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.

MR. WILLIAMSON: Good morning. It is 9:11 a.m. and I call the May 2005 meeting of the Texas Transportation Commission to order. It's a pleasure to have each of you here this morning

And please note for the record, public notice of this meeting, containing all items on the agenda, was filed with the Office of the Secretary of State on May 18, 2005, at 1:27 p.m.

Before we begin today's meeting, let's all take a moment to place our pagers, cell phones, the Berries and other electronic devices on the silent mode, please.

I know some of you think you already have, but it would be nice if you'd just go ahead and check it and be sure.

Robert, have you got your pager on the silent mode?

MR. NICHOLS: Yes. It's totally unplugged.

MR. WILLIAMSON: Thank you very much.

As is our custom, we will open with comments from each commission member, and we begin with the man with the plan for the western part of the state, Commissioner Houghton.

MR. HOUGHTON: Good morning. There were a lot of things happen last night, and if you hear a distant whistle in the background, it's a train coming. I think the Senate voted last night to approve the rail relocation program, and I think at the same time changed the name of the Railroad Commission, and we are now in the railroad business.

And I want to congratulate one of my fellow commissioners, Mr. Nichols, for his work on the rail relocation program.

MR. WILLIAMSON: Hear, hear, Robert Nichols.

(Applause.)

MR. HOUGHTON: He came bounding in this morning like a kid who had just gotten his report card and there was straight As. It was an amazing thing, but it's going to be a new day and that will go to a constitutional vote in November.

But congratulations to those who have worked on it. I'm the newbie on the board, so congratulations, Mr. Nichols.

And welcome to you all today.

MS. ANDRADE: Good morning. Welcome to everyone. Thank you so much for your interest in transportation and for what you do for us and with us.

We have some special guests. We have some representatives from San Antonio from our Alamo RMA. Good morning and welcome.

Also, we've got some representatives from our public transportation study group. Michael, thank you so much for being here.

This is a busy weekend. I wish you all safe travels, drive safely.

And I'd also like to thank Commissioner Nichols for all the work that you've done for us across the street. Thank you.

MR. JOHNSON: I keep saying when you bat third you see a lot of the same pitches, and so I guess you're going to see a lot of the same pitches.

It's a delight to see everyone here this morning. There are a lot of familiar faces, people who are involved and dedicated to making this state and its transportation programs the best and to improve upon that standard. And we appreciate what you do.

Clearly there are a lot of new paths that we are proceeding down, and as Ted mentioned, combining the responsibility for transportation into one area I think is a very appropriate step, and I salute Robert for his efforts and leadership in that area's interest was one of the probably key components in just having that seed germinate to start with.

Thank you for being here, thank you for what you do for this great state.

MR. NICHOLS: I'd also like to welcome everybody here. I know a lot of you came a long way to be here today to make comments regarding some of the issues that we're going to be talking about and voting on today, and we want you to know we look forward to your comments. We appreciate the fact that you've taken the time to come here.

I'm so excited about that rail relocation thing passing last night. It would not have happened without full support of this commission, everybody knows that, and it certainly would not have happened without the support of Governor Perry and Lieutenant Governor Dewhurst, and I think everybody knows that.

So they were on board and saw the need and it passed 31-0 late last night, and that is a big one for the state of Texas. And as time moves on and we move toward the November vote on that issue, I think the public is going to see the possibilities are boundless and open up so many new opportunities for rails and cars and movement of people and goods. It's unbelievable.

Thank you.

MR. WILLIAMSON: Thank you, fellow members, and I associate myself with the remarks. I welcome you here and I appreciate all of you who have come a long way to either watch or to offer witness to a particular position.

I want to take a few moments to talk to you about the events of the last 24 hours and the last six months.

Some sitting away and observing this process might assume or have assumed that the department and the commission are in some ways in an adversarial position with some of the leaders of the state.

I would like to make it clear, all of us would like to make it clear from our hearts that there is no leader in this state at the current time with whom we are adversarially balanced.

We owe a great deal of gratitude to David Dewhurst for the way he has approached transportation in the Senate over the past six months.

The lieutenant governor, I believe, is reflective of a new breed of leaders who will be elected in the state probably for the next 50 years, and that is an individual who has risen from poverty, made a lot of money, knows how things work, and does not automatically assume what someone tells him is the only way things should be.

Frequently, when you're sitting in Gordon's spot or when you're living in Texarkana and having to kind of watch from afar, you see things not working like they apparently should and you think: Well, somebody is gumming up the works.

I think in the case of this session for transportation, we've asked a lot of the governor and the legislature over the last six years, a lot in the way of cultural and behavioral change. And as my close friend Sam Russell -- with whom I served in the legislature -- knows, the scariest thing to an elected person is to be asked to do cultural and behavioral change without knowing exactly what's going to happen when the change occurs.

People who stand for election and represent us at city council and school board and in the legislature and at the state level want to know before they vote -- and well they should -- what is the probable outcome of the cultural or behavioral change they're going to support.

And over the last six years we've asked those men and women to change the law in ways that none of us really could know for sure what the outcome would be.

As a consequence, we've all got to hear or have the pleasure of listening to what we call the easy-way-out crowd and the don't-do-anything group, and those criticisms often hurt and are often threatening.

From San Antonio to Dallas, from Houston to Midland, there are those who either think there's an easier way out or somebody is going to send us some money from an unknown source, or if we don't do anything things will get better, and their criticisms have at times been bordering on the psychotic.

This is to be expected when major change occurs in a democratic society such as ours.

The record should reflect at the close of this legislative session that Governor Perry, Speaker Craddick, and Lieutenant Governor Dewhurst did not take the easy way out, they didn't follow the path of do nothing, they didn't promise something for nothing, as some elected officials choose to do.

The record should reflect that Todd Staples and Steve Ogden and Florence Shapiro and Gonzalo Barrientos on the Senate side, and Mike Krusee and Lois Kolkhorst and Jim Pitts and a whole host of other House and Senate members on the House side, went far beyond what was necessary to continue to give tools to the people to address their transportation problems.

I think all of us wish that we could figure out a same way to approach the other dilemmas that confront the legislature: public education, the tax system, the other things that are important in this state. Those perhaps are to be reserved for another day.

But it can be said this day, with one major bill left to pass, that the leadership of this state, and in particular David Dewhurst, have gone way beyond what would be expected of an elected person to take the hard-way-out and the do-something position and recognize that you don't get something for nothing, there is no road fairy waiting to give us money. And we should all be grateful for that, I think.

Having said that, it's time for us to proceed, and we need to approve the minutes, gang.

MR. NICHOLS: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries, minutes are approved.

Michael.

MR. BEHRENS: Thank you, Chairman. We'll go to agenda item number 2 which is Aviation, and Dave Fulton will outline the projects for the month of May.

MR. FULTON: Thank you, Mike and commissioners. For the record, my name is Dave Fulton, director of TxDOT Aviation Division.

This minute order contains a request for grant funding approval for 19 airport improvement projects. The total estimated costs of all requests, as shown in Exhibit A, is approximately $4 million: approximately $2.6 million federal, $500,000 state, and $800,000 in local funds.

A public hearing was held on April 22 of this year. No comments were received.

We would recommend approval of this minute order.

MR. WILLIAMSON: Do we have witnesses?

MR. BEHRENS: No.

MR. WILLIAMSON: Members, you heard the proposal. Do you have questions or comments for Dave?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

MR. KING: 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.

MR. FULTON: Thank you.

MR. WILLIAMSON: Mike, let me take a minute to catch up with what I didn't do.

If you wish to address the commission, I need for you to fill out a speaker's card at the registration table in the lobby.

If you're going to comment on an agenda item, I need for you to fill out a yellow card such as the one in my left hand; if you're going to comment in the open comment period, I need for you to fill out a blue card, such as the one in my left hand.

Regardless of which color card you complete and where you wish to comment, please try to limit your comments to three minutes unless you're an elected official, in which case we'll stay forever.

(General laughter.)

MR. WILLIAMSON: Okay, Mike.

MR. BEHRENS: We'll now go to agenda item number 3 which is going to be a report on planning and public transportation. This is a result of a study group that was working on this, and to introduce that will be Bobby Killebrew.

MR. KILLEBREW: Good morning, commissioners, Mr. Behrens and Roger. For the record, I'm Bobby Killebrew, Public Transportation Division interim director.

Today I have the pleasure of introducing item number 3, a report from the regional planning and public transportation study group.

This study group, as it has commonly been called, is set up and functions under the office of Commissioner Andrade, and is chaired by Mr. Michael Morris, director of transportation for the North Central Texas Council of Governments.

Mr. Morris will be leading the presentation this morning, and at this time I'd like to turn the presentation over to Michael.

MR. MORRIS: Thank you very much, Mr. Chairman, commissioners, Mr. Behrens. It's very nice to see you again.

