Texas Department of Transportation Commission Meeting

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

Thursday, December 16, 2004

COMMISSION MEMBERS:

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

STAFF:

MICHAEL W. BEHRENS, P.E., 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. It's 9:00 a.m. and I would like to call the December meeting of the Texas Transportation Commission to order. It's a pleasure to have all of you here this morning at our last meeting in the calendar year of 2004.

Please note for the record that public notice of this meeting was posted, containing all items on the agenda, with the Office of Secretary of State at 1:53 p.m. on December 8, 2004.

Before we begin today's meeting, let's all together, including myself -- as we always do -- take a moment to pull our pagers, BlackBerries, cell phones and other electronic devices out of our pockets and purses and put those devices on the silent, vibrate, or power-off mode. Thank you.

As is our custom, we will begin our meeting with comments from each commissioner. Let's begin with Commissioner Houghton. Ted.

MR. HOUGHTON: Good morning. And it seems like every time that I give a statement or a welcome during these commission meetings, I say it's another historic event today, and again, another historic event -- we had the Texas Mobility Fund -- so each and every meeting seems to be something new in transportation.

It's, again, another historic day. It was, Mr. Chairman, a year ago tomorrow that I was appointed to this august board, and the experience has been quite interesting, quite interesting. The learning curve is straight up, it has been a delight serving with my fellow commissioners and I'm missing my roommate -- not my roommate, my next door neighbor. Wrong use of words.

(General laughter.)

MR. HOUGHTON: Wrong use of words. My next door neighbor. She was appointed three hours prior to my appointment. So again, it's been a tremendous opportunity for me and thanks to the staff for making it one momentous type of event. Thank you.

MR. JOHNSON: I would like to welcome everyone here. Obviously, as Ted has said, this is a very important meeting, as they continue to be as we tread new water in the ways to do things and the accomplishments of this department.

I would like to wish everyone the happiest of holiday seasons and hopefully you'll be with your loved ones and have a safe holiday season.

And I think, finally, I noticed with keen interest, the front page of the Austin paper today had a picture of the gentleman to my left, Mr. Robert Nichols, but I didn't recognize the other two people in the picture. Robert, could you help me?

Anyway, happy holidays and seasons greetings and safe travels.

MR. NICHOLS: I'd also like to welcome everyone here. We do appreciate you taking the time to come to our meetings and participate. It's, to me, an exciting meeting, there are some very historic things that we're going to be voting on today.

Also, this is a wonderful time of the year, the holiday season. It's also a very dangerous time, so please drive carefully during the holidays. Thank you.

MR. WILLIAMSON: And I echo the remarks. We appreciate everyone who takes time out of their life to attend our meetings and either witness the events or comment on the events.

As many of you have heard me say in the past, one of the two things that you're blessed with is time, it's the most valuable thing that you control, and when you give your time to us, it means something to us.

I note for the record, Commission Andrade has been delayed on a personal matter. She will be present at any moment with us, and when she's here, if she cares to offer remarks, we'll certainly stop our proceedings and allow her to do that.

I need to remind everyone that if you wish to address the commission today, there's a speaker's card at the registration table out in the lobby. If you intend to comment on an agenda item, we ask that you fill out a yellow card such as the one I'm holding in my left hand, and please identify the agenda item. If you need to comment on something of a general nature and not on the agenda, please fill out a blue card such as the one in my left hand.

And because of the nature of many of the topics we'll take up today, we're going to try to fairly strictly enforce the three-minute limit except, of course, as always for elected members of the legislature.

And we note also for the record that a great friend of transportation, Chairman Mike Krusee, is with us this morning, and we appreciate you being here, sir.

We're going to rearrange a few items on today's agenda. The chair always like to announce these things so if you have other plans and need to make arrangements, you can go do so now, and we won't be offended if you get up and go outside and make a phone call to do that.

We're going to move items 11 and 12 up on the schedule. I don't know exactly where they will fall, but I know in relation to time and that is I intend to begin those items at ten o'clock this morning. We'll hold the public hearing on the project selection process, item 2, at about 12:30 this afternoon which is when we guess we'll be through with items 11 and 12.

We'll probably take a break somewhere around 9:50, 9:55, we'll take a restroom break, and we'll probably take another at around 11:10 to 11:15. That will be subject to the ebb and flow of the presentation by our staff.

In any event, we will be through by three o'clock this afternoon. That means we will not be taking a lunch break under any conditions. We'll walk straight through, and commissioners, like myself, who have to eat something around noon to avoid a headache, will step to the back room and snack, and you're welcome to step out as well.

I think we begin this historic day at the commission, Mike, by approving the minutes of the November commission meeting. So do I have a motion?

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor 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?

MR. BEHRENS: Thanks, Mr. Chairman. We'll go to agenda item number 3 and I'll ask Doris Howdeshell to come forward and acknowledge some awards that the department has received recently, and could you present those, Doris, please?

MR. HOWDESHELL: Good morning, Mr. Chairman and commissioners. For the record, my name is Doris Howdeshell and I'm director of the Travel Division here at TxDOT, and I have a couple of awards to present today.

Keep America Beautiful announced winners of its national awards at their 51st national conference in Washington, D.C., on December 1 through 3 of this year, and the Texas Department of Transportation won two first place awards: a first place award for statewide television advertising, and a first place award for statewide and local radio advertising.

The Rogers Awards, as they're called, recognizes outstanding PSAs. Keep America Beautiful is credited with producing one of the most successful PSA campaigns in history. I'm sure you probably remember the crying Indian; that's a PSA that Keep America Beautiful did. And their awards actually recognize PSAs designed to effect positive change in our environment.

TxDOT won these two first place awards for the latest Don't Mess With Texas PSAs entitled "Excuses." And if you'll turn your attention to the screen, we'll watch two 30-second PSAs.

MR. WILLIAMSON: And just for the members of the audience that aren't familiar, because sometimes some of us don't look to the screen, we look down -- Doris is aware of this but some of you might not be -- we also have screens in front of our desks, so frequently to maintain eye contact with our great employees, some of us will look ahead and pay attention to the screen below.

(Whereupon, a video was shown.)

MS. HOWDESHELL: The radio PSAs are also very similar, offering up those ridiculous reasons to litter.

What I'd like to do this morning is to present the awards to the commission to thank you for your continued support of the program.

MR. HOUGHTON: I have a question, Doris. Who owns the phrase "Don't Mess With Texas"?

MS. HOWDESHELL: I'm sorry?

MR. HOUGHTON: Who owns it? It is registered to the department?

MS. HOWDESHELL: Yes, sir, it is, it's trademarked; it was trademarked in October of 2000.

(Pause for photographs.)

MR. BEHRENS: We'll now go to agenda item -- actually an item that's not posted on the agenda, and Cathy, if you'd come forward, please.

Cathy Williams is our assistant executive director for Support Operations, and just this past week, Cathy announced that she is retiring from the department effective the end of this month, and we're going to really miss Cathy up on the second floor. She's been with us a good while, been here the whole time that I've been in Austin, and really a support person to me as well as all the employees in the department.

And Cathy, I'd like to read this resolution at this time from the commission.

"Whereas, the Texas Transportation Commission takes great pride in recognizing Cathy J. Williams, PHR as an outstanding, dedicated administrator and employee who has served the Texas Department of Transportation for 26 years, most recently as assistant executive director for Support Operations, having been appointed to that position on September 1, 1998;

"And whereas, Ms. Williams has provided insight, experience and leadership in developing policy, procedures and products in all areas of Support Operations, while establishing, promoting and fostering a sprit of customer service throughout the department;

"And whereas, Ms. Williams has devoted her professional life to public service with TxDOT by holding various positions including switchboard operator in the Paris District when she first joined the department in 1973, followed by that of accountant, budget analyst, support operations, executive assistant, and director of the Human Resources Division;

"And whereas, Ms. Williams earned her master's degree in business administration in 1982 from East Texas State University, achieved certification as a professional in human resources in 1994, and in 2002 received the Governor's Commission Award for Outstanding Women in Professional Development;

"And whereas, Ms. Williams has devoted her professional life to improving the quality of life for all Texas;

"Now, therefore, be it resolved that the Texas Transportation Commission on the occasion of her retirement from service to the State of Texas, hereby recognizes and thanks Cathy J. Williams for her career achievements and the loyal service on behalf of Texas and its citizens.

"Presented by the Texas Transportation Commission on this day, the 16th day of December 2004."

Signed by Chairman Ric Williamson, Commissioner Robert Nichols, Commissioner John Johnson, Commissioner Hope Andrade, and Commissioner Ted Houghton.

(Applause.)

MS. WILLIAMS: Thank you. It's been a pleasure to be able to work with TxDOT for the 26 years and to start off on the switchboard and to be where I am now, I would have never ever in my wildest dreams thought that possible.

It's been a pleasure to work with the current chairman and members of the commission and our current administration as well as previous commissioners and administration.

I'm a bit prejudiced, I think TxDOT is the best state agency, we have the best state employees, and I know we will continue to be the best state agency, and for that, I thank you.

MR. WILLIAMSON: Ted?

MR. HOUGHTON: Well, I've only had the opportunity for one year, Cathy, and thank you for guiding me through the minefields when I first walked into this building. And you decide to get married and then you decide to retire, so congratulations and thank you very much personally.

MS. WILLIAMS: Thank you.

MR. JOHNSON: Cathy, one of the things I find to be one of the highest standards at any agency or any business can have the longevity and loyalty of its employees, and I'm struck by so many of your colleagues that have been here a long time and I'm equally as struck by the fact that you started answering the phones in the Paris District 26 years ago, and I marvel one, at your ability to rise through the system to the highest position that a non-engineer holds, and I congratulate you for one, your loyalty, and two, your talent.

And I guess the simplest and probably the most honest thing I could say is I'm going to miss your bright shining face around here.

MS. WILLIAMS: Thank you.

MR. NICHOLS: The first thing I'd like to do is thank you very much for all the time and energy you have put into the state of Texas through this agency. Most people will never know all the things that you have done, but you did do them and there are many in the department that know what those things are and very much appreciate it.

We are all better off because of your contributions, and we will miss you. Thank you very much.

MS. WILLIAMS: Thank you.

MR. WILLIAMSON: I've been with the agency now almost four years; I had a considerable amount of experience in state government prior to this. I think it's safe to say that this state agency comes closest to being run like a private sector of the state agencies I was familiar with in my years as a legislator.

You epitomize the agency's approach. In all of my dealings with you it was as a business by the book with a practical commonsense viewpoint of how to solve problems. I told you this privately, I have to tell you publicly, you will be sorely missed. We understand that it's time to go conquer other mountains, or in your case, dive to deeper depths, but that doesn't hide the fact that we will miss you, and while we all wish you the very best, people like you are never replaced, we only look for someone that we hope may be the same contribution center that you were.

I hope you have fun in your retirement.

MS. WILLIAMS: Thank you.

(Pause for photographs.)

MR. BEHRENS: We'll now go to agenda item number 4 which is a minute order that is being brought to the commission that is recommending the funding of a $600 million safety project that will cover the entire state.

Carlos?

MR. LOPEZ: Thank you, Mike.

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

The minute order before you provides for the approval of the 2005 Safety Bond Program. We used the Safety Improvement Index to rank projects that came in for the districts for this program. That index is one of many indices that TxDOT uses to rank projects for different types of programs. For example, we have indices that rank bridge projects, that rank railroad crossings, safety rest areas and highways that form corridors in rural and urban areas for project selection.

The Safety Improvement Index takes into account accidents and crashes at a particular location and the type and cost of the improvement that's going to try to fix the problem, so therefore, we thought that was the best index to use for this particular program.

After ranking all the projects that came in from the districts, we're ready to recommend to you today a 645 project, $605 million Safety Bond Program that will allow us to widen 1,600 miles of narrow two-lane roadways, install 740 miles of median barrier on divided highways, build 171 left-turn lanes at highway intersections, and build ten new highway overpasses.

The Texas Transportation Institute Safety Center has estimated that these specific projects have the potential to save 1,800 lives and prevent 21,000 injuries over the next 20 years.

We recommend approval of this minute order.

MR. WILLIAMSON: Discussion or questions, members, starting with Mr. Houghton?

MR. HOUGHTON: When would the first projects see dirt or concrete, or whatever it may be, being poured? When would these projects begin?

MR. LOPEZ: We have projects that are scheduled for letting as early as May of 2005, and they'll all be staggered throughout about the next year and three months after that, with a majority of them going to contract by August of 2006.

These are quick turnaround projects, they don't take a whole lot of time to build, so Texans ought to see the improvements on the ground fairly quick.

MR. HOUGHTON: And just looking at the numbers here, it seems to be that east of I-35 has gotten a significant amount of projects.

MR. LOPEZ: That's correct. When we were first laying out this program, we got with the Safety Center and we wanted to see what kind of projects would give us the best safety benefit in return, and they suggested to us that whatever dollar amount that we decide to spend on this program, that half of that ought to go to widening two-lane narrow roads. We have a significant run-off-the-road problem in this state, we have about 30,000 miles of roadways that are less than 24 foot of width, and a lot of those are east of I-35.

Because of that, by looking at the crash history at those locations, projects tended to be concentrated in that area for the widening type of projects especially.

MR. HOUGHTON: So it's a good news, bad news for some districts: good news is you have great safety, bad news is not a lot of projects.

MR. LOPEZ: That's correct, but that is a good positive way to look at it is if your district didn't particularly get a whole lot of money, that means, relatively, your roads are in fairly good shape.

MR. HOUGHTON: Now, what percentage does this take care of the big, big projects out there, the safety projects? I mean, we've got a lot of issues from a safety standpoint. So does it take care of 10, 20, 30?

MR. LOPEZ: Well, that's a good question. We concentrated on our four major categories for this particular program, and there are other types of work that we could have asked for but these are going to give us the best return right away.

The projects we asked for right now, we got about $1.8 billion worth of requests. About $1.4- to $1.5 billion of those projects met the safety test and had a safety improvement index that was over one. So we've got about 40 percent of the projects that were submitted, but a lot of those that we're not funding are grade separations which tend to have just a little less return on safety benefit and tend to be the higher dollar type of projects.

MR. HOUGHTON: Overpasses, underpasses?

MR. LOPEZ: That is correct.

MR. WILLIAMSON: Mr. Johnson?

MR. JOHNSON: Carlos, I think I have a couple of observations. One, the numbers that you mentioned in terms of the reduction in fatalities and injuries, I mean, that's an inspiring number, and I know TTI is very capable in their prognosticating, and I can't help but think we should all be uplifted by that.

And what follows right behind that is safety has been and will continue to be uppermost in this department's thinking, and I think this is an outward and visible sign, but I mean, every day, every member of this staff, and I'm going to say every employee -- most every employee, I think safety is on their minds, and I think this is, as I mentioned, an outward and visible sign of that.

And I guess thirdly, I'd like to thank Senator Ogden and Chairman Krusee for their tenacity in this particular area. Sometimes when we look at congestion and mobility issues and the massive amount of challenges that we have and the expense of those challenges, we sometimes get carried away with those thoughts and we, in a golfer's term, take our eye off the ball, and I think this shows that indeed not only do we have our eye on the ball but so do the leadership in the legislature.

Thank you for what your division has done in this regard also. I mean, I know every day this is in your mind 24-7.

MR. LOPEZ: Thank you, Commissioner.

MR. NICHOLS: A comment and a question. The comment is in the past sessions we were given opportunities to issue bonds to accelerate projects of a lot of different types. I think it is very important for people to recognize that we chose to accelerate on our bond program were the ones that will save lives.

We talk that story and we believe it and we're taking that action. I think that's real important for everyone to know.

Number two, the scoring on these projects was originally created through the Safety Research Center over at A&M?

MR. LOPEZ: Actually, I think that formula originated with TxDOT. Over the years the research agencies and the Safety Center have helped us refine that formula and make sure it stays current and does the job it's supposed to do.

MR. NICHOLS: As I understand it, as you explained it to me the other day, they went through each of the different types of safety projects and those that ranked the very highest, the ones that for the dollars had the greatest opportunity to save the most number of lives or incapacitating accidents, they took those first, regardless of where they were in the state, so it was strictly based on the scoring process.

MR. LOPEZ: That's right.

MR. NICHOLS: And the spread across those, if you were to ask the question for the amount of dollars you spend, what projects could we do the quickest for the amount of money that would save the most number of lives, and these are the projects for that amount of dollars.

MR. LOPEZ: That's correct.

MR. WILLIAMSON: Please.

MR. HOUGHTON: 645 or 644? 644 projects?

MR. LOPEZ: It should be 644.

MR. HOUGHTON: 644 projects, so that's an opportunity for contractors of all sizes. It seems like these projects are smaller in scope, so a greater opportunity for smaller contractors to have an opportunity.

MR. LOPEZ: Yes, especially the widening projects. You'll see that's the kind of work we a lot of times do through our maintenance contracts, so smaller contractors will have the chance to submit bids for these projects, especially on the east side of the state.

MR. HOUGHTON: That's it.

MR. WILLIAMSON: Carlos, first of all, I want to join with the other commissioners in extending my thanks to you for your approach. I know we rushed you, we put a lot of pressure on you to get this done because we felt like it needed to be done this year. It will take six months from now to actually get these projects moving and we want to get these projects moving, and your diligence is noted and appreciated.

I also want to take a moment to thank those who were in the business of disseminating information in the free world. I think that all the news services did a very good job of spreading the message that we're focused on these safety projects.

And it's real important for everyone in the room to know that the process we used, we couldn't have known ahead of time that the money would be distributed the way it was. We're always sensitive when certain parts of the state don't receive as much as other parts of the state, and we always, because we are creatures of political process, ask you the hard question: why isn't there as much money in Brownwood, El Paso, whatever? And the answer is because this was focused on Texans lives, not on geographic areas.

MR. LOPEZ: Right.

MR. WILLIAMSON: You did a real good job. I think we have a couple of people that wish to comment, so if you would step back for a moment.

Bill Shipp, City of Commerce.

MR. SHIPP: Thank you, Mr. Chair. If I may, I am Bill Shipp, city manager of the city of Commerce, and you also have a comment card from the mayor of Commerce, Sheryl Zelhart, and if I might ask your permission to let her speak first and then I could follow with my comments.

MR. WILLIAMSON: Absolutely, yes, sir.

MR. SHIPP: Thank you, sir.

MR. WILLIAMSON: Welcome. Is this your first time with us?

MAYOR ZELHART: No, sir, it's not.

MR. WILLIAMSON: I just don't recall, so thanks for being here.

MAYOR ZELHART: I appreciate it very much.

As Mr. Shipp said, I'm Sheryl Zelhart, I'm the mayor of Commerce, and I want to thank you all for the opportunity to address the commission this morning. And we do appreciate the work that TxDOT does in our community. We have a very good relationship with Bobby Littlefield who is our district engineer and Craig Miser, who is our Greenville area engineer. They've been very good to work with.

Recently TxDOT completed an intersection at Highway 24 just north of Commerce where it intersects Highway 50, and that was completed just a little bit over a year ago, and this intersection is of great concern to us. We've discussed these concerns with both our district engineer and the area engineer. We've had 12 major accidents at this intersection since it opened; we've had 18 people transported to the hospital from those accidents.

As a result of these discussions, TxDOT has implemented a progressive safety measures program and we continue to have very serious accidents at that intersection. We had one on Tuesday and two people were again transported to the hospital, both of the automobiles that were involved were totaled.

We were informed in October that a grade separation project had been submitted to TxDOT for funding under this Safety Bond Program, and we learned today that this project had not been funded.

What we would like to do at this time is, of course, continue to work with TxDOT to solve this problem, but we'd also ask that you would carefully consider finding funding for this project.

We believe that the safety of the people that travel that road is utmost in your minds as it is in ours. And again, we would thank you for your time and your consideration. Thank you.

MR. WILLIAMSON: Members, any conversation with the mayor?

(No response.)

MR. WILLIAMSON: Okay, Mr. Shipp.

MR. SHIPP: Thank you, sir. If I may, if I can hand you -- I always find it a little more personal if I can visualize some of these things -- I'd like to hand you some photos here to pass around.

The first of those photos is simply a photo of the intersection itself; the second one is a little bit different picture of the intersection, shows a little bit of the stacking problem at the intersection. And the third and fourth photos are actually the accident the mayor just referred to that happened just this Tuesday.

We haven't been taking photos of accidents but this was one that was fairly typical of the type of accident that's happened, and so I asked the police to take pictures and we got a few pictures to kind of show you what type of things happen.

MR. WILLIAMSON: Let me ask you -- I don't think we have the ability to show it to the audience but you'll know what I'm talking about -- what's the business establishment in the upper left-hand corner of the picture?

MR. SHIPP: In the upper left-hand corner is a propane filling station, gas station, propane station.

MR. WILLIAMSON: Is that a retail operation?

MR. SHIPP: It's primarily retail. And also cater-corner from that, conveniently enough, is Benson Brothers Wrecking Service, so they're always right there handy on the job.

(General laughter.)

MR. SHIPP: To add just a couple of things to what the mayor said. She said in the 17 months since that intersection has been opened which completed the bypass around the north edge of Commerce, in that 17-month period since July of 2003 there have been 12 accidents. Five of those have happened within the last two months, and in those five that happened in the last two months, we had eight transports to hospitals during that period of time.

Another thing I thought was significant as we reviewed the accident reports, that on the 12 accidents, eleven of these occurred on dry roads; all 12 of them occurred during daylight hours. So there weren't those types of mitigating circumstances.

MR. JOHNSON: Is there a common element involved in the accidents?

MR. SHIPP: That's a good question. If you look at that picture up there, you're looking here coming from Paris on Highway 24, headed south into Commerce.

MR. WILLIAMSON: Our guys and gals just love a challenge. When I said we can't put it up, I saw those eyebrows shoot up.

(General laughter.)

MR. SHIPP: And the crossing road to the right is Highway 50 going to Ladonia and to the left is Highway 224 going back into Commerce. It's the old 2450 before the bypass was built; the new part of the highway is that highway above the intersection on the picture.

In fact, this one was taken on Tuesday after the accident. You can see in the intersection where the fuel spill was where they cleaned up the fuel spill.

In answer to your question, sir, of the 12 accidents, nine accidents have been with vehicles coming from Paris, the bottom part of the screen, into this intersection and automobiles either crossing coming from the right at that stop sign or they've been in the median where there is a stop sign and they've crossed. And quite honestly, they've just pulled right in front of traffic is what it boils down to.

And it's one of those things you go stand on the ground and it looks good, it really does, it's hard to say why there should be an accident there but they are happening. I think what happens, as you come in here you're on a two-lane highway about three miles before you get here back in Delta County -- a section of 24 is two lane in Delta County -- and then suddenly you're on this four-lane divided highway, you have kind of a sense that, I'm on a freeway.

And then all of a sudden you hit this intersection that doesn't have high traffic counts, no, but you are starting to get into a city where there is a fair amount of traffic crossing there.

And really, that's all I had to say. Like the mayor said, it's certainly a concern for us, it's been a safety problem. We'll certainly continue to work with TxDOT in whatever fashion we need to, but in working with the area and district engineers, we felt it was appropriate to forward a recommendation for an overpass at this intersection.

This shows the stacking here a little bit at that intersection. And we really would appreciate your consideration and we will continue to work with staff.

MR. WILLIAMSON: Mike, is Bobby Littlefield here with us today?

MR. BEHRENS: No, he's not here, but for the mayor and for Mr. Shipp's information, Senator Deuell had called me about two weeks ago expressing his concerns about this intersection; yesterday I talked to Representative Homer also about this intersection. And we're already looking at it and we're going to be looking at it not only from the district standpoint but we'll be looking at it from our Austin division standpoint. Carlos Lopez, who just made the presentation, will be looking at it also.

MR. SHIPP: We appreciate your help.

MR. BEHRENS: Yes, sir.

MR. WILLIAMSON: We thank you for taking the time to come down here and visit with us.

MR. SHIPP: Thank you, sir.

MR. WILLIAMSON: We appreciate it very much.

Other questions or comments for Carlos?

(No response.)

MR. WILLIAMSON: It's a pretty big deal. The legislature decided and the commission passed rules to, in effect, borrow from construction ten years from now to build safety matters today. I think that says a couple of things: one, safety is important to us; two, we have confidence that the other transportation programs we're working on will yield sufficient cash flow ten years from now to maintain our construction program.

MR. HOUGHTON: Is this the first of the tools available, the Prop 14 Texas Mobility Funds that we'll now issue debt on? These are the first?

MR. LOPEZ: Yes, these are the first ones.

MR. HOUGHTON: This is first out of the chute.

MR. LOPEZ: Yes.

MR. WILLIAMSON: So I think we should all be proud.

MR. NICHOLS: So moved.

MR. WILLIAMSON: Mr. Nichols has moved.

MR. JOHNSON: Second.

MR. WILLIAMSON: Mr. Johnson has seconded. 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, Carlos.

MR. LOPEZ: Thank you, commissioners.

MR. BEHRENS: We'll go to agenda item number 5, our Aviation agenda item for the month of December.

Dave Fulton.

MR. WILLIAMSON: Do we need to have Carlos come back and lower the podium for you?

MR. FULTON: I can take care of it.

(General laughter.)

MR. FULTON: 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 18 airport improvement projects. The total estimate cost of all requests, as shown on the Exhibit A, is approximately $13.7 million: approximately $10.2 million federal, $2.1 million state, and $1.4 million in local funding.

A public hearing was held on November 10 and no comments were received. We would recommend approval of this minute order.

And I would point out that some representatives of the City of Sugar Land would like to address the commission at this time.

MR. WILLIAMSON: Commission members, if there's no objection, we'll go ahead and hear from our two witnesses. I don't want to make the same mistake I made a while ago, so Mr. Abraham and is it Savage?

MR. ABRAHAM: Savico.

MR. WILLIAMSON: Which wants to go first or which should go first? They're going to come together.

MR. ABRAHAM: Members of the Texas Transportation Commission, it is indeed an honor on behalf of the citizens and city council to be here and address you about our airport.

At this time, if you don't mind, I'd like to introduce two other individuals: our assistant city manager, David Ellison, and also our Airport Policy Advisory Board chairman, Ken English. Thank you.

For the record, my name is Thomas Abraham. I am a city council member representing the City of Sugar Land, Texas, and the Sugar Land Regional Airport. I am pleased to be here today in support of the project under consideration for the Sugar Land Regional Airport.

Sugar Land Regional Airport continues to develop into an important part of the Houston metropolitan aviation system providing the additional capacity needed for general aviation and corporate aviation. The Sugar Land Regional Airport continues to see growth as high as 20 percent each year.

The projects that the commission has approved in the past have helped the airport keep up with the continued demands of both transit and based aircraft. The project before you today adds to that capacity that is critical within the Houston metropolitan area. In addition to adding capacity, this project will bring new businesses to the airport and local area economy.

For example, Citgo Petroleum will construct a $2.5 million hangar and office facility housing three to five jets. The revenues that the airport can expect to earn from this in fuel sales, property tax and land lease are anticipated to approximately $300,000 annually, including an estimated 100,000 gallons in fuel sales.

This clearly demonstrates that projects such as this in front of you help to keep the airport self-sufficient as well as provide for the local share of grants.

The City of Sugar Land is also committed to success of the airport. The airport has contributed millions of dollars in improvements, including water lines, fire protection lines, and wastewater services, and is currently spending over $5 million for a new 20,000 square foot terminal to meet the growing needs of the airport.

The Sugar Land City Council has recognized that the airport plays an important part in the economic development of the city by providing access to not only existing businesses but new businesses as well.

In support of these businesses, the airport is currently in the process of having U.S. Customs at the airport 40 hours a week, which became necessary as our customers acquired jets able to access global markets overseas without having to refuel. This shows that airports such as our general aviation reliever airport need to be prepared to meet the new challenges of general aviation and corporate aviation.

The Texas Department of Transportation Aviation Division, under the leadership of Mr. Dave Fulton, has worked closely with our airport staff in planning and development to ensure that we meet the challenges of providing the economic benefits to the community as well as the current and future needs of general aviation and corporate aviation.

Also I want to make one statement further too, that is every grant, every money, our council makes sure that it is done for the betterment of our community and every citizen. On behalf of our citizens, they are very, very appreciative of your decision.

Thank you for the opportunity to speak to you today and for your consideration of the project before you. Thank you.

MR. WILLIAMSON: Members, any questions of Mr. Abraham?

(No response.)

MR. WILLIAMSON: Thank you, sir. Thank you for coming all the way up here. Mr. Savico.

MR. SAVICO: Members of the Texas Transportation Commission, for the record, my name is Philip Savico. I'm the aviation director for the Sugar Land Regional Airport.

We're up here today to show support not only to one of the best aviation divisions that I've dealt with -- and I've dealt with a number throughout the country in my career -- and that is for the support of Dave Fulton and his staff.

We've worked years in planning the Sugar Land Regional Airport. The Sugar Land Regional Airport is an airport that is becoming something to reckon with, something to see. It's going to be quite an airport that the state itself can be proud of.

We're building a new general aviation center. We've built a new control tower. We have radar there. We've built a corporate taxiway that provides for new business enterprises, major Fortune 500 companies; Customs will be there. Customs will also support major Fortune 500 companies, as well as bringing international travel into the Sugar Land area.

