to construct the plans according to the traffic control plan and sequence of work, and we placed that amount of money in the detour item and excavation item.

By virtue of that, we have decreased the bid price of the barrier; it is now a minor item of work. Therefore, we cannot sue the state for a -- request a new price if that overruns or underruns; it is a non-major item of work.

So we feel that the issue fails the materiality test on two counts. One is based on a four-step process that was shared by us by the department, we read this literally and we feel that here were two items that did not attach in the process.

One was, as my father stated, the bid was not kicked out by the computer as is mentioned in step one. Number two, the concrete traffic barrier is not a historically abused item, as might be prep right of way and mobilization, items used to front-load a bid which cause an increased interest cost to the state -- which we understand, and as my father stated, the items that we placed the money in were actually later items of work.

Number two --

MR. WILLIAMSON: There's more?

MR. F. WORD: Yes. So we fail to see how you can jump away from step one. If you don't meet step one, how do you get to step two and number three. It appears to us that the state has just jumped straight to number three, has made a change in the quantity, and therefore, considers it materially unbalanced.

The opinion that our bid does not reflect the lowest ultimate cost to the state -- which is a term that is found in the documents -- can only be achieved once you change the estimated quantity, in conflict, we believe with item 2.2 which states that the bids will be evaluated based on the engineer's estimated quantities.

Until the state changes the bid from 51,900 feet to 30,000 feet, we are still low bidder. If the state lowered it to say 35,000 feet instead of 30,000 feet, we could be awarded the job because the difference between the low bidder and us falls to less -- we are still low.

So even if we had done what we did, if we had just cut our price somewhere else another $23,000, I don't think we'd be standing here. We might but I don't think we would.

So we don't believe that for $23,000 the ultimate cost to the state is more than it would have otherwise been; we believe that the ultimate cost to the state should include the cost of readvertising, rebidding, the potential damage to the roadway and the hurricane evacuation route and other factors.

For that reason, we ask that if we are not at least allowed to be awarded the project that we be allowed to rebid the project, especially in light of the fact that we notified the department of the error; we did not shield it; we did not hide it. Thank you.

MR. WILLIAMSON: Where did you go to school?

MR. F. WORD: I'm an Aggie as well. Strike number three?

(General laughter.)

MR. WILLIAMSON: Not according to him.

MR. NICHOLS: To who? I went to Lamar; I'm neutral on the A&M/UT thing.

MR. WILLIAMSON: Are we allowed to ask this person questions, Mr. Monroe, or should we just absorb what he has to say and talk amongst ourselves?

MR. MONROE: You're certainly free to ask him questions.

MR. NICHOLS: First of all, I just want to make a general comment, and that is I haven't known you long, but I've known Mr. Word ever since I've been on the commission, and I wanted to publicly say I think your firm and work has been pristine, as far as I understand it.

You have got a great reputation as a construction company doing the right job, doing the right way and all those kind of things. You've also worked individually supporting transportation and transportation funding and I thank you for that. And however this ends up, we look forward as an agency to doing work with you in the future. I think it's real important to say that.

A question I have is I always hate it when engineers, whether it's in-house or -- I wouldn't say outhouse --

(General laughter.)

MR. WILLIAMSON: In this case they might qualify as an outhouse engineer.

MR. NICHOLS: -- an outside consultant, but it's just unfortunate that it happens to be an outside consultant that made that error, it makes it very awkward for the department and certainly creates a real problem for the industry in this process, so it's something, as we lose experience -- which we've lost a lot of experience in the last ten years -- we will see more often.

I know the department tries very hard to be fair and consistent and I think that's very important for you guys out there bidding to know we're going to be very consistent and we want a system that's beyond reproach.

One of the reasons that the department, as I understand it, uses the unit method for pricing is so as the units expand or the units contract, we have a basis to work with and pay and those type of things, so the unit measurement is one of the key things.