I was so proud of some of my colleagues from the study group this morning. I saw some of the public transit executive directors from the state. I said, That's really nice to come and support the chairman during the presentation. Then I looked down the agenda a little bit further and you have a funding allocation that very much impacts their lives.

(General laughter.)

MR. MORRIS: There are several members of our study group here today that represent the public transit interest, health and human service, and your colleagues on other commissions, and the Workforce Commissions of the state of Texas and their commissions.

We have staff members from those particular organizations; we have probably half a dozen or so members of the committee. If they would just stand up, I would appreciate that.

Now, those individuals from other health and human service, you do not have anything else on their agenda, so they are here supporting me, and I appreciate that.

The committee would very much like to recognize Commissioner Andrade who came to our particular meetings, formed this, came to me in the fall with this particular item, saw where the legislature was trying to go.

This isn't just the product of this particular study group, this is the product of one of your commissioners who has tremendous insight with regard to how to move forward with this.

And I'm very optimistic that great things will happen in this area to a group of people where great things need to happen to them.

This is the representation of the study committee that the commissioner formed. Please notice it's a cross-section of not only members from the whole state, but the functional areas in what I hope to describe to you as a pretty complicated situation.

We met only four times and developed a unanimous presentation that's before you today. I was anticipating several meetings to break down very defensive institutions: of course we're not doing anything wrong, everything is just perfect. These institutions were waiting for some process to come along in order to sit around the table and make it a better system.

I'm also thankful to the commissioner for getting the support of the Public Transportation Advisory Committee when she gave a presentation to them with regard to the findings of this particular study group.

In the last legislative session, 3588 -- which you're very familiar with and I'm also sure you're familiar with Article 13 which focuses on this transit initiative -- is calling for improvement in the delivery of transportation services.

Try to develop more efficiencies in its operation, not to reduce the exposure in Fund 6, but the legislature specifically said to increase the levels of service. This is an efficiency initiative for the purposes of increasing transportation services to these constituents.

Encourage cooperation and coordination. And remember, this is very critical because historically this has been implemented by several different commissions -- and I'll tell you why in a moment -- and of course, it requires the development of regional plans.

The commissioner called me and said, Well, we're going to get going in early January. And I don't know if we met before the first Mimosa after New Year's Eve or not, but we started very early in January. Less than 100 days later we stand before you with a recommendation.

What are some of the things that are important with the implementation of these legislative elements?

First of all, what the legislature did is move the dollars all under your authority here at the Texas Transportation Commission. I think that's what has needed to happen in order for there to be one integrated planning approach to see how we can work together.

When the dollars are split between commissions, it's very hard for some person to take responsibility with regard to an initiative.

I think there's a lot of improvements possible -- I'll give you a few examples in a moment -- but this will be evolution, not a revolution with regard to improvements in this particular area.

We have to be somewhat sensitive, but you should accept accountability in this particular process. And the reason is -- I'm going to use the term "client-based transit" -- for a lot of these particular programs the purpose is not the transportation system, it is the customer, it is a person seeking retraining, it is a person who has a medical problem, it's a person seeking chemotherapy.

Transportation is simply a means to some other objective or social need that these particular individuals have, and I think we need to underscore the importance of these clients. And I'll define some terms in a minute.

Public transportation. The important thing to point out to you is this is the conveyance of passengers either by a public sector entity or government money that is funding a private sector provider. So this is going to impact taxicabs and other private sector paratransit systems that you are using your transportation funds for the delivery of these particular services.

So we're going to be in a public-private sector coordination situation with this definition of public transportation.

The mission. This is a statement the committee developed; this isn't in the legislation, this is what our committee did.

But there are three dimensions that are important: we think there are issues with regard to planning and programming; we think there are issues that affect metropolitan, suburban and rural areas, so this is statewide; and we think this affects service delivery, customer service, efficiency and effectiveness.

So we're on three different dimensions here and we hope to seek improvements in all three of those particular dimensions.

Now, to me a lot of people say, "Boy, Michael, you find that pretty interesting, to the rest of us it's not all that exciting." But to integrate two completely different methods of transit planning, system-based planning which is what I'm trained in and TxDOT is trained in, you develop a transportation system, there aren't any specific faces of your users, you're developing a logistics system, it's customer service-driven, and you anticipate clients to be on your roadway, your toll roadway or your rail system or your bus system.

Client-based transit planning is you have an individual face, you have a customer of need. Transportation is just some means to provide the social service that that particular person is seeking, have it be retraining or chemotherapy or elderly service, have it be any of those particular elements.

So what we're going to do is take these historically separate approaches and integrate them into the same system of transit, and I'll show you some examples in a moment.

Let's talk about the funds that you have. In the 2004-05 biennium, you have in your Fund 6 $278 million. Two important points, probably.

First, notice the magnitude of funds, $166 million in client-based transportation. So a majority of the funds are going to the one philosophy of transit planning which is transportation as a means, but the real purpose is the identification of their specific social service.

Also, though, if you look at going east-west across the table, a significant amount of federal funds. So you'd say, Well, first of all, boy, this is going to be hard; I'm sure these federal funds come with a lot of federal requirements.

And that may be true, but Secretary Mineta -- and I think the timing of this is perfect -- came out last week with a desire of the federal government to address exactly the same efficiency and effective measures with regard to these federal transportation programs that are in the middle of that particular graph, the 55.3.

So I think the planets are aligning with the federal government who is looking to move in this direction and the state government who is wishing to move in this particular direction. So I think there is some opportunity. With accountability and a little patience on your part, I think we can make great strides with regard to this process.

Now, what is the process that is being proposed? A lot of the social agencies and a lot of the councils of government structures are somewhat simultaneously defined and tried to be represented in this particular map.

The way I would look at this map from your standpoint is 24 regional areas of the state. We're proposing to use COG districts but this does not mean to imply that COGs will be the developer of these transit plans, this is a geography of a statewide initiative that will be performed in 24 portions of the state.

Clearly this is not a one-size-fits-all initiative. In fact, you're going to hear me in our recommendations where you are going to request a lead agency from each of these jurisdictions to step forward and coordinate this transit planning effort.

In one part of the state it could be a COG, in another part of the state it could be an MPO, in another part of the state it could be a transit provider, in another part of the state it could be a health and human service provider, in another part of the state it could be a Workforce Commission.

This particular proposal suggests to you to move forward with 24 experiments that are developed in a bottom-up approach in each of these communities in which the participants have experience in the delivery of these services.

I want to underscore again it's not necessarily the councils of government that will be taking the lead in each of these particular areas.

I also want to point out -- and you see other color-coded systems where you see some of the colors not coinciding with the boundaries -- you already have rural transit providers that are not homogeneously providing service within COGs, they'll cross over COGs, called rural transit districts.

So we're going to have to not only develop a regional plan for each of our regions, we're going to have to coordinate with the boundaries of our system and make sure we're integrating those services because, of course, the user doesn't care about these lines or frankly any other lines on the map when they're trying to get their transportation services.

So the coordination of these rural transit providers in each of our particular plans is a little level of additional work but not too horrible.

What are some of the examples of success that we have seen within the state and the nation in this particular area?

One example from TxDOT in Johnson County -- this was performed inside your district with your public transit coordinators -- expanding a city service to a county service where it isn't just the residents of Cleburne that have transit needs but representatives of all of Johnson County, connecting that service to the rest of the regional transit system, leveraging TxDOT funds and MPO funds to develop cleaner transit vehicles and more transit vehicles to conduct this particular service.

In Houston you have a county judge and a commissioners court who saw a whole disaggregated approach of private non-profit organizations within the Harris County area. That district of TxDOT with that MPO, working closely with that county, developed a one-stop shop where the customer is not required to go find their particular provider, they have a particular need, there is a coordinated effort to do it.

It's a very successful program in Harris County, so successful they're now concerned about the revenue stream to continue to provide this service to these customers.

The classic example I like is often you'll have a social service agency provide taxi vouchers to provide transportation to a particular user. One early success may be to check the origin and the destination of that individual's home to their training needs. It may fall within a public transit provider in a particular community, and you could give that person a monthly transit pass for a year for the same amount of money you're giving them a taxicab voucher to go to training for five or ten days.

Coordinating these systems where that money goes and gives that person transit, improves the effectiveness of that particular individual where the revenue would go to the transit provider as a way to provide that particular service.

Our committee spent one day looking at success stories from across the country. Your public transit division has a new strategic plan that has a lot of these new initiatives in it.

We studied North Carolina, Maryland and Florida. You see a pattern that the states that we've seen who have crossed into this area are all on the East Coast, they've been in it somewhere between 10 and 25 years trying to do a similar thing.

The one mistake they made is their geography of their implementation was by county, it was too small in implementation. That's why you're hearing a recommendation of going to 24 regions. If they had to do it over again, you would have seen them take a much larger geography with regard to the coordination of these plans.

Let's look a little bit more now on specifics of schedule and what are we specifically making recommendations to do.