This helps the city in developing our markets within the community itself, it provides access. Although we talk a lot about highways, airports are every bit as important as providing access for corporations like Best Buy, for healthcare companies. These Fortune 500 companies do build and they do provide the community with jobs.

Our airport five years ago went from a small airport to a fairly large airport now that supplies over 150 jobs on the airport itself. We're looking to have over 250 jobs at the airport within the next three years.

These projects continue to provide high-paying jobs, and we look forward to the support of the board for the consideration of these projects before them today. Thank you.

MR. WILLIAMSON: Questions or discussion with Mr. Savico?

(No response.)

MR. WILLIAMSON: Thank you for coming up. We appreciate you taking the time to be with us today.

Discussion with Mr. Fulton?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. FULTON: Thank you, Mr. Chairman.

MR. WILLIAMSON: Thank you, Dave.

MR. BEHRENS: Commissioners, we're going to now jump to agenda item number 7 under Transportation Planning.

MR. WILLIAMSON: And while Mr. Randall is coming forward, we would want the record to reflect we now are in the August presence of the Honorable Representative Edmund Kuempel from somewhere south of here and somewhere north of San Antonio, and I think he generally is from Seguin if the news about Seguin is good, if it's bad he's from Comal County, it just kind of swings.

MR. KUEMPEL: I can vacillate the Sea of Tranquility with the best of them.

(General laughter.)

MR. BEHRENS: Jim, if you'll go ahead and present those two minute orders.

MR. RANDALL: Okay, sir. Jim Randall with the Transportation Planning and Programming Division.

Item 7(a), this minute order approves projects for the second program call for the Border Colonias Access Program.

In accordance with a request from the Governor's Office, Government Code Section 1403.002 requires the Texas Public Finance Authority to issue general obligation bonds and notes in an aggregate amount not to exceed $175 million to provide financial assistance for border colonia access roadway projects. The TPFA, as directed by TxDOT, distributes the proceeds to the eligible counties.

Pursuant to Government Code Section 1403.002, the Texas Transportation Commission has established a program to administer the use of the proceeds of the bonds and notes. The commission has adopted rules to implement the program codified in Title 43 Texas Administrative Code Sections 15.100 to 15.106.

In accordance with Section 15.103, the first program call of $50 million was issued on January 18, 2002. On July 23, 2004, a second program call for $50 million was issued. Over 300 applications were received for the second program call. The projects were ranked according to the criteria prescribed in 43 TAC Section 15.104.

We are recommending approval of 178 projects in 22 counties. 118 projects are in the allocation portion and 60 projects are in the competitive portion.

Staff recommends approval of the projects described in Exhibit A of this minute order for funding under the Border Colonias Access Program.

MR. WILLIAMSON: Members, we have with us today, having come a long way, county commissioner and most recently one of our financial partners in the RMA business, Commissioner David Garza who wishes to comment.

David, Commissioner, we appreciate so much your coming up.

MR. GARZA: It's a pleasure to be here, Chairman.

Good morning, commissioners, Chairman Williamson. It's a pleasure to be here. I do want to recognize another commissioner here present today, John Wood from Cameron County who is with us joining us.

My name is David A. Garza. I'm Cameron county commissioner from Precinct Number 3.

Before I make any remarks to item 7, I do want to advise you that this last Tuesday, the county commissioners court in Brownsville passed and appointed six members to the RMA board.

MR. WILLIAMSON: Excellent.

MR. GARZA: So we look forward to that coming to fruition as soon as we get a chairman.

MR. WILLIAMSON: You know what, that means we've got an RMA on the Red River, and an RMA, I guess we could say, on the Gulf Coast.

MR. GARZA: Right, we're on the Gulf.

MR. WILLIAMSON: We're there.

MR. GARZA: So we look forward to those challenges and making some projects come through for us.

As I mentioned, I want to address the commission on item number 7(a). First of all, I would like to compliment the TxDOT staff for their hard work and efforts in getting these projects to recommendation point.

I know that we've worked in Cameron County very hard with Mario Jorge and his staff in submitting our projects and our applications to them, and I can assure you that Cameron County will be very fiscally responsible for all the funding we have had. We'll continue working with the local TxDOT office.

But I do want to mention some recommended changes that we would like for you to consider in helping us with. There were some changes made legislatively and we will work with our local legislators to accomplish those changes that need to be made from the first call to the second call.

There were some counties that because of their population received a higher percentage of the allocation the second time over the first call. And I realize that those changes were legislatively made, but I also believe that some of the population figures that were used in the allocation formula are inaccurate.

I know that TxDOT had nothing to do with that, those figures came from the Water Development Board, but they do not appear to be accurate to us, so we wish to bring those to your attention.

MR. WILLIAMSON: We understand exactly what you're saying.

MR. GARZA: What that resulted in is we had one county in particular in South Texas that is 15 percent of the population of Cameron County receiving more of the allocated monies than we did, and that just doesn't seem to be too fair, but I know it's not TxDOT's fault.

Anyway, we would like to thank you in advance and we are very happy that we are receiving the funding that we did. With the funding that we're getting with this call, we're looking at doing approximately 70 roads in Cameron County which will equal 22 miles of roads. And we hope that we can work together with TxDOT and your staff so that in the next call we will have more adequate funding for everyone, especially the allocated portion.

I thank you for your time.

MR. WILLIAMSON: We appreciate the precise and yet gentle way you lay it out.

MR. GARZA: It was the third format, sir.

MR. WILLIAMSON: We all kind of understand the dilemma we're stuck in on this one and I think we're all going to be working together here in a month to try to resolve that.

Members, dialogue with the commissioner?

MR. HOUGHTON: Commissioner, or James can answer this question -- I don't know who is going to answer it -- start to finish, vote today to getting the pavement on the ground, is it working, is it expeditious; are there logjams in this process?

MR. GARZA: Start to finish on the allocated portion of what we've done, Cameron County is about done with all their projects from the first call.

MR. HOUGHTON: From the 2002 first call?

MR. GARZA: Right. On the competitively based ones, we had a situation in which we had a major utility company, PUB in Brownsville, that had a whole lot of relocation of utilities that has delayed that project. We've awarded a contract, we will have a pre-construction bid conference very soon, and that project will be underway.

On the allocated, and which Cameron County is being done through a forced account process, it has been working great and TxDOT has done well for us locally.

MR. HOUGHTON: James, across the border in the colonias, we're seeing the same types of progress or same results?

MR. GARZA: You would probably have to have that answered from one of your TxDOT staff members.

MR. RANDALL: To date we've expended $17 million out of the first $50 million call. What we're seeing, as usually with any new program, it takes a while to start ramping up to get the program going. We're expecting that the counties have more experience with the program, our folks are out overseeing the projects, we're getting better on our billings and stuff like that, so we expect it to accelerate in the future.

MR. HOUGHTON: Are we issuing the contracts or is the county issuing the contracts?

MR. RANDALL: The county is.

MR. HOUGHTON: The county issues the contracts.

MR. RANDALL: Yes, sir. The billings are issued through TxDOT and then we take it to the TPFA, they distribute the funds and then we allocate them back to the counties.

MS. ANDRADE: So out of the first 50- we've expended 17-.

MR. RANDALL: 17-.

MR. JOHNSON: One question, Jim. Briefly describe the difference between the allocation methodology and the competition methodology for the awarding of the colonias grants.

MR. RANDALL: Yes, sir. In our rules, the allocation program is based on the percentage of the colonia population in the county. In the competitive project, we're looking at ranking the projects and it's according to the colonia population, the road mileage, the condition of the road, the presence of a school bus route, and the access the colonia has to the region. So that's four criteria we're looking at.

MR. JOHNSON: And the population figures are submitted by the Water Board. Is that correct?

MR. RANDALL: Yes, sir. The Texas Water Development Board, they're, I guess, the only state agency that really has a read on the colonia population, so early in the program several years ago when we met with the Governor's Office, Secretary of State, other agencies, it was determined that we would use their population figures for the colonias.

MR. JOHNSON: Thank you.

MR. NICHOLS: I didn't have anything.

MR. WILLIAMSON: More for the commissioner?

MR. HOUGHTON: I have something for David.

MR. WILLIAMSON: Okay, Commissioner, can you come back up?

MR. HOUGHTON: You talked about, Mr. Chairman, champions, and Commissioner Wood and Commissioner Garza were significant in the forming of the RMA in Cameron County, and I assume that that project that we're talking about, the rail relocation, will be one of the first rail relocations in the state of Texas. Is that an accurate statement?

MR. GARZA: That is an accurate statement. On our first project we already have the EA done. We've received additional federal funding for the west rail in Brownsville. We've just been told last week from Senator Hutchison that we were also in receipt of $2.8 million so we can continue the EA and design for the project in Harlingen-San Benito area. So those projects will be well underway.

MR. HOUGHTON: Well, I would like to single you and Commissioner Wood out as the champions that made this thing happen.

I went down to Cameron County, I saw the enthusiasm in two people that grabbed this thing and took it, and this is what it takes across the state to make things happen, and I applaud you all for making it happen.

MR. GARZA: Thank you.

MR. HOUGHTON: But I do have one other question. Do you still have that Kerry bumper sticker on the back of your car?

MR. GARZA: Not any longer, sir. Cameron County delivered in red, so we have funding for our rail.

(General laughter.)

MR. GARZA: The one thing that I would like to say is that the allocation formula that was in the first call, as far as the numbers were concerned, is not the same that was used for the second call. I want to make sure we clarify that. But we're okay, sir.

Any other questions? If not, I wish to thank you for allowing us an opportunity to come before you and we look forward to working with you with the RMA.

MR. WILLIAMSON: And I think we all echo Mr. Houghton's comments about your partnership has been wonderful, and actually it's a great example. We chuckle about the Kerry bumper sticker, but it's a great example of how the department, we work with members of each political party and members of all the geographic parts of the state. My favorite saying is there are no Democrat highways or no Republican bridges, there are no Liberal pull-offs and there's no Conservative fast lanes, it's all one Texas highway system.

You've been a great partner and we look forward to doing some great things down there.

MR. GARZA: Thank you, and thank you for bringing us forward on the agenda.

MR. HOUGHTON: Thanks, Commissioner.

MR. WILLIAMSON: Jim, to wrap up 7(a), do we have witnesses on 7(b)?

MR. BEHRENS: No.

MR. WILLIAMSON: Let's go ahead and wrap up 7(a). Anything on that?

MR. RANDALL: Yes, sir. On the legislative change, the last session they added a 10 percent set-aside for the rural border counties, and that's ten of them, so when we have a $50 million program call, that means $5 million is set aside for those counties, and that goes into the allocation portion. So that's the change.

MR. WILLIAMSON: I think the commissioner made it clear that he understood. We all understand what the challenge is, we'll just have to figure out how to work through it during the next session.

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. RANDALL: Item 7(b), we bring you the first quarter program for the economically disadvantaged counties to adjust matching fund requirements.

In your books is Exhibit A that lists the projects and staff's recommended adjustments for each of them. The adjustments are based on the equation approved in earlier proposals. There are 59 projects in nine counties; the total reduction in participation for these projects is $1,276,159.

We recommend approval of this minute order.

MR. WILLIAMSON: Discussion or questions or comments for Jim in regards to item 7(b)?

MR. NICHOLS: So moved.

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: Thank you, Jim.

MR. RANDALL: Thank you.

MR. WILLIAMSON: As previously announced at the beginning of the meeting 59 minutes and 56 seconds ago, we're now going to take a ten-minute break. At that time after ten minutes, we will come back from recess and we will take up discussion item 11 which is a discussion matter that affects discussion item 12.

And everybody has got plenty of time to get up. If you don't want to lose your seat, that's fine, but you've got plenty of time to get up and stretch because it will be another hour after that before we take a break.

We're in recess for ten minutes.

(Whereupon, a brief recess was taken.)

MR. WILLIAMSON: We will return from our recess.

For those of you in the audience today who are curious, we've put discussion item 11 ahead of discussion item 12, as I would like to think we always do, for a reason.

Two years ago, actually beginning with Senator Shapiro and Representative Alexander four years ago, state policy in regard to how to pay for expanding our transportation system began to change. And it's safe to say that over the four years there's been some rough spots and will continue to be some rough spots, and not everyone in our state agrees with the policy and the direction the commission has taken to address capacity problems, and we acknowledge that, we understand that.

What we've tried to do is carefully listen to the criticism and the opposition in an effort to first ask ourselves do we need to correct course, are we wrong about something, and if we feel like we're right, then try to understand how to distribute information to a free people and let citizens themselves make the decision about the correctness or the rightness or wrongness of the policy.

I believe I speak for all of the commission when I say we have an abundance of confidence in the citizens of the state, in the legislature, and certainly in the governor to take information from two perspectives and balance it and make a rational decision about the wisdom, the rightness or the wrongness of the policy.

One of the most persistently repeated criticisms of the policy is that the legislature and the commission by extension is instituting a system of double taxation for the use of the roads of the state.

You know, Mr. Johnson, in my years in the legislature, I had the privilege of serving many great chairmen, but one of the most intelligent chair that I had the privilege of serving was Paul Sadler. Remember from East Texas? And he had a great saying: I can lead you to the truth, I cannot make you understand it.

And something that's perplexed us all is how anyone can say, I've already paid for this road, you're making me pay for it twice. Because we know instinctively, in the use of our cash flow, that we can't possibly be paying for our roads or we wouldn't be allowing our road conditions to deteriorate and congestion to build anywhere in the state.

If we were paying for our roads, if the user fee system called taxes was exactly balanced with the use of the roads, then we would never be congested and we would always have our roads at a pavement score of 95 percent or higher. So how do we understand that argument and at least offer the information for a rational public to weigh and balance?

And so we put our staff on gathering information and building the research models to help our citizens understand the dilemma we see clearly. We don't do that with the expectation people will agree with us necessarily, but just so that the information is there.

One of the things that we've instructed staff to work on over the last six months is a defensible analysis of just how much revenue is generated by the tax system and consumed on the road built with those taxes.

And discussion item 11 is the, I think, third report on this research project, because, as I understand, by the time the legislature convenes, we're going to be prepared to lay that model before the House and Senate members and say just so you know, this is what a road costs and these are the taxes of all kind from all sources, including federal reimbursement, that are generated by the use of that road, and here is the difference between the revenue and the cost.

And that's very important in our deliberations about discussion item 12, I think. So Mike.

MR. BEHRENS: I'll turn it over to Amadeo. He has put together this discussion item where he'll talk about the cash flow analysis when we talk about the cost of building that road and maintaining that road and how it compares to the money it takes to do that.

Amadeo?

MR. SAENZ: Thank you. Good morning, Commissioners, Mr. Behrens, Roger. My name is Amadeo Saenz, I'm assistant executive director for Engineering Operations. I'd like to visit with you today on a discussion item and kind of give you a status report of some of the things that we've been looking at with respect to determining where our money comes from and how much of it is attributed to a particular road and such and so forth.

Of course, as you know, the majority of our revenues to construct and maintain our highway facilities comes from our state gasoline tax and our federal gasoline tax. There's also vehicle registration fees that add on to it and some other taxes and fees on lubricants. But the majority of it comes from the state and federal gasoline tax.

You know, of course, there's a 20-cent state gasoline tax and then there's an 18.4-cent federal gasoline tax. Not all that revenue that is generated when people buy gasoline comes to our Transportation Fund 6. About 72 percent of the state gasoline tax, 72 percent of 20 cents is almost 14-1/2 cents, and then of course our federal tax is 18.4 cents of which part of that goes to mass transit, about 3 cents' worth of that, and then the real return that we have realized over the years is about 85 percent, or about 13 cents.

So in total for every gallon of gasoline that people purchase, the department realizes about 27-1/2 cents per gallon. That money then comes into Fund 6.

What we've tried to do is, of course, as we develop projects, those projects have an initial capital cost to construct. And then as that project is built and it's open to traffic, from then on we have routine maintenance and every so many years on the schedule we have some preventive maintenance that needs to be done.

And as traffic builds up on a particular facility, then we have to add additional capacity so we can keep the congestion levels at a level that are bearable. And then, of course, the project continues to be rehabbed and continues to be maintained and eventually rehabilitated, and the road stays on forever, the road never just goes away. So there is always an expense on that road.

But as we were looking at this, we wanted to maybe look at a 40-year period, and during that 40-year period we would build a facility and then, of course, we would maintain the facility, add on to the facility when it needed to be added on. And then what we wanted to do is we wanted to determine, okay, based on this facility and the traffic that is utilizing this facility, how much tax revenue is this facility generating?

So we said maybe one of the things that we need to look at, we'll take small steps and we look at a project that was recently built that did not exist, and so we took an example of State Highway 151 in San Antonio.

State Highway 151 in San Antonio is about a ten-mile corridor, it's a four-lane divided freeway, was built in phases. Traffic on that corridor ranges from about 5,400 vehicles to 25,000 vehicles in 1986 when it was opened. In 2004 today, that traffic ranges somewhere between 14,000 vehicles and 43,000 vehicles; different segments of that facility have different traffic.

At the end of our 40-year study period, because I looked at it from the point that we started, traffic would be somewhere from 39,000 on the low end and maybe 96,000 at the high end on the different elements.

That traffic that uses that facility, then we attributed how much gasoline tax that traffic would generate for that facility.

MR. WILLIAMSON: Based on how many average miles per gallon per vehicle?

MR. SAENZ: Based on some research, average amounts per gallon is about 22.1.

MR. WILLIAMSON: So we took into account the more fuel-efficient vehicles.

MR. SAENZ: Yes. And this came about through some research, and our staff found out that about 22.1 miles per gallon was that. And as I mentioned, we were able to realize about 27-1/2 cents per gallon.

Of course, we did not take into account any fuel tax increase in the future, we're saying this is what it is today, and based on when the project opened, based on the traffic for each individual segment, the lanes of the segment, we were able to determine the vehicle miles traveled, then attributed that and based on the 22 miles per gallon, how many gallons of gasoline would have been expended on that facility.

And then, of course, we were able to determine how much gasoline tax revenue would come into Fund 6 by the people that were utilizing this facility.

MR. WILLIAMSON: What about vehicle motor registration fees? That's a large expenditure for a lot of citizens.

MR. SAENZ: We took that, and what we tried to do on that is we have that data based on a county basis, so we were able to take the vehicle registration fees by county, divided by the total vehicles miles traveled in the entire county, and then prorated down to this road. So we were able to incorporate that.

MR. WILLIAMSON: So you accounted for gasoline tax at the state and federal level.

MR. SAENZ: And vehicle registration.

MR. WILLIAMSON: And for vehicle registration fee annually.

MR. SAENZ: Yes, sir. So all those factors go in to determine how much revenue can be attributed to the people that are using this facility, or how much money this is bringing in.

Of course, as I mentioned, the facility was constructed and then it needs to be maintained, and since the road is already in place, we utilized actual data from 1986 till today, and then, of course, we then took some factors and projected the life of the expenditures from then on till the design year of 2046, or the lookout year of 2026.

If you look at this basically on Highway 151, and we took this as an example, and of course this can be attributed to any other facility in the department, but we wanted to try out our mechanism on this and from then we can move forward and try to incorporate it into basically the different highway systems that we have and eventually our whole system.

If you look at that, of course, that project originally cost about $40 million to build and it was built around 1986, from 1986 on to about 2000, and of course the project, being brand new, has very small maintenance costs in the early years but as you see, as we're getting into 2000 and 2001, those maintenance costs begin to increase.

The big increase that you see just after 2000 is that, as I mentioned, the project was built in phases and some additional capacity was added and some additional main lanes were constructed on 151, and that's a project that was just completed in the last couple of months to complete 151 to a full freeway.

That brings us to 2004, so we continue to have some maintenance that will continue. In time we will have to go in there around 2008 to do some preventive maintenance. We've got to do a little bit higher than the regular routine maintenance than the mowing and the patching, we've got to go out there and maybe put additional surface on this project, and you see that little hump.

And then based on the projected traffic -- as I mentioned, traffic is going to go anywhere from 25,000 to 96,000 -- around 2012 this facility, based on congestion, would have to be expanded. We would have to add an additional lane in each direction, and that's that other hump you see up there. Then from then on we project just routine maintenance as well as preventive maintenance for the rest of the life of the facility.

But if you look at it over a 40-year life period, this facility, the blue line is basically the line that depicts the revenues that would be collected from gasoline tax, federal and state, as well as vehicle registration fees. So if you look at it, the lines never cross.

Even if you were to drop down and say I will not incorporate the cost of the initial construction and bring your initial construction line and fund it from somewhere else -- which is normally what we do -- your revenues over this particular facility, the traffic volumes for this particular facility, even though they require the facility to be expanded during its life, are never enough to be able to pay for the maintenance that would be needed to keep this facility in a condition that's good or better, which is one of our maintenance goals.

So the blue line depicts the traffic, and you can see the difference is basically the shortfall that we have on this facility. That's not to say that every single facility in the state of Texas falls under this same scenario, because if they all fell under this same scenario, we wouldn't have any money to build any capacity.

But what we do is we then reduce our maintenance monies that we have that we apply to these facilities and we bank some of our tax dollars that we're receiving, and we use it to go out there and address. So we would have banked money from all over the state to go out there and take care of that expansion that would be needed in 2012.

MR. WILLIAMSON: So in effect, we would have avoided maintenance on other facilities in order to invest maintenance dollars on this facility.

MR. SAENZ: Yes, sir. We would have reduced the level of service of our maintenance on other facilities so that we could have saved some dollars to come and put them on this facility.

MR. WILLIAMSON: Or in the alternative, Amadeo, we could have not added that lane capacity. Correct?

MR. SAENZ: That's correct.

MR. WILLIAMSON: The gap wouldn't have grown quite as much by simply doing exactly what we're doing now which is not adding capacity, just let congestion grow.

MR. SAENZ: Yes, sir. But in that case, congestion on that particular facility would have grown which, in essence, would have probably caused additional damage and additional maintenance costs. So it's going to always be a balance.

MR. WILLIAMSON: But we don't maintain that every road in the state will show this deficit. We suspect there are roads that generate a surplus, we just don't know for sure which roads those are yet?

MR. SAENZ: We are working on trying to collect that data, we're trying to collect that based on the district. And I think we're going to see that certain roads across the state in various districts, particularly in the metropolitan areas that have the large traffic volumes, are going to be what I would say in the black, where the blue line will cross above the red line. And that's what we would call money that's available to help us address some of the other things.

What's very important is that we need to make sure that we keep our level of maintenance at such a point that we preserve our existing system at a level that is bearable and usable.

MR. WILLIAMSON: So what we can say, sort of in summary up to this point, is we know instinctively of the deficit. The deficit is expressed in increasing pavement scores which means deteriorating roads and an increasing congestion which means roads more heavily used. That's how that deficit is absorbed.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Are there other examples you brought?

MR. SAENZ: Well, another example we started looking at -- and I apologize, we started working on it late into the evening yesterday and our data was not correct -- but we did basically the same scenario.

Before I leave that, let me go ahead and turn this slide over. Kind in summary, over the 40-year period our revenues for 151 are estimated to be about $74 million based on the traffic that is using 151 from the beginning till the end of the 40-year period. Our cost of maintenance and rehabilitation are about $159 million. So if you look at our revenue over cost ratio is only about 47 percent. So we could basically cover only half of the cost with the revenue that is being generated by the users on that facility.

We've done the same thing, and I guess I wanted to pick another example, and I was looking at 130, segments 1 through 4. I don't have all the data collected but I was able to get to the point where I calculated this R-over-C ratio. The R-over-C ratio for 130 is somewhere about .20 to .25. I say it in a range because I had to make a little bit more assumptions because I didn't have all the data, but it was somewhere between 20 and 25 percent.

MR. WILLIAMSON: That is to say, it would be that had 130 been built as a tax road and not a toll road.

MR. SAENZ: Yes, right. And what I did is I calculated the cost of the project as a road that did not include the toll elements, and I used the traffic numbers for that facility as a non-toll facility. And then, of course, I applied our maintenance factors to that facility as a regular four-lane divided facility.

So a lot of my data is more based on assumptions because the facility doesn't exist at this time, but based on our early looking at that facility, we're somewhere between 20 and 25 percent.

MR. WILLIAMSON: So by the time the legislature convenes, we need to have this refined and broken out to rural two-lane, trunk system, urban four-lane, urban multiple-lane. Any member that says I want to know for example, what's the tax rate of return on Interstate 10 from downtown Houston to Katy, we'll be able to generate that with some surety and say this road is paying for itself or not paying for itself.

MR. SAENZ: We should be able to categorize our facilities based on rural interstate, urban interstate, metropolitan interstate, our farm to market road system, and come up with what we would call a rate of return for each individual type of facility.

MR. WILLIAMSON: Of course, you know if we pursue this for the first time in the long argument of private vehicles versus public transit, we're in effect giving the proponents of public transit the information they've long sought which is what is the true subsidy of the automobile on Texas highways.

MR. SAENZ: True.

MR. WILLIAMSON: But we're prepared to do that.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Because we think truthful information is more important than untruthful information.

MR. SAENZ: Yes, sir. I'd be happy to answer any questions.

MR. HOUGHTON: I have a question. When is the last time the gas tax was increased?

MR. SAENZ: I believe it was 1991.

MR. HOUGHTON: Have we done in real dollars what the gas tax is today in real dollars? I mean, we talked about 13 years ago we were getting 27.5 cents.

MR. SAENZ: Let me see if James Bass is here.

MR. WILLIAMSON: Not if he's smart. If he's smart, he's avoiding it.

MR. HOUGHTON: Bass is not here.

MR. SAENZ: We could very easily calculate that and come back and determine what in real dollars it is based on that because of inflation.

MR. HOUGHTON: That's important. I mean, a loaf of bread 13 years ago is a lot different than it is today.

MR. WILLIAMSON: John?

MR. JOHNSON: Two things that strike me, particularly the graph that you showed on State Highway 151 in Bexar County. I think if you use that as a template, you could make the case that over time we're going to be spending all of our gasoline tax on maintenance and upkeep because clearly as surfaces age, they require more in terms of dollars. And in that case, there was an uptick in the graph when we added capacity because the more lanes to maintain, the more cost. But also, that's magnified by the number of years and especially as the surface ages.

The other thing that you mentioned was that in the major metropolitan areas where there are congested freeways and roadways that the possibility exists that we are actually running in the black, or there's a profit between the gasoline tax collected and the amount of money spent on upkeep and maintenance.

I find that to be a distressing commentary that in order for us to have more income from a particular corridor than we have in expenses that we either need more traffic, which leads to congestion. I mean, it's in essence the congested roadways which are creating positive cash flow in terms of the cost of maintenance and upkeep versus the income derived through the gasoline tax.

MR. WILLIAMSON: Well, not just gasoline tax, John, but tax receipts from all sources.

MR. JOHNSON: That's a depressing conclusion, because clearly one of our goals and objectives, certainly the group of transportation leaders and users that we convened several years ago to outline the goals that this department ought to have, and mobility, congestion and safety were on everybody's list right at the top, and to think that the only way we're going to have a positive cash flow in these situations is more congestion and less mobility. I think that's a depressing conclusion.

So maybe that's the purpose of this drill is to get depressed.

MR. SAENZ: Right before Christmas. Sorry about that.

MR. JOHNSON: I would hope not. I think it's to illuminate the facts that we're having to deal with and the judgments that we make to find the appropriate funding sources.

Anyway, those are the observations that I have.

MR. SAENZ: And I think we need to look for additional funding sources to help supplement so that we can bring those curves a lot closer together across the state.

MR. HOUGHTON: I'm going to get shot for saying this, but this begs the question that you can no longer go down this rocky road without additional revenue sources or user fees, and we have said we're not going to convert existing roads, but there's going to come a point in time where you can't avoid that subject, non-conversion.

MR. WILLIAMSON: Well, unless other sources of revenue are generated.

MR. HOUGHTON: That's the first criteria: you've got to identify can you, will you, and can you get the authorization, and then what are the other sources of user fees.

MR. WILLIAMSON: Robert?

MR. NICHOLS: On this particular example, the useful life of preservation costs was about double the original construction cost?

MR. SAENZ: It's a little bit less. We're looking into the numbers.

MR. NICHOLS: It's almost two times.

MR. SAENZ: Yes, sir.

MR. NICHOLS: And I know you ran an example like six, nine months ago of another one, had a little lower volume, and the preservation costs were about three times the construction cost.

MR. SAENZ: Right.

MR. NICHOLS: And I know that over the years, at least the last eight years, most of the focus I know from the legislature -- I'm not talking about recent but historically in the communities that have real congestion problems, the focus was to come up with resources to add capacity, which is very logical to help reduce congestion, but there was no emphasis on coming up with resources to pay for the preservation. Because obviously every time we add capacity, we had better come up with a new resource to preserve it; otherwise, we're going to have to rob from our ability to add capacity, and that's the trap we got into and that has evolved over the 20 years.

So I think that's one thing is to show a little clearly: you add capacity, you better come up with a resource when you do that to preserve that thing.

MR. HOUGHTON: Do you have that number, James?

MR. WILLIAMSON: What number?

MR. BEHRENS: Fast Jimmy Bass.

MR. BASS: It's very small. For the record, I'm James Bass, director of Finance at TxDOT.