And we recognize that we don't know exactly what those costs are and each of you find different sources and have unique techniques to get your cost up or down or where your margins are, so we expect those numbers on a unit to be higher or lower, who got the best deal on concrete or whatever.

We also recognize that because we are unit-based on our pricing and our payment structure that if there are materially out of whack unit pricing that it can distort the whole process. That's why they go to materially and mathematically and so on.

And you know, you've got an engineer's estimate of $14 for these barriers to move them and pick them up and take them back; you had one bidder that bid five bucks; you heard me asking Tom what the range was, he was saying about $4 to $10; and you bid 3-1/2 cents.

And I realize you may not know how many or how far, and you certainly pointed out the error to us, but can you imagine any circumstance where you could pick the barriers up and take them back for 3-1/2 cents in a practical situation?

MR. F. WORD: Depending on how we would define what the work is and what part of the work actually stays in that item, we could reasonably argue that the cost of moving the barriers is the cost of actually loading and unloading them and that the transportation cost of those barriers can be borne in another item reasonably.

One thing I would like to point out, the 3.1 cent bid, if we had notified the department within five days after the bid that we had made an error in our bid, we probably wouldn't be standing here at all today because the job, if we had elected to go through with it, could have been awarded. It was not our intention to mislead the department in any way about the nature of our bid.

Concerning your statement about consulting engineers, yes, ever since the department has started farming out more and more of the plans, there's more errors in the PS&E, the area engineers have less time to be able to go through these things with fine-tooth combs and make sure that they're right.

I doubt that the area engineer could have reasonably correctly estimated what the actual number is at the late date that we notified him of the issue; nevertheless, the notification was made.

As far as why we did what we did, as I said, not all units are strictly variable costs, there's fixed and variable costs associated with them, and the marginal cost of an extra barrier here and there essentially can be the same or less than the plan quantity.

MR. NICHOLS: I understand, but when you're in a $4 to $10 range and, people bidding $5, engineer is estimating $14 and you've got a unit of 3-1/2 cents, it seems to me -- an I am an engineer, I'm not a civil engineer -- that seems dramatically different.

MR. F. WORD: Certainly. We all take the same math. The issue that I'd like to point out is that the definition of mathematically balanced is a reasonable actual cost. Our point is the fact that there was, even after the correction, even after you assume a correction down to 30,000 fee, there's still over 8,000 feet of barrier that's going to have to come from somewhere and there isn't any place closer than that stockpile site, so it's going to have to come from further, so what is the reasonable actual cost. It's going to be something but we don't know.

MR. WILLIAMSON: Hope, do you have any questions that you want to direct to this gentleman?

MS. ANDRADE: Mr. Word, how long has your company done business with us?

MR. F. WORD: I believe my grandfather was here at the first bid opening.

MR. NICHOLS: Is that right? No kidding.

MR. T. WORD: And got a job.

MR. NICHOLS: And got one. That's an amazing history.

MR. F. WORD: But the company has been in business since 1890.

MS. ANDRADE: Thank you, and thank you for working with us. And I echo what Mr. Nichols says; it just makes it difficult. We have to be consistent. We deal with so many contracts, so many contractors, and the minute that we start being flexible on our rules, then we just open ourselves up. And I feel for you. I'm not an engineer; I'm a business person and I know about taking a risk, so it puts us all in a difficult situation.

I would like to ask some questions of Thomas.

MR. WILLIAMSON: Thank you, Mr. Word.

MS. ANDRADE: Thank you very much.

MR. T. BOHUSLAV: Can I say a couple of things first?

MS. ANDRADE: Yes, I'd like to hear from you.

MR. T. BOHUSLAV: The first thing in regard to our specification items, it's very clear in the item that what the work consists of, loading the materials, unloading the materials and hauling the materials for this item in this case, so to move that work in another item would be unbalancing the work as specified in the item, so it's very specific in that regard.