The committee has met from January until April to prepare for this particular presentation. We are seeking today direction from you, this commission, on how to proceed into the later phases of this particular initiative.

Phase 2 is suggested to begin on June 14. In fact, hopefully you're not too upset at us because we've already sent out invitations for entities from across the whole state to come to Austin to hear this new approach that is being proposed in response to the legislative initiative. We call it the work plan development phase.

We will kick off on June 14 the requirements of developing a work plan. We don't want people to go too far into the planning process until they report back how they're going to pursue this integrated transit plan.

But over the summer until September, each region would be working on the hard part of this process: getting to know each other, getting to understand the importance of the traditional public transit and the integration of client-based services, developing a work plan, developing a lead agency, and reporting back -- we propose in Phase 3 -- in October where each of the 24 regions would stand up and present how they're going to go about doing this particular task so we can all learn from each other.

Who are the customers that have to sit at the table; who are the providers that need to coordinate service. These are very complicated transit plans because they've been stove-piped over the years, and what we're going to do is try to cross-pollinate these particular initiatives with regard to efficiency and effectiveness.

The suggestion would be then to do an actual plan from October of this year to September of next year. We wish you to get these plans in advance of the next legislative session in case there's any particular legislative changes that seem to cross-pollinate across all the plans that could make improvements in this particular area.

We're asking your commission approval and policy direction which would be a year from this fall as a result of these 24 experiments that are going to occur within the state of Texas.

What are the specific action items?

First, we're asking you to approve the process in this schedule to meet these legislative requirements. We're asking you to approve the COG boundaries, not necessarily COGs to perform the work, and then ask a lead agency to come forward.

Now, you should say, Well, wait a minute, that's kind of a risky thing. That's exactly how you did the Texas Metropolitan Mobility Plan, and we're following that model where at least for the larger TMAs you said you come up with the boundary, you come up with the lead agency.

In this particular case, since the legislation is statewide, we can't have flexibility of boundaries leaving out portions of the state, so we're fixing the boundaries and asking each of the regions to come forward with a lead agency to coordinate these services.

The third item -- which we are mirroring the Texas Metropolitan Mobility Plan approach which focused on what we need to do and not how you should do this in each of your regions -- this date that we came up with is coinciding with the date for the next TMMP round in your TMA areas.

So you're going to have seven of the metropolitan areas updating their Texas Metropolitan Mobility Plans that are due to you in September of 2006 coinciding with the state of Texas developing transit plans in the same time frame.

If you remember the comments you made on the Texas Metropolitan Mobility Plan, you are hoping to see more intermodal elements to these plans, both in the goods movement freight side and in the public transit side.

Well, here is your opportunity now to tie these schedules together where each of the TMAs then can cross-pollinate the transit plans with these initiatives that are already occurring within their region.

We're asking you in number 4 to endorse the June 14 date. Because of federal requirements on planning funds, MPOs may not be able to flex their money all the way out to boundaries outside their area. We'll be requesting TxDOT to come up with planning funds to assist in this area.

By the way, that's no different than what you did in the Texas Metropolitan Mobility Plan. You offered planning funds to those TMAs that didn't have enough money to do the work.

And then we're asking you to listen to the results of these 24 experiments to see if there's any consistency in direction that either changes state regulation, changes TxDOT policy, changes division policy, maybe potentially changes state legislation. And by the way, if we discover some federal rules may be broken, you have not been shy in the past of suggesting to the federal government changes in federal legislation to make improvements to this system.

You have individuals in this state whose transportation system is very much dependent on this particular initiative. The Central Expressways, the Grand Parkways, those type of improvements don't necessarily impact their lives; this particular system does. And you have a group of people willing to improve the efficiency of that system in order to deliver more of that service in the state of Texas.

Madame Chair, I'll be happy to take any questions or directions or add or subtract from anything I said that you think may be misleading from our effort.

And Mr. Chairman, we're prepared to answer any questions the commission may have.

MR. WILLIAMSON: Hope, I think you've been so focused on this and done, by the way, such an excellent job, I think I would defer to you. Take it from here.

MS. ANDRADE: Mr. Chairman, first of all, I'd like to thank Michael. Thank you so much for your leadership, thank you for accepting this most important role.

I still remember our first meeting. I believe that we scheduled it on a Thursday afternoon when we sent out notices of invite, and that following Monday we not only had 100 percent participation but we had 110 because we even had people who were volunteering to come serve.

So thank you so much.

I'd also like to thank my fellow commissioners, and thank you, Mr. Chairman, for allowing us to move forward with this. House Bill 3588, Article 13 certainly gave us this opportunity.

I had served a short term on my local transit authority board and had recognized the much needed and limited funding. When I came to this position, I saw that it was statewide. So we needed to do something, and I certainly thank you for leading this.

I'd also like to ask our study group members to stand up one more time so that my fellow commissioners and I can give them a round of applause.

(Applause.)

MS. ANDRADE: We have a lot of work before us but I know that we will meet that challenge.

Also, Mr. Chairman, I'd like to ask if we could create a letter of support for this study group for their June 14 meeting.

MR. WILLIAMSON: That would be a letter from the commission?

MS. ANDRADE: Yes, sir.

MR. WILLIAMSON: I think that would be just wonderful. What do you think, guys? I think we'd like that.

MR. HOUGHTON: Absolutely.

MS. ANDRADE: And I'll also be asking the Texas Workforce Commission and the Health and Human Services to send a letter of support also.

Thank you so much, Michael.

MR. MORRIS: Thank you.

MR. WILLIAMSON: Questions, members? Mr. Nichols?

MR. NICHOLS: First of all, I'd like to thank Hope for having the idea of putting this whole group together.

We all recognize that one of our goals around the state is to try to improve that which relates to transit, but the combining and pulling health and human services and how do you coordinate the two -- because they're totally uncoordinated, mostly uncoordinated right now -- is a very difficult process which impacts a lot of people, I'm going to say most of the people in this room, and we're going to have a lot of support from the commission to working to get there.

And you are just an ideal person to chair this thing and the work that you've done, and I want to thank you very much for not only what you do up in the Dallas-Fort Worth area but the impact this will have statewide. Thank you.

MR. MORRIS: Thank you.

MR. WILLIAMSON: Who's next? Mr. Houghton, Mr. Johnson, anything?

MR. JOHNSON: Well, the only thing that I have to add, if it's anything at all, and it's pretty obvious, is this is clearly an area that has a lot of loose strings, dangling participles, et cetera, and to bring it all together is a monumental task.

Hope, I salute your organizational efforts, and Michael, your leadership efforts. It doesn't go unnoticed outside of the Metroplex all the things that you do for the state, Mike, and I want to salute you and thank you for this.

I'm comforted by the fact that we're headed in the appropriate direction, that we will have something that is a rolling mass somewhat organized, and I think that's a great step because it's complex, and to bring it all together is going to be a challenge. But I'm confident that between the two of your very capable leadership that it will get done.

MR. HOUGHTON: Well, I just want to know if you added hours in the day. I mean, there's 24.

(General laughter.)

MR. MORRIS: I was not familiar with Title 13 and when the commissioner came to me in the fall she didn't say, Well, we've got this legal responsibility in Title 13, do you think you could help? She came to me and said, Don't you think there is a need or an opportunity to integrate these elements?

And just so the rest of you don't get too many ideas, it was this topic that I felt was very important to me. So if you're all thinking of, well, let's draft Michael to lead another group --

MR. HOUGHTON: We've got this rail relocation program.

(General laughter.)

MR. MORRIS: I've been here when you're talking about what you do with the soil when you dredge the Gulf and stuff. This particular topic is important to me.

MS. ANDRADE: Ted, I'm sorry, he's fully committed to me.

MR. HOUGHTON: Is he fully committed?

MS. ANDRADE: Yes.

MR. HOUGHTON: You said one thing that made it personal and that's putting a face where we talk about systems a lot and we talk about track railroads, but putting the human element to it is very profound.

I salute both, Hope, thank you, and yourself for doing that. Because it does, you have to put the face on it and not lose that. And thank you very much, Mike.

MR. MORRIS: Thank you.

MR. WILLIAMSON: Michael, you always do a good job and we do appreciate the time you put into things. And I think Mr. Nichols probably just signaled to you the next thing that we were probably going to ask you to put your time into.

Let me just say that I appreciate your work, Hope, I appreciate the work of the staff and the volunteers.

As the commission knows, Governor Perry's interest in transportation is broad and deep, it's not just about building roads. He's committed to a commuter rail system in this state that makes sense; he's committed to public transit in a way that's efficient and reaches the most number of Texans.

The recommendations you made comport with his long-term vision for the transportation system of the state, and I can't imagine that we'll do anything but proceed.

MR. MORRIS: Thank you, sir.

MR. WILLIAMSON: Thank you very much, Michael, we appreciate it.

(Applause.)

MR. BEHRENS: Moving to agenda item number 4 which will be our rule for final adoption this month involving public transportation, and Bobby.