And as Mr. Saenz mentioned earlier, the last time the state gas tax was increased was October of 1991 which, as that falls in the state's fiscal year, it was actually fiscal year 1992. So fiscal year 1992 actually had some state gas collections under 15 cents a gallon and some under 20 cents, so the first full state year of the new gas tax was in 1993.

What that shows is in 1993 dollars, the deposits to the State Highway Fund were just over $1.5 billion. In fiscal year 2003 in 2003 dollars, it was almost $2.1 billion, almost 33 percent increase, it would appear.

The next column over says "Motor Fuel Tax Adjusted for HCI." HCI is the Highway Cost Index, very similar to a consumer price index but looks at the materials that we purchase for construction. If you discount that revenue stream back to 1993 dollars to show the true purchasing power of the state gas tax between '93 to 2003, the purchasing power actually went down, it's relatively stayed the same over that entire period in the neighborhood of $1-1/2 billion.

And the rest of this chart goes on to show that unfortunately vehicle miles traveled and other items, there is no discounting factor to bring those back. Inflation does not affect the increase in vehicle miles traveled. So the revenue generated per 100 miles of VMT has gone down considerably and the purchasing power of that revenue has gone down even more so.

MR. NICHOLS: So you basically dropped from it looks like a penny, 1.3 cents per mile traveled?

MR. BASS: Correct.

MR. NICHOLS: To under a cent. If you were to back up a couple more decades using that same process, to like the '70s, I would almost speculate it was probably many times higher than this.

MR. BASS: Correct.

MR. NICHOLS: Because the volumes were lower.

MR. BASS: And it's actually per 100 and doing it per mile it would be less than a penny. This particular chart shows that it's less than a dollar because it's per hundred miles.

MR. NICHOLS: So that's about a penny.

And at the point in time in Texas' history when the vast amounts of our roads were built, the '50s and the '60s and the early '70s, these numbers would have been dramatically higher actually, on cents per mile traveled actually going into construction for new roadways?

MR. BASS: Correct. And the intent of this chart was just to show the impact of inflation since the last motor fuels tax increase on the state side, that yes, the true gross collections have continued to increase as population, registered vehicles and vehicle miles traveled increase, but that purchasing power of that revenue has stayed relatively the same.

MR. WILLIAMSON: Thank you, James.

Okay, Amadeo, I appreciate the report and the update. Same instruction from the commission five months ago when we started this, this department is famous for collecting data and ratios and computations and graphs, we want to be sure we focus as much on the information the legislature needs for the future as we focused on the information it needed for the past.

So let's get this routine down cold where we can defend it from every angle and be prepared to deliver it to the legislature in January, along with some of the other analyses that you'll present us in January.

Thank you very much for your hard work on this. It's important.

MR. SAENZ: Thank you, sir.

MR. WILLIAMSON: I think we're ready.

MR. BEHRENS: We'll go to agenda item number 12(a). This will be a recommendation by department staff which the minute order concerns the selection of the best value proposal for the planning, development, acquisition, design, construction, financing, maintenance and operation of the Oklahoma-Mexico priority element of the Trans-Texas Corridor system, and this one generally paralleling Interstate 35. We refer to it as TTC-35.

The second part of this minute order will be concerning and the recommendation of looking at the execution of a comprehensive development agreement for TTC-35.

Phil, I'll turn it over to you.

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

As Mike mentioned, you have a minute order before you this morning. What I thought I might do to help illustrate the process, we put together a little PowerPoint presentation, and I guess pardon the pun, but I'd like to provide kind of a roadway map to lead you through the process of how we've gotten to this point.

MR. WILLIAMSON: Phil, if we're going to do it this way, the commissioners need time to absorb what they're looking at, so if you would, kind of give us the opportunity to look as you go.

MR. RUSSELL: Will do.

Really I think you have to ask yourself the question, first off, of what is the problem, why are we going down this path, what would be the purpose of it. And I think from our perspective we define that in two general areas. There are probably many more, but for today's discussion, I've focused those into two general areas: population and traffic growth.

And I got the guys to go back and look at the census data in Texas back at the turn of the century, and I think it's kind of interesting -- as most of us know that are kind of amateur historians, I guess -- Texas at the turn of the century was very rural, very bucolic, pretty much what you see in the films in Hollywood.

I think it is interesting to note that the growth that is occurring is in the central and the eastern part of the state, not surprisingly -- that probably has much to do with water -- but I think it's also interesting to note where some of those population centers are growing. Of course, Harris County -- and I apologize, I think that screen eats my lasers -- maybe I can still show it -- Harris County, right here on the southeastern portion, but apart from that you have Bexar County, you've got Waco, McLennan County, Dallas-Fort Worth area.

And so even though I-35 has not yet been built and probably hasn't even been contemplated, you can already begin to see population that is accumulating and developing along this central artery of Texas.

Let me zoom forward a half century, right after World War II, and you can begin to see some changes. The population, off the top of my head, at the turn of the century was about 3 million people. Now we're popping up to 8 million people, the best I remember. But you can begin to see some centers popping up of more population, but you see further development along that corridor.

And of course, this is about the time that the precursors of I-35 were being developed, but again, you can see that development coming up from Laredo and the Lower Rio Grande Valley, up through San Antonio, Travis County, Waco, on up through Dallas-Fort Worth.

We zoom forward to the last population date, year 2000, and you can see the landscape of Texas is vastly different. For the sake of today's discussion, I've popped to those 50-year snapshots, but the reality is you can begin to see certainly in 1950, but even more so about 1970 you see some increase in population in the state.

And again, you can see some heavy growth areas up and down the corridor. Dallas County, Harris County, in the red, are showing some vast and quick explosive development.

We zoom forward to 2030, and not surprisingly, increased development along this artery, the spinal cord for Texas, and probably for the central U.S. as well, continues to see this growth. Again, you see Bexar County, Harris County, Tarrant, and Dallas all now achieving that explosive growth.

MR. WILLIAMSON: So the top urban centers of the state, there's really four mega-urban centers: Dallas-Fort Worth, San Antonio-Austin, Harlingen-Brownsville, and Harris-Ball, I guess Galveston County.

MR. RUSSELL: Galveston.

MR. WILLIAMSON: Okay.

MR. RUSSELL: And if we zoom one more snapshot up to 2050, again it's furtherance of that same growth pattern. It's not to say that there's not some growth out in these areas, but much of that is still rural, still more agricultural. This area very, very quickly is becoming urbanized within that central corridor.

And then to quantify that, and we tried to analyze just the I-35 corridor, just that spinal cord of Texas, and we looked in close proximity and we selected counties within a certain 50- or 100-mile radius of that study area, and what it showed, really, commissioners, were staggering.

I think we all sensed this but essentially what it's saying is over half of the state's population is located within very close proximity and relies upon I-35 on a day-to-day basis. The total population for the state, of course, is approximately 21 million as of the 2000 census, but over 50 percent now rely upon and live within close proximity.

And again, if we use those same figures and straight-line it out, it would suggest that almost 60 percent, 57 percent will be in 45 years living in close proximity. So I think that begins to give you the sense of the population, where we've come, and where those that have that demographic knowledge think we're going to be heading to the future.

MR. WILLIAMSON: So at this point in your analysis, we're not considering who lives in Oklahoma and uses 35, we're not considering who commutes from Chicago with a big truck and gets to Mexico and hauls goods back and forth, we're just focused on Texans.

MR. RUSSELL: That is correct, just the population.

MR. WILLIAMSON: The citizens of this state that are within 50 to 100 miles of this corridor and use it every day to transport themselves or to receive the goods and services they purchase as of this moment in time, over 50 percent of the population of the state relies on Interstate 35 as its principal lifeblood.

Forget NAFTA, forget that, forget the migration from south to north and north to south, forget all of that. Just thinking about Texas and Texans, over half the population uses the 35 corridor as its principal artery for its daily business. Is that what I derive from that?

MR. RUSSELL: Yes, sir, exactly.

MR. WILLIAMSON: Carry on.

MR. RUSSELL: It absolutely is the spinal cord.

Let's talk about the other half of that. With that population, what logically comes with it, of course, is the traffic. I pulled out some quick figures from some of the metropolitan areas, San Antonio, Austin, Temple, Waco, Dallas. As you can see, we have some very, very large numbers.

Again, for the folks here in Austin, that's probably not surprising at all. When you look at Dallas and San Antonio, you can see that same sort of explosive traffic and congestion.

MR. WILLIAMSON: Now, is Dallas Interstate 35 East or is that a number combined with 35 West?

MR. RUSSELL: That's just East.

MR. WILLIAMSON: That's just East. So you left out the more important part of the Metroplex?

(General laughter.)

MR. RUSSELL: It was unintentional, I assure you.

MR. HOUGHTON: Does that include, Phil, truck traffic?

MR. RUSSELL: Yes, sir, it does.

MR. HOUGHTON: So that does include commerce.

MR. RUSSELL: Yes, sir.

And Commissioner, I'll be happy to share that data with you as well -- I don't have it in front of me. Best I remember, the traffic, for instance, between the Austin area north of Austin, I think it's approaching in excess of 20, 25 percent truck traffic.

Amadeo, does that sound reasonable?

I reviewed those numbers here a month or two ago, but I'll be happy to provide those at a later date.

MR. WILLIAMSON: That's fine.

MR. RUSSELL: And once again, you can look at 2030 and 2050 and the reality is all of these facilities, the reason they're not growing even faster is, frankly, there's just no more capacity, there's no more lanes to put them. They're going somewhere and they will go somewhere, but it really begins to give you a sense for what's going on.

US DOT puts out some various studies. This represents some of the truck flows, Commissioner Houghton, that you talked about a minute ago, that are coming up through Texas and how those are distributed throughout the United States. And you can see, you know, predominantly it's going to the Eastern Seaboard, East Coast, but also some in the Midwest and California as well.

MR. WILLIAMSON: Hang on a second.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: Does the traffic appear out of the Lower Rio Grande Valley appear to be, in the aggregate, heavier than that of, say, the Laredo corridor or the Del Rio corridor?

MR. RUSSELL: That's what that graph is suggesting.

MR. WILLIAMSON: The large artery here would then suggest that about 50 percent splits to Houston -- no, maybe 60 percent to Houston and maybe 40 percent to San Antonio and then further north?

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: So that almost suggests that the I-69 corridor, from a truck perspective, from about Corpus Christi northeast is more heavily traveled than the 35 corridor.

MR. RUSSELL: There's a great deal of traffic in that corridor as well, yes, sir.

MR. WILLIAMSON: Okay, thank you.

MR. RUSSELL: And again, if you lend that back to some of that population growth, I obviously focused on the I-35 corridor, but you can begin to see that same growth potential through Harris County and throughout East Texas.

MR. HOUGHTON: Do we know the volumes that go with truck traffic?

MR. RUSSELL: Yes, sir. This is in trade value in billions of dollars. I think we probably have some data -- and again, I'd be happy to provide that to you -- of the actual cargo, but this is in value in billions. And you can see the general progression of truck traffic from 1995 all the way through 2000.

Obviously there was a little significant aberration in 2001 that was attributed to 9-11. It's been leveling out. They have not computed the data, I understand, for 2003 or -4, but I think the preliminary numbers that I've been given would suggest that 2003 and -4 will again begin to see that growth building up over 120 once again. I would anticipate, my expectations are that '03 as well as '04 will once again show that escalation.

MR. WILLIAMSON: Could that drop partially be attributable to economic slowdown as well as border slowdown, or a combination of the two?

MR. RUSSELL: That's an economist question, obviously, but I would think obviously that would be a key contributing factor, yes, sir.

MR. HOUGHTON: Part of that is China too.

MR. WILLIAMSON: And this is truck growth, this isn't a match for Texas population. Part of this is Texans and part of this are non-Texans moving through the state.

MR. RUSSELL: Yes, sir. It's kind of the second half of your rhetorical question, I guess, earlier where we were talking about purely population, purely Texans, now we're beginning to talk about other folks that use our corridor besides all of us that live up and down that corridor.

So I think by most viewpoints, we really have some issues that are up and down 35 and we have to begin to look at what our choices are, what our opportunities are to improve that corridor, that need.

We've looked at three or four areas: do nothing, doing nothing more than what we're doing right now; there have been some suggestions that perhaps we need to improve the existing footprint, widen in place, double-deck; construct a series of loops perhaps around the cities; or maybe construct a parallel corridor such as the Trans-Texas Corridor 35. And I thought I might briefly talk about each one of those bullet points.

The cost of doing nothing more than we're doing right now, I guess really that's kind of the copout title. It would be pretty easy for human nature, I guess, just to sit back and wrench our hands and say, Dadgummit, we're doing just as much as we can and that's about it. But the reality is congestion does get worse every day that we delay.

And from a personal point of view, Chairman, I'm the guy that lives in Georgetown, I'm the one that gets to drive up and down 35, along with all those other members of the driving, traveling public, and I find myself increasingly having to leave Georgetown earlier and earlier to get here on time, if not to get around the congestion but from the dependability standpoint.

If I have an early meeting and I absolutely have to be there, it might be a meeting with Mr. Behrens at eight o'clock and I absolutely don't want to be late, so now I'm at the point that I leave my house at six o'clock in the morning. And looking at these numbers, I anticipate I'll probably have to start leaving earlier than that in the next few years.

So I think that congestion gets worse, driver frustration grows, economic activity will slow down. I think here locally, Dell Computer is one of those stories that came out two or three years ago, and certainly not within the department, but there were others that perhaps didn't believe some of those concerns that Round Rock area that suggested we're moving out of town or at the very least we're not going to grow our business anymore unless some sort of congestion relief is provided.

Of course, the reality is Dell did move some of those jobs or at least moved their business elsewhere in Tennessee and other places. So I think that model is there, it made everyone take notice, and I think that Dell example is and will continue to occur up and down that corridor unless we aggressively fight that congestion.

Of course, quality of life suffers. I am a morning person, but I would love to leave the house a little bit later in the morning.

MR. WILLIAMSON: Wait a second. Go back, I want to ask you a question.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: When you say the cost of doing nothing more than we're doing now, I want to quantify what we're doing now. We are investing every day tax dollars in capacity on Interstate 35 between San Antonio and Dallas, are we not?

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: I mean, I drive it twice a week and I see the construction, have to live through some of the nighttime stops. You know, I used to always leave at night where I wouldn't get stopped, and now we do nighttime contracts, so we're stopped every night.

But we are investing now in 35 based upon the amount of money we have available to allocate.

MR. RUSSELL: I think, Chairman, you're exactly right. We are expanding it. I think Mr. Behrens is pushing those districts, the Austin District, Richard Skopik, and the Waco District is working very hard, all the way up to Dallas-Fort Worth.

And to the extent they can, they're widening on the inside area. Some of the folks here in the Austin area can see some of those improvements that have occurred through Williamson County. And so for various reasons, we had some right of way and we had some flexibility within that median in the middle of that roadway to add some additional lanes, and we're doing that.

I think part of it is, just as you expressed, that work as done is always complex, it's under traffic, and it's always a bit of a challenge. And it takes us a while to accumulate enough dollars to actively pursue it. We're doing it, it's never built as fast as I think any of us would like to have it built.

Let me talk a little bit more about that exact subject: widening in the existing urban footprint. To the extent we can widen inside that median and the transportation engineers 50 years had the foresight to provide a little extra right of way, then that is advantageous. We can squeeze those lanes in, and those sections were completed up through Williamson County here just within the last few years.

But if we don't have that flexibility, then our only opportunity is to begin to widen outside of those main lanes, and you really have a cascading effect. We have to widen those lanes where there are sections of frontage roads that typically requires that those ramps and those frontage roads also be reconstructed and widened.

The right of way along that 35 corridor is very expensive, even in the rural areas, whether it's the rural or the urban areas. You know, in the rural areas, we buy it per acre; as we get very close to I-35, we buy it per foot. So that's reflected in that cost of construction.

All those issues that you talked about a moment ago of building it under traffic, one of the things that we try to do to accelerate construction is to do some nighttime work, 24-7, and it doesn't come without a price tag, it is costly. We think it's in the best interest of the traveling public but it is costly building under traffic.

Without a doubt, you not only disrupt existing businesses, you simply destroy those businesses that are very close to that right of way. As we have to expand it to buy a slightly larger footprint, we will get into those businesses and destroy them.

Increased congestion, we've talked a little bit about that. Limited state dollars. Once again, on a pay-as-you-go format, it takes a bit of time. And Amadeo, in the previous presentation, discussed that a bit, but it takes us a bit of time to accumulate enough state dollars to build these projects. And to date, my experience is the private sector has not been overly interested in contributing dollars to that sort of project.

MR. WILLIAMSON: I don't want us to fall into the trap of picking and choosing numbers that we want to use. When you say $60 million a mile, you're talking about an urban mile?

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: You're not talking about north of Temple to south of Waco. So in theory, when we're analyzing our choices, we wouldn't multiply $60 million times 320 miles, we would multiply that times perhaps 84 miles inside the urban footprint.

MR. RUSSELL: Right.

MR. WILLIAMSON: And we would use a lesser figure, probably a near-urban figure that we might investigate, but certainly not $60 million a mile.

MR. RUSSELL: That's right, Chairman. I think perhaps on the Katy -- if Gary Trietsch was here -- it might be higher than that actually, with the right of way costs in some of those construction efforts. But I think you're exactly right, when you get to some of the more rural areas, then that number would go down. Right of way is slightly cheaper and some of the construction problems are a little cheaper as well. So there's a range.

MR. NICHOLS: Let me ask a question.

MR. RUSSELL: Yes, sir.

MR. NICHOLS: Most of the expansions that we have undergoing and are planning on 35 along these stretches is typically to add an additional lane on each side. Is that right?

MR. RUSSELL: Some reconstruction activities, but also adding lanes where possible, yes, sir.

MR. NICHOLS: And that's going to take a number of years to complete that, but that corridor is already congested today, so if that expansion was completed today, we would basically be at capacity right now.

MR. RUSSELL: Yes, sir.

MR. NICHOLS: Without allowing for the growth that you showed a while ago.

MR. RUSSELL: That's right, without getting in with really comprehensive widening and redesign.

MR. WILLIAMSON: So when you say increased congestion, you mean as you block lanes to do the construction, that's what that means.

MR. RUSSELL: Yes, sir, exactly. Any of us that have driven up and down I-35 for the last 20 years would agree.

MR. HOUGHTON: Has the analysis, the R-over-C, that Amadeo showed earlier been done on this?

MR. RUSSELL: Not to my knowledge, but we'd be happy to do that as well.

MR. HOUGHTON: That would be a big number.

MR. RUSSELL: I suspect it would.

MR. WILLIAMSON: Okay, so do nothing or widen the existing urban footprint.

MR. RUSSELL: Yes, sir. In those urban areas, are there other choices? Here in Austin we're mighty proud of our University of Texas Longhorns, and so I don't think we're going to get into roadway expansions getting into Memorial Stadium, Disch-Falk Field -- my point being it's highly congested, you've got the State Cemetery, you've got a lot of impediments towards widening that footprint. And I think that would go to the same token in Temple, Waco, Dallas, whatever the case may be.

Now, in the early '70s there was a gallant effort, with an understanding that that footprint was limited, there was a gallant effort to go ahead and double-deck and put meaningful congestion relief here. The best I remember, that was probably in the early '70s, 1972 or so.

MR. WILLIAMSON: I can tell you because I worked on it.

MR. RUSSELL: Did you?

MR. WILLIAMSON: Yes, when I was in college.

MR. RUSSELL: '72?

MR. WILLIAMSON: '72.

MR. RUSSELL: But because of those efforts, I think the congestion relief that we do have today in Austin is attributable to essentially to doubling that capacity. The reality is it is expensive, it's all structure, it's all bridge work. If you look at the basic cost that the department has for widening or building bridges, that would be somewhere in the neighborhood of about $25 million per miles, not a lot of extra right of way but very expensive construction cost.

MR. WILLIAMSON: So the difference between $60- and $25- is purchasing the right of way and moving the utilities, things of that nature?

MR. RUSSELL: Yes, sir, fundamentally so.

MR. WILLIAMSON: Why do local leaders not like double-decking?

MR. RUSSELL: I think it's a multitude of reasons. When I was in the Dallas District in the '80s there was some discussion about double-decking North Central, and the reasons I think most often expressed were visual pollution, noise pollution, there were several of those issues that really had no support at all. To my knowledge, that has not been really supported since the double-decking effort here in the Austin area.

MR. HOUGHTON: It might be an improvement going through Memorial Stadium.

MR. WILLIAMSON: Hey, hey.

MR. RUSSELL: Well, I don't know. Is that Rose Bowl or Cotton Bowl, Chairman?

MR. WILLIAMSON: Six more years and there will be as many Longhorns as there are Aggies and then we'll have our day, you and me and Amadeo.

(General laughter.)

MR. RUSSELL: Moving on, even though when you double-deck in place, you do minimize -- I think one of the upsides to it, you minimize the impact to some of those businesses, some of those areas outside the right of way, you still do destroy some businesses, you certainly continue to disrupt those existing businesses.

Once again, it's the same issue we have of limited state dollars, pay-as-you-go basis, we've got to accumulate those dollars before we can build those projects, and once again, I've seen absolutely zero interest from the private sector in putting in any of their equity into a project of this type.

One of the other issues that comes up is the cost of constructing a series of loops around the cities. As you can begin to see, as we move out the cost goes down, down to, say, $10 million per mile. Typically these are done on new locations so it's not being constructed under traffic. We do have some savings from that standpoint.

The right of way begins to get a bit cheaper, maybe not being purchased per foot but certainly purchased for large amounts per acre. Disruption to businesses is lessened because typically you don't have as many businesses in those areas. Although to be effective, those loops still have to be built in fairly close proximity to those cities.

Expectation of greater access. Typically communities and developers and property owners will be looking to those opportunities to develop their property. A longer time frame to develop; you get into right of parcels, utilities, probably less than it would be right up next to 35, but there are still utility issues. We do have to build all those grade separations throughout.

Once again, the same issue: limited state dollars. And once again, to date we haven't seen a great deal of interest from the private sector in developing these sorts of projects.

MR. WILLIAMSON: So we've been open for business generally four years, intensely for two years, and aggressively marketing our new approach to transportation for almost two years, and to date the private sector has not stepped forward with any interest in widening, double-decking or looping.

MR. RUSSELL: No, sir. The only project I can really think of, there's been some interest in 820 and 183 in the Dallas-Fort Worth area. That's a highly urbanized project and there might be some traffic and revenue potential there. But outside that, not much interest, no, sir.

And then the last option is the cost of constructing a parallel facility such as the Trans-Texas Corridor 35. Again, the actual construction cost between this and a loop is probably pretty close to the same, a four-lane facility, about $5 million per mile, $4 million per mile probably. The right of way is, again, much cheaper. Instead of paying $10 or $15 a foot, we're paying perhaps a few thousand dollars per acre in those areas.

We think that private dollars are available and are interested and we do receive a great deal of interest from the private sector on developing these sorts of projects.

And the time frame, that I think Mr. Behrens has talked about before, typically can be constructed a little quicker. It's not under construction, our developer can get out and move very, very quickly, just as is occurring on our Central Texas Turnpike project.

MR. NICHOLS: And that process does not disrupt the traveling public.

MR. RUSSELL: Exactly.

MR. NICHOLS: And also, you don't have to tear down existing businesses.

MR. RUSSELL: You know, Commissioner, there is some limited impact here on 130 as we cross some of those existing roadways, but by far there is very little impact to the traveling public. There might be some businesses, there are certainly a few homeowners there, but for the most part, looking at the big picture, the impact is much, much, much less, and the ability to build it expeditiously is greatly increased.

MR. HOUGHTON: What about the right of way as far as the footprint versus what traditionally has been done in the past?

MR. RUSSELL: As far as the Trans-Texas Corridor itself, or in this?

MR. HOUGHTON: The Trans-Texas Corridor.

MR. RUSSELL: Well, the footprint for the Trans-Texas Corridor, of course, is envisioned to be a bit larger. What I always analogize back to is in the early '50s a lot of our farm roads and state highways in the state were being built on 60 and 80 feet. And I can tell you from my times in the Bryan District, we had many farm roads built on 60 and 80 feet, and I can imagine what the impact must have been to those property owners or to the general public when the folks came down, the interstate planners, and started talking about 400- or 500-foot impact.

So you look at that, that had to be a quantum leap from a 60- or 80-foot footprint to where we are now on the interstate of 400 to 500, but where would we be without the interstate system.

So I think that same logic probably applies here. When you begin to grow beyond the interstate -- which we certainly are doing on I-35 -- from that 400- to 500-foot footprint to what the Trans-Texas Corridor might be of 1,000 or more, that certainly makes people stand up and notice and there's some interest in that.

But I will say also that we're going to be practical about it, we're going to use good commonsense, and there may be opportunities where we split that system apart, it may not be an all-in-one swap, it may be in a couple of different areas. That could occur here in the Austin area. But the reality is, Chairman and commissioners, a lot of that activity, a lot of that right of way acquisition activity is going to occur one way or another.

Utility companies, whether it's electrical or water lines, all those things are going into place right now, whether it's an electrical transmission line, a water line, whatever the case may be.

MR. WILLIAMSON: So you're saying as opposed to in one spot wide, multiple spots not as quite as wide, but added together just as wide or wider.

MR. RUSSELL: Yes, sir.

MR. HOUGHTON: If hindsight were 20-20, back in the '50s when they built the interstate system, do you think they wish they'd have had that wide footprint up 35 today?

MR. RUSSELL: I can't speak for those folks in the '50s. As one of those in the year 2000, you get, I wish they had gone and got a little extra right of way. Because I think just as we're trying to build some additional lanes in that median, if we had the luxury of a bit of extra right of way, then certainly.

Again, just my point of view, we probably wouldn't be looking at the Trans-Texas Corridor, we could continue to widen inside that existing footprint, and I think that would be the proper thing to do.

MR. WILLIAMSON: Okay.

MR. RUSSELL: The goal of the Trans-Texas Corridor 35 project, very simple: to build an efficient, reliable transportation system to assure public safety, improved mobility, economic vitality, and quality of life.

Let's talk for a few minutes about some of the benefits. Four of those -- and there are many -- four of those that I've selected to discuss today: the private sector resources, private sector innovation, faster delivery, and build as market need dictates.

I think, commissioners, there's been a lot of discussion that elements of the Trans-Texas Corridor are being contemplated being built in areas that aren't needed, but the fact of the matter is we have one procurement that we've initiated and that's the Trans-Texas Corridor 35 element. And since it is market-driven as a toll road, market conditions will dictate.

We're going to be building sections that aren't justified, but when you have fairly high levels of congestion, that's when it begins to make sense to develop reliever alternative routes.

MR. WILLIAMSON: So with respect to item 1, when you say private sector resources, you say money available to us from the private sector in replacement of state dollars not available to us for the reasons we discussed earlier, and private sector dollars available to us for this type of facility not apparently available to us for widening the existing footprint, double-decking through the cities, or building near urban loops.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: That's what that means?

MR. RUSSELL: Yes, sir, exactly.

MR. WILLIAMSON: And by private sector innovation, you mean different ways of either designing or building or operating different pieces of the asset, ways differently than what we would do.

MR. RUSSELL: Exactly.

MR. WILLIAMSON: Faster delivery speaks for itself. I want to focus a moment on the build as the market dictates. This goes back to a little bit of the information battle we face every day. No one has suggested that any of this facility be built before its time, and the difference is who is defining time.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: In our world, in the TxDOT world we define an asset's time according to a government process. In the case of a private-sector-financed asset, the private sector is not going to invest a significant amount of money in building an asset upon which they're going to lose money, so by definition that defines time.

MR. RUSSELL: I think so.

MR. HOUGHTON: But at the same time, Phil, one profitable sector of the corridor may support a non-profitable or less profitable sector of the corridor as defined by the investors.

MR. RUSSELL: Yes, sir.

MR. HOUGHTON: And the development group.

MR. RUSSELL: The financial term would be cross-collateralization, but Commissioner, you're exactly right. And the reality is that's how we can develop that entire corridor throughout in an effective, efficient time frame.

(Governor Perry entered the Commission Room.)

MR. WILLIAMSON: Continue.

MR. RUSSELL: Yes, sir.

The CDA approach. The purpose -- and again, there are many elements, many reasons why we've selected this approach for this particular project, but really it boils down to two main elements: equity and innovation.

We're hopeful, we anticipate bringing private sector money, equity into a project to help us deliver it quicker, and as you say, Chairman, replace some of those existing state or federal dollars.

We've never said we have the corner on good ideas, we think we have a lot of good ideas, but we're very hopeful and anticipate the private sector bringing in some really neat innovative ideas in helping us deliver this project in a more expeditious fashion.

Our particular approach and the goals on this 35-TTC were: to procure a long-term strategic partner for the department, up to 50 years; we want to minimize those state and federal tax revenue contributions; we want to maximize, obviously, the private sector commitments -- that provides more state dollars so that Amadeo can utilize those to maintain other needed facilities; and of course, as we discussed before, to accelerate project delivery.

Let me step back for a minute and tell you a little bit about how we analyze the proposal and how this procurement process has unfolded. We've selected what I think are the best and brightest minds across the department and throughout the state to help us with the procurement. Mr. Behrens was happy and nice enough to make sure that we could pull in the folks we needed to have a successful procurement.