In regard to their bid bond, it is returned to them, they did get their bid bond back, and I don't want that issue to be lost in here.

They did tell the area office; the area office became aware of this on the morning of the letting. The area engineer, not being the one that developed the plans, wasn't familiar with that quantity and did not know if there was a problem or not, and so there was not a response.

I wish that they had responded to us; we might could have done something, held the letting and not even opened it if we determined during the letting we wouldn't even open the bids or read them and just hold them back.

The issue about an error in the quantities, if they had given us a price of say $2 -- that was their estimated price a foot and that's what they could do it for, and it created a situation such that the bids were only materially unbalanced, their bid price was mathematically balanced -- in other words, that's what it was going to cost them, it was only materially unbalanced and that it changed to the low bidder is because their price was lower than the other contractor's price and we know we're going to have to adjust that quantity in there.

If that had been the case, we would have rejected based on an error in the plans because it changed who the low bidder was and we don't feel comfortable with that, and the second bidder is not here to argue their case on that issue. But we would have considered it to be only an error in the plans, we need to reject and go back and rebid it for that reason.

But because it is -- and they argued that it is -- mathematically unbalanced, it doesn't reflect the work and original profit and the overhead, we have to reject it based on mathematically and materially unbalanced, and when that occurs, the rules fall in place and say that they're not allowed to rebid again.

The issue of we were notified that morning of, one of their staff called our office and the area office did not know what the quantities were in the project, we didn't respond. I think, well, in that case there may be some compassion on that part.

We do expect more bidders when we go back and relet it; if we only have the one bidder remaining, we do expect, and in fact, the district is talking to other contractors about bidding the project in the area as well. So just to clarify a few things.

MR. WILLIAMSON: I've got a couple of questions, Thomas. We have rules in place, and sometimes we comply with the rules -- most of the time we comply with the rules because we comply with the rules, but sometimes we're in a position in life where we're not even comfortable complying with the rules and so the rules allow the commission to make a decision where the staff might not be comfortable making a decision.

On this commission, as long as I've been here, we have always stood firm behind our employees. It's very important to this commission that the world knows that we trust our employees, and if there's a reason not to trust our employees, then we act accordingly. So I don't think any of us want to do anything that indicates that we don't take our employees' counsel and we don't trust our employees' judgment.

But several times off and on during the day, Robert and Hope, we've talked about judgment, and there comes times every once in a while where we've got to exercise judgment, and what I'm asking you, Thomas: Is this a case where you're asking for the commission to exercise judgment, or is this a case where you're saying the rules are the rules and we reject it?

MR. T. BOHUSLAV: If we don't follow our procedures here, it leaves us open to a lot of arguments in the past and in the future. I think it is both very clearly mathematically unbalanced -- they didn't have to mathematically unbalance their bid, they could have gone forward and said we'll put a price here, we know the quantities aren't there and we'll work that out on the job -- which is what the other contractor chose to do. It was their choice to mathematically unbalance their bid. In this case, I believe it would be appropriate for us to act and go ahead and follow our procedures.

MR. WILLIAMSON: And just out of curiosity, Mr. Monroe, is this an item available for consultation in executive session, or is this item not qualified?

MR. MONROE: The exceptions which allow for an executive session are very few. The only thing that would come to mind is the possibility of litigation which would justify that.

MR. WILLIAMSON: If the commission were to respectfully reject Thomas's recommendation and request Thomas to come back with a recommendation that suggested a no bid and put everybody back to square one, are we putting ourselves in a position to be litigated against by the second bidder?

MR. MONROE: There was a time when I would have felt more confident saying no, but these days when all you have to do is find a brown paper bag and write "Help" on it and file it along with a filing fee, quite possibly.

MR. WILLIAMSON: So it could go to executive session.

MR. MONROE: Yes, sir.

MR. WILLIAMSON: And who all is allowed to attend that executive session? -- whoever we wish to attend?

MR. MONROE: Within reason, yes, sir.