MR. WILLIAMSON: A very non-controversial matter.

MR. KILLEBREW: I'm hoping I get the same applause when I finish my introduction, I don't know.

MR. WILLIAMSON: Wait. I've got my hard hat someplace. Go ahead.

(General laughter.)

MR. KILLEBREW: Again good morning, commissioners, Mr. Behrens and Roger. Once more for the record, I'm Bobby Killebrew, Public Transportation Division interim director.

Before you for consideration is a minute order which adopts amendments to public transportation funding formula rules. The formulas detailed in the minute order are for the distribution of state and federal funds to rural and small urban public transportation providers.

By way of background, on June 24, 2004, the commission adopted rules establishing a formula for the distribution of state and federal funds. It was understood at that time that further adjustments would be needed to continue to provide for fair and equitable distribution of public transportation funds.

On March 31, 2005, the commission adopted draft rules as adjustments to the formula adopted in the previous year. Following the commission's approval on March 31, 2005, to release the draft rules for public comment, we held three hearings around the state: in Austin, Corpus Christi, and Mesquite.

A Public Transportation Advisory Committee meeting was held, and we accepted public comments by mail until May 16.

The department received comments from 316 individuals or entities. Four indicated that they were in favor of the proposed rules, 17 indicated they were opposed, the remaining commenters discussed both advantages and disadvantages to them to different elements of the formula, or they commented in general about local transit services and the importance of these services to the community.

There is no entity, of course, that wants to experience a reduction of funds and be faced with the potential of cutting service, and many comments received detailed this very sentiment.

At this time I'd like to refer you to the flow chart that will illustrate the proposed changes.

Starting at the top of the diagram for state appropriation, the first proposed change is the initial split between small urban and rural providers. Instead of having a split on the factors of population and land area, the split would revert to a more historical 35 percent for small urban providers, 65 percent for rural providers.

Moving down the left-hand side, the small urban allocation, the next change is that any urbanized areas with a population of 200,000 or greater would be adjusted on a pro rata basis to reflect a population level of 199,999.

Again moving down that side of the chart for performance criteria, these criteria would also be adjusted on a pro rata basis to reflect a population of no more than 199,999.

The changes in formula performance criteria for the small urban providers include: changing local funds per capita to local funds per operating expense; changing the inverse of the change in operating expense per mile to miles per capita; eliminating vehicle revenue miles; and all small urban performance measures would be calculated on the basis of comparing system to system.

Moving down the right side, the changes in the formula performance criteria for the rural providers include: changing local funds per capita to local funds per operating expense; changing the inverse of the change in operating expense per mile to operating expense per mile.

And if I could add a clarification on this particular one, there was some earlier correspondence that went from my office to your aides which I'm sure trickled down to you, and we also had discussions.

In that correspondence and in those discussions, I may have used the term "cost." In this particular thing when we got to the legalese part of drafting the rules, we determined that "cost" is not defined, "cost" is used synonymously with the term "operating expense," thus it was proper to use the term "operating expense" and that's what's reflected on the chart today, as well as in the rules.

The next one: changing the change in ridership per capita with operating expense per passenger; and eliminating vehicle revenue miles. All rural performance measures would be calculated on the basis of comparing system to system.

The federal rule apportionment is allocated the same way as the state rule apportionment. The Public Transportation Advisory Committee had previously recommended pretty strongly that the breakdown would mirror each other so that there's not a totally different formula breakdown, federal funds versus state funds for the rural operators. Therefore, the same changes in the formula performance criteria applies.

In addition, for all of these formulas, 2004 is set as the base year for the 2006 formula allocations, and the upper level cap on growth has been removed.

Also, if available funding exceeds the allocations received in fiscal year '04-05 for state funds, and fiscal year '04 for rural federal funds, additional funding will be awarded by the commission on a pro rata basis, competitively, or a combination of both.

Consideration for the award of these additional funds may include, but is not limited to: coordination and technical support activities; compensation for unforeseen funding anomalies; assistance with eliminating waste and ensure efficiency; maximum coverage in the provision of public transportation services; and reductions in air pollution.

These additional awards, if made, are not subject to the transition funding allocation process in succeeding fiscal years.

All of these proposed changes that I've just described have been recommended by the Public Transportation Advisory Committee.

The rules have changed from the approved March draft version. At the recommendation of the Public Transportation Advisory Committee, several performance measures were changed, as I previously mentioned. Let me go over these once again, the changes.

Under the small urban state: changing the inverse of the change in operating expense per mile to miles per capita. Under the rural formulas, both state and federal: changing local funds per capita to local funds per operating expense; changing the inverse of the change in operating expense per mile to operating expense per mile; changing the change in ridership per capita with operating expense per passenger; eliminating vehicle revenue miles.

The department has also added fiscal year references to clarify the provision if available funding exceeds the allocation, additional funds will be awarded by the commission on a pro rata, competitively or a combination of both basis.

In addition, the Public Transportation Advisory Committee recommended further changes which have not been included as recommendations as these recommendations might have a disproportionate impact which could be felt in too short a time frame by some recipients negatively affected.

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

The Public Transportation Advisory Committee reiterated its intention to revisit the formula.

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

MR. WILLIAMSON: We have a lot of witnesses but the commission might want to ask you some questions before we hear from the witnesses.

Members, you heard the layout and the proposal. Do we have questions at this time?

MR. JOHNSON: I have one. Bobby, first of all, thank you for spending time with me yesterday to walk me through a lot of this. I missed one thing, though, and I needed a little bit of hand-holding, if you will, for my better understanding.

You mentioned that in both the urbanized areas with populations of greater than 200,000, calculation is made whereby the assumption we move the population to 199,999. Do we use that as a base in all areas? In other words, whether you're higher or lower in the calculation, the population then becomes a non-factor because everybody is weighted equally?

MR. KILLEBREW: The Public Transportation Advisory Committee, this was a recommendation that came from the group, and their intent, sir, on this is that in the small urban pot for the state funds that are administered by this commission we have some systems who are in that pot who are typically over what's considered a small urban system: they're greater than 200,000 in population. A small urban system is between 50,000 and 200,000 in population.

Using the population at an 80 percent needs in the formula would give those systems a great weight in the formula. Therefore, the recommendation was to revise those systems not to get credit for any population greater than 199,999.

It doesn't use it as a base factor but it does put them in the same ballpark, if you will, as the rest of the systems that are in this group.

MR. JOHNSON: Is that assumption made only on the calculation of the performance-based portion of this?

MR. KILLEBREW: It's throughout the whole urban side. The 80 percent needs which is based strictly on population.

MR. JOHNSON: So there's no rounding there, obviously.

MR. KILLEBREW: Pardon me, sir?

MR. JOHNSON: There's no rounding or moving to a constant when we're using population.

MR. KILLEBREW: That's correct, sir. And in the performance part of the formula, since we have some measures that are also per capita, it's also used there as the 199,999 not to give an unfair advantage.

MR. JOHNSON: Thank you.

MR. NICHOLS: I'll reserve my comments or questions till after we hear the other comments.

MR. WILLIAMSON: Okay. We have witnesses, and the first is a good friend of this commissioners, Stephen Rosales, longtime great state employee.

MR. ROSALES: Some say too long.

Good morning, commissioners, Mr. Chairman, Director Behrens. My name is Stephen Rosales; I'm deputy chief of staff for State Senator Eddie Lucio.

And I'd like to make a few personal comments, if you don't mind because I may not get another chance.

MR. WILLIAMSON: Oh, sure, absolutely.

MR. ROSALES: I'd like to thank Director Behrens and Amadeo and Steve Polunsky on your staff. I'm head of constituent services for Senator Lucio and any time we have a constituent service problem, they're right on it, they respond immediately.

You know, I worked for Lieutenant Governor Bullock for 23 years, and of all the agencies I deal with, they do the best of really responding. I mean, that's coming from my heart, that's not from Senator Lucio -- of course, he'd say the same thing.

MR. WILLIAMSON: Appreciate it, Stephen.

MR. ROSALES: First of all, he asked me to apologize for not being here this morning. He was in the Senate last night till 2:00 in the morning making sure you got all your funding and stuff, and today I think he gets to vote on the confirmation of the commissioners, or maybe it happened yesterday.

But he wanted me to apologize for not being here, and also express his pride that it was his legislation that expanded the board to five members and what great selections Governor Perry made in Commissioner Andrade and Commissioner Houghton from my hometown of El Paso, and he wanted me to express that.

Now I'm going to read the statement from him, if you don't mind. For the record, I'm reading this for Eddie Lucio, state senator for District 27.

"Thank you for allowing me the opportunity to offer some of the comments regarding the proposed rules relating to public transportation.

"As you know, for many people public transportation is their only means of mobility, for access to work, the grocery store, pharmacy, medical treatment. For others it's a matter of choice which means fewer vehicles on our roads and less pollution.