When you look at the Overall Evaluation Selection Committee right here, if you can see that pointer, it was headed up by Ed Pensock of my staff. Throughout that we've got James Bass, who you heard from a minute ago, the director of the Finance Division; Thomas Bohuslav, the director of the Construction Division; John Campbell, the director of the Right of Way Division; Wayne Dennis, the deputy director of the TP&P, the Planning and Programming Division; Mark Marek, the director of the Design Division; and of course, Cathy Williams, who unfortunately is retiring. Cathy was very, very beneficial as Mike's kind of eyes and ears on that Overall Evaluation Selection Committee.

I should point out, as well, that the Federal Highway Administration was very closely involved throughout this procurement process. Dan Reagan and his staff have been very, very, very helpful to us. Tony Palacios was the observer who was involved, again, in the procurement process.

Let me attempt to drill down, Chairman, into those individual committees and I'll talk for just a moment on each one of those.

The first committee, the Legal Administrative Subcommittee: Chair Jack Ingram, one of our fine associate general counsels; Patti Ball from our staff; Mr. Coby Chase, the director of the Legislative Affairs Office who has been very quiet this morning; and Robert Lopez, information specialist from the Public Information Office.

This committee, as the name connotes, looked at legal administrative issues that came up during the procurement process, they did the pass/fail analysis, essentially to ensure that all three proposals did pass muster, that they at least made the minimum scores to go to the next level.

The Financial Subcommittee: John Munoz, James's deputy at the Finance Division, chaired it; Brian Barth, the director of Transportation Planning and Development in the Dallas District, participated; Andy Evans, Jack Heiss from my staff participated; Max Proctor, director of Programming and Scheduling for the Planning and Programming Division; and Linda Olson, director of Letting Management from the Design Division.

This was obviously -- and I'll go into it in a bit more detail in a moment -- the Financial Committee was a critical, critical element. For all those things that we've talked about this morning, bringing in private equity, leveraging and replacing state and federal dollars, this Financial Committee really did a bang-up job in analyzing these proposals to ensure that we had the best value to the State of Texas.

The Management Committee: again, Robbie Stone, turnpike design engineer in my division, chaired it; we had Elizabeth Boswell, the Construction Section director in the Construction Division, one of Thomas's able lieutenants; Jack Foster, who has been very involved from a TxDOT standpoint over the last 10-12 years on overall system planning throughout the state, Jack is the director of System Planning for the Planning and Programming Division; Lain Ellis, archeologist for the Environmental Division, we wanted to make sure that, as all these projects are, the environmental issues are extremely important and we wanted to make sure we had that input on that committee; Robert Stuard, of course, the deputy district engineer in the Austin District who is gaining a great deal of experience on the 130 projects and other projects in the area.

The Development Committee, another very, very, very important committee. This committee looked at the overall development, phasing and engineering plans for each one of these proposals.

Dieter Billek, in my division, chaired that committee; we also had Doug Booher from my division; Mr. David Hohmann who is a Design Division director, one of Randy Cox's lieutenants in the Bridge Division; Julie Brown, the deputy district engineer to David Casteel in the San Antonio District; Albert Ramirez, the Transportation Engineering supervisor in Laredo; Alisa Polansky was very instrumental, Alisa comes to us from the Waco District; Gustavo Lopez, design engineer down in Amadeo's old district, the Pharr District; Mark Schluter, director of Transportation Operations in Fort Worth; and of course, James Kratz, transportation engineer for the Traffic Division. A very, very important critical committee for this selection.

Let me take a step back and emphasize one more time Federal Highway Administration's involvement in this process. Dan Reagan and his guys have been instrumental in helping us develop not only this project, but frankly, the 130 projects and others.

Mary Peters, the administrator for the Federal Highway Administration, was down here in Austin back in the summer or spring, I guess, and took special interest in what we were trying to do here in Texas, particularly the Trans-Texas Corridor 35 project. So they've been involved from the very beginning in the procurement process, the evaluation, selection and oversight.

MR. WILLIAMSON: Is he here today?

MR. RUSSELL: Dan Reagan? He is indeed.

MR. WILLIAMSON: Would you like to take a break?

MR. RUSSELL: Love to, Chairman.

MR. WILLIAMSON: Dan, are you out there, buddy? You wouldn't mind speaking, would you?

We talked earlier about accurate information and inaccurate information. One of the inaccuracies we've had to deal with the last few months is the notion that we're somehow doing something different on the environmental that's helping us avoid our obligations under NEPA.

First of all, everything we've done to date, from your perspective we've done according to the book and correctly?

MR. REAGAN: Yes, sir, that's correct.

MR. WILLIAMSON: And have we done anything that seeks to avoid complying with the NEPA process?

MR. REAGAN: No, sir. We wouldn't let you do that.

(General laughter.)

MR. WILLIAMSON: And it's your anticipation that you will continue to be watching every step we take to make sure that we don't do that in the future.

MR. REAGAN: We will not treat this any differently in terms of environmental assessment than we do our normal activities with the department, Mr. Chairman. By law, we have to approve the environmental documentation. My name goes on the documents, so I'm the one that has to stand in front of the judge and justify what was done. So we will be very careful, I can assure you of that.

MR. WILLIAMSON: I'm always mindful of not putting you on the spot, but I appreciate you. It's very important for us to lay this groundwork.

MR. REAGAN: Yes, sir.

MR. WILLIAMSON: Like I said earlier, people can be led to the truth, whether they choose to repeat it or not, we can't control.

MR. REAGAN: That's correct.

MR. WILLIAMSON: Thank you very much.

MR. REAGAN: Thank you.

MR. WILLIAMSON: Just a short break for you, Phil.

MR. RUSSELL: Thanks, Dan, appreciate it.

Moving along, and again, I think some of those things that Dan could amplify much better than I could, but they were very involved throughout. The industry review meetings are created with a format so that we can gain some understanding of what the private sector interest is. We had multiple rounds of these industry review meetings, and the Federal Highway Administration was involved in each and every one of those meetings.

I talked a minute ago about FHWA administrator Mary Peters coming down and visiting Texas, and the reality is most of that was related to the Special Experimental Project 14, what we in TxDOT euphemistically refer to as SEP-14. We always want to abbreviate everything we can.

The SEP-14 project essentially allowed us, and it was a reflection of what we're trying to do in the department of a new delivery system where we can look a concurrent processes from an environmental and from a procurement standpoint.

But Dan, again, was very involved in that and his staff, the environmental coordination, and of course, as Dan says, his name will be on the final document as we move forward.

Let me start honing in on more of the elements of the process itself. As I mentioned earlier, all three proposals on the 35 element were reviewed for responsiveness, basic pass/fail criteria; they all passed with flying colors. Each one of those subcommittees evaluated, based on their subject matter expertise. Those scores were evaluated and sent up to the Overall Evaluation Selection Committee. That group made a recommendation to me, and then subsequent to that, I've now made my recommendation to the executive director, Mr. Behrens.

As I drill down more into the individual elements, this was the proposal scoring system. We looked at, again, the development plan and the financial plan was the lion's share. We anticipated earlier on innovation equity will be the champions on this project. Now, the weighting factors demonstrated the importance we placed on that.

You can see the scores for the overall management plan, and the quality of the management plan. Essentially they're looking at the overall structure for each one of the teams, their experience on bringing together and building large infrastructure projects throughout this country and worldwide.

And then the price for the initial scope of work -- and I'll talk a bit more about that later -- that's not the price to construct the project. What our effort will be is, assuming we execute the contract, we move forward and it's awarded and executed, over the next 12 to 18 months will be a planning effort where the successful proposer will be refining their development plan and refining their financial plan. And what we said was essentially we'll cap that effort at about $3-1/2 million, and so we look for their leveraging capabilities even within the planning effort.

MR. WILLIAMSON: Now, Phil, I want to understand all of the proposers knew this ranking of importance, they knew the conceptual development was more important than conceptual financial plan.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: But did they know what weights you would attach in your scoring?

MR. RUSSELL: No, sir, they didn't. They knew the priority list, conceptual development plan and order of priority all the way down. We did not tell them the weighting percentage, and we did that really for one very careful reason: we wanted these folks to spend significant time on all elements. Internally we looked very closely at the development and financial plan but the other elements are equally important, and we wanted to make sure that they spent the due diligence, the time and effort to fully address each one of those elements to give the state the best proposal possible.

MR. WILLIAMSON: So they had to almost guess at whether or not conceptual was worth 15 percent or 40 percent of the total score, so that forced the proposers to have to invest resources in all elements of the plan.

MR. RUSSELL: Yes, sir, exactly.

MR. WILLIAMSON: And did that result -- well, I guess you'll tell us if that resulted in the product you wanted.

MR. RUSSELL: I'll give you a sneak peek, Chairman, but yes, I think we were rewarded for that effort. We had really great thorough proposals.

MR. WILLIAMSON: Okay.

MR. JOHNSON: Phil, one question along that same line. On the financial plan, did the proposers have an indication of what the important criteria were to the people who, in essence, were going to be grading their financial plan?

MR. RUSSELL: Well, actually that's a great segue, Commissioner. When we look at it, what we did for each one of the elements, we subdivided that into criteria. For instance, the development plan had 18 different criteria which the development committee closely analyzed and checked them against. They didn't know what the criteria would be or even how many. Again, they focused on the overall development plan and then they were graded upon their completeness in those different areas.

The financial plan had 12 elements, 12 criteria, so on and so forth. And the point structure, again that's just a straight derivation from that percentage on the previous slide, 200 points total.

MR. HOUGHTON: But Phil, we've been talking about equity, equity, equity for I've been here for a year, on and on and on from this dais, have we not?

MR. RUSSELL: Yes, sir.

MR. HOUGHTON: I think everyone has been hearing that.

MR. RUSSELL: Very straightforward, yes, sir. It should be no surprise to anyone.

Let me say that, as the chairman alluded to a moment ago, I think our efforts were rewarded. We had three outstanding proposals. I couldn't tell you how pleased I was as I read through these proposals.

The teams really brought the best and brightest, not only domestically but internationally, and as you'll see, I think they've married up some of that international expertise with some of our great domestic partners.

As you can see, if we have time, Chairman, I want to spend just a couple of minutes going through each one of the members on these teams.

I'll start with Cintra, in alphabetical order, and if I can go through those, the yellow, Zachry Construction Corporation and Ferrovial-Agromàn are in yellow because they are both equity partners with Cintra.

Zachry and Ferrovial are obviously both in the construction industry; Earth Tech is, of course, a large planning and design firm; Price Waterhouse is a financial advisor; J.P. Morgan also a financial advisor; Bracewell and Patterson, legal advisor;

Pate Engineers, one of our great local engineers, civil engineering; Aguirre and Fields, right of way and surveying; Rodriguez Transportation Group, civil engineering; OTHON, Bill Othon runs the company, it's civil engineering as well; Railroad Industries Incorporated deal with railroad and logistics consulting; Amey is an operation maintenance and highway advisor;

Mercator is a financial advisor; Public Resources Advisory Group is a financial advisor, as is Southwestern Capital Markets; National Corporate Network is a staffing and employment services; and HRM Consultants is a right of way consultant. Really put together a great, great team.

MR. HOUGHTON: How many of those companies do work in the state of Texas?

MR. RUSSELL: Don't have that number offhand, Commissioner, but I would say the vast majority of those are involved in Texas currently. I'd be happy to give that breakdown to you at a later date as well.

The second team, again in alphabetical order, is the Fluor Team. Fluor, of course, heads this up as the equity partner; Dan Stoppenhagen has been our point man on that.

Fluor has with them Parsons Brinckerhoff which is a very large project planning and design firm nationwide as well as locally; Edelman is a public outreach firm; Vollmer Associates is, of course, one of the traffic and revenue forecasting engineers; Goldman Sachs is a financial advisor; Transurban is a potential financial investor, Transurban comes from Australia; S&ME, Inc. is an independent quality management firm; again Rodriguez Transportation Group deals in planning, civil engineer; and RJW Operations are administrative services and public involvement. Again, really a great, great team that Fluor put together.

The third team, the last but certainly not the least, is the Trans Texas Express; Phil Armstrong headed up that team's effort. They have four equity partners that have been named: Skanska BOT AB -- Skanska is, I think, the largest worldwide construction company out of Sweden; Telvent is a large Spanish firm dealing with construction and maintenance/operation planning; Hensel Phelps is, of course, a large construction services company; Chiang, Patel & Yerby is a planning and engineering group company there in the Dallas-Fort Worth area, and have really pushed this team and led this team throughout.

Skanska USA is a civil construction services; Turner Collie & Braden, TCB, is one of our good planning engineering firms; DMJM+Harris, planning and engineering; Corgan, planning and engineering; Morgan Stanley is a financial advisor, as is First Southwest Company;

LAN, Lockwood Andrews & Newnam, planning and engineering; Hanson Wilson is planning and engineering; Nationwide Water Resources Services, planning and engineering; W.P. Engineering, operations/quality assurance; Moreland Altobelli, property acquisition and mitigation; Lea + Elliott, planning and engineering; Cinnabar Services, right of way acquisition;

Vinson & Elkins, legal counsel; Shannon, Gracey, Ratliff & Miller, corporate and condemnation attorneys; Arredondo, Zapeda & Brunz, engineering and planning group, predominantly in the Dallas area; APM & Associates, engineering and planning; and Advanced Consulting Engineers, engineering planning.

And again, Chairman, I appreciate your patience in allowing me to go through each one of those teams, but really all three teams really answered the call and did an excellent job putting together and forming these teams.

I'm sure before I end this presentation I'll drive you crazy talking about some of the environmental issues, but there's been enough misunderstanding, I guess, in what we're trying to accomplish here that I think it's important. I'd say once again, all these facility alignments, the locations are conceptual in name, they are subject to the NEPA process, all environmental approvals, FHWA approvals -- Dan Reagan has to sign that document, TxDOT review and approvals, final traffic and revenue forecasts and financial modeling.

MR. WILLIAMSON: Does that mean we're fixing to see a map?

MR. RUSSELL: Yes, sir, we're getting ready to see a map.

MR. WILLIAMSON: So we just need to be aware that whatever those lines are, they're lines for purposes of educating us and not lines for purposes of building a road.

MR. RUSSELL: Yes, sir. And again, Chairman, you know, typically we have a very sequential process that we follow. We achieve the environmental clearance, then we start looking into some of the other elements, design, right of way acquisition. What we're attempting here is more of a concurrent process to accelerate project delivery, but there's still two different processes and we are still in control of the environmental process.

But I think that is a complex subject and there's been a lot of misinformation, misunderstanding, I think, about what we're trying to accomplish.

MR. JOHNSON: Can I make a suggestion from experience that I've had?

MR. RUSSELL: Yes, sir, certainly.

MR. JOHNSON: I think the word "conceptual" needs to be capitalized and maybe even in bolder print, because as many times as we mention this, there will be someone somewhere who assumes these lines are exact and actual, and that's when things start getting exaggerated and embellished, and we run into a lot of issues that perhaps the assumption is a mistake in the first place, and as you know, we get a lot of feedback and dialogue over that.

So you may just want to emphasize again that these lines are conceptual, capitalized, bold.

MR. RUSSELL: You're exactly right. And of course, Commissioner, you've been to some of our public meetings, and when the governor and we unveiled the plan showing the potential alignments, there were many people that had their slide rule, their ruler out measuring and saying is that on the front side of my front porch or is it right behind my back porch.

And regardless of how many times we said that, it always got lost that those are just concepts, they show needs now and needs that we think are going to occur in the future. All of that will be worked out in the environmental process, whether it relates to how close something should be to a city, how far away it should be, all the environmental and socioeconomic.

So, Commissioner, you're exactly right, we'll try to even boldface that more the next time.

Once again, we talk a little bit about the Federal Highway Administration's involvement. In the future they will continue to be closely involved with us on the procurement and concurrence of that. As we achieve individual environmental clearances, Dan Reagan will be signing, approving those. The developer oversight and coordination will be closely coordinated with Federal Highway Administration. They will be approving individual facilities.

And of course, one of the things that really makes this process work is Mr. Reagan is nice enough to co-locate some of his staff with TxDOT's staff, and it really helps streamline the process, whether it's an environmental or just a project development process.

Again, step back, knowing that we're running concurrent processes. The environmental status to date, we've had about 70 public meetings held throughout the corridor. The draft environmental impact statement is being prepared and includes the project's purpose and need. The draft EIS will identify and analyze the project's preliminary corridor alternatives.

We've had two series of public meetings to date, essentially coming out with a blank slate, with a very large study area. The last public meetings we begin to refine that and we anticipate in the spring we'll refine it even more, and the ultimate goal, of course, is to come out with a preferred corridor up to ten miles wide.

Let me give you just a few of the highlights from all three proposals, and Chairman, commissioners, I've got to be a big careful. As you know, it is an open procurement, I can't get into the detailed specifics of the proposals. Ultimately we hope we will have this contract awarded and we'll be able to execute a contract with that selected provider, but until we do, all of the information on the two unsuccessful proposers is confidential, and if for some reason we weren't able to come to an agreement with that selected provider, we would have the ability to drop down to number two. So again, we're very cautious about releasing that information.

MR. WILLIAMSON: Wait a minute. I want to understand what you said.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: You are going to recommend a person to negotiate with.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: And we're going to see a little bit about why.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: It's the two that you're not prepared to negotiate with yet that you can't disclose details because it would be an unfair disadvantage to them.

MR. RUSSELL: Right.

MR. WILLIAMSON: So you're going to negotiate with the one you selected and if you can't get the best interests of the state, you're going to drop to the second one and do it again, and then drop to the third if necessary.

MR. RUSSELL: Yes, sir.

And the other part on that, Chairman, is we will be paying a stipend to the two unsuccessful proposers, and essentially that will allow us to purchase the intellectual property rights to their creative good ideas, and we will have that ability to import those in to that successful proposer. So for a couple of reasons, at this time we want to keep that information confidential.

MR. NICHOLS: At the point we pay the stipend, then their proposals will be public information.

MR. RUSSELL: I think actually once we execute the contract the proposals become public. Richard Monroe may want to correct me if I'm in error.

MR. NICHOLS: But there is a point in time when that information will become public.

MR. RUSSELL: Yes, sir.

MS. ANDRADE: Phil, I have two questions. One is once we pay those proposers, that information will belong to us?

MR. RUSSELL: Yes.

MS. ANDRADE: And two is what time frame are we going to allow ourselves to negotiate with the first proposer?

MR. RUSSELL: We're going to be probably over the next 30 to 60 days trying to negotiate. We have very limited negotiation capabilities before then. Once we execute that agreement, before we begin that 12- to 15- to 18-month planning effort, we'll have an additional opportunity to refine some of those and import some ideas from the unsuccessful proposers.

MS. ANDRADE: So we're hoping no more than 60 days?

MR. RUSSELL: Yes.

MS. ANDRADE: Okay, thank you.

MR. RUSSELL: An important point was just brought to my mind. As much as I talked about how confusing and complex the environmental process and what we're trying to undertake is, a moment ago I mentioned that our environmental process is a two-phase. The first phase we hope, through public involvement, through engineering and environmental analysis, we hope to refine that corridor down to essentially a development corridor no more than ten miles wide, essentially selecting that alignment but it will be within that ten-mile corridor.

It does not mean that the project will be ten miles wide or that we'll be purchasing that right of way ten miles wide, but that will be that first environmental clearance. And then as we begin to look at individual elements of the Trans-Texas Corridor, whether they're road or rail or other, then within that ten-mile corridor is where we will hone and focus our environmental energies, and it won't be ten miles wide, it will be that 1,000- or 1,200-foot wide corridor.

So thank you for that clarification. Hopefully I didn't confuse anybody earlier on.

Commissioners, you know, the reality is there have been concerns expressed in the public, in the media's eyes, and I thought in all fairness perhaps I could take just a couple of minutes talking about each one of those issues.

Four of those that come up the most to my attention, I guess, as I attend public meetings or read various publications, are: it costs too much, it takes too much land, it's not needed, it doesn't address urban congestion. And I thought I might spend just a couple of minutes on each one of those bullet points.

Costs too much. The reality is, and Amadeo and others before me have shown, that we really have insufficient public dollars to pay for these needs. We're going to have to look for other opportunities from the private sector to help invest and pay for some of our public facilities.

The facility development, we talked about before, is market-driven. The market will control which elements are built and in what fashion, and what speed, what phasing.

And this is a long-term program. I think there's been some concern or comments made that we intend to build all elements of the Trans-Texas Corridor in a very short time basis. We've tried to be very clear from the beginning that this is up to a 50-year, and perhaps even longer from a planning horizon. So this is an attempt to look at where we have congestion right now and we have to provide relief, and where we anticipate growth in the future.

MR. WILLIAMSON: Well, let me see if I understand. The most often repeated concern is this costs too much from the perspective of state tax dollars.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: You're going to divert state tax dollars away from my project in LaGrange on to this boondoggle next to Austin. Right? That's an example.

MR. RUSSELL: Probably an exact quote, Chairman, yes, sir.

(General laughter.)

MR. WILLIAMSON: And staff's response to that is, you know, you're right, we have insufficient public dollars, and therefore, we're trying to attract private investment based on a market-driven system. We understand that the market driving it means it will be a long-term program.

MR. RUSSELL: That's right.

MR. WILLIAMSON: Mr. Phillips, when did you slip in?

MR. PHILLIPS: Quite a long while ago.

MR. WILLIAMSON: Sorry I missed you.

MR. PHILLIPS: It's good to be here.

MR. WILLIAMSON: And did I just see Mr. Staples?

MR. BEHRENS: Right in front.

MR. WILLIAMSON: Sorry I missed both of you, and welcome to both of you. Thank you for being here.

Okay, go ahead, Phil.

MR. RUSSELL: Let's go to another often expressed concern: it takes too much land. You know, commissioners, the reality is to the extent that we're going to be taking land and we're taking it out of production, really there's no argument. Yes, we will be taking property, it does take a fair amount of footprint to develop any of these infrastructure improvements, whether it's widening the existing footprint, whether it's back in the '50s we talked about earlier on the interstate program, or whatever the case may be.

I think there are some things that can probably help mitigate and alleviate that. Property owners will have an opportunity to participate, become equity partners in the corridor. We're going to be looking very closely at that, seeing whether there's interest where there's opportunities there.

The urban property tax rolls will be impacted more than rural and agricultural property taxes, and that's a tough one. But the reality is, as we talked earlier, those urban land costs are very, very expensive.

And property owners, of course, could continue to use the land until needed for transportation purposes. It's been a long history of the department throughout the state where if we were progressive and active and purchased right of way in front of a transportation project, we worked very closely with those local farmers and ranchers to allow them to utilize their land until the time we needed it for construction, and we anticipate that same philosophy on the Trans-Texas Corridor.

MR. WILLIAMSON: So the truth is this is one of those things that's just painful and there's not a lot that we can do about that.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: We do know that going all the way back to the series of choices you gave us which were widening the existing footprint through urban Texas, building double decks, near urban loops, no matter what we do, we're going to be taking somebody's land. It's either going to be the gas station, the clothing store, the rancher or the farmer, somebody's land is going to be taken. There's going to be some disruption.

We also know that the value of property removed from urban tax rolls has much more impact on a school district in Waco than the value removed from agricultural rolls.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: We also know that we historically have dealt fairly with every landowner, and in this case they will have the opportunity to participate as equity owners forever. We also know that they will be allowed to use their land until the very last moment, and perhaps thereafter. But we don't run from the fact that we understand you can't do things like this without some pain, it's a difficult thing to have to do.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: We also know the flip side is for those who choose to stay next to the corridor if it's built, for the first time in their lives they'll have the opportunity for economic development in their community that otherwise wouldn't occur. They'll have access to competitive natural gas and utilities and fiber optic phone systems, and lord knows what else the economy brings over time.

MR. RUSSELL: Yes, sir.

MR. NICHOLS: Isn't it also true that on the land masses taken for the utility corridor portion of this, if not put together in an orderly fashion, independently each oil company, gas pipeline, electrical transmission line would go out and get their own 60-foot corridor or 100-foot corridor, whatever. And independently it actually takes up more land, disrupts more roadways and farms and things like that than it would if it were put together in an orderly fashion.

MR. RUSSELL: Commissioner, you're exactly right. I talked to one of our district engineers, Maribel Chavez up in the Fort Worth District, and she tells me that in her area from Denton on the south, I guess, towards Grandview, there's an unbelievable amount of activity that's occurring right now, and she gave me some data on how many permits that are occurring every day permitting longitudinal crossings of our highway system.

And I think that same comment is occurring whether it's a water line, whether it's a transmission line. Those things are going to occur whether we're involved in the Trans-Texas Corridor or not. They will continue to occur and bisect those properties.

MR. NICHOLS: And independently those don't draw near as much attention but collectively they take up more and have more disruption.

MR. RUSSELL: Exactly. It's 160 feet here, 20 feet here, 100 feet together; when you collate those, it's a sizable chunk of property.

MR. WILLIAMSON: Okay.

MR. RUSSELL: I've also heard expressed the reason: You know, that's really not needed. But the reality is TTC-35 is needed. Relief to 35 is of preeminent importance to the state. Again, I would be very, very surprised if any community, any newspaper, any television station polled their readers or their listeners about the state of affairs of 35 from Dallas all the way down through Austin-San Antonio, I'd be very, very surprised if the general public said we're happy, it's a great driving experience, give me more of that.

(General laughter.)

MR. WILLIAMSON: Well, in fact, haven't we done some recent direct survey work?

MR. RUSSELL: Yes, sir. Actually we've done a couple of those things. We had public meetings throughout the state -- Randall Dillard and the Public Information Office handled those -- and we just let the public come in there and say what do you think about corridors, whether you lived in El Paso, Jacksonville, Amarillo, whatever, what corridors do you think need improvement. And by a large majority, Texans said the 35 element; about 59-60 percent of those that turned in surveys suggested that that corridor needed improvement.

MR. WILLIAMSON: What about the business community along the corridor, Coby, what did they say?

MR. CHASE: For the record, my name is Coby Chase, director of Legislative Affairs.

We were asked to talk to our districts up and down 35 to ask them to report to us the largest businesses that rely on a sizable transportation system and ask the fairly simple question: Does something need to be done to improve I-35, transportation along that corridor?

And I haven't counted them, but I imagine there's over 30 or 40 large businesses, like Pittsburgh Paint and Glass, Lone Star Heavy Haul, Dell, Wal-Mart, UP Railport, University of North Texas -- not a business per se -- the American Airlines Center, Wal-Mart Distribution Centers, Texas Crushed Stone, United States Postal Service, all said yes.

MR. WILLIAMSON: So the reason this is important, as you know, we hear frequently, Governor, from people purporting to speak for the mayor of Dallas, people purporting to speak for the county judge of Dallas County and McLennan County, and the City of Waco and the City of Temple, and they all say the same thing: Don't do something that will destroy the tax base of our economy. But we go straight to that tax base and say do we need to do something about this corridor, and they all say yes. Now, they leave it up to us as to what that is.

It's just kind of interesting that everyone that uses the corridor for an industrial reason recognizes the problem. Everyone that lives on the corridor and is afraid of losing business puts the problem secondary behind their economic activity.

Okay, thank you, Coby.

MR. RUSSELL: Chairman, we've talked before, it is a 50-year program, it's not just for today, it's for the future for Texas. It is market-driven, and Coby has talked very well about some of those businesses up and down the corridor.

Let me talk a little bit about some of the things you hear, primarily in the metropolitan areas: It really doesn't address urban congestion. But I think the reality is probably just the opposite. It allows for diversion of that through traffic from those local roads.

You know, I look in the Dallas area, I guess, first off before the time that LBJ Freeway was built, people come up 35, if they chose to go to I-30 or I-20, they only had one choice really: they came into the mixmaster, the canyon, downtown Dallas, and/or Fort Worth and then they turned left, turned right and headed on out that way.

Well, certainly George Bush provided an opportunity, as I do when I travel frequently in Dallas: Do I go ahead and continue up 35, should I take LBJ around to make my connection? And I think to some extent, George Bush Turnpike that the North Texas Toll Authority is developing gives the traveling public those same options. Again do you come in, do you deviate, do you take George Bush, and I think the numbers will show that George Bush is providing a lot of relief to LBJ.

I think the same thing could be said in Houston first off with 610 and then the effect that Sam Houston Tollway has on relieving some of that congestion on 610. Those are a couple of the ring roads, the circumferential roads, but there are other examples too. Dallas North Tollway relieves and handles a great amount of traffic that would otherwise be forcing its way up North Central Expressway.

And again, the idea that nonstop traffic will take the easiest route. The same thing I do when I'm, again, traveling through Dallas, I look at my watch, I see is it on the peak, is it on the shoulders, and then I make my selection or my choice of how I'm going to drive.

Now, in all fairness, Chairman, I've talked about some of those examples that have really been successful, I think it's only fair that I talk about an example that hasn't been quite as successful, it hasn't provided that immediate relief, and that's the Hardy Toll Road.

And you know, there's been a lot said about it, it's underachieving, but I think it really comes down to is the glass half full or is it half empty. You know, perhaps some would say it was built too far in advance, but the reality is construction was cheaper, right of way was cheaper, and as we get better connectivity there in that north Houston area, I think that will be a great relief route as well for I-45.