MR. WILLIAMSON: Staff-wise.

MR. MONROE: And within the department.

MR. NICHOLS: Let's go to executive session.

MR. WILLIAMSON: I think at this time we will recess and go to executive session to discuss potential litigation against the department, and let's bring Thomas.

(Whereupon, at 5:05 p.m,. the meeting was recessed, to reconvene following executive session.)

MR. WILLIAMSON: We resume in regular session, and the members of the commission met and consulted with legal counsel and staff on matters pending before the commission and reached no conclusion, took no votes, made no decisions.

Mr. Word.

MR. T. WORD: Yes.

MR. WILLIAMSON: Don't come up. The commission wishes for me to express to you, sir, its deep appreciation for the work of your family and your generations of family. I have no idea what the vote is going to be, but I can tell you that we don't take these matters lightly, and we don't view this unfortunate circumstance as anything but what it is: an unfortunate circumstance; we're sorry it happened.

We're very respectful of what your family has done for the State of Texas over the years.

MR. T. WORD: Commissioners, I've been involved with this long enough, we all have, my sons have, that we understand the rules. We bear no anger toward anyone and certainly not Thomas; that's his job.

MR. WILLIAMSON: I think we're all uncomfortable about this situation, but we just want you to know that we have deep affection with everyone that we do business with such a long time and does such a good job.

Besides that, my buddy in New Braunfels, Rod Johnson, would be really mad at me if I didn't say that to you.

(General laughter.)

MR. WILLIAMSON: Members, we've heard from our staff; we've heard from one of the affected contractors. I will say for the record it appears that we have no choice but to follow our rules and regulations. I will entertain a motion to accept Thomas's recommendation.

MR. NICHOLS: I so move that we will accept all of these with that one rejection.

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

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

Do we have other items?

MR. BEHRENS: We'll go to agenda item number 14, which is our Routine Minute Orders. The minute orders are listed as they were posted on our agenda as required by the rules, and unless you have any questions about any individual one, I'd recommend approval of these minute orders. I don't think any of these minute orders, to my knowledge, impact any of the commission.

MR. NICHOLS: I so move.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed will say no.

(No response.)

MR. WILLIAMSON: Motion carries.

Members, we have finished, at 5:22, the agenda items. It is now open comment session time, and we have one fellow who stayed here a long time, and we finally figured out that he couldn't stand here any longer and so he had to leave, but he wanted the commission and the State of Texas to know how impressed Cameron County was with the way we handled the CDA discussion and the way we discussed RMAs, and he wants to commend us for our RMA approach and wants us to know that he will be here shortly in a few months with his own RMA, and that's David Garza, who is a commissioner in Cameron County, Texas.

He came up and said goodbye to us but he said, You be sure and read into the record we like the way you do things and we'll be back.

Is there anyone else that needs to say things before the commission or other matters before the commission of which I'm not aware?

(No response.)

MR. WILLIAMSON: I'll entertain a motion.

MR. NICHOLS: I'd just like for the record to state that since I've been on the commission since '97, I believe that you have now set the record for the longest meeting I have ever attended, straight up. Other than that, I move we adjourn.

MR. WILLIAMSON: I have a motion.

MS. ANDRADE: Let me make a comment.

(General laughter.)

MR. NICHOLS: If we make it to 6:00, we'll probably have an all-time record.

MS. ANDRADE: Do Mr. Nichols and I get special time for staying?

MR. WILLIAMSON: If we ever get an enhancements program, we'll be sure that the Jacksonville Jaguars and -- I don't know which school district you live in -- whichever school district it is gets special enhancement attention.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. We are adjourned at 5:25 p.m.

(Whereupon, at 5:25 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: June 24, 2004

I do hereby certify that the foregoing pages, numbers 1 through 315, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Penny Bynum before the Texas Department of Transportation.

__________06/27/2004
(Transcriber) (Date)
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731