"Under the proposed Appropriations Bill which is being considered in conference committee, the Department of Transportation will see a budget increase of about 45 percent for the next biennium over the current biennium, yet the amount requested and appropriated for public transportation will remain the same.

"The rules you are considering for adoption would decrease funding to the Brownsville system as well as a number of other systems. That is unacceptable to me in light of the fact that TxDOT's budget is increasing by $5 billion.

"The Brownsville system supports the position that has been offered by the Texas Transit Association which would prevent those systems that are proposed to receive cuts from being cut under your formula proposal.

"We all know that funding cuts translate into service cuts, and service cuts go against the legislative intent of Chapter 46 of the Transportation Code that was added by House Bill 3588 last session; Generating efficiencies that will permit increased levels of service and furthering the state's efforts to reduce air pollution.

"It is my understanding that approximately $10 million would take care of the funding problems for both the rural and small urban systems. Surely in light of the budget increase your department received for the next biennium and increased federal funding that will result from the Federal Transportation Reauthorization Bill, you will be able to prevent cuts to any system, while allowing those systems that are scheduled to gain funds to receive them.

"I am proud of the services provided by our Brownsville transit system. Brownsville transit patrons are just as important as patrons of any transit system in the state.

"Use whatever tools are available to you, including budget transfer authority, to assure that no transit system in Texas receives a cut in funding."

Thank you.

MR. WILLIAMSON: We thank you, Stephen, and it's always a pleasure for you to be with us.

Members, any dialogue with Stephen?

(No response.)

MR. WILLIAMSON: We wish for us that you would express our appreciation to Senator Lucio for his support of transportation. He's always been a good friend.

MR. ROSALES: Thank you for what you do.

MR. HOUGHTON: Let me just say Stephen is from far west Texas, far west Texas.

MR. WILLIAMSON: The western outpost of our continuing expansion in that direction.

MR. HOUGHTON: And we are protecting the rest of the state from the invasion.

And Steve did relay to me, announce that in five days he's leaving state government.

MR. WILLIAMSON: Oh, no.

MR. HOUGHTON: And hopefully coming back to El Paso.

MR. ROSALES: I hope so.

MR. WILLIAMSON: I hope it's good for you but that's bad for us.

MR. ROSALES: Well, I have a six-year-old and a three-year-old that want a daddy, so it's time.

MR. WILLIAMSON: We understand that.

MR. ROSALES: Thank you and God bless you all.

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

Also, please tell the senator that I have spoken to Norma in Brownsville, and I'll be visiting with her and see how we can help out there.

MR. ROSALES: Thank you. I know he'll appreciate that.

MR. WILLIAMSON: Good luck on your stuff.

MR. ROSALES: Thank you, Chairman.

MR. NICHOLS: The next witness is Bettie Kennedy, the Reverend Bettie Kennedy from Lufkin.

REV. KENNEDY: I am Bettie Kennedy, representing the rural community.

The Texas Transportation Commission is considering a rule that will result in a 10 percent reduction in the funds to the Brazos Transit District and which will negatively impact the transit program in Lufkin, Nacogdoches, and East Texas and other counties.

I have pictures here which I thought maybe you would understand. These are some of the reasons. One is the access to medical services will have to be reduced for those persons going to doctors, hospitals, for medical treatment, for tests and clinics, and that kind of thing.

In social services there are persons who are having the chance to go to pay their bills, and here I have a lady who is going shopping. She's 85 years old and rather than to try to pay a taxi, she gets on the transit system to go to pay her bills and also to go shopping for her groceries at 85.

Other people have access to shopping, and I was very interested in this, that not only the grocery stores, the shopping centers and the malls, but they go to get their hair fixed. And some are mentally challenged and they feel very proud to be able to shop independently.

One of the drivers mentioned that 85 people had gone one day to Wal-Mart for shopping.

Access to educational facilities will have a reduction. Those that are going to school, the children, those that are going to college locally at Angelina College and SFA, but there are parents that do not have means if a child becomes sick at school to go pick up a child other than on the transit system.

Those who have access to jobs and job training and job search, many who do not have jobs that are seeking to find jobs use the transit system for interviews and for training to better their conditions.

Many who are seeking to be independent, to go to and fro about their daily tasks without consulting or having to remain home because of the lack of services. Here you will see the person in this picture is very independent, a lady of 85 years old, very independent.

If this should happen that we are cut, there will be many persons who work for the transit system who will lose their jobs. Then that will have an effect and place stress on the family and the children of the community.

The reduction in funds will have a negative impact on our local economy. So many are hurting and will even hurt worse if they are cut. They will become homeless and on the streets, they will become jobless.

The fixed routes of the transit system allow many citizens to be independent and do not have to rely on relatives or friends or neighbors to come for transportation.

There is a component about the transit system in which it allows persons to call in if they need particular services of the system to go to a desired place in the community.

The most dependent will suffer. In the county of Angelina, 14 percent are African-American, 12 percent are Latino-American, 28 percent are 18 years of age, 29 percent are the elderly.

The transit program in Lufkin has been in place since 1988, the transit system in Nacogdoches has been since 2000, and in the neighboring counties have been since 1994.

The transit program in Lufkin needs the service in the neighboring rural areas. I do characters and they placed me on one of the buses as Rosa Parks -- and I'm throwing this in for good measure -- and I rode through the Lufkin area in character. And Rosa Parks was on a transit system that changed the city, that changed the state, that changed the nation, and consider what I've just said.

Thank you.

MR. NICHOLS: Did you have any questions?

(No response.)

MR. NICHOLS: Thank you, ma'am.

Next witness, Sam Russell.

MR. RUSSELL: Thank you, Mr. Chairman, members of the commission. For the record, I'm Sam Russell, general counsel for the Texas Transit Association.

Thank you for allowing me the opportunity to make some final comments on the proposed rules relating to public transportation.

On several occasions I have advanced the association's position which would freeze at their 2004 funding levels those systems that lose funds under the proposed formulas and allows those systems that gain funds to receive them.

The association has estimated that this proposal would require $9.6 million, $7-1/2 million for rural and $2.1 million for small urban.

We had hoped that the Appropriations Conference Committee would accept the House funding levels which would have completely covered this proposal. Unfortunately, the conference committee appears to have decided to accept the Senate funding numbers which do not include the additional $10 million.

We do know that additional federal funds will be available under the Federal Transportation Reauthorization Bill, so with a little ingenuity, perhaps, this proposal is still capable of being accomplished by using additional rural federal funds and perhaps the department's ability to transfer funds between strategies for the difference for small urban systems.

What I've observed during this rulemaking process is: number one, that most transit systems oppose the proposed rules; number two, that there's been compelling testimony from many individuals in opposition to the proposed rules; number three, that state and local officials have submitted written comments in opposition to the proposed rules; and number four, that now PTAC offers an alternative to the rules that have been proposed.

I implore each of you to make the TTA proposal work. I believe the money is there to make it happen. This is a real opportunity to do something really good for public transportation in Texas and its patrons, so let's not let this opportunity pass us by.

It's a win-win situation for everyone, the department, the transit systems, and particularly the patrons of the transit systems. Thank you very much.

MR. NICHOLS: Thank you. Did anybody have anything?

MR. JOHNSON: I've got a question.

Sam, the numbers that you mentioned, back to the $9.6 million which would be additionally required to be appropriated to make everybody whole at the 2004 level plus the increases that are calculated in the new formula, what was the breakdown between small urban and rural in the $9.6-?

MR. RUSSELL: $7.5- for rural and $2.1- for small urban.

MR. JOHNSON: So assuming that under the federal reauthorization bill that we get $7-1/2 million more, we could take care of the rural out of that pool, but that still leaves $2.1 million unappropriated or that we have to find from somewhere else to take care of the small urban.

MR. RUSSELL: That's correct.

MR. JOHNSON: Another question, I think I understood you to say that PTAC had some concern or wasn't in full support of the rules as proposed or the calculations as proposed. Can you embellish on that a little bit? Maybe I misinterpreted what you said.

MR. RUSSELL: I think it would probably be more appropriate for one of your PTAC members, who are here in the audience, to tell you what happened at the PTAC meeting on Friday, I believe it was.

I wasn't able to be at the meeting so I don't know exactly what they did, but I do know they changed some of the performance measures, I believe, or suggested a change in some of the performance measures.

I think they were in support of the concept of using the rural federal dollars to accomplish what we've suggested on the shortfall there, and there was another recommendation for the small urban and there were two or three components of that that I don't recall offhand what those were.

MR. JOHNSON: Utilizing your best guess method, what is your opinion as to the amount of the increased federal money available to Texas under the reauthorization?

MR. RUSSELL: The numbers that I had, oh, maybe three weeks ago, under the House version of the reauthorization bill, rural systems stand to receive an additional $5.9 million for FY '06 and '07 plus an additional $1.6 million for FY '08.