MR. JOHNSON: I think that if you would take the traffic off the Hardy and put it on either 45 or 59 -- which 45 certainly has a huge amount of congestion, 59 is in decent shape until the construction in the downtown area -- if we were take that traffic off the Hardy and move it over to those two corridors, I mean, it would be a nightmare. So I think this is a little bit of a misleader here.

MR. WILLIAMSON: I think the point you're trying to make -- correct me if I'm wrong, Phil -- is there are legitimately some criticisms out there of toll alternatives. But in this context, John, traffic patterns are not meeting expectations, therefore, the revenue that HCTRA projected to support this deed is not there, therefore it hasn't been a good investment for HCTRA.

And those things ignore two matters before us: one, what would happen if you didn't have the toll road; and more importantly, what would happen if HCTRA had not put tax money in to begin with.

MR. JOHNSON: I mean, it's a good investment for the community.

MR. WILLIAMSON: I'm sorry. Go ahead.

MR. RUSSELL: That's fine. Any other questions?

You all have been very, very patient. Let me start honing in on the highlights of the recommended proposal.

It's a 50-year partnership. They've subdivided it into near-term, mid-term, and long-term projects to develop the entire corridor from Oklahoma to Mexico.

It anticipates over $6 billion in near-term transportation construction projects.

It also anticipates a payment in excess of a billion dollars to TxDOT for additional transportation projects that can be utilized within that corridor.

And they would negotiate the right to operate and collect those tolls for up to those 50 years.

MR. HOUGHTON: Let me ask you a question. So South Texas has now an opportunity to get its long-needed four-lane, fast, truck route, highway, whatever it may be -- an opportunity.

MR. RUSSELL: Potentially, yes, sir.

MR. WILLIAMSON: I want to be sure I understand this, Phil. Anticipate, I guess, is a TxDOT word. Are you saying that this proposal in the near term -- what is the near term, how many years?

MR. RUSSELL: Near term I think is structured to be five years, from 2005 to 2010.

MR. WILLIAMSON: In the near term we're going to spend $6 billion?

MR. RUSSELL: No. They're going to, they're going to bring those financial resources to bear.

MR. WILLIAMSON: The successful proposer.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: Is going to spend $6 billion?

MR. RUSSELL: Yes, sir, or have caused to be spent that $6 billion.

MR. WILLIAMSON: How much is ours?

MR. RUSSELL: Zero state and federal dollars as it's currently structured.

MR. WILLIAMSON: How much of that debt do we guarantee?

MR. RUSSELL: None. I would anticipate it will all be revenue bonds or other bank loans, it will not be TxDOT.

MR. WILLIAMSON: You're saying that these guys are going to spend $6 billion, not our money, their money, no debt, we don't sign any notes?

MR. RUSSELL: That's their plan, yes, sir.

MR. WILLIAMSON: I think that meets our definition of equity.

MR. HOUGHTON: That meets the definition of equity.

MR. WILLIAMSON: And they're going to give us a billion dollars?

MR. RUSSELL: Yes, sir, that's in their proposal.

MR. HOUGHTON: It's pretty hard to look past that.

MR. WILLIAMSON: Would you care to comment on this as one of the godfathers of this deal? I mean, it was Senator Shapiro and Mr. Alexander and yourself and Mr. Ogden.

MR. KRUSEE: I do have to catch a flight so I do appreciate the opportunity just to say a word, and I really wasn't going to say anything because I think this is one of those days where actions speak louder than words.

But as I was watching the chairman speak in his peculiar thoughtful style --

(General laughter.)

MR. KRUSEE: -- I started thinking about the first time that I met Ric Williamson and it was on 1992 when I first got elected, I was 32 years old and it was about this time of year and I hadn't even been sworn in. And Ric Williamson calls me up and he says, Come on over to my apartment tonight and let's talk about what kind of legislator you're going to be.

So I went over there and Ric had one of his good friends over there and that was the night I met Rick Perry, who was the Ag Commissioner, and we talked long into the night about accomplishing great things for Texas, about how to be a great leader for Texas, and we weren't thinking about how to be on Texas Monthly's ten best, but you know, Ric, I think we were talking about days like this.

MR. WILLIAMSON: I didn't know that you remembered that.

MR. KRUSEE: Sure I do. And you know, Governor, a little over two years ago when you made that presentation in the auditorium at the Capitol, and I was in the audience and like everybody else out there, I didn't really fully grasp what the hell you were talking about.

(General laughter.)

GOVERNOR PERRY: You do now, don't you.

MR. KRUSEE: I do now. And I want to congratulate you on your vision and your leadership and the commission and your staff on your hard work because you have made this, I think sincerely, the most historic day in transportation, not just for Texas but for the United States since Eisenhower.

MR. WILLIAMSON: Thank you.

MR. KRUSEE: Thank you.

MR. WILLIAMSON: Thanks for stepping up. I appreciate your remembering 12 years ago.

Are you going to tell us who this is?

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: We're all kind of curious.

MR. RUSSELL: The recommended best value proposer is Cintra. Again, we think they have really done -- all three teams, but Cintra has really done a bang-up job. As Commissioner Houghton said earlier, it's been a constant drumbeat, equity-equity-innovation, and I think they've really come through with flying colors.

If I could, Chairman, I might spend a few moments on some of the individual projects, and I should stress those are conceptual projects that they've identified. We still are involved in that environmental process, all of those things are subject to that environmental process, but let me just touch base on a couple of those elements first.

As I said earlier, we're almost on the new year. With any luck, you all will approve this award and as Commissioner Andrade said, we will be working very diligently to work out the details and execute this contract. And then over the next 12 to 15, 12 to 18 months -- we depict it as 12 months -- we will be working closely with Cintra to refine their financial plan, refine their development plan, and hopefully about a year or so after that we will begin to develop individual elements of their plan.

The first project that they discuss -- and I'll talk a bit more about this -- would be a toll road from Austin to San Antonio, Segments 5 and 6 essentially of 130.

MR. WILLIAMSON: So that's not a different road, that is maybe perhaps a different way of approaching Segments 5 and 6.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: That's the part from Lockhart to San Antonio via Seguin that we're currently not able to afford to pay for.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: Okay, go ahead.

MR. RUSSELL: And each one of these amounts, those are the estimated construction amounts. And again, on that first segment, Chairman, of course that is environmentally clear as part of the Central Texas Turnpike Project, but these others are not. And so obviously, as that alignment, as the environmental, the NEPA process dictates, that alignment will be refined and these amounts will be adjusted accordingly. But philosophically, I hope that gives you a flavor of the projects that are conceptually involved in their proposal.

They also look for their second project to develop a toll road kind of on the southeast portion of Dallas; their third one would be a complementary project on the northeast quadrant of Dallas; they would extend a project Georgetown up to Temple -- that would be a favorite project of mine so I can get north a little easier; and then extend that from Temple on up to Dallas.

Those are five of their first rollout projects, and I've kind of grouped those into that top five. I'll talk a bit more about that on the next slide.

But two of their other projects that are included in their near-term projects will be a toll road on the south part of San Antonio, I guess from I-10 on around to 37; and then a potential railroad relocation project here in Central Texas.

MR. WILLIAMSON: Now, is this what they're going to spend, or is this what they estimate the total cost to be and they'll spend part of it and we'll spend part of it?

MR. RUSSELL: All of those top five projects -- and again, I've grouped those for a reason -- those are all projects that they will be delivering to us. They'll be developing their financial plan; I'm sure it will be a combination of revenue bonds and bank debt and other funding opportunities. And then these other two we'll talk about as well.

Now, this slide signifies the concession fees that at this time they've indicated would be paid to the department. That first project -- and again, they've got their estimates of what these projects will cost to construct, and then these numbers indicate what they have conceptually provided would be the concession fees to the department. So for the right to build that first project, they will construct it and they will pay the department $36,700,000.

MR. WILLIAMSON: I hate to be repetitive but I just want to be sure we all understand. With regard to that first project, they're in effect saying: We'll build it, you don't have to worry about finding the money; we'll pay you $36 million and we'll take care of building it.

MR. RUSSELL: Yes, sir.

MR. NICHOLS: They're going to buy the right of way, they're going to do the engineering, they're going to do the construction, and then operate it and maintain it.

MR. RUSSELL: Yes, sir, for up to that 50-year period.

MR. NICHOLS: And then at the end of that, they turn it over to the state and the entire project is owned by the State of Texas.

MR. RUSSELL: Yes, sir. And Commissioner, it strikes me that I probably have made an omission and should clarify that. These concession agreements are leasehold agreements, they're still on the state highway system, they're still assets of the State of Texas, a state highway system project. We would be contemplating a 50-year lease of sorts and then after that time it would certainly vest back with the department.

MR. NICHOLS: So ultimate control of access and those kind of rights related to that are still held by the state.

MR. RUSSELL: Yes, sir.

Chairman, without going into too much detail -- I know people are probably getting a bit tired -- these numbers still represent what those conceptual concessions would be.

MR. WILLIAMSON: Oh, I don't think we're too tired of this.

MR. RUSSELL: You like these dollar signs and zeros?

MR. WILLIAMSON: We could look at this a while.

MR. RUSSELL: And again, I'll say one more time that these things are contemplated in their proposal as that NEPA alignment is adjusted closer, further away from cities, closer to 35, further away from 35, NEPA-driven, then these numbers will be adjusted accordingly as well. So I want to make sure I'm not leading you all astray.

Now, Commissioners, these two projects, the southeast San Antonio from I-10 to 37, and then the rail relocation, the financial plans of those have not been finalized to the extent that they're offering concession fees, but I think, especially on this project, that there may be an opportunity to leverage some of those state dollars.

I think the comment was that $100- or perhaps a little bit more, $130 million we could have this entire project built. If you remember, the construction cost for that was estimated at $489 million. So that might be one of the options that the commission would want to look at.

MR. WILLIAMSON: So for example, if Toyota popped up and said, You know what, we'd like to triple the size of our plant but we need a faster, more direct connect to 35 and 37 to do that, I guess we could take part of our concession fee they paid for the other projects?

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: Put that cash with toll debt and immediately build that segment and move that quickly if we needed to.

GOVERNOR PERRY: Mr. Chairman, can I ask a question?

MR. WILLIAMSON: Yes, sir, Governor.

GOVERNOR PERRY: The dollars that will be flowing in on concession, are those limited to the I-35 corridor?

MR. RUSSELL: That's a great question, Governor. Yes. We will not have the flexibility to utilize those on I-10 or I-69, they will be limited to that 35 corridor.

GOVERNOR PERRY: But the fact is those dollars that either this front-end payment, this billion-dollar front-end payment -- is that a correct terminology, is it a front-end payment?

MR. RUSSELL: Yes, sir.

GOVERNOR PERRY: Then the concession dollars that are coming also would be eligible to be put back into that with additional growth that we might not foresee right now.

MR. RUSSELL: Yes, sir, exactly. We could apply all that money back into individual elements.

MR. WILLIAMSON: That's a lot of money.

MS. ANDRADE: Phil, is that for any area of I-35?

MR. RUSSELL: Excuse me?

MS. ANDRADE: In any area of I-35?

MR. RUSSELL: Yes, ma'am.

And again, we asked all three proposers to try to categorize the near-term, mid-term, and long-term, and practically speaking, we understood that those near-term projects, even though we don't have the environmental clearance completed, people can have a sense, they can really fine-tune some of their development and financial plans, and it gets a little more difficult as you go out to the mid-term and long-term.

But that gives you a sense for the projects that were included in the Cintra proposal, not only those in the near-term that I've discussed and shared with you but also the mid-term could be an extension or actually an improvement, I guess, to I-10 which would be connecting up essentially Seguin, the 130 connection at Seguin on down to this project right here.

They also have identified separating the cars and trucks on 130, the pieces of 130 that Bob Daigh has currently under construction right now from Georgetown to Austin.

Some of the long-term projects are kind of interesting as well, commissioners, and again, these are long-term, after 2025, but they've analyzed and begun to look at projects such as freight rail between Dallas and Austin, high speed rail between Dallas and Austin, Austin and San Antonio, a roadway element on the west side of the Dallas-Fort Worth Metroplex, and then a continuation of the Trans-Texas Corridor on down to the lower Rio Grande Valley.

(Tape ended; some dialogue lost.)

MR. WILLIAMSON: ... the State did not invest any money in their plan, in other words, if we let them self-finance or self-perform, this is their estimate of when they would get there. Cuing on the Governor's question about the $1.2 billion, where we spend it, what if we were to voluntarily decide that it was in the State's best interest to connect this corridor with the Port of Corpus Christi, could we take part of that $1.2 billion and go make that connection now?

MR. RUSSELL: Yes, sir, subject to the environmental clearance; once that's secured, yes, sir.

MR. WILLIAMSON: What if we decided it was in the State's -- you're giving me that look. Are you fixing to talk about this anyway?

MR. RUSSELL: No, sir.

MR. WILLIAMSON: Because if you are, I'll stop asking if I'm anticipating.

MR. RUSSELL: No, sir.

MR. WILLIAMSON: There was no cost attributed to moving UP out of San Antonio and Austin. What if we wanted to take the billion and what if we could negotiate a deal with UP -- I don't mean to steal your thunder, I know you're working with them -- but what if we were to negotiate a deal to get them to move, we could use that money to do that?

MR. RUSSELL: Absolutely.

MR. NICHOLS: As I understand it, once the contract is signed which is like after a vote and 30-60 days, you've got a period of about one year which is us working with their proposal, all of us working together doing an actual development plan of these different pieces, what we see, what they see, and then put a financial element to that. So there is some flexibility in there.

MR. RUSSELL: Yes, sir. And Commissioner, I call it a refinement of their existing plan. Things will change over the next year just as they have over the last year, subject to environmental public involvement. But I think clearly that we have the ability to redirect their priorities.

MR. HOUGHTON: Vis-a-vis the San Antonio to Rio Grande Valley, vis-a-vis to Corpus Christi in the planning process.

MR. RUSSELL: Yes, sir.

MR. HOUGHTON: They're not ultimately unilaterally in charge of the planning process.

MR. RUSSELL: Absolutely not.

MR. WILLIAMSON: Please continue.

MR. RUSSELL: The last graph was in a word format; let me try to place these on a map and perhaps that will help from an understanding process.

The first project, again, would be a continuation of existing 130 on down to Seguin, I-10; the second project would be that southeast Dallas corridor connecting up potentially between I-20 and I-30; the third project would be a continuation on up into Grayson County; the fourth project -- the one near and dear to my heart -- would be an extension of 130 from Georgetown up to Temple, Temple to Dallas to connect up; San Antonio southeast loop; and a possible rail relocation.

And again, Chairman and commissioners, we've attempted to put these in dashed lines. I know still, no matter how many times I say that, there will be some misunderstanding that those alignments have been set. They have not; those are conceptual lines that Cintra has put on their proposal, and again, subject to that environmental process.

MR. WILLIAMSON: Let me just ask you, Phil.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: My very good friend and one of the greatest mayors in Texas, Laura Miller, called me a few days ago and she said, Look, Ric, Dallas wants to help itself and help the state, but we have some concerns about the impact of traffic flow on our city.

And what I told her at the time was: Mayor, your opinion and the opinion of your county judge and the opinion of the businesses in your area will all be reflected in the NEPA process, and we don't have any preconceived notions and we don't think our proposers have preconceived notions about where this road should or should not be; to the extent that the environmental process reflects the public's will, it will be driven as probably as close to the edge of urban Texas as possible.

Was that an accurate thing to say?

MR. RUSSELL: Potentially, yes, sir.

MR. WILLIAMSON: And the same could be true for people in Waco who might be concerned, and people in Temple, except for my friend Martha Tyrock that's okay with whatever we want to do. She's a good lady.

MR. RUSSELL: Yes, sir. Again, Chairman, through these 70 public meetings, we're going to have additional public meetings, we're gaining input. We talked about the Dallas area. Bill Held and his staff are very closely involved; Michael Morris with North Central Texas Council of Governments, very involved. And we're receiving that feedback as we speak.

And I think the beauty of this is one size does not fit all. Every community has their own needs, some wish that that line was closer to their communities, and others may say we want it further away. And I think we've got the flexibility to take that input and digest it, along with the other data that we'll be analyzing.

MR. WILLIAMSON: Okay.

MR. RUSSELL: Now is the time to be commenting on it.

Mid-term projects, as I mentioned earlier, the I-10 and separation of cars and trucks on 130, and the long-term projects that I talked about as well. That gives you a bit of a visual perspective of how those projects might play out.

Chairman, again, I'm sure there are folks in the Lower Rio Grande Valley that are running back saying we've been selected, we've been selected. Again, that's a conceptual line; we are looking, as part of the environmental process, at multiple alignments throughout here. So this is Cintra's conceptual perspective, and I think philosophically it illustrates they see a future need to connect up the Lower Rio Grande Valley, depending on where the environmental process takes us.

MR. WILLIAMSON: So this line was created by Cintra, not by us.

MR. RUSSELL: Exactly.

MR. WILLIAMSON: And it's not meant to be a proposed line, it's meant to show conceptually we are sooner or later going to need a high speed truck corridor into the Valley.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: And again, if you leave it to us and don't invest your equity in this, then we think it's a 25- to 30-year project. That's how long before that market-driven decision occurs, but it could occur sooner if we decided to take our equity and it could occur sooner if we decided to invest state tax dollars or if the market were to change.

MR. RUSSELL: Absolutely.

MS. ANDRADE: Phil, I had a question. And I guess the Rio Grande Valley is probably very happy to see that they've been selected but are concerned probably with the time frame. So I guess Chairman Williamson answered my question when he asked you there is a possible chance that that could happen earlier?

MR. RUSSELL: Yes. I think you all will have the ability to utilize that billion, billion two of concession fees however you deem appropriate and in the best interest of the state throughout that 35 corridor.

MS. ANDRADE: Thank you.

MR. WILLIAMSON: This is what we were talking about.

MR. RUSSELL: Yes, sir. And this plays back to the same question, Commissioner Andrade, it shows some of the potential projects that Cintra has identified that that money could be utilized on. And again, I think we've spoken about most of these from the Dallas-Fort Worth area all the way down to the Lower Rio Grande Valley.

We've kind of overlaid the Cintra projects, and again, in no particular order, we've thrown out perhaps some other options. You know, we could look at a passenger rail connection between Dallas-Fort Worth and the Trans-Texas Corridor.

And I believe, Chairman -- I could be mistaken, but I think that's one of the comments, actually, that Michael Morris and the North Central Texas Council of Governments has suggested during our public meetings and public involvement process. So that's something that could be looked at.

There could be a rail relocation between the different railyards, UP or BNSF, where we could help provide some better rail access in that area.

MR. WILLIAMSON: But more important, get that rail out of downtown Dallas and Fort Worth.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: So it's a potential we could use that money or some of it to address the Tire 55 dilemma.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: Phil, do you know about where the new UP multimodal yard is going to be in relation to this map?

MR. RUSSELL: Amadeo, do you remember offhand?

MR. SAENZ: Keep clicking, it will show it.

MR. WILLIAMSON: Is it on here?

MR. RUSSELL: Okay. I guess, Chairman, one of the other elements is something that's frequently been discussed is connecting the inland Port of Laredo to the deepwater Port of Corpus, particularly their new La Quinta facility. That might be something that the commission deems appropriate.

GOVERNOR PERRY: Because that's part of the I-35.

MR. RUSSELL: Yes, exactly, Governor.

MR. WILLIAMSON: Let me ask you, Phil, would there be anything that would stop us -- I mean, I know this is a tangent; I'm just amazed about this money so I've got to stay on it. We could take the $1.2 billion and let's say a revenue bond for an overweight truck toll road from Laredo to Corpus would generate 50 percent of the cost of that asset. We wouldn't use all the $1.2 billion, we'd just use part of it and do a toll bond, and the developer wouldn't care about that. It wouldn't matter to the company if we decided to additionally leverage our equity to build more projects.

MR. RUSSELL: No, I don't think so. Again, their interest is to utilize it on that 35 corridor because that helps the flow of traffic up and down that corridor.

MR. WILLIAMSON: So if the United States Army came to us and said if you'll spur into Killeen and if you'll spur to the port and deepen the port, we'll relocate 50,000 troops to Fort Hood, we could go leverage those spurs with our $1.2 billion, if that's what it took to build $3 billion in assets to bring those employees to Fort Hood. Nothing stops that.

MR. RUSSELL: Yes, sir.

We talked a little bit about heavy truck; we could look at that as a heavy truck route between the San Antonio area and Lower Rio Grande Valley. There we go, Amadeo. Alliance Airport.

MR. WILLIAMSON: See, we picked 277 for our conceptual line.

MR. RUSSELL: -77?

MR. WILLIAMSON: -77.

MR. RUSSELL: Again, it was a dashed line and I know it doesn't suggest any NEPA alignment, although there are plenty that probably think it does.

MR. WILLIAMSON: But it makes the point that lines are conceptual at this time.

MR. RUSSELL: That's exactly right; you're exactly right, Chairman.

Alliance Airport, of course, in that area.

MR. WILLIAMSON: Is that where the BNSF -- does anybody know -- is that where BNSF's railhead project is?

MR. RUSSELL: That's BNSF, and Mike, the UP down in the Wilmer-Hutchins area, that star?

But anyway, that gives you a flavor of potential uses of those projects or of that money for those projects.

Those are all the things that we just got through discussing.

Types of possible rail inside the Trans-Texas Corridor, that gives you a sense. I think Mario Medina and some of his folks probably put these together. It gives you a sense that the design restrictions will have within the corridor. From a bullet train, high speed rail, what the Federal Railroad Administration would require.

MR. WILLIAMSON: Is Mario here?

MR. RUSSELL: Come on up, Mario.

MR. WILLIAMSON: Can you answer just a quick question for me since it's anticipated in this proposal that we have some high speed rail? I notice that we're showing commuter rail can move as fast as 90 to 110 miles an hour. Did you do any work in this layout to give us kind of an example of the difference between like bullet train high speed and fast passenger? Like in times, for example.

One of the things we've been interested in for a while is do you really gain much by having a bullet train from Dallas to Austin.

MR. MEDINA: For the record, I'm Mario Medina, the Multimodal Section director for the Transportation Planning and Programming Division.

As you see on here, those are the kind of speeds when we're dealing with high speed, what it's going to take. One of the things that you need to be aware of is once you get past a certain speed, the rate of return or the number of passengers you have kind of decrease. Once you get to 120 and above, it gets very, very expensive to build but you really don't have any good return from the amount of passengers you'll have. So I just want to point that out real quick.

MR. WILLIAMSON: So you're saying that if Tony Harstell is inclined in Dallas to get on a train and come to Austin, his aboard train time of two hours is not a whole lot faster than his commuter express time of 2.9.

MR. MEDINA: Three hours, yes, sir.

MR. WILLIAMSON: And in the marketplace, that one hour is not enough to justify the additional cost of the bullet train.

MR. MEDINA: Yes, sir.

MR. WILLIAMSON: That's another way of saying perhaps almost as many people, perhaps even more people will take the high speed commuter train as will take the bullet train.

MR. MEDINA: Yes, sir.

MR. WILLIAMSON: Are we doing any research on the technology, Mike, commuter passenger rail? Do we have any reason to believe that they may move faster than 90 to 110 miles an hour in the future?

MR. MEDINA: Well, mainly what we're dealing with here on high speed rail is steel-on-steel technology, steel wheel on steel rail. You'll be able to get up to 200 miles per hour and use that same equipment and get you on that commuter line that can slowly be decreased down to 80 and down to zero at a station, of course.

Some of the higher things such as maglev which is kind of the state of the art, you can get up to speeds of 300 miles per hour, but then again, the cost escalates substantially versus the rate of return you're going to get from the ridership.

One of the things that I think probably is going to happen as we develop these things, we're going to have to go ahead and make a determination on the technology, and right now from my standpoint, my recommendation would be to go with steel-on-steel, steel wheel on steel rail.

MR. WILLIAMSON: Well, if that's the case, why isn't Amtrak full all the time?

MR. MEDINA: The reason that Amtrak isn't full is because of the freight rails, the freight congestion that's on there. The freight rails own the system that Amtrak is running on, pretty much they come first, Amtrak comes second, so that really goes ahead and kills their service time.

MR. NICHOLS: The point you made on freight rail congestion, most people are absolutely not even aware of it. They understand highway congestion, they don't understand rail.

MR. MEDINA: Yes, sir.

MR. NICHOLS: And in Texas today, we literally have some of our freight rail lines maxed out, in effect, congested, and isn't it also true that we have the major rail lines putting a lot of our industries on allocation?

MR. MEDINA: Yes, sir.

MR. NICHOLS: They can't even ship all their product, they're on allocation as to how many rail cars they can ship.

MR. MEDINA: Yes, sir, and actually what's happening is they're turning away business.

MR. WILLIAMSON: Well, I guess what I started to say and I didn't say, but now because of Robert's question, I'm compelled to say, if the freight rail owns all the line, why would we spend one dime and one minute of our time messing around with Amtrak if they're not ever going to be able to move faster? Wouldn't we be well advised to quit wasting our energy on that and focus our energy on this?

MR. MEDINA: My opinion is focus our energy on this. What happens here is by going ahead and building the Trans-Texas Corridor, these rail relocations will provide an alternative for the freight rail system which will hopefully improve the capacity issues we have on the existing rail system which, in turn, will allow us to run commuter trains and probably go ahead and improve the service time for Amtrak also.

MR. WILLIAMSON: I hope you get to feeling better.

MR. MEDINA: Thank you, sir.

MR. WILLIAMSON: Is there any more to this boondoggle?

MR. RUSSELL: Just a couple of little follow-ups, Chairman.

We talked a little bit about the possible rail routes, and I guess really in conclusion, we've talked a bit about that, the next steps in the process. There will be some limited negotiation, assuming you award the contract, before Mike can execute the CDA. We'll execute that CDA and then over the next 12 to 15, 12 to 18 months will be that intensive planning effort where we begin to fine-tune and refine their financial and development plan, and as you pointed out, if we choose to re-prioritize some of those projects, this would be the opportunity to work that out.

So again, in summary, Cintra is our recommended best value proposer. Their plan proposes a concession-based long-term strategic partnership for the department that will minimize the use of our state and federal dollars and maximizes private investment, and we think accelerate project delivery.

The minute order before you would reflect that, and staff would recommend its approval.

MR. NICHOLS: Phil, I know you're not supposed to talk about the other proposals until we reach agreement here and pay the stipend and all that, but it would be reasonable to say that those that the other two proposals we had were very, very good also?

MR. RUSSELL: Very good, Commissioner. I was very pleased with the quality of all three proposers, both from the experience, the horsepower they brought to bear, as well as their overall plan.

MR. NICHOLS: I think as a state we were very fortunate to have not only three outstanding consortiums, but all three of them stepped up to the plate with very good proposals.

MR. RUSSELL: Yes, sir, without a doubt they brought the best and brightest.

MR. WILLIAMSON: Governor, did we get you what you wanted?

GOVERNOR PERRY: Mr. Chairman, well done. That was a very well done presentation.

Senator, I hope you will, like me, thinking about what we have just seen here today when our hair is gray, we will be able to tell our grandchildren that we were sitting in the Department of Transportation conference room when one of the most extraordinary plans was laid out for the people of the state of Texas.

I think back to how our state was impacted in the 1950s with another rather visionary plan when Mr. Turner advised then President Eisenhower of this interstate highway system. Probably a lot of the same concerns were expressed.

When I laid this vision out almost three years ago, I said I want the best transportation system in the world, and I think we've just seen the future and it is here, it is today.

I hope that a lot of people in this audience kind of rocked back on their heels and said I can't believe this. But I think the message is believe it, believe it, it's here.

When we talked about connecting this state, when we talked about the issues of congestion and pollution and economic development, this concept does exactly that.

And I want to join Robert to those three consortiums that have come forward and say thank you. Thank you for some of the most innovative thinking that I certainly have seen, and I suggest this commission, these engineers and employees of a great state agency have ever seen before. Again, the word "stunning" keeps coming back to me, and to each of you, whether or not you were part of, at this particular time, the recommended consortium or those other two, this is powerful, powerful stuff.

And you have contributed greatly to the future of the State of Texas, and I would suggest you have contributed greatly to the United States with what you have laid out today. I've only got one more thought, Mr. Chairman.

Hope, I just came back from San Antonio. We were there with the Toyota suppliers, so another great announcement in your hometown and for South Texas, and for that matter for the entire State of Texas.

You had Segments 5 and 6, I believe, that you talked about to link State Highway 130 over to Lockhart. That was one of those near-term that this consortium talked about in detail.

MR. RUSSELL: Yes, sir, all the way down to I-10.

GOVERNOR PERRY: And it would be a real priority for the people of that area, Mr. Kuempel, I would suggest, and certainly for your folks in San Antonio.

Mr. Chairman, last month did you not negotiate the option to have that section built?

MR. WILLIAMSON: Well, I'd love to take credit, but I think Nichols actually negotiated it.

GOVERNOR PERRY: Let me put it this way: did this commission not negotiate the option to begin that as early as last month?

MR. WILLIAMSON: Is it not true, Mr. Behrens, we can instruct them up to the end of this month to get started?