Now, under the Senate which was before they adopted the one that had even more money in it, and I think which the president has said he may veto -- hopefully he won't -- rural systems would have received an additional $11.3 million for FY '06 and '07 plus an additional $2-1/2 million for FY '08.

Now, on the small urban side, under the House version, for FY '06 and '07 they would receive an additional $3 million plus in '08 an additional $2.4 million.

Under the Senate version the small urban would receive an additional $3.3 million in '06 and '07 plus an additional $5.3 million in FY '08.

Now, I don't have the specific numbers for the revised Senate bill that was approved.

MR. JOHNSON: So if the House version comes out as the version that results from the conference, the $5.9 million extra for Texas is not enough to cover the $7-1/2 million under your calculation which would be necessary for the rural areas.

MR. RUSSELL: Not in the '06-07 biennium. It would take, I guess, working it over a three-year period rather than trying to do it within a two-year biennium time frame.

MR. JOHNSON: Thank you.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: Other questions of Mr. Russell, members?

MR. HOUGHTON: Bobby, what was the vote that you mentioned regarding the formula?

Sam, don't leave. I'm confused on the vote. Sam, you said that the majority of the people at PTAC are not for this change, and Bobby, you had mentioned a vote earlier.

MR. KILLEBREW: Yes, sir. Bobby Killebrew again, for the record.

PTAC took up individual elements one at a time so they didn't do the whole formula change in one fell swoop. Individually, as things were progressing, everything for the members that were present, every vote they took was unanimous with the exception of two items, and on those two items each of those had one "No" vote.

MR. HOUGHTON: So Sam, what vote are you referring to or what are you talking about as far as the group is not for this change?

MR. RUSSELL: Well, I think the vote was seven to one.

Is that what it was, Bobby?

MR. KILLEBREW: We had how many members present? We had six members present, so it would have been a 5-to-1 vote.

MR. HOUGHTON: That's a pretty heavy majority.

It seems like, Sam, there's an issue with money versus formula. We're not sure what the money is. Is the objection to formula?

MR. RUSSELL: Well, I think our position all along has been, in light of the fact that we thought there may be an additional $10 million in the state budget -- which apparently there's not going to be -- but beyond that, the additional federal funds, that there was really no reason for any system to be cut, because all that did was result in cuts in service which meant somebody who is depending on public transportation is going to be out of some transportation.

So our position was to freeze those systems at their '04 level who were under the proposed formulas to receive their 10 percent cuts, and go ahead and let those other systems who are to gain funds gain the funds that they're expected to gain.

MR. HOUGHTON: But at a smaller rate.

MR. RUSSELL: No.

MR. JOHNSON: The $9.6- would take care of it.

MR. RUSSELL: The $9.6- would take care of what has been proposed for a five-year period within two years.

MR. JOHNSON: And we're talking about fiscal year '06 which starts in four months -- or less, three months and a week.

MR. WILLIAMSON: Sam, is it accurate to say that if you reduce Brownsville with the cut, there's a net reduction in service in the state? Or is it more accurate to say if you shift money from Brownsville to one of the newer or higher growth transit systems, the same number of people get served but they just get served in different parts of the state?

MR. RUSSELL: That may be true, but what makes a dialysis patient in one area less important than a dialysis patient in another?

MR. WILLIAMSON: I'm not asking that question, Sam, I'm asking, you made the statement that if you reduce Brownsville services will be reduced.

MR. RUSSELL: In Brownsville.

MR. WILLIAMSON: But what you mean to say is in Brownsville, but I know you, being a fair and balanced guy, you would want to say and services might be increased in Mount Pleasant.

MR. RUSSELL: They may be increased in Mount Pleasant.

MR. WILLIAMSON: Or someplace else in the state. And isn't that really the nut of this problem is figuring out how to allocate resources between the state fairly?

MR. RUSSELL: I think that's what the process is about. But I think what we have to look at is whether the result of that process is what we want to see achieved.

MR. HOUGHTON: What I see, Sam, is the analysis that I have in front of me is that under the rural state funding formula, 19 lose, 20 gain; under the urban state funding formula, 14 lose, 12 gain. That's balanced.

MR. RUSSELL: Again, I know it may be balanced in the approach but the ultimate result is when you have patrons who no longer have public transportation available to them, have we really accomplished what we need to in making sure adequate public transportation is available to all people.

MR. HOUGHTON: Statewide.

MR. RUSSELL: Statewide.

MR. HOUGHTON: And that's, I think what we're trying to achieve here.

MR. RUSSELL: But the system in Amarillo is of no benefit to the system in Brownsville.

MR. WILLIAMSON: Nor is the system in Brownsville any benefit to the system in Amarillo.

MR. RUSSELL: I mean, you've got to look at the area that you're serving and the people that you're serving.

MR. HOUGHTON: I think that's what we did by trying to balance.

MR. JOHNSON: But isn't one of the difficulties here the timing of all of this? We've been waiting on reauthorization for two years, so the federal funding is unknown. We've been operating on continuing resolutions, and so it makes this process more difficult.

I think the process is good, I think the conclusion is logical where you want to be, but I also think that when we're talking about cutting services, that's not a desired result. And if we knew what reauthorization said, I think we could deal with this issue not equitably but more logically because we can put finite numbers to what we're trying to do and where we're trying to go with it.

MR. RUSSELL: I think that's been a lot of the problem, but we're a lot closer now on reauthorization than we've ever been before.

MR. JOHNSON: We hope to be. Well, things are more like they are today than they've ever been before.

(General laughter.)

MR. RUSSELL: I think you're probably right.

MR. NICHOLS: If we go back in time in two-year increments, like sessions -- first of all, when you say we, you're speaking on behalf of the Texas Transit Association

MR. RUSSELL: The association.

MR. NICHOLS: Okay. If you go back in time two years ago, four years ago, in those time periods, and if you define fairness -- I think one of the objectives is to try to be fair and I think everybody wants to be fair -- if you define that basically by how much population, taking into consideration your geography -- obviously if you have a population spread over a larger area, your costs are higher -- if that is fair and you go back two and four years ago and look at the funding, it's pretty apparent that we had some areas of the state proportionately dramatically underfunded while some areas of the state proportionately were dramatically -- I almost want to say overfunded but still providing a good service and a needed service, but on the fairness line they were receiving more.

Two years ago and four years ago, as we got more money into transit, it would seem reasonable that you would put that money into the ones that were dramatically underfunded and try to bring them up to a more equitable basis.

Do you understand what I'm saying so far?

MR. RUSSELL: Absolutely.

MR. NICHOLS: But the Texas Transit Association, as a body, dramatically resisted and opposed that in the legislative process, and that was the official position. And correct me if I'm wrong. As new money came in, they wanted not only to put money in some of these that were dramatically underfunded but also proportionately raise those that were being overfunded.

Was that the position you had two years and four years ago?

MR. RUSSELL: Yes. It was based on the statutory formula that the legislature adopted in '94.

MR. NICHOLS: Which the Texas Transit Association fought to change, resisted changing, opposed changing that formula that continued to do that.

It would have seemed much more reasonable to me, and I still do not know why the Texas Transit Association did not support, at those times as new money came in, funding those who were desperately short and unequitably funded and helping bring them up and rising all the ships.

MR. RUSSELL: Well, I'm not so sure that they resisted that because at that time the discretionary program was still in effect.

MR. NICHOLS: Ten percent.

MR. RUSSELL: Of $100 million, that would have been $10 million set aside in the discretionary program.

But I think, Commissioner, what you have to do, you've got to go back maybe 20 years and see what the industry was facing when it was completely discretionary. And I think over a period of time the legislature, with transit systems and people tugging on them, said, Well, the way to cure this is let's just put a formula in the statute and get rid of this headache.

MR. NICHOLS: And unfortunately, as new providers came onboard into geographic areas of the state that had no transit service, because of that formula, there basically was no funding or minimal, and they up until this point pretty much stayed that way.

I don't think there's anybody on the commission -- and I didn't mean to get into too much of this because there's a lot more witnesses.

MR. RUSSELL: Sure. The only other comment I would make is, and I think the rider in the appropriations bill is still there, that suggests that an inventory be conducted of all of the providers in the state and the types and levels of service that they're providing.

You've got systems that provide public transportation, you've got systems that provide client-based transportation, you've got systems that provide both types of transportation. And I think really that is critical that we determine who is providing what type of service across the state.

I don't know how we ever get to coordination without knowing that as a basic building block, and I would certainly hope that that kind of a study goes forward.

MR. WILLIAMSON: Any other questions, members?

(No response.)

MR. WILLIAMSON: Sam, I have been told -- in fact, I've been given a report or a written transcript or something, I can't remember what it is -- that you've been quoted as indicating the association will litigate the formulas if we adopt them. Is there any accuracy to that?

MR. RUSSELL: I have not said that to anyone.

MR. WILLIAMSON: I didn't think that you did, but I wanted to give you the opportunity to --

MR. RUSSELL: If I'm asked to at some point in time in the future, I would probably certainly take a look at it, but I have not made any statement to that effect, Mr. Chairman.

MR. WILLIAMSON: Would it be your instinct that these formulas ought to be litigated if we have to move forward?

MR. RUSSELL: Well, I would certainly hope that this department and this industry could certainly agree short of any kind of litigation and work something out.

MR. WILLIAMSON: The reason that I asked you that is after we listen to all the witnesses, I'll have some information to provide you and your association members and the public in general about the governor's and the lieutenant governor's viewpoint about all of this which might make us all feel a little better. But I don't want to share that information if I'm going to be sued.

MR. RUSSELL: I've certainly not made any type of accusation like that, Mr. Chairman.

MR. WILLIAMSON: Okay, Sam. Anything else?

MR. RUSSELL: That's it.

MR. WILLIAMSON: Thank you, Bud, we appreciate it.

MR. RUSSELL: Thank you.

MR. WILLIAMSON: David Blackmon, representative of a great oil and gas company active in the Barnett Shell in North Texas.

MR. BLACKMON: Yes, sir. We're the second most active producer up there, in fact, 425 wells, I believe.

MR. WILLIAMSON: Burlington Resources.

MR. BLACKMON: Yes, sir. And I'm here actually today representing the Texas Oil & Gas Association. We really appreciate the opportunity to offer just some brief comments related to this proposed rules change.

Texas Oil & Gas Association is the state's largest oil and gas association. We represent about 92 percent of the oil and gas produced in this state and about 95 percent of the refining capacity.

I'm sure you're probably aware that over the last 20 years really the world's oil and gas industry, at least the nation's oil and gas industry has pretty much consolidated itself in Houston. A lot of major companies have headquarters downtown, large offices of employees downtown.

And we apologize that we're kind of late getting into this. We really were not aware of this proposal until about ten days ago and didn't have an opportunity to submit written comments.

What we have found is that we have a lot of employees that live in The Woodlands and commute downtown and back, using The Woodlands Express bus service that is operated by the Brazos Transit District which I guess is one of the services or districts that would lose funding under this formula change.

We're told by folks at the transit district that the formula change would at least curtail this bus service and possibly eliminate it over time.

The Woodlands Express is used by about 1,200 riders every day. I guess in a year's time that translates to more than 200,000 passengers. This means more than 1,000 cars that are not on the I-45 corridor every day that would be if this service was eliminated.

The concern we have is twofold. Number one, probably half these riders are our employees, employees of oil and gas companies in downtown Houston. The second thing is the city of Houston is, of course, an area that has periodic attainment problems under EPA clean air standards, and the concern we have is putting these 1,000 cars back on the road every day would exacerbate that problem.

Another concern is that we've been informed that the change to the funding formula would postpone and possibly eliminate construction of a proposed new park and ride facility that would potentially remove another 1,000 cars from the I-45 corridor each day.

The population in these areas along 45 north of Houston is growing rapidly. These kinds of services are going to be vital for Houston's future economy and its continued ability to meet these clean air quality standards that seem to get stricter every year, as we're all aware.

Listening to the testimony today and talking with people about this, it appears to us that this particular problem is an unintended consequence of this rules change. We don't think that the rules change, as you are considering, was really intended to cut back funding to this particular bus service.

We hope you can find a way to change the rule or at least figure out a way to meet your stated goals, your goals of increasing funding to the underfunded systems, that doesn't affect this bus service in the future.

And that's really all I had to offer today.

MR. WILLIAMSON: Members, questions or comments for Mr. Blackmon?

MR. HOUGHTON: What does it cost to ride that transportation system from The Woodlands, your employees?

MR. BLACKMON: It amounts to several dollars a day. I'm not sure of the exact amount, but the employees pay a fee. They can either pay it by the month or on a daily basis, is my understanding, but I'm not sure of the exact amount. But it's not real expensive.

MR. HOUGHTON: And your understanding that with this change in funding that that service would go away?

MR. BLACKMON: No, sir, I don't think it would go away immediately. In fact, I just had a conversation with a fellow from the district this morning and they have some contingency plans. They believe it would be curtailed initially, but if funding is not restored over time, it could eventually go away.

But no, I don't think it would be entirely canceled.

MS. ANDRADE: So your employees do pay a fee for riding this bus service?

MR. BLACKMON: That's what I'm told. Now, I don't use it personally but yes, but it's not a heavy expense.

MR. HOUGHTON: I'm glad you're here because I've been curious about that. So if you knew that this was going to affect your employees, would you as a private business be interested in partnering up with that transit service to help them?

MR. BLACKMON: Yes, absolutely, I'm sure we would. We do a number of things like that in the community, and certainly Burlington and I know our other major members would certainly be willing to sit down and try to develop something like that.

MR. HOUGHTON: I'm happy to hear that, I've been talking about that. You know, it's great that we bring the employee to the workplace but if you're not going to be able to, then the employer should be willing to do something.

The same with medical facilities. We bring a patient there but we should hold them somewhat accountable for that. And so I've been encouraging people to talk to the private sector and see if they'd partner up and help with those services.

MR. BLACKMON: Yes. In fact, our companies already do help employees to some degree.

I just talked to a lady with Total Fina yesterday, and they are moving their large office there in Houston. They've been out at Greenspoint which is near Intercontinental Airport; they're moving downtown 400 employees, and they're offering their employees an incentive to use the bus service, because so many of them live in The Woodlands, a very high percentage of their employees do because their office has been so near to that area over the last several years.

So they're offering incentives to their employees to do that and now they're concerned about the service being curtailed.

MS. ANDRADE: Thank you.

MR. WILLIAMSON: Other questions?

(No response.)

MR. WILLIAMSON: Say, this is pretty remarkable: we have a Republican governor who is focused on public transit, we have a Republican lieutenant governor who is focused on public transit, and we now have the oil and gas industry of the state focused on public transit. There may be hope for public transit in the state.

MR. BLACKMON: I was just sitting out there thinking you probably don't get a lot of testimony from TxOGA at your regular meetings like this, be we thought this was an important issue.

MR. WILLIAMSON: We value it and we actually think it's a valuable thing for corporate Texas to be focused on this.

MR. HOUGHTON: Absolutely.

MR. BLACKMON: Well, it is. In the corporate community these kinds of things are getting a higher profile as time goes on. You know, 20 years ago you didn't see a lot of concern in the oil industry about things like this, but times change.

MR. WILLIAMSON: Times change, they do.

David, I do thank you for taking the time to participate in government.

MR. BLACKMON: Thank you. We really appreciate the opportunity.

MR. WILLIAMSON: And I appreciate my industry being interested in this. Thank you a lot.

Joe Brannan.

MR. BRANNAN: Mr. Chairman, members of the commission, I'm Joe Brannan, the executive director of the Golden Crescent Regional Planning Commission in Victoria. We're also the managers/operators of the Victoria transit system.

I promise not to sue you and I'm going to fill up with gas on the way home, so hopefully everybody is happy.

(General laughter.)

MR. BRANNAN: I want to congratulate the commission and leadership in the agency for the process that you've undertaken. Having lived through several of these in different places around the country, this is a nightmarish task when you take some from one and give some to the other.

And really, I'm a latecomer to this process. In fact, about four o'clock yesterday afternoon my staff came to me and said read this, so that's how late a comer I am.

The draft recommendations that the commission promulgated in March, we don't have a problem with. And again, this is a situation where we don't lose. I'm not going to lie to you. The best thing you could possibly do is put all the money in Victoria forever. We'd do a good job, we wouldn't sue you, and we'd buy gas on the way home.

I do, however, have a concern, and it was expressed to me by my board of directors yesterday afternoon as well, there are a number of additional things that were added to the plate at the last minute in the PTAC recommendations. I think we need some time to digest those before there's action taken, particularly as they reflect to match and consideration of match.

We got a bunch of paper put in front of us at the last moment, and I know you guys did as well, and would welcome the opportunity to at least see what the impacts of those are going to be.

But I would caution that we need to be wise and considerate as we move forward with those considerations. And with that, I'd be happy to answer any questions.

MR. WILLIAMSON: Questions of this witness?

(No response.)

MR. WILLIAMSON: I was going to wait till the end to say this, but since you focused on it, I need to say it now.

The problem the commission faces is we have to execute contracts effective September 1. We have a known amount of money and then we have an unknown; we hope for a larger amount of money. We don't have the luxury of waiting till June to adopt a formula because if you back it up in time, how long it takes to negotiate the contracts, get them signed and in place and get our accounting system set, this is it, we have to make a decision today.

So while we appreciate always the admonition that we should think a little bit more about things because we believe in thinking about things around here, the truth is we can't do that today. We're going to have to decide how we're going to do this today in order for our legal staff and the contracting community to move forward.

MR. BRANNAN: If I could just quickly respond to that, Mr. Chairman.