MR. BEHRENS: I think we have, what, Phil, to the first part of January?

MR. RUSSELL: Yes, sir, January 3.

GOVERNOR PERRY: Then I would highly recommend that you move forward with the completion of State Highway 130 and get it done so that the people of San Antonio can hook up and get to going.

MR. WILLIAMSON: I think that's a good idea.

MS. ANDRADE: Governor, I think that will make San Antonio, especially the business community, extremely happy.

GOVERNOR PERRY: Well, I think we're fixing to make a lot of people in the state of Texas happy.

Mr. Chairman, thank you for the work. Mike, please relay to the men and women -- certainly in this audience they can hear -- in this agency, all across this state in those district offices what a fabulous job they're doing. They are part of something really big.

I have an idea that the people of the state of Texas don't realize just how big this is yet, I'm not sure I do, when a consortium is willing to come in here and offer what we just heard.

Todd, one of the things that we were concerned about was are we going to have the dollars available to do what we're talking about doing, and certainly we want to retrieve more of our dollars from Washington to help leverage what we have in this state. But the fact of the matter is it shocked me that not only can we build these near-term projects without one dime of our construction monies going away from the needed projects that are out there off of I-35 or our maintenance on the rest of our system, but a billion one, a billion two to also come back in here to be used to speed up, that is stunning. And I wish there was a bigger word for it; I'm sure someone else will have it.

But again, I want to say thank you to those individuals who have made today possible, both legislatively, on this commission. This is what I was talking about almost three years ago, and I am excited to be a part of a state that has that type of vision, that has that type of men and women who understand what the future can look like. Thank you.

MR. WILLIAMSON: We appreciate you saying that.

We've got a couple of housecleaning things. Senator Staples, Mr. Phillips, Mr. Kuempel and whoever else I might have missed, you're more than welcome to join with us in a few moments to go back to the back and answer some questions.

Bob Jackson, are you filling in for Richard Monroe today?

MR. JACKSON: Yes, I am.

MR. WILLIAMSON: I know I've asked you in the past about advisory committees. The Governor has suggested to me that the intensity of this matter requires that we reach out to those who perhaps don't agree with us, and he's written me a note that he wonders if we can set up an advisory committee that certainly contains the mayor of Dallas, the guy that writes the strange website about me down in Houston, people who are opposed, people who are concerned, in equal parts people who are skeptics, who are opposed for valid reasons or who support for valid reasons.

Can we put together an advisory committee to check and balance on us as we go through the next year or so of planning?

MR. JACKSON: Yes, sir.

MR. WILLIAMSON: Can you draft up the rules to accomplish that?

MR. JACKSON: Sure. I think the Governor has indicated he pretty much wants that.

Also, do I have the authority to name subcommittees from the commission?

MR. JACKSON: Yes, you do.

MR. WILLIAMSON: Would it be inappropriate to suggest that Mr. Nichols and Mr. Houghton would be a subcommittee of two to participate with Mr. Behrens and the staff in the event we decide to move forward with this?

MR. JACKSON: That would be fine.

MR. WILLIAMSON: Then let the record reflect that, unless Mr. Houghton and Mr. Nichols are unwilling to do this, they will be directly involved. I think the other three of us have missions we're already on right now and I think they're the two best. Mr. Nichols obviously has the most experience on the commission with the 130 project, and this is Mr. Houghton's type of business, so we'll set them up as a subcommittee. Thank you very much.

And let me know about the advisory committee. We'll adopt rules or whatever you suggest.

MR. JACKSON: Sure.

MR. WILLIAMSON: At this time you don't want a vote now do you, Mike, or do you?

MR. BEHRENS: We need a vote.

MR. NICHOLS: We've got people signed up to speak.

MR. WILLIAMSON: I think one has left and one is going to speak later.

Mr. Phillips, now or in the back room, what do you want to do? We want to hear what you've got to say since you were part of getting this done. It also looks like part of that thing ends up in your district.

MR. PHILLIPS: Mr. Chairman, Governor and commission members. I guess Chairman Krusee said it rather eloquently about what a historic day this is. And I have a Sydney in my family, Governor, Sydney, Henry and Mary Beth Phillips, my kids, are going to have a brighter future because of actions today. We don't have a choice.

This is grand, and when I began running for office to represent Grayson and Fannin Counties and started studying and seeing this Trans-Texas Corridor, it made me dream big. It was exciting to say not only will I go down and be able to represent and do some neat things and important things, but here's an opportunity to do some big things, some grand things.

And being at the northern part of the Metroplex and seeing the growth and the continued growth and the congestion, and talking to my business leaders and saying that X factor transportation is a huge factor in their decisions whether they locate a plant here, whether they have a product line that gets to go in Denison, Texas, as opposed to somewhere in North Carolina because the X factor transportation is so important. Traveling down and going to Laredo and seeing all of the growth and the 75 percent of goods that come from Mexico that go through Texas.

This is a historic day, and I just want to congratulate the Governor on putting this plan out and the vision, and the chairman and this commission for accepting that vision and working with it, and TxDOT, Mr. Behrens and your group for working hard. This was a lot of work, I know it was. It was a lot of time, it was a lot of putting together.

And I also want to thank the private sectors who stepped up and who were innovative and who put forth these plans. This private-public partnership is going to make our future, the future of Sydney, Henry and Mary Beth Phillips and all those children in Texas brighter and greater.

Thank you very much.

MR. WILLIAMSON: Thank you. Thank you for your part in it.

Senator, would you care to say anything? This podium is always open to you, sir.

MR. STAPLES: This is one of those rare events where we really are building tomorrow today, and congratulations to each of you who have made this happen, Governor, the commission members, the department and the private sector who stepped up to the table and shared that vision, and it's an exciting day.

The reality of it is that by expediting this, all Texans benefit. You're going to be able to address projects all over the state because it's freeing up needed resources that this is a win-win for all Texans, and I think that's what's so exciting about today. So vote "aye" is all I have to say.

(General laughter.)

MR. WILLIAMSON: Mr. Kuempel, we're kind of glad to see you here.

MR. KUEMPEL: It's nice just to be seen at my age, Mr. Chairman. But I guess in 1985, having already been elected, when I first saw Rick Perry coming in from Haskell and you coming in from Weatherford, I had a premonition. And the premonition was I wonder if Rick Perry will ever be governor of this state and Ric Williamson will ever be chairman of TxDOT. This was in 1985.

(General laughter.)

MR. KUEMPEL: I knew Mr. Nichols was inventing things that I wouldn't understand; Mr. Johnson was taking care of Houston, certainly Mr. Behrens -- I don't know where you were, and this lovely lady probably wasn't even born in 1985.

MS. ANDRADE: Thank you very much.

MR. KUEMPEL: And Houghton was too far west for me to worry about at that time.

But I will tell you, when you see a turtle sitting on top of a fencepost, you've got to figure somebody put it there. The dream, the vision of what you have done today, the culmination of three years of hard, hard work, especially the department -- the star is shining bright, I can tell you -- but to bring this to fruition is something that you ought to be very proud of. And to me, certainly the independent consortiums did a great job, and you always have to pick one.

I think this is what makes Texas the greatest state in the nation and the United States the greatest nation in the world.

GOVERNOR PERRY: Amen, brother.

MR. WILLIAMSON: Amen. Thank you, Edmund.

Members, I'll entertain a motion.

MR. NICHOLS: So moved.

MS. ANDRADE: I second.

MR. WILLIAMSON: I have a motion and a second. All of 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, five-zero. Congratulations, Governor.

(Applause.)

MR. WILLIAMSON: At this time the commission will recess for as long as it takes to leave the dais and proceed to the delegation room. That room is located directly behind or to the north of this room.

When the commission reassembles in the delegation room, the meeting will reconvene, and we will deal with any questions from the media on the record about this historic event in the state's history. We will now move the meeting to the delegation room.

(Whereupon, a brief recess was taken.)

PRESS CONFERENCE

GOVERNOR PERRY: Ladies and gentlemen, if I could grab your attention quickly, I have a one o'clock meeting with governors of border states of Mexico, so I'm going to be departing rather quickly.

But obviously the commissioners will be here. I just want to introduce, first off, Mr. José Lopez, with Cintra -- we met about a minute ago -- and David Zachry, who I have known for some time, the Zachry Company. So these are two of the major principals that were just, I guess, named as the chief finalists -- is that an appropriate term? The wording is a little bit maybe out of the correct order, but let me say thank you and congratulations.

Part of this great vision that we have -- and I'm not going to take any more time making statements. I've pretty much had my say about what today was all about in the commission room. With that, let us open it up to any questions that those of you in the media may have, either for myself or these gentlemen, for the commissioners, or for Mike Behrens.

THE PRESS: [inaudible]

GOVERNOR PERRY: Well, obviously we will look back on today, I think, as one of the most historic days in infrastructure, certainly, in the state of Texas. You will have individuals who point back to 16 December 2004 as every bit as impactful, in a very positive way, as the interstate highway system was more than a half a century ago.

As it changed the United States and as it changed Texas forever, in a very positive way, the Trans-Texas Corridor and the rewarding of this contract will also show, for future generations, what a visionary group of people were leading this state at the Department of Agriculture, at a legislative level, and, I might add, in the private sector, because today would not be -- we would not be having this announcement today if we didn't have very innovative visionary private sector groups, investors, and constructors, and you name it that are on this team that made today possible.

So put your red star on the 16th of December, 2004. This is a big day for Texas.

THE PRESS: For Mr. Lopez, with Cintra. Obviously the deal sounds very, very good conceptually for the State of Texas. Essentially $7 billion, either it gets built or given to the State of Texas.

What is it about your conception that would make that work for you? In other words, did you make some assumptions about what the tolls would be on such roads? How can you make it work for yourself so that you can afford to build those roads and give Texas that money?

MR. LOPEZ: Thank you. Yes, we obviously made a lot of assumptions in the -- and one thing is the very nature of conceptuality it is not only because of the relatively early stage of the studies, of the findings, but as well because we're subject to a lot of regulations, and a lot of has been said about NEPA and other necessary federal and state procedures that will remain in the hands of the administration.

Obviously we've made assumptions on the toll regimes and on the toll levels, which are obviously subject to the approval of the state. But the general assumptions have been made absolutely in line with the actual tolls existing in the state of Texas.

THE PRESS: Does that mean they would be in the neighborhood, for passenger cars, of 20 cents or less a mile?

MR. LOPEZ: We don't enter here in too much detail, but the -- whatever you can see in the parts of Texas that are being tolled will be the starting point for our studies, yes. The tolls are not as easy as saying X cents per mile. They're trucks, they're per axle, they're -- it's a more complex element, but, yes. The answer is, yes.

MR. WILLIAMSON: And then we wouldn't know how to get into their business, but, you know, we're running the toll system separate and apart, the state system, and then Bob Tesch and the NTTA people and HCTRA are running their regional toll systems. And I think we all kind of sense that there may be even more variables than what's being charged now.

We see the day when tolls will be charged based on how fast you're going, based on what time of day you're traveling, based on your independent consumer choices about how you want to drive, where you want to drive, how you want to drive, and how fast you want to drive.

So one of the nice things about the approach the Governor had us take is we kind of don't have to worry about what they want to charge. They have to worry about what they want to charge because they've got to attract you to pay their toll or they don't make any money.

MR. JOHNSON: It's a market driven process.

THE PRESS: Mr. Lopez --

FEMALE VOICE: We have time for one more question --

MALE VOICE: They do that in California right now, market --

THE PRESS: Well, I have more questions, but not for the Governor, so I'll step aside.

MALE VOICE: Okay. One more for the Governor.

GOVERNOR PERRY: Thank you all for coming and being with us today.

THE PRESS: Mr. Zachry, to what degree does other types of ancillary revenue play in your ability to make this work for you, such as, you know, leasing land for other types of businesses, or concessions that would be inside the tollways?

MR. ZACHRY: Our preliminary models are that we're not figuring those in at the moment. And our position, Zachry's position in this, is we are an equity partner, but -- and I would like to express our thanks to the Governor, to the Commission, to all of the staff that ran the solicitation and compliment them on the process.

I would also like to thank Cintra, our partner in this, and I'd like to say what a great thing it is, what a great honor for Zachry to work with a company like Cintra, and they are really the ones that brought tremendous innovation.

We listen to the commission; we listen to the Governor, and we're just very, very pleased to be able to work with Cintra to be able to bring the innovation that the Commission was looking for.

THE PRESS: Can I ask why the portion from [inaudible] to Laredo, that San Antonio was not included in the map, or maybe not even in the plan?

MR. LOPEZ: I'll try to address that. Not that I'm trying to evade your question at all, but all you've seen is -- it has been conceptual. There are plans to join, obviously, San Antonio to the southern border. The Corridor is extremely wide there, and of the actual situation of the environmental findings, or the environmental advance of -- the environmental process, there is no sure shot on where is going to be chosen by the state.

So there are -- if you can see on the earlier maps that Mr. Phillips has shown earlier today, there were a number of possibilities.

THE PRESS: Going on from that question about Laredo to San Antonio -- and this may be better for the Commissioners -- why is it, as far as the time line's concerned, that you're talking about San Antonio to the Valley in 2025, when, as we all know, there is no interstate to the Valley.

Why is it it seems yet again that the Valley comes last under this plan?

MR. WILLIAMSON: Perhaps it would be more fair for us to address that.

MR. NICHOLS: Let me take a shot at that. What we asked for were conceptual proposals, actual proposals that they would do and put in writing. Now, he was referring to the environmental process. So specifically where those lines are, we cannot address today. But conceptually you know where it's going to be.

We also asked them to look at near term, mid term and long term. And, as you -- the very next step in this process, once the contract is signed, is we will be working with them very closely, our engineers, their engineers, and planners on a development plan -- it's going to be 12 to 14 months, is what we anticipated -- a development plan and a financial plan to go with that, to try to, if necessary, reprioritize in that plan.

So we're going to take the process during that period and try to re-evaluate that where we have input. They did not have the benefit of our priorities, they put in their priorities. And we'll get into that.

MR. WILLIAMSON: Now, let me add to that. I don't, at this great and happy moment, don't want to give offense, but let me be a little frank with you. I've been on the Commission almost four years, and I tend to hear a lot, not just from the Valley, but from other parts of the state: My fair share; I'm last again, and why am I not important?

And, you know, that question is sort of predicated upon the central planning theory of government, which is central plans for everybody to get a piece of the pie. But we're not central planner people, Steve. We are market driven Republicans. We believe in the market process.

We think that all the taxpayers of the state get the best benefit for all of us when the market, to the extent it can, is allowed to operate. But we were able to do this in a way that we reserve some capacity to address perhaps the equity notion of how do you get a heavyweight axle to South Texas. The answer is, we're going to have equity to make a decision about it.

He's got to decide how he makes money. That's the market-driven decision-making process. We've got to decide where we invest our equity to achieve market and equity goals. And it may well be that our equity goal is that high speed corridor to Brownsville, or that high speed rail to Laredo, or that high speed corridor to the Port of Corpus Christi.

That's what this Commission will be about over the next year deciding that. But we can't expect him to have the central planning concept of the past, because that's not how he's going to survive as a business person. He's in a market driven competition world.

MR. JOHNSON: I have one other point here, and that is that this is perhaps a template for the development of I-69, which, whether you look at it from top to bottom or bottom to top, the Rio Grande Valley is either the beginning or the end of.

And so I think to assume that the Rio Grande Valley is being either ignored or put off is not an accurate one, because today this is an extraordinary event, and the Rio Grande Valley is perhaps affected, but absolutely the Rio Grande Valley will be affected by the development of the I-69 corridor.

And, as I mentioned, this is perhaps a template for the way that corridor can be developed within the State of Texas.

MR. WILLIAMSON: Now, we started saying over four years ago, when the Governor became governor, that we don't believe in the road fairy. We know that there are people in Washington, D.C., that make a lot of promises to the voters in the state.

We don't believe in the road fairy. We believe we have to solve our own problems. Nobody has brought us cash to build I-69. No one, certainly, has given us any money to improve Interstate 35. We're having to do this ourselves.

And as John points out, perhaps this is a template, you know, to crack that problem of I-69. We have an east-west and a north-south problem. The north-south problem probably lends itself more to the market- based solution that Cintra and the Zachry family have brought. But the east-west problem is going to be right in front of us before very long. And perhaps, as John says, that's a model that we can emulate.

THE PRESS: Mr. Lopez, would this be one of your biggest projects, if you do go ahead with this job, with this bid?

MR. LOPEZ: Yes. The -- I guess at this time our largest project is a project in Canada, our largest single project in the highway concession. It is in the range of $3.107 billion Canadian, what we pay, which are smaller dollars than those ones.

I guess the next one is the Chicago Skyway, which we are going to buy, actually in four weeks time to the City of Chicago for $1.830 million. And this will be -- you justify yourself with figures you have seen.

This is a project which will be in those ranges, if not bigger, so, yes, we are very -- actually, if I can make a mention to the Governor, when we were coming here, the Governor said to me, José, you look like too formal. We're not that formal here in Texas. And I said, Governor, we've met for one minute, you've extracted from our consortium already $1.2 billion. So at this rate, I'd better watch out. This is in the joking side.

But we're very proud. The consortium, we're very proud to invest in.

MR. HOUGHTON: Just a minute, that was $1.3 billion for the Chicago Skyline?

MR. LOPEZ: No, no, no. What -- the 1.2 billion that we have been talking of the conception plan for the Trans --

MR. ZACHRY: On the Chicago Skyway.

MR. HOUGHTON: Chicago.

MR. ZACHRY: The purchase of the Chicago --

MR. LOPEZ: That's correct.

MR. ZACHRY:  -- project was 1.8 billion.

MR. LOPEZ: The Chicago is 1.830 million.

THE PRESS: Mr. Lopez, in looking at the proposal, are you planning on having any type of non-compete clause for future expansion of I-35 in order to attract as much traffic as possible to the Trans-Texas Corridor 35?

MR. LOPEZ: I guess this is more a question for the Commission or the officers of the state. What I can answer to you is that in our -- in the terms of engagement that have been presented to the would-be winner, there's no restriction on -- or there's no limit to competition from existing roads or no limit to other roads being built and things like that.

THE PRESS: Including expansions from four lanes to six, or --

MR. WILLIAMSON: Well, let me answer that question, while also asking Tony's question.

We're on the record, Ben and Tony, as you know, of saying we fully expect that there will be limitations on our ability, at some point in the future, to compete with the road he is going to spend his money on and pay us for. We believe that profit is a decent and honorable pursuit and that for him to pay his franchise taxes in Texas, he's going to have to generate some profits.

We're not afraid of that. He offers to take us out of the risk business in offering an alternative corridor parallel to 35, and he offers us cash in exchange for that.

Now, it will be up to Commissioner Nichols and Commissioner Houghton, Ben, to see to it that staff stays within certain Commission guidelines. Among that, I'm sure, are be sure we can expand 35 to six lanes the entire length of the highway.

But all of our decisions, you have to remember, are made, not in the context of what would you like to do, Commission, but what do you have the cash to do.

And the reality, Patrick, is we don't have the money to expand Interstate 35 much bigger than six lanes. It's not -- we're in a different position than, say, the California legislature a few years ago when the Orange County issue came up. They were flush with cash and could have done a lot of things. We don't have that luxury.

As you saw from the presentation ahead of the layout, which we put out there for you to look at, Gordon, we don't have the cash to go expand Interstate 35 much beyond six lanes. So it's really not much of a consideration for us.

But even if it is, these guys are willing to build it for the taxpayers of the state so that we don't have to raise their taxes, pay us additional cash so we can consider some things we might not have considered, and for that, they need to have an expectation they can generate a profit, and we shouldn't be ashamed of that.

And I know John's got a comment about it, so I'll give it to him.

VOICE: Well, you're very kind to do that. What would you like for me to comment on?

MR. WILLIAMSON: I thought you might want to say something.

THE PRESS: Mr. Williamson, one quick question. I just spoke with California. Will this avoid the kind of traffic problems that California is famous for? Are we still going to have those big traffic jams that we have over the state?

MR. WILLIAMSON: I think Mr. Houghton can comment on that.

MR. HOUGHTON: I took a tour of Southern California, Los Angeles County, in the beginning of the year, or in the spring. We don't want those problems. We do not want those problems in Southern California. They're done building roads in Los Angeles County, and their fixes are horrendous. I can't tell you, in dollars, what the fixes are.

By doing what we're doing today and getting ahead of it, I think we're going -- we're helping ourselves for a very, very long time, but we have to stay on the edge.

What I did want to say, in regard to Senator Staples, I was in Lufkin a month ago talking about Trans-Texas Corridor 69, which is coming to a theater near you, because that's next. And it has to come.

I mean, it has to come for our state to remain competitive from an economic development, from moving people to and from, and that's what we have to do, not to emulate what has happened in California, because of a lot of different reasons. That's a long-winded answer to your question.

THE PRESS: I have a more general question for Mr. Williamson. And forgive me; I know you covered this, but as you mentioned [inaudible] reference to our meeting, there are a lot of critics of the Trans-Texas Corridor project in general.

So what I'd like for you to do is respond to the critique that this plan is more about generating revenue and putting that as priority number one instead of transportation for the State of Texas. I see shaking heads already.

But that seems to kind of sum up the criticism, that we're too concerned, since a private agency is handling it, about revenue instead of what's -- doing the best thing for the people of Texas with respect to transportation.

MR. WILLIAMSON: We face some barriers in this communication. Not you and me, but the public. One of the barriers we face is we don't all agree on what's best. We have some people in our state that believe what's best is to build no more new roads.

And that is a fair statement; that's not being outlandish. There are people in our state that wish we would not build roads and would instead plow our tax money into alternative forms of transit. Or, in fact, let the roads congest so people will quit moving to our state. That's a legitimate viewpoint. We don't judge that to be right or wrong.

There are some who have a vested interest in keeping congestion within the existing footprint. The obvious examples would be the service station operator, the fast food chain operator, the wholesale outlet store that's already on the footprint. That's a legitimate position. We don't say that they're bad people for having that position.

There are some who would argue that keeping the footprint -- or keeping the traffic within the existing footprint, even as you expand it, is better than an alternative path because my manufacturing plant has a competitive advantage where it is related to 35; just build a loop and get my raw product to me faster. That is a legitimate argument.

The sum of all of those persons who have those viewpoints frequently seems to be greater than the whole of the 10 million people a day that depend on I-35 for some part of their livelihood or quality of life.

But you yourself can use your own logic and come to the same conclusion that we've come to. Have you been on 35 lately? What's the answer? You're a citizen of this state; what's your answer? Do you think 35's congested? So do we. And so do about 99 percent of the people who use it.

So we honor those who oppose and those who have a different viewpoint. They're Texans, they pay taxes, they have a right to be listened to. That doesn't mean that their argument is any better or any more supportable than our argument, men and women who face this problem every day.

We have 14,700 employees whose only job is to figure how to allocate tax money into a transportation system. Nobody in our department looks for reasons to waste our money.

THE PRESS: Everyone seems to agree that I-35 is congested. What people seem to disagree on, though, is that whether or not this plan that's [inaudible] in its entirety will actually, in fact, relieve congestion. Because there's a vested interest in getting as many people on these tolls and opting them out of money that we raise from that, that seems to create more congestion in some cases.

So maybe you could speak to that specific --

MR. WILLIAMSON: Okay. I'm going to speak --

THE PRESS:  -- question.

MR. WILLIAMSON:  -- specifically to it by -- once again, you look like an intelligent person, and here we have a guy who was just offered basically to put up 6 billion of his own money to build this competing corridor.

And you're going to have the opportunity in nine years to drive 35 for your taxes as heavily subsidized as they are, if you paid attention to the early part of the presentation. Are you going to pay him $10 to drive to Dallas 80 miles an hour?

Now, you explain to me why giving you the opportunity to make that choice is anything but reflective of a market-based economy? That's the only way I know how to answer your question, because, as I've taken great pains over the last year to say, even the people who've been perhaps at times a little bit personal and a little bit untruthful, if you've got a better idea, tell me what it is. If there's something wrong with our logic, tell us what it is.

Now, if you choose to misstate the facts or not state the truth, I can't argue with you about that. All I can do is continue to repeat what I believe to as the truth and the facts. And this proposal proves our point.

We thought for a long time that there were private sector interests willing to offer Texans this alternative; they're willing to take a chance. That's the business they're in. We thought this would happen. Frankly, the Governor probably thought of it before most of us did. But now we think it's going to happen with 69.

That's how I answer it. How do you answer it, Robert? You're quicker about these things.

MR. NICHOLS: About -- back up four years ago. We did not, as a state, have the option, any other option other than to try to continue expanding 35. We did not have the ability to put a dime into a toll road as a state agency. The reason 35 has not already been completed expanded, is because we did not have the money. And we still don't have the money. We are plowing money in there to expand it.

We -- once we received the authority to build toll roads, we already knew the need was there for a new corridor, and it is cheaper, faster to build and have more infrastructure left over by building in a new location than it is tearing down, disrupting and reconstructing the existing facility.

So we knew -- as we began with toll authority and the Trans-Texas Corridor option, we knew that we could build a lot of that as a toll road. We would still, as a state, have to put some resources in it. So we had a basis of a plan.

But what we then did is went a step further, and we went to the free enterprise and said, you know, we know how we as a state can build this, it's going to take some of our money, and any of our money put in this comes from some other area of the state, which is where a lot of people were concerned.

But going to the free enterprise system and the different businesses, we asked them to make proposals to see if there was a better way to do it. In fact, we were all surprised with the type of proposal we got.

So by them building this with their money, it will free our money up to take care of some of these other expansions, while this one is solving itself.

Now, the decision of whether or not to build or not build basically -- strictly on revenues is not correct. We, as a state agency, all the way through this process will be making the decisions of which ones we will or will not build, or allow to be built. So that is a TxDOT decision to be made by this Commission.

What they are saying -- and they have it put in their proposal -- is they feel like they can make money on some and they cannot money on others. They kind of laid that out in their proposal. If we are willing to do concession agreements on the ones they think will pay for themselves, then that's the way that will go.

Well, as it works out, some of our primary corridors that we were concerned about, are the ones they feel like they can make money on. But we ultimately make that decision, and it's not driven totally by revenue. It's indirectly driven by revenues. We do not have to put money in it as a state because it pays for itself.

THE PRESS: How do you go in and tell a landowner that we need your land so this private interest can make money?

MR. WILLIAMSON: That's not what we say. We need your land because we need to build this road. That's what we've been saying since 1857.

THE PRESS: Well, yes, Texas needs the road, but this -- in this case, it's a private interest that --

MR. NICHOLS: Texas -- it's a Texas property. The real estate will be owned by Texas and leased to them for -- to operate a toll road. We may lease some of the other land out to a railroad, to run a railroad. We may lease some of the other land out to lease to a utility company.

Ultimately, we think we will do it in less space than you would if you went to all the pieces independently. If we go in and take the amount of capacity for expanding the right of way of Interstate 35 for the next 30, 40, 50 years, look how many shopping centers and office buildings and gas stations we're going to have to tear down. That's pretty expensive real estate, and those people don't really want to lose their businesses either.

MR. WILLIAMSON: And what I mean, my answer was the environmental process doesn't -- your question implies that we go build roads to nowhere. The environmental process doesn't let us do that. So we're either building a road for a reason which gets the NEPA against the road, or the FHWA tells you can't build that road because it doesn't do anything.

In which case we're never telling that farmer, we need your land for his road. It's our road in the first place, and the only reason we're building a road is because we can justify it through well documented environmental process.

THE PRESS: How exactly are the toll rates going to be set? Is the state going to have any say so over it?

MR. WILLIAMSON: I think that's what Mr. Nichols and Mr. Houghton are going to --

MR. NICHOLS: That's part of the details that'll be worked out during these agreements.

THE PRESS: And did you say that right now, statewide, the average is about 16 cents a mile? Did I hear that right?

MR. NICHOLS: I don't think that was stated, but if you'll go down to different areas, it's -- most of them I have seen are over 10, but under 20, which is a broad area. I think 12 or 15 cents is probably somewhat typical.

THE PRESS: For Mr. Lopez and Mr. Zachry. Just could you give us your titles with your companies and then beyond that, I'd like to find out, as equity partners, what that means, and what the percentage of each company would be in terms of the equity in the project? Start with your titles, if you would.

MR. ZACHRY: My title is president of Zachry Construction Corporation. And they will address the technical side.

MR. LOPEZ: My title is director for U.S. and Latin America for Cintra. And in answer to your question, the partnership for the development work to be done in cooperation with TxDOT, it will be 85 percent Cintra and 15 percent Zachry.

For a specific project, for those specific projects, obviously there might need to be some reshaping of these percentages and it's foreseen in our proposal to TxDOT that this could change, and it allows for different partnership percentages.

THE PRESS: Including other partners?

MR. LOPEZ: Why not, certainly. But all that will be subject to TxDOT conversations. From our side, yes. But it's -- everything's under TxDOT rules really.

THE PRESS: Is it safe to assume that the lion's share of the 7 billion that we're talking about here would be borrowed money?

MR. LOPEZ: Absolutely, yes. The -- as in any other project finance, which are, one by one, those projects will be certainly be project financed. You -- the investors -- namely Zachry Construction and Cintra -- will bring some equity money, and typically that goes in the 20, 30 percent.

If we have higher than that and we have lower than that of the total investment, of total 7 billion, six-something billion we've been talking about, the balance is financed through a different set of instruments available at the time of the financing, of the financial market and they derive very much by market conditions, availability, by the state, by the country.

Here in the United States it's very common to finance with -- call into the capital markets, issuing bonds, which makes shareholders of these endeavors virtually everybody who has a pension fund, because normally this is long-term investments, special funds, heavy investors actually beneficiaries of all this. It's not only the companies who bring their equity, but it's people who invest there.

Some other options available are, which these type of projects kind of attract to Texas, is some federal funding, some, for instance, TIFIA projects, TIFIA money, which is some money federal has available assuming certain conditions on this type of public projects, publically -- sorry -- privately geared projects. As well you have access to capital, to credit and other financial instruments.

And, of course, there is the resource, the very common resource in the United States to tax free bonds. But to tell you the truth, we're not considering much of that, because when a project is solid and has a solid standing, you can normally finance in better ways than tax free and you free that ability for other projects.

THE PRESS: The Chairman made a reference to going 80 miles per hour to Dallas. Is there an understanding --

MR. LOPEZ: I'm not sure that will be legal unless the Commission decides --

THE PRESS: And seriously, that was going to be my question. I don't know the law; I'm not a cop. Would it -- do you have the legal authority right now in state law to set higher speed limits than 70 on turnpikes?

MR. WILLIAMSON: Mike Behrens.

MR. BEHRENS: Yes, we do.

THE PRESS: Is that just on turnpikes, or on any old road you want?

MR. BEHRENS: Well, it was in the statute. In the Trans-Texas Corridor you can go up to 85.

MR. WILLIAMSON: And I think, and again, the spirit of we're not hiding the ball and we're trying to advertise to everybody what we're doing.

We may well ask the legislature to make some market -- what we consider to be market based changes. We might ask the legislature to allow us to raise the speed limit even higher. Well, I mean, if the radius and the grade's okay, and it's safe to go 90, why wouldn't we want to give Texans this alternative.

By the same token, we might ask the legislature to allow us to build a road that would permit us to move trucks at 150,000 pounds of axle weight. Why would we want to do that?

Well, there are some bulk steel operations in Mexico that might want to ship at 150,000 pounds per axle to SMI in Sequin to break down and build -- what's the bars called -- rebar in a way that would permit SMI to hire 2,000 -- create 2,000 new jobs if they could simply reduce the cost of that transportation by that increased axle load.

THE PRESS: What's the current limit?

MR. WILLIAMSON: 60,000.

MR. NICHOLS: Eighty.

MR. WILLIAMSON: 80,000. So it may be that go to the legislature and say, there's certain options you can give us that will let us market this partnership to create jobs for Texans. And as you heard the Governor say over and over and over again, you know, there are a lot of politicians representing this state that are interested in a lot of things, this guy's interested in jobs.

He believes economic development is the basis for solving the public education pass problem, solving our quality problem, solving the tax and equity problem. He believes that and I think we share that belief.

THE PRESS: I have a question about the concession agreement. Some people are going to look at this and say that TxDOT says you will approve these roads based on the normal environmental standards and you will look at them and objectively look at the roads to make sure that they are in the best interest of the people of the state.

But how can you look at them objectively when in some cases you stand to gain or lose hundreds of millions of dollars if this road is built or not?

MR. NICHOLS: Because Dan Reagan, from the Federal Highway Administration, said earlier they're not going to let us build any of it unless they sign off, and they're not going to sign off unless they have been assured and have observed that the environmental process was done correctly.

THE PRESS: So we're counting on the feds to make that we're being --

MR. NICHOLS: We're counting on the feds and we're going to be doing it ourselves.

VOICE: It's a partnership with the feds.

MR. WILLIAMSON: There's a difference between a guy that serves in the legislature and a guy that hasn't. See I would turn your question -- I wouldn't want to answer your question like you asked it, because asking that question presumes that the feds might have the same poor interest as we do, that you were trying to set up.

The correct answer is the federal government has a well established set of regulations designed to assure that a road can't be approved unless it meets certain criteria, irrespective of Dan Reagan's personal opinion, irrespective of what we get paid, without regard to his concession.

There is just not any way to build a road to nowhere, guy. It's just not possible. We're not depending on the federal government to tell us that that's the law.

(End of press conference.)

COMMISSION MEETING RESUMED

MR. WILLIAMSON: Just for the record, I called the meeting to order in the delegation room, and I called that meeting to order at -- we reconvened at 12:40, and I then called a short recess, 15 -- I'm sorry; 1:40 -- we've been recessed for the last few minutes.

The Commission is now called back to order at 1:44, and we will continue our meeting.

Mike?

MR. BEHRENS: Okay. We're going to go ahead and let Phil finish up his next minute order, agenda item 12b, concerning the final approval for the request for financing from the Central Texas RMA.

Phil, if you will do that.

And let me also announce, after Phil, we're going to go to item 6 which will be Coby Chase and talking about proposed legislation. So those of you that signed up can be on notice for that.

Phil?

MR. RUSSELL: Thanks, Mike. And, again, for the record, I'm Phillip Russell, director of the turnpike division.

And, Mike, I'm going to tend to go through these fairly quickly. I've been up here far too long as it is, so slow me down if you would like, but I'll probably move through pretty quickly.

Commissioners, as you know, the Central Texas Regional Mobility Authority has recently submitted a request for financial assistance on the US 183-A project. A total equity request by our own rules is a two-step process, just like the SIB application process.

Last month I brought to you for preliminary approval that -- CTRMA financial request. As stated, it was for an amount up to $65 million. Since that time, myself, James Bass, Bob Daigh have met with Central Texas Regional Mobility Authority.

We have received the final traffic and revenue numbers, and today we're prepared to move forward with the minute order before you, which would grant final approval of the request for financing in the amount up to $65 million and would authorize and direct the executive director to enter into a financial assistance agreement with the Authority.

I'd be happy to address any questions you might have.

MR. HOUGHTON: The T&R study's in?

MR. RUSSELL: Yes, sir.

MR. HOUGHTON: They're in? Up to 65 million?

MR. RUSSELL: Yes, sir.

MR. BEHRENS: Bob Tesch signed up to speak for.

MR. TESCH: Yes, in favor.

MR. BEHRENS: Surprise, surprise.

MR. TESCH: Mr. Chairman, members, Mr. Behrens, Merry Christmas and Happy New Year to all of you, and congratulations.

The item that I'm here to -- for the record, I'm Bob Tesch, chairman of the Central Texas Regional Mobility Authority. This item may be a little anticlimactic compared to what has happened here today with all of its historic proportions, but we nevertheless are just as enthusiastic about this project and we recognize that the CTRMA, and other RMAs, play a very vital part in the overall vision for Texas in improving our congestion throughout the state.

When I was here last month to thank you for considering the preliminary approval on our total equity request, I briefly told you how important this request was for our first project and for our organization. I'd like to re-emphasize that point today as you consider your final approval of this item.

This is a huge milestone in what has been a two year period of -- full of noteworthy achievements for our organization. This grant is a critical piece in the financing of project 183-A, but it's more than that, it's an investment by you in this project, but not just this project, but in a system and in an organization.

Getting this project financed and under way will be a catalyst to other mobility improvements, and to our organization, and an assistance to us in bringing those improvements to bear. It'll enable us to be what I think you envisioned RMAs to be, and that is viable organizations capable of making meaningful improvements under local control and working as a partner to TxDOT.

And so I thank you for your consideration of this item, and request that you give it favorable consideration. And I thank you for your vision and leadership and assure you that your confidence in the CTRMA is both appreciated and well founded.

Mike Heiligenstein, our executive director, has been visiting with some of you and staff throughout the past few days. He's here and I think he would like to say a few words.

Mike?

And following his comments, if you have any questions --

MR. NICHOLS: Okay.

MR. RUSSELL:  -- we would certainly be --

MR. NICHOLS: We'll listen.

MR. RUSSELL:  -- happy to address those.

MR. NICHOLS: All right. Mike?

MR. HEILIGENSTEIN: I think --

VOICE: For the record, state your name.

MR. HEILIGENSTEIN: I'm sorry. Mike Heiligenstein, executive director, CTRMA. We have visited with most of you, and I believe we have most of the questions answered and would add that we do have the preliminary project financing agreement, this two-year legal staff, and, of course, we anticipate comments back.

We'll be working diligently on that, and I know many of you had some suggestions during our meetings over the last few days that we will take to heart and incorporate into that agreement.

Other than that, I have no other comments.

MR. NICHOLS: Anybody have a question?

MR. JOHNSON: I just have an observation, and basically a note of congratulations. I want to congratulate the two of you and all your colleagues. We think this is a very significant step in the evolution of RMAs if you will, and here, again, it shows what we can accomplish if we partner.

And, Bob, as you mentioned, this is part of a system and this system of roads is going to improve mobility in the Travis and Williamson County area in a very, very meaningful way. And I just want to congratulate you for your leadership and what you've accomplished.

MR. TESCH: Thank you.

MR. HEILIGENSTEIN: I thank you also, and we look forward to working with you during this session to maintain the momentum throughout the state in whatever we -- our organization can do, we'll be there for you.

MR. HOUGHTON: And I think the media's pretty much gone, but is -- Phil, this our first total equity project?

MR. RUSSELL: The first 12.7 with the RMA.

MR. HOUGHTON: With the RMA and -- another milestone.

At the same time, Mr. Bass, you're happy with the progress in that direction? Thank you.

And congratulations, Bob.

Mike, thank you very much.

MR. NICHOLS: Yes, and as I understand it from our conversation, the minute order is for up to $65 million, which is -- and you will not -- basically as you get the rest of your numbers in, there's some more detail work, if there's some savings, we're certainly hoping that they'll be reserved out of here and maybe will work on the next project. The next project, we'll try to integrate the financials just a little earlier, that kind of stuff.

Do we hear -- have a motion?

MR. JOHNSON: So move.

MR. HOUGHTON: Second.

MR. NICHOLS: We have a motion and second. All in favor say aye.

(A chorus of ayes.)

MR. NICHOLS: Any opposed?

(No response.)

MR. NICHOLS: Motion carries. Congratulations.

MR. RUSSELL: Thank you.

MR. BEHRENS: Okay. We'll now go to agenda item number 6.

MR. WILLIAMSON: I'm sorry, Coby. I need to say something.

I don't know all the names, and I hope that you'll take a moment today or tomorrow and make me a list of names. And I think the Governor did an adequate job of saying thank you to the staff, but it also is important for, I guess, the direct leader to say thank you.

And I say thank you, to you, Mike, to Amadeo, to Phil, to Ed Pensock and the whole host of staff people who worked really hard on that last business. I know it was late nights and early mornings and not without agony, and I personally appreciate it. These are exciting times for us.

MR. RUSSELL: They really are, Chairman. Thank you very much. You're right; Ed Pensock, Jack Ingram and many others were very, very much involved in this, beyond the committee members that shown up there. Be happy to provide that list for you.

MR. WILLIAMSON: Thank you.

MR. RUSSELL: Thank you very much.

MR. BEHRENS: And now we'll move to agenda item number 6, which will be the -- Coby will address the Commission recommendations to the Texas legislature regarding potential statutory change.

MR. CHASE: Good afternoon. My name is Coby Chase, and I'm the Department's director of legislative affairs. I am here before you for the sixth time in as many months.

Hi, Julie.

Today's goal is to ask the Commission to adopt a final report regarding its priorities for the upcoming 79th legislature. I think it's important to point out the general characteristics of these suggestions. These individual pieces can be a little difficult to stitch together, so let me do this for you.

These recommendations fine tune House Bill 3588 based on experience to date, and what TxDOT sees as its promise for the future. It further changes our role from parent to partner, if I may borrow that line from Tarrant County Commissioner, Glenn Whitley.

It firmly establishes TxDOT as the state's guiding force in rail planning and enhancement, and it advocates the establishment of new financial programs to create greater transportation options.

We've been through this before. Like I said, this is our sixth public hearing on this document. I will move through this document efficiently, but stop me any time you want to talk. If something has not changed at all since our last meeting, I will note that.

If something has changed, or has been added, I will note that too and discuss that briefly. But, however, I will engage in a discussion as far as you'd like to take it.

On all of the House Bill 3588 issues, they're removing the statutory cap on total equity, no change. State law should -- unless I say there's change, it'll be no change -- state law should be amended to allow TxDOT to enter the pass through toll financing agreements where we build the project and local and public or private entities would pay us.

Clarification that all toll revenue from TxDOT projects be deposited into the state highway fund. Allow surplus total revenue from a TxDOT project to be used on a non-term bike project with the same geographical area.

On the rail matters in House Bill 3588: The present statutory cap of 12.5 million per year in expenditures for non-Trans-Texas Corridor projects should be repealed. The present 25 million per year in expenditures for non -- for Trans-Texas Corridor rail projects should be eliminated.

There is a need to clarify TxDOT's contracting authority for rail, utilizing more creative delivery methods like design/build. A comprehensive development agreement the recommendations are the same, as they have been in the past: the ability for projects other than just toll roads, and the Department's ability to use CDA expires in 2011, to eliminate that provision entirely.

Toll conversion. This is new, it is new in the sense that it is now absent from the report. This report contains no recommendations regarding toll conversions. That means no recommendations on the -- and it also means no recommendations on directing revenues from a TxDOT toll converted project on the definition of a toll conversion. So I have -- we have -- our staff has completely removed any discussion of toll conversion from the document.

Regional Mobility Authorities, no change. RMAs should be allowed to provide public transit services. New issue: A regional tollway authority should be allowed to convert to an RMA on a voluntary basis.

Advance acquisition, no change. The Department should be granted the authority to acquire property from willing sellers in advance of finalizing the environmental process.

MR. WILLIAMSON: Who's going to be most concerned about the convert on a voluntary basis?

MR. CHASE: Logically, I would believe no one should be concerned about that. It is a completely voluntary activity. But I would assume -- I mean, this looks ahead. I mean, if -- there should be a provision in the statute that allows a regional tollway authority to change if it wants to, if it sees that it could better function as an RMA. It's just that simple.

Local transportation planning authority, no change. Local governments should be granted clear authority to regulate development in identified transportation corridors.

Rail relocation --

MR. WILLIAMSON: Does that apply to HCTRA as well?

MR. CHASE: That is a county toll authority.

MR. WILLIAMSON: So it doesn't apply to --

MR. CHASE: It doesn't apply to that.

MR. WILLIAMSON: If we were going to -- so the reality is, it's only NTTA.

MR. CHASE: I believe so, yes.

MR. JOHNSON: Why would you exclude HCTRA and Fort Bend and any other -- those are the only two county toll authorities --

MR. CHASE: I wouldn't do it deliberately. Should I add that?

MR. JOHNSON: I think it would be equitable.

MR. WILLIAMSON: But one of the things I want to avoid -- and James is here, but I think he knows, even if he wasn't here I would say this -- there are going to be times when we disagree with NTTA and we should disagree on top of the table.

There's going to be times when we just observe how the law should be, and we want to be on record as observing that, and they should feel comfortable that we don't have an ulterior motive.

And if we don't make the same logical argument to Robert Echols that we would make to Margaret, then it would seem that we were singling them out, and, you know, we got enough -- I think we're going to have enough fights to fight and we don't need -- I mean, I just -- you know, we have a view, this Commission has a view.

And NTTA shouldn't be threatened by that view and Echols shouldn't be threatened by that view. You know, our view is, RMAs should be bigger and they should have the ability to do public transit and we're going to advocate for that on a voluntary basis, but in the end, it's kind of up to them to work that stuff out.

MR. CHASE: NTTA has always been one of our strongest partners and allies. I don't -- I see no reason why they would feel threatened. But, yes, adding county toll road authorities would certainly make sense, again, voluntarily.

MR. WILLIAMSON: And I'll call Judge Echols and make him aware that we've had this conversation today.

MR. CHASE: Rail relocation, no change. TxDOT should be granted clear authority to enter into contracts for the relocation of rail lines. No change, but I do need to clarify on a program -- the bonding program at $100 million per year and leveraging a billion dollars.

It was brought to my attention -- and this is my fault and I apologize -- I have stated publically a few times, just in my own confusion, with all these billions being thrown around these days, that this was a $2 billion a year -- you could bond $2 billion a year.

That was my mistake, and I've said it enough times that somebody pointed it out, when you added up the math in my own legislative work, it was actually $100 million per year for that settlement, and that's actually a $1 billion bonding program. I apologize and felt I needed to clarify that.

MR. WILLIAMSON: So we need to either say it's fine; leave it at that and we'll start describing it as 1 billion, or we need to raise that up, or we need to leave it as it is with public notice now that we intend to suggest to our legislative associates that it should be more than one billion?

MR. CHASE: Yes, sir. And I think where the two billion got lodged in my brain was -- I think we discussed at least some project in terms of there's at least $2 billion worth of needs that we can say off the top of our heads, and I think that's what lodged in my head, and I just started repeating it. I apologize.

MR. WILLIAMSON: Robert, you've been leading the Commission on this rail relocation business. Just leave it like it is and we'll let the legislature react?

MR. NICHOLS: Yes, if you put in -- it's important to have a dollar amount with an annual revenue source to go in the future to issue bonds out. That is the most critical thing, whether -- if we go in and ask for a hundred a year, you know, they're going to tell us yes or no, or whatever. But we've got to make the case. It's going to take more than that to get the job done in a reasonable period of time.

MR. CHASE: So do you think we should raise the --

MR. NICHOLS: I think they expect it.

MR. CHASE:  -- amount to 200 million a year?

MR. NICHOLS: No, I would recommend 100 a year.

MR. CHASE: Okay.

MR. NICHOLS: That would be my suggestion.

MR. WILLIAMSON: And we'll all correct our verbiage to reflect that that's a $1 billion one time --

MR. CHASE: Again, my apologies.

MR. WILLIAMSON:  -- debt item. Well, if you have 100 million a year, you're going to be able to borrow a billion against it.

MR. NICHOLS: Yes, but when you pay that off, you can --

MR. WILLIAMSON: Well, yes. I'm sorry, at a time maybe is what I should have said. And we will make Mr. Staples, Mr. Ogden, presumably Mr. Krusee, and Mr. Pitts aware that our personal view is that it takes much more than that to address El Paso, Houston, Dallas/Fort Worth, Austin, Corpus Christi, San Antonio and the lower Rio Grande Valley.

Our view is that once that issue takes off, it will take a life of its own over there, and they'll do what's in the best interest of their constituents.

MR. CHASE: Loan programs, no changes to any of the loan programs. The state fund is State Infrastructure bank. The State Infrastructure Bank for public transportation providers for capital investments.

On the Texas mobility fund, there's no changes, but I do want to note something. We recommend that the legislature seek additional funding for the Texas mobility fund, no change to that, of course. No change in the monies that we have suggested be deposited into the Texas mobility fund, and let me go through those again.

Motor vehicle certificate of title fees, motor carrier permit fees, oversize/overweight permit fees, motor carrier registration fees, single state registration fees, motor carrier proof of insurance, salvage dealers, license fees, motor vehicle rental tax, excess fines for speeding violations, aviation taxes and franchise fees, personalized license plates fees and motor vehicle sales and tax.

No change in the recommendation to amend state law to increase the base 20/60 permit fee from $75 to $2,000 to cover road way damages caused by large trucks, no change. Amend state law to increase existing driver safety course fee from $10 to $40 and dedicate $30 of the fee to the Texas mobility fund. Here is where I would like to discuss something for a moment.

Amend state law to direct the revenue from DPS- issued citations from the county to the Texas mobility fund. I think we received a little bit of mail about that over the last couple of weeks.

MR. JOHNSON: Probably 254 pieces.

MR. CHASE: Something like that.

MR. WILLIAMSON: And I was so pleased to see all of those counties in support of our efforts to build roads in the counties of the state.

MR. CHASE: It was heartwarming. I've never made so many friends in my life.

MR. HOUGHTON: We all collectively --

VOICE: I would call it acquaintances.

MR. CHASE: Yes, I didn't land on any Christmas card lists, if that's what you're asking.

MR. WILLIAMSON: We could all collectively take great pride in knowing that we stepped on ourselves.

MR. CHASE: Yes. And your director of legislative affairs led the way on that.

It will be the Commission's decision whether or not that recommendation stays. It was actually quite enlightening to read those letters and faxes and e-mails and the occasional phone call, that what they do with this money and how they rely on it, and the thinking in my shop was there's probably an answer that was so obvious that we missed it.

When the -- as you know, the mobility fund is funded right now with a $30 fee that's tacked on to traffic tickets, and 10 -- I'm certain I have the split right -- $10 of that goes to trauma care, 20 goes to the mobility fund, with a portion sliced off so the counties can administer, or the courts can administer the collection of the fines, or the remnants of the fines.

And that's scheduled to go -- start going to GR next year, I believe. Why don't we just suggest that that stay in the mobility fund?

MR. WILLIAMSON: As opposed to the other?

MR. CHASE: As opposed to the -- right, the one that the counties have taken issue with. Correct.

MR. WILLIAMSON: I don't know; we got Gary Slagel here to tell us how smart we are. We've got Lawrence Levine here to tell us how much it would improve things in Hood County. And we've got Karen Coffey here to tell us how innovative we are, or maybe we need to just hold our position and not change.

MR. CHASE: Would you prefer to wait until they testify?

MR. WILLIAMSON: Are we going to want to change pretty quick? You want to go ahead and let them have their say, or you want to finish?

MR. CHASE: I would like to finish, if that's okay with you. But you're the boss.

On the remainder of the agenda, the Department owned buildings, no change. Clarify that we have clear authority as far as construct, finance and manage our buildings. Sale of Department property, no change there. The money from any of those sales should go back to the state highway fund.

Concurrent jurisdiction, eminent domain cases, no change there. Second lowest bidder, raising that threshold -- or that ceiling from 100,000 to 300,000.

A new issue -- well, partially new issue that was raised at the last Commission meeting: When a vehicle is purchased from a dealer, the buyer is issued a temporary cardboard tag, or issued temporary cardboard tags that are valid for 21 calendar days.

There's presently no valid system for tracking the printing and distribution of these tags. The potential exists for abuse through duplication or counterfeiting of these cardboard tags.

As discussed last month, it is recommended the Texas law be changed to authorize the issuance of a secure form of temporary tag. And I believe the motor vehicle commission chairman, Kevin Pagan, has submitted a memo to Mr. Behrens recently detailing the benefits of this approach, and it's -- he was fairly eloquent about it. That is all I'm prepared to say about it right here. Are there any questions about that issue?

Four issues that are all new on competitive engineering contacting. I'll mention them briefly. The first is authorizing TxDOT to enter into quality based best value negotiations with engineering consultants for the procurement of their services.

Right now, value considerations are specifically prohibited from being used in initial negotiations with consultants. It is proposed that state law be amended to allow for value based selection of such services.

The next issue, state law provides that the Department outsource a minimum of 35 percent of its engineering services. This requirement has been in place since 1997. The Department oursources over 50 percent of its engineering work, and will, by necessity, continue to do so. However, the use of private sector engineering services should be determined by the Department and not an artificial amount set in law.

Third, current law precludes local governments from using design/build procurement for the delivery of transportation projects. I couldn't -- we couldn't find any exceptional rationale for this.

And, as TxDOT becomes more -- gathers more expertise in that area, it makes sense that we would share it with our local partners on whom we rely and they could benefit from that approach as well. State law should be amended to allow local governments to utilize the design/build method for procurement of projects.

And then, finally, in order to better inform the private sector firms of the rights and compensation levels, and to administer the Department's engineering procurement process as efficiently as possible, the Department should be authorized to establish overhead rate ceilings and personnel compensation limits.

And on the employment new issue -- or, pardon me, next issue, employment and recruitment and retention, there are no changes. And the recommendations are made in the previous months.

That concludes my remarks.

MR. NICHOLS: Are you aware of any other profession in the State of Texas where it's against the law to get a second price?

MR. CHASE: I am not, no.

MR. WILLIAMSON: Let's hear from Karen Phillips Coffey. Is that correct? She is chief counsel, Texas Automobile Dealers Association.

MS. COFFEY: Yes, Mr. Chairman. And I'm a fellow Weatherfordite. So --

MR. WILLIAMSON: Well, hello.

MS. COFFEY: Well, hello indeed. It's nice to see you.

I'm here today to discuss the paper tag issue that Mr. Chase just raised. This issue came to our attention that it was going to be before you last week. And I don't know if you received the same circular that I received, this Problems and Solutions? I don't know if that's what Mr. Pagan gave to you or not, but that's what was handed out last week at the motor vehicle division meeting.

First of all, the Transportation Code, as I know you're aware, says that the Department may not issue buyer's tags, but it prescribes the specifications, the color, and the form of those particular buyer's tags.

Now, as representative of the Texas Automobile Dealers Association, our members are the franchise dealers in Texas. And we, of course, have very much of a need to be able to issue a red and white tag, which is the buyer's tag, immediately as soon as we have a sale with respect to a new or used vehicle that we are selling to the public.

This allows us -- for the dealer to allow that vehicle to be immediately given to the purchaser, and then within 21 days, we're required to title and register and also pay sales tax on that particular vehicle; then the metal tags are sent to the customer. Typically this happens within that 21-day period.

Now, currently the figures that have been discussed within this particular circular, or information that was provided, I assume, to you, and that was provided at the meeting, discussed the fact that 2.8 million vehicles are sold in every calendar year by automobile dealers.

I would suggest to you that the franchise dealers of that 2.8 million and which approximately 2.5 billion a year are paid in motor vehicle sales tax, that the franchise dealers are about 88 percent of that total, and that's 2.2 billion out of 2.5 billion.

Currently, the red and white tag is in need and has to be issued immediately to the buyer. For that process to slow down is going to slow down the fact that you will not be having the vehicles titled and registered as timely, motor vehicle sales tax will not be submitted to the state as timely, and in addition to that, customers won't be receiving their vehicles as timely.

If the state were the one to be issuing red and white tags, we believe that that's going to slow down commerce tremendously because we need to be able to put that red and white tag on the vehicle immediately so that that customer is able to drive away with their new car, or the car that they've just purchased.

There may be some complaints with respect to title not having been transferring timely enough. According to the consumer complaints issued, or that were received by the motor vehicle division, they're claiming that 993 complaints is what they received; 993 complaints which, if you round it up to 1,000, give or take, out of 2.8 million vehicles per year that are sold, that percentage of complaint is .00035714. I don't think we have a huge problem in the State of Texas with respect to people not getting their title and registration timely.

In addition to that, some of the information that was relied upon from the State of Arizona, which is much different than, of course, the State of Texas, they verified that tardy registrants were 6500 per month in Arizona. They're unable to identify tardy registrants in Texas because they never pull out. We don't know the data with respect to automobile dealers.

In addition to that, we don't know if those numbers were -- Arizona's tardy registrants were from dealers, or from individuals. I could go on and on with respect to the numbers, and some of the numbers that are calculated as to what the State of Texas is losing out in revenue, rounds up to a $60 registration fee. Sixty dollars, which is really $58.50, is the registration fee that's paid for on new motor vehicles and vehicles that are three years and less.

It's very likely tardy registrations are from older automobiles, which are not sold by the members who are dealers, and individuals transactions, we don't know. These numbers don't tell us.

In addition to that, registration fees go downward as the age of the vehicle goes up. So I would suggest to you that the $60 figure is inadequate with respect to giving you what the true picture is.

Finally, transfer fees, in other words, if I'm selling you a used vehicle and the vehicle is still registered, then I may be only having to pay a $1 transfer fee. The registration fee, at the most, is only going to be $5 on registration for transfers.

So, once again, I don't think we have a problem here. At least we don't have a problem with my members and, I would assume, probably other automobile dealers, because we're doing the bulk of the sales.

We're the ones who are in need of being able to deliver that car immediately to the customer. They want their car when they buy it. We're the ones who are submitting the sales tax and we're the ones who are paying the registration fees.

We need to be able to continue to do that for customer satisfaction so that the counties and the state get their sales tax immediately, and to change the law for a .00035714 problem -- percent problem, I would suggest to you, we don't have a problem. So I would request that you leave the lot as it is.

I'm more than happy to answer any questions.

MR. NICHOLS: Anybody have any questions?

MR. JOHNSON: I'm somewhat lost. Why is your concern that we are proposing to -- which part of the law are we proposing to change?

MS. COFFEY: It's my understanding that the proposal is going to be that the Department be able to issue the buyer's tags. Currently, the dealers go out into printers and these printers are approved by the motor vehicle division, and they purchase the red and white tags. This would have these tags in the Agency --

MR. JOHNSON: They're the source of the tag.

MS. COFFEY: I'm sorry, sir?

MR. JOHNSON: Basically, the distribution source of the tag.

MS. COFFEY: Correct.

MR. JOHNSON: Creation. Okay.

MS. COFFEY: We do not want an agency to be issuing the red and white tags. We need to have that freedom of commerce.

MR. HOUGHTON: You don't think technology is advanced enough that that could be issued at the time of sale, that would be secure?

MS. COFFEY: It's possible --

MR. HOUGHTON: That you do not have the opportunity to go print it, or -- my friend's tags on their unregistered -- or vehicles that have license plates have lapsed. I mean, I don't think we're sitting here saying we're going to issue --

MS. COFFEY: I hope not.