The commission's draft recommendations, draft rules in March received a substantial amount of public input, and that's the process, that's the right process. I guess my concern is when we have further recommendations that arrive on the table from a meeting last Friday, the overall process I have no concern with whatsoever, I think it's just those additional items that arrived that we do have some concern with.

MR. WILLIAMSON: I appreciate your being willing to share those concerns. Anything else?

(No response.)

MR. WILLIAMSON: Thank you so much, Joe.

MR. BRANNAN: Thank you.

MR. WILLIAMSON: Ann Sheets.

MS. SHEETS: Good morning. My name is Ann Sheets and I'm from Bastrop, Texas, and I am here today to talk about the CARTS service because it does provide independence, and independence is a key ingredient to the dignity of the aged and disabled.

Independence is what made America into the country it is today. It should not be diminished or eradicated by the application of rules and formulas which result in a one-dimensional picture of the needs of the CARTS service in Bastrop.

The bus riders in the area are the aged and the disabled, since those that are able-bodied travel to and from Austin by their own private vehicles. Therefore, the bus uses is limited.

Bastrop is a decentralized bedroom community built around Highway 71 and 290. Due to the nature of Bastrop, facilities required by the aged or disabled are obtainable only with the aid of bus transportation.

I've spoken to many of the riders of CARTS, and many of them have arranged their lives and living around the existence of CARTS routes. To remove such routes will result in many riders becoming virtual prisoners in their own homes, faced with the prospect of assisted living or nursing home living.

For instance, my husband fell at work and experienced a tremendously horrible workman's comp injury. He broke his neck, his back, he tore his shoulder and has a severe head injury.

This injury requires travel to Austin every 15 days for pain management appointments and prescription refills. Pain management is not available in Bastrop County and the prescription my husband is on is Paladone, a Class R narcotic, which will not ever be carried by a pharmacy in Bastrop due to security concerns, limited population access, and the extremely high cost of the drug.

Additionally, my husband must travel to Austin on a weekly or biweekly method to obtain medical treatments which are not available in Bastrop due to low reimbursement workman's compensation rates.

My husband cannot drive due to seizures and I do provide him with transportation to Austin; however, I cannot provide him with what CARTS provides him: the independence which allows him to feel like a worthy member of society and not a burden.

Facing the reduction or elimination of CARTS service under the proposed rules and not taking into account the human side of each and every bus environment, is in my opinion a true travesty.

Due to the nature of the bedroom community such as Bastrop and their specialized transportation requirements, I ask that consideration be added to the formula and rules which would address the specialized needs of the bedroom community.

Thank you.

MR. WILLIAMSON: Wait. Questions for this witness?

MR. HOUGHTON: What's the name of the service in Bastrop?

MS. SHEETS: I'm just here by myself talking for my husband and those that ride the bus in Bastrop.

MR. WILLIAMSON: CARTS, I think, Capital Area Rural Transportation Service.

MR. HOUGHTON: Thank you.

MR. WILLIAMSON: Any other questions?

(No response.)

MR. WILLIAMSON: Thank you very much for taking the time to be here.

Oh, Glenn. Did you ride your motorcycle to work today?

MR. GADBOIS: No, sir. It's going to rain.

MR. WILLIAMSON: You're failing the clean air test, Glenn.

MR. GADBOIS: I did car pool. Does that work?

MR. WILLIAMSON: Got me.

MR. GADBOIS: My name is Glenn Gadbois. I'm the direct of Just Transportation Alliance, a project of Texas Citizens Fund.

Today you have stolen most of what I wanted to say and already said it, but I'm just going to kind of go back and cover a couple of things.

First, this has been hard and I have watched you all struggle with this, the transit agencies struggle with this, the people that will be affected struggle with this, and I don't think anybody is taking this decision lightly.

I do appreciate the process you have allowed this to go through, and I do support the proposed formula as it came out, especially after the chairman's addition to it two meetings ago.

I would like to talk to a couple of, I guess, corrections or misstatements.

The first is ours. In some of our comments we indicated that Medicaid services and medical services were paid for by Medicaid, and that people with disabilities got transportation from 5310 which is all true.

But what was pointed out to me, and I think is worth pointing out for a larger reason, a lot of the money that we are talking about today develops the core system that provides medical trips and that provides trips for people with disabilities beyond what they might get -- if they do -- from either of those two pots of money.

I think that's worth pointing out because part of this fight or struggle is that this money is the core of a system. Providers may have pulled in other pots of money from the human service programs or from other programs that you all provide, but this provides the core.

Now, having said that, there is another correction that I also want to build off of. The impression from the Texas Transit Association and some transit providers during some of the heated language that we have had over consideration of this formula have indicated to the community, to elected officials, and more importantly for me, to their riders that this commission has not been supportive of public transportation and, in fact, is engaging in penalizing public transportation and that this formula represents a cut.

I want to deal with the first first. As you all have pointed out, reallocation, looking at how we distribute money fairly is not a cut. It may be a reduction to one service area or system, but the objective is to provide that more fairly or equitably or rationally where the population is, and therefore, that service increases elsewhere.

In addition to that, I want to publicly go on record saying this commission has been incredibly supportive of public transportation. It did not start with, but certainly as far as my memory goes, from mid- to late '90s when you pulled money out of STP for capital replacement, certainly in your support of House Bill 3588, and your willingness to invest even more money out of a portion of your budget into public transportation and health and human service transportation, certainly in your use of toll credits for public transportation.

As a consequence, I don't want to leave the public with the impression that this focus is not very focused on and very supportive of public transportation because I think it is.

And indeed, it is my impression that as we move forward with this formula and you all can look your constituents and elected officials squarely in the eye and say, Yes, we think this is a good return on our investment, we think this is as equitably distributed or at least getting there, we think this is actually achieving the kind of levels of performance we want, when you can do that, I am confident that you will walk hand in hand with the transit industry and us for additional new money.

In fact, you have already been engaged in looking for additional new money for public transportation that has not even been recognized yet, I think, by the public transportation industry, and since the legislature hasn't finished its business, I won't thank you for that now but I'll thank you for that a little later.

And so I just simply want to make sure that this commission gets the appreciation and recognition that it warrants and to not take the heated language too seriously. We can all understand where that comes from. Thank you.

MR. NICHOLS: Thank you.

Candice Carter.

SPEAKER FROM AUDIENCE: She had to leave.

MR. NICHOLS: Jason Sabo, director of public policy, United Way. Did I mispronounce that?

MR. SABO: Actually you did mispronounce it but you came closer to the accurate Hungarian pronunciation, so my grandfather would be pleased.

My name is Jason Sabo and I'm the vice president for public policy of United Ways of Texas, and we're here in support of the proposed rule change.

And I think that I need to be very clear in why we're supporting this and say that you all are in a very unenviable position, and I would consider the position that you find yourselves in to be somewhat analogous to the position of many of my member local United Ways.

I think that it was Commissioner Andrade who said earlier that there's much need and limited funding, and I think that we all recognize the central importance of public transit to the ability of Texans to work, to the ability of Texans to access medical care, et cetera. And I don't think any of us can debate that nor the importance of the human element in the conversation that we're having today.

However, my members represent 67 Texas communities from one side of the state to the other, from the north to the south, and I can tell you that some of my member communities will gain from this, some of them will lose.

And I think, however, the important message that the United Way system at large can convey is that akin to what you're talking about here, United Way has gone through a very similar transformation in terms of moving away from a funding mechanism based upon historical means to one based upon performance measures and accountability.

We did this not because we were being told by the legislature to do it, but United Way chose to move in this direction because the public demanded it. Without these kinds of performance-based measures, United Way would simply cease to exist.

And I think that as you are moving in the direction that we are, towards increased scrutiny and increased accountability coming from, in my case, donors, in our case, taxpayers, I think that the kind of measures you are talking about today are only going to become increasingly important.

And as you promulgate these formula and as you move forward, I want all the commissioners and staff of TxDOT to know that United Way and our members at the local and state levels will be happy to assist you as you walk across 11th Street in next session and subsequent sessions to ensure that you are accessing the revenue that you need and the dollars that you need to provide the kinds of transportation services that all Texans need in all Texas communities.

I'd be happy to answer any questions.

MR. NICHOLS: Thank you very much.

Jonas Schwartz.

MR. SCHWARTZ: I must say this is accessibility at its finest.

Good morning, members. My name is Jonas Schwartz and I represent Advocacy, Incorporated, and we are the state's protection and advocacy organization for persons with disabilities.

I'm pleased to be here this morning and provide you with a few brief comments on the proposed rules that you all will be making a decision about today regarding the funding formula.

You know, I had the opportunity to attend your public hearing here in Austin and as an advocate I am a huge believer in the public process and appreciate the fact that you all held three public hearings around the state to get input from a diverse group of people about the funding formula.

And when I arrived at the hearing here in Austin, I was surprised to see that there were approximately 20 seniors and/or persons with disabilities that had come to speak with staff, and they