MR. HOUGHTON: I think that we're -- Mike, am I wrong? I don't think we're saying we're going to issue the --

MR. BEHRENS: I think we're the ones that they can buy the blank tags from --

MR. HOUGHTON: Blank tags that are secure technologically, that you can --

MS. COFFEY: We don't want --

MR. HOUGHTON:  -- look at it --

MS. COFFEY: Yes, we do not want to be able to come to an agency to purchase our red and white, or any tags.

MR. HOUGHTON: You want your printers to continue to print?

MS. COFFEY: I didn't say I really wanted the printers to continue --

MR. HOUGHTON: What's wrong with buying it from us then?

MS. COFFEY: Well, currently we have a problem with licensing, just to give you an example. It takes us maybe six weeks to get a license from TxDOT with respect to our members, even on a re-application or a renewal. Our concern is that if we have to come to the agency to get our red and white tags, we're not going to be able to continue commerce.

MR. HOUGHTON: So if there was an expeditious manner to get that to you at the time of sale, or you'd have something that would not slow the sales process, would you object to that?

MS. COFFEY: I might, depending upon how it's written. Another reason that we're concerned about the agency having control over the tags is because they might decide to use that as a means for punishment. In other words, if you don't do A, B, and C, we're not going to be sending you your tags.

Right now, TxDOT -- the vehicles and title registration has put in place an annual point of sale sticker. And we're for that, we're working with those counties, and we're working with TxDOT on that. What this appears to do would be to have a real time, presumably, point of sale temporary registration.

And as long as the dealers are able to do that at their dealership, and it's not going to be held up by the state agency so that commerce can continue, then we're more than happy to be involved with a solution.

But for an agency to be the one to be issuing the stickers on temporary registrations, to be the ones who are going to decide if and when I'm going to get those stickers, then, yes, we have a concern about the expeditious nature of it as well as being able to continue to deliver our cars in a timely manner.

MR. HOUGHTON: You raise a point that you got my attention when you said punish. Why would we punish?

MS. COFFEY: I don't know. But the fact remains that right now we have licenses and licensees who might not be able to get their license in a timely manner because maybe they've not done something with the agency that they're supposed to.

MS. ANDRADE: So your whole fear is the delay?

MS. COFFEY: Delay is absolutely a concern, as well as cost. Now I talked with VTR, Mike Craig, and asked him about the Arizona plan, about the temporary -- or point of sale with respect to temporary registration, which would be going beyond what VTR does right now.

He told me that it might cost, on a per dealership basis, upwards to 300,000 -- $3,000 for the equipment. And in addition to that, he said that -- and I don't mean to quote him, because I didn't tell him I was going to quote him -- but one of the issues here is whether or not there's a real database to be helpful in this regard.

In other words, if there's no database to help with respect to the information that would be on a temporary tag, then it's not going to help law enforcement anyway. And right now we don't have that database.

MS. ANDRADE: So you're not against change, what you're fearful of is that what we're proposing at this time could cause delay?

MS. COFFEY: We have real concerns with the fact that the agency is not handling licenses; we don't think they can handle paper tags right now, red and white tags. We need to be able to get out tags timely, quickly, satisfy customers, be able to register title and pay the sales tax on those vehicles.

MS. ANDRADE: It sounds like you don't trust us, you're worried about that.

MS. COFFEY: It's not a matter of not trusting you, it's a matter of fact that I think perhaps maybe the agency isn't able to handle the workload that they have now. This would give them additional workload; we don't need to stem progress.

MS. ANDRADE: Okay, thank you.

MR. WILLIAMSON: I'd just be interested to hear what Coby had to say about that, but we'll wait till the other witnesses speak.

MR. NICHOLS: Thank you.

MS. COFFEY: Thank you very much.

MR. WILLIAMSON: Thank you, Karen. Good to see you.

MS. COFFEY: Good to see you too.

MR. WILLIAMSON: Lawrence Levine. And Lawrence, you've had to wait all day after that long drive down. I think you go by Larry.

MR. LEVINE: Yes, I do. But that was exciting to hear all that took place this morning. It sounds worth the trip.

MR. WILLIAMSON: Better than Parker County Commissioners Court, isn't it.

MR. LEVINE: Members of the commission and Chairman Williamson. I'm Lawrence Levine, the Hood County auditor, and I'm speaking regarding the transfer of county DPS ticket revenue to the Mobility Fund.

This kind of bill, in my opinion, is the same as an unfunded mandate, only in reverse, because the revenue is taken away from the county but the expense still remains. We still have to have the JP courts funded and the county courts funded and the money is no longer retained by the county.

Hood County, which is a medium-sized county, let me give you a perspective on the damage that this would do to our county. Of the fines collected by our office-holders, the county would suffer a 15 percent loss of revenue, that's just from fines collected. Another way to measure it is each year the county experiences about $650,000 worth of additional revenue to fund growing demands on county services and being able to fulfill a vastly growing population in Hood County.

If that $650,000 were cut by $300,000 -- which is the amount of fines that would go to the Mobility Fund -- it would be a disaster for the county, financially. So in lieu of those kinds of numbers, and obviously the mail you've been getting, this is a typical example of the disastrous effect of transferring all those fines out of the county.

Thank you very much. If there's any questions, I'll attempt to answer.

MR. JOHNSON: My only question is just in dollar terms, what is the county faced with the loss of revenue from their portion of the traffic fines?

MR. LEVINE: About $300,000 a year.

MR. JOHNSON: Thank you.

MR. WILLIAMSON: Thank you, Larry. Good to see you.

MR. LEVINE: Same here. Thank you.

MR. WILLIAMSON: Gary. I never can remember: Bob's brother or Bob's son?

MAYOR SLAGEL: Well, good afternoon, Mr. Chairman, commissioners, Mr. Behrens. I'm Gary Slagel, mayor of the city of Richardson, but I'm also the legislative chair for the Dallas Regional Mobility Coalition, and as many of you probably know, that's an organization of five counties and 27 cities in the Dallas District basically.

We have reviewed your legislative plan and only have one issue which is really the one that was just discussed regarding the DPS fines going into the Mobility Fund.

Funding the Mobility Fund is great and that should be done, but the issue here is similar to that of the auditor, the prior speaker, in that the dollars that would be removed from primarily the counties -- in our region the cities wouldn't be nearly as impacted as the counties would be -- the dollars are significant and can make an impact on those budgets.

What we do believe in is the metropolitan mobility plan and in that we work with the TxDOT district and the commission and the local entities to define projects that need to be jointly funded, and part of those projects are jointly funded using the dollars that come out of this.

So we would respectfully ask you to reconsider that issue and remove it from your legislative agenda, as Coby Chase had identified. And we certainly feel comfortable with his alternative should you wish to do that. Thank you.

MR. WILLIAMSON: Questions of Mayor Slagel?

(No response.)

MR. WILLIAMSON: Thank you. It's good to see you again.

MAYOR SLAGEL: It's good to see you.

MR. WILLIAMSON: Okay, Coby, I think that we all are going to take your sage advice and ask you to alter the legislative item affecting the counties.

MR. CHASE: Okay.

MR. WILLIAMSON: And we certainly want the counties to know that through the words that I'm speaking and through your words that it was not our intention to pick a fight.

MR. CHASE: No.

MR. WILLIAMSON: Everything we spend is spent in some county in Texas.

MR. CHASE: Last I looked, yes, sir.

MR. WILLIAMSON: I do want to hear your viewpoint or any reaction you've got from Ms. Coffey's comments.

MR. CHASE: Yes, but before I get there, to go back to the fee issue, you would like me to suggest that the commission suggests in its recommendations that the existing fees to go into the Mobility Fund remain in the Mobility Fund, and not switch back to GR?

MR. WILLIAMSON: Is that our will, members?

MR. CHASE: The way it's currently split too.

MR. WILLIAMSON: I think yes, we're comfortable with that position.

MR. CHASE: On the motor vehicle temporary tags -- I will remind you Brett Bray is in the audience too who may be able to address some of these issues -- but the way I understand it, the Arizona system which seems to be discussed -- and no one can nail down exactly how much revenue will be brought in and I'm not sure that's really the biggest driver here -- and in spite of what our Vehicle Titles and Registration Division speculated as to the cost, all that is required is internet access and you print out a new one a regular piece of paper and it slips into a plastic envelope and it replaces the red tag.

Look at the red tags now, they're easily counterfeited, easily manipulated, not of much use to law enforcement. In the Arizona plan, all you do is you access the internet, type in that Coby Chase bought a 2004 Dodge, and it says 2004 Dodge and it prints out a unique number, kind of like a license plate number. So law enforcement can see it and that tag matches that car.

Instead of those red tags, if you look at them up close, you can't tell from a safe law enforcement distance if that tag belongs to that car, you just can't do it. I defy anybody to tell you you can do it from this distance. These do that, and it's a very cheap system, the technology already exists.

The closest thing that would come to $3,000 for a dealer, in my opinion, is if they don't own a computer at all -- which would be surprising -- and they don't have internet access, and that doesn't cost $3,000.

MR. NICHOLS: Does it use a standard printer, just a little Hewlett-Packard printer?

MR. CHASE: Exactly.

MR. NICHOLS: If the object is to keep it from counterfeiting, what would keep a counterfeiter from just printing one out on his computer also?

MR. CHASE: You could do that as well, but if law enforcement pulls up behind it, it has a unique number and they look it up, kind of like a license number.

MR. NICHOLS: We're all business people up here, and I think the last thing any of us want to do is to disrupt a sale in a business like an automobile dealership or add extra cost. I think it would be fair to say that we would want to work with automobile dealers and stuff like that to try to make sure that we do not create a system that does add a lot of extra expense or where they would be punished and have to wait and all that kind of stuff.

MR. CHASE: Absolutely. And this happens right at the point of sale, it's instantaneous, as fast as you can log onto the web.

MS. ANDRADE: Coby, whatever we decide on this temporary tag, I think, like Commissioner Nichols said, is we just have to communicate with them. And I think her not feeling comfortable or thinking that it's going to cause delay or even the fearful thing of saying that we're going to punish, makes me feel like she doesn't trust us because she doesn't know us or we haven't made an effort to visit her. So let's sit down and talk about this and come to some agreement.

But we certainly do not want to affect their sales because it affects us.

MR. CHASE: No, not at all, now that we're building new roads.

MS. ANDRADE: Yes, we want them to keep selling cars.

MR. HOUGHTON: How are you going to punish them, Coby?

MR. CHASE: You know, I have no idea.

MR. WILLIAMSON: Do we directly do their policy, or do they have their own board?

MR. CHASE: They have their own board.

MR. WILLIAMSON: Made up of consumers?

MR. CHASE: You're going to have to ask Brett; I forget the composition of their board.

MR. WILLIAMSON: Kind of like the old TTA system where we were kind of responsible for the money and part of the regulations but they had their own independent board?

MR. CHASE: Yes, sir.

MR. WILLIAMSON: Do you recommend in your deal that we do away with that?

MR. CHASE: No, sir.

MR. HOUGHTON: So Coby, we could collect fines if somebody has unpaid tickets and they try to register a vehicle or buy a new vehicle?

MR. CHASE: Uh-huh.

MR. HOUGHTON: That's a great idea.

MR. WILLIAMSON: I was persuaded when it was first brought up, John. I was persuaded by the security argument. I think if we don't do this for administrative purposes, more than likely the Department of Homeland Security is going to be doing it in the next few years.

MR. CHASE: We have problems with it on the border, we have problems with nefarious-type people who use this in the drug enterprise.

MR. WILLIAMSON: I think Mr. Nichols' and Ms. Andrade's comments are always worth paying attention to. We need to have a good relationship with TADA, but unless there's a strong feeling members, I'm comfortable with this recommendation and we'll let the legislature decide if it makes sense or not. That's my view.

MR. JOHNSON: My reaction is somewhat akin to Robert's. We print boarding passes to get on an airplane, there are a lot of things you can print off the internet onto your printer, but still somebody could easily duplicate or counterfeit one of those. And if that's the prime driver here, I don't know that we've advanced making counterfeit more difficult from something that's a pretty ordinary red-and-white cardboard tag to something that's printed out on somebody's computer.

MR. CHASE: The red-and-white tag is very easy to counterfeit right now. You can manipulate the dates and all sorts of things. The Motor Vehicle Division can show you some pictures sometime of what can be done, and for law enforcement purposes, they're not good.

What the Arizona system does is it's still a piece of paper, it's a cheaper piece of paper, frankly, and it prints out a unique number just like a new license plate. I mean, if you're a criminal, you're going to have to be good enough to figure out that this unique number matches and it has to say 2004 Dodge. That's the trick there, you can do that with the red tags now. That just prints right out of the printer.

And if you are counterfeiting them, it will have to say 2003 Lexus, and then it will have a number, and if law enforcement sees you and they decide they want to run that number, there's no such number, that's all it is. They can see it from a distance.

MR. WILLIAMSON: Adjust the county fee business.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: And again, unless I hear a strong objection, I'd just as soon us pursue this and let the legislature tell us what they want to do. Okay, that's what we'll do.

MR. CHASE: Thank you. I believe you're going to need to vote on the minute order.

MR. WILLIAMSON: We were trying to avoid that.

MS. ANDRADE: So moved.

MR. HOUGHTON: 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.

P U B L I C H E A R I N G

MR. BEHRENS: We'll now go to agenda item number 2, which will be our public hearing to receive data, comments, views and testimony concerning the commission's highway project selection process for the 2006 Unified Transportation Program.

MR. RANDALL: Good afternoon, commissioners. For the record, my name is Jim Randall, director of the Transportation Planning and Programming Division.

The notice for this public hearing was filed with the Secretary of State on November 10, 2004, and published in the Texas Register on November 19, 2004.

This presentation and hearing is held annually to fulfill the requirements of the Texas Transportation Code Section 201.602. The highway project selection process being discussed will be used for selections in the 2006 Statewide Preservation Program and Statewide Mobility Program.

At this point we have a 14-minute video presentation. After the video I'll return to provide additional information and answer any questions you may have. Thank you.

(Whereupon, the video was shown.)

MR. RANDALL: I've got just a little bit more to add, please, sir. In order to complete our presentation, I'd like to point out that copies of the project selection process brochure, along with the addendum, can be found in the foyer. The brochure will recap the information provided in the video and the addendum provides more detail on the ranking index and allocation formulas used in the project selection process.

MR. WILLIAMSON: Where are you going to send that?

MR. RANDALL: Where am I going to send that? It's out there in the foyer.

MR. WILLIAMSON: No. Where are you going to send it? Are you going to send it to people or are we just going to keep it around?

MR. RANDALL: Well, it's on our website for the existing 2005 SMP and SPP. It's in the front of the UTP which explains by category how we rank the projects and things like that. So it's on that as well as here, and we can put it out on our website again.

MR. WILLIAMSON: Go ahead.

MR. RANDALL: Okay, sir. A copy of the presentation in VHS, DVD and CD format can be found in the foyer as well for those who want to take the public hearing home to share with others who could not attend.

Again, we are requesting written comments regarding the highway project selection process to be mailed to the address shown above. The deadline for comments is January 18, 2005.

And that concludes our presentation, and I'll return it back to you, Mr. Williamson.

MR. WILLIAMSON: What I was asking about was the tape itself. I liked the tape.

MR. RANDALL: Yes, sir.

MR. WILLIAMSON: I think the tape is worth sending to some people.

MR. RANDALL: Well, last year we sent it out to all the 25 district engineers, so we can do that again.

MR. BEHRENS: Do you send it to the MPOs?

MR. RANDALL: Yes, sir.

MR. WILLIAMSON: I thought it did a pretty good job of summarizing some of the things we've done.

MR. RANDALL: Okay, sir.

MR. WILLIAMSON: Now, if you could put some of that Don't Mess With Texas advertisement in it, it would be pretty good.

MR. RANDALL: Well, this was done by our Travel Information and my Programming section, so this was all TxDOT.

MR. JOHNSON: Award-winning Don't Mess With Texas.

MR. BEHRENS: We don't need any action on this, do we?

MR. RANDALL: No, sir. It's just to close the public hearing and then we'll be back probably in February with a minute order. Thank you.

MR. WILLIAMSON: Thank you, Jim.

COMMISSION MEETING RESUMED

MR. BEHRENS: Now we'll go to agenda item number 8 and agenda item number 9. I'll ask James Bass to go through both of those agenda items.

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

Agenda item 8(a) would define the State Highway 45 Southeast turnpike project as being financially independent of the Central Texas Turnpike System. The indenture for the Central Texas Turnpike System assumes that any toll road operated by the commission will be a part of the system unless so designated by the commission.

This minute order provides such a designation and we would forward to the trustee if approved. Staff recommends your approval.

MR. NICHOLS: Depending on what we did the ultimate way that 130 heading into San Antonio is financed or franchised or whatever, this would not prevent us from pooling this with that for a bond issue.

MR. BASS: Correct. If it were retained as a part of the system, you would not have the flexibility to direct it otherwise, but doing it this way, we believe it provides more flexibility.

MR. NICHOLS: Right.

MR. JOHNSON: Is the reason that we're making this move basically for flexibility?

MR. BASS: Yes, sir.

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. NICHOLS: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BASS: Agenda item 8(b) would authorize the department to submit an application to the Bond Review Board for the issuance of up to $1 billion of Texas Mobility Fund bonds and other obligations, including the pledge of the State's full faith and credit as a backstop.

In addition, the minute order authorizes my position to execute an agreement with the Comptroller's Office that would provide for the division of responsibilities between the department and the Comptroller related to the department's administration of the Texas Mobility Fund.

Staff would recommend your approval.

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: Opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BASS: Agenda item 9(a) seeks preliminary approval of a loan to the City of Rosenberg in the amount of $1 million to pay for the rehabilitation of the storm sewer system along US 90A, State Highway 36, and Farm to Market 1640.

Staff recommends your approval so that we may begin negotiations with the city.

MR. NICHOLS: So moved.

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.

MR. BASS: Agenda item 9(b) seeks preliminary approval of a loan to Hidalgo County in the amount of $1.2 million to pay for the construction of Mile 2 West Road. This project, I would like to point out, is not on the state highway system but is eligible for federal funding assistance and therefore eligible for assistance from the SIB.

The project is consistent with the Texas Transportation Plan and is currently funded through Category 10, Supplemental Transportation Projects, that you saw earlier.

And again, staff would recommend your approval of this minute order so that we may begin negotiations with the county.

MR. HOUGHTON: 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: Opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MS. ANDRADE: James, I have a question. What's our balance now?

MR. BASS: In the SIB, I have that right here, the cash balance right now is $40 million but some of that is committed, it just has not been disbursed yet, so the uncommitted balance is $21 million.

MS. ANDRADE: Thank you.

MR. BEHRENS: Agenda item 10(a) is our proposed rule for adoption this month. Dianna?

MS. NOBLE: Good afternoon, commissioners, Mr. Behrens. For the record, my name is Dianna Noble and I'm the director of Environmental Affairs for TxDOT.

Item 10(a) proposes the adoption of amendments to 27.32 concerning private toll roads, 27.43 and 27.44 concerning regional tollway authorities, and 27.72 and 27.73 concerning county toll roads.

The purpose of these proposed amendments are to clarify environmental review and public involvement requirements, project approval, and to better define roles and responsibilities. These proposed rules will be published in the Texas Register for public comment.

I have also made contact with the parties that may be potentially affected by these proposed amendments and made them aware of these proposals.

Staff recommends approval of this minute order.

MR. WILLIAMSON: Questions or comments, members?

MR. JOHNSON: I just have a question of Dianna about another matter. Yesterday a judge, I believe in Galveston, issued an injunction against the Corps of Engineers. Are you familiar with that? Obviously not. I just wondered if TxDOT was affected in any way.

MS. NOBLE: No, sir, I'm not aware of that injunction.

MR. JOHNSON: Thank you.

MR. WILLIAMSON: Other questions or comments?

MR. JOHNSON: So moved.

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.

MS. NOBLE: Thank you.

MR. BEHRENS: Agenda item 10(b)(1) is our rules for final adoption, that rule pertaining to our Adopt-A-Highway Program.

Doris?

MS. HOWDESHELL: For the record, my name is Doris Howdeshell, director of the Travel Division.

The minute order before you today adopts amendments to the rules concerning the Adopt-A-Highway Program to clarify some of the requirements of the program. The commission adopted these proposed rules at the September 30, 2004, commission meeting, and then they were published in the October 15 issue of the Texas Register. No public comments were received, and staff is recommending approval of this minute order for final adoption of the changes.

MR. WILLIAMSON: Mr. Nichols?

MR. NICHOLS: I read the rules and the changes. I want to hear from your voice that we have enough control that if we have what I would call an objectionable party that wanted to adopt, that we can refuse.

MS. HOWDESHELL: Bob Jackson may have to help me with that. In my opinion, we do. What we did is we actually surveyed the majority of the other states and reviewed portions of their rules on how they deal with questionable groups, and we think we incorporated the best of those into our changes.

And with that, if Bob would like to say something else, I'll yield to him.

MR. NICHOLS: Bob, are you nodding yes or no?

MR. JACKSON: We have a number of ways in our rules to deal with a difficult applicant, and I think the failsafe is if there's no other way, they only get one sign and it's vandalized, then we're not going to replace the sign.

MR. NICHOLS: That almost makes me nervous because if we have the ability not to give it to them, why are you so worried about them having one sign and us not having to replace it? Why would we even have to get to that point?

MR. JACKSON: Well, First Amendment concerns, there's only so far we can go in saying we think you're objectionable. Now, they have to fit the definition of an eligible group and that may include a number of groups that will cause people a lot of concern, a lot of local concern, and we may have to put a sign up.

MR. NICHOLS: So we as a commission, if there's a question about it, they can't just bring it to us and we say no, we have to have basis and grounds and all that stuff?

MR. JACKSON: We do have an appeal process that goes to Mike.

MR. NICHOLS: So you make the final call on it?

MR. JACKSON: There's a lot of case law on this subject. We were fortunate when we had a difficult circumstance in Vidor, Texas.

MR. NICHOLS: Because I recall some difficult ones in the past; I was hoping we had it protected.

MR. JACKSON: We won in the Fifth Circuit and I think we may have been fortunate that we had pretty good circumstances at that time in that location.

MR. NICHOLS: Okay.

MR. WILLIAMSON: Other questions or comments, members?

MR. JOHNSON: Move adoption.

MR. NICHOLS: 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.

MS. HOWDESHELL: Thank you.

MR. BEHRENS: Agenda item 10(b)(2) is a final rule for adoption concerning federal, state and local participation. Mark?

MR. MAREK: For the record, my name is Mark Marek, I'm director of the Design Division for TxDOT.

The minute order before you today, commissioners, proposes final adoption of amendments to Sections 15.51, 15.52, 15.54 and 15.55 related to federal and state and local participation in the development of highway projects.

These amendments, as proposed to you earlier, include definitions for on and off Safe Routes to School Program established by recent legislation, clarification of the standard payment provision to include right of way, and amendments to maximize the department's flexibility in the use of federal funding in conjunction with the restructuring of the Unified Transportation Plan.

Also, some participation ratios have been revised to allow the department the flexibility to request federal reimbursement for more right of way and preliminary engineering activities, thus reducing the required state and local participation requirements for some types of projects.

Amendments were also included to allow additional time for a local government to complete an equivalent match project if it had made a good faith effort to comply with the deadlines.

No comments were received on these proposed rules. Staff recommends your approval of this minute order.

MR. HOUGHTON: 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. MAREK: Thank you.

MR. BEHRENS: Agenda item 10(b)(3) is a final rule concerning our logo signs. 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 provides for final adoption of rules regarding our Logo Sign Program. The proposed rules were published in the October 15 edition of the Texas Register and no comments were received.

These proposed rules will make various changes required during the last legislative session. They will allow for the use of dual logos, allow the department to use the best value contracting approach when awarding a contract, and increase the percentage of program revenue that the department gets to at least 10 percent of all rental fees.

We recommend approval of this minute order.

MR. JOHNSON: So moved.

MR. NICHOLS: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. LOPEZ: Thank you, commissioners.

MR. BEHRENS: Agenda item 10(b)(4), this will be final adoption of rules concerning oversize and overweight vehicles and loads. Carol?

MS. DAVIS: Good afternoon. I'm Carol Davis, director of TxDOT's Motor Carrier Division.

The minute order before you adopts amendments to 43 TAC Chapter 28 concerning oversized and overweight vehicles and loads. The amendments were proposed by the commission in September and published in the October 15 edition of the Texas Register. We've received no comments.

The amendments provide for both TxDOT and the motor carrier industry to operate more efficiently, and staff is recommending final adoption of these amendments.

MR. NICHOLS: Have you presented to us before?

MS. DAVIS: Yes, sir.

MR. HOUGHTON: I thought so. Move to approve.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MS. DAVIS: Thank you.

MR. WILLIAMSON: We let you off light.

MS. DAVIS: Thanks.

(General laughter.)

MR. BEHRENS: Agenda item 10c will be presented by Bob concerning rule review.

MR. JACKSON: Bob Jackson, deputy general counsel.

The commission is required to consider readoption of its rules every four years. Notice was put in the Texas Register; no public comments were received on the readoption of chapters concerning regional mobility authorities and the Trans-Texas Corridor.

We recommend readoption of the rules.

MR. HOUGHTON: So moved.

MS. ANDRADE: 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. Thank you, Bob.

MR. BEHRENS: We'll go to agenda item number 13, our contracts for the month of December. Thomas?

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

Item 13a(1) is for consideration of award or rejection of highway maintenance contracts let on December 7 and 8, 2004 with estimated cost of $300,000 or more. We had ten projects, we recommend award of all projects.

MR. WILLIAMSON: Thomas, where is our graph of the Highway Congestion Index, or Highway Index? This is easier to understand than Amadeo's was earlier in the day.

MR. HOUGHTON: Yes.

(Pause.)

MR. BOHUSLAV: As I mentioned earlier in regard to HCI, I think you were discussing earlier about 1991 was the last time the gas tax increased, effective in 1993. But in 1991 the Highway Cost Index was about one, and today -- actually with this letting, I don't have it on that plot -- it's about 1.64, so if you divide whatever dollar value you have in 1991 by 1.64, that's the effective dollar value for the materials that we use on the projects.

But remember, this does not address increased pavement thickness we have to build now because of the increased traffic loads we have. It doesn't address additional costs on our projects that we have to cover, for instance additional environmental requirements for treatment of storm water and so on and so forth. So it only addresses kind of unit material prices on projects, so actual increase to build a mile length of highway are actually more than what's shown here.

MR. WILLIAMSON: We're on 13a(1). Questions or comments?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: Opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BOHUSLAV: Item 13a(2) is for consideration of award of our highway and building construction projects let on December 7 and 8, 2004. We had 69 projects, we have four projects we recommend for rejection.

The first one is project number 3009 in Cameron County. We had four bidders, 26 percent over. This is for a hike and bike trail. It's about a million dollars that the City of Brownsville would have to fund and they'd like to go back and redesign and down-scope the project.

The project recommended for rejection is project number 3222 in El Paso. Two bidders, 62 percent over. This is rehab work on I-10. They'd like to go back and redesign, and the restrictions on the work on this project would require that the contractor bring in two plans and it just wasn't cost effective and they'd like to redesign the project.

Project number 3022 in Ellis County. Four bidders, 82 percent over. It's a city street and they're going to replace a bridge. They'd like to go back and re-let this project, and actually I think the match participation by the county there, they'd like to go back and re-let it and see if they can solicit more competition. Actually there was a bidder that didn't get their bid accepted because there was a problem.

And then lastly the last project for rejection is project number 3027 in Refugio County. Had one bidder, it was 50 percent over. We need to get some more bidders on that and go back and re-bid it.

MR. WILLIAMSON: What county was that?

MR. BOHUSLAV: Refugio.

(General talking and laughter.)

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BOHUSLAV: Thank you, commissioners.

MR. WILLIAMSON: Thank you, Thomas.

MR. BEHRENS: Agenda item 14 is our routine minute orders for the month of December. They were all duly posted as required. We can go over any of them that you'd like to discuss that you want to discuss individually; otherwise, I'd recommend approval of all the routine minute orders. To my knowledge, I don't think any of them affect any of the commissioners.

MR. WILLIAMSON: Are there any commissioners that need to withdraw or abstain on any votes having to do with this matter?

(No response.)

MR. WILLIAMSON: To our knowledge, none of us are involved in any of these things. Mike, we appreciate you also making that statement; we know it's difficult every month.

Do I have a motion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

In ten seconds the most privileged motion will be available. Thank you, members. It was a pretty intense week. Thank you for your contribution; this was a good day.

That privileged motion is in order now.

MR. HOUGHTON: Move to adjourn.

MR. NICHOLS: I'll second it.

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. We stand adjourned at 3:09 p.m.

(Whereupon, the meeting was concluded.)

C E R T I F I C A T E

MEETING OF: Texas Transportation Commission
LOCATION: Austin, Texas
DATE: December 16, 2004

I do hereby certify that the foregoing pages, numbers 1 through 267, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Sunny Peer before the Texas Department of Transportation.

__________12/22/2004
(Transcriber) (Date)
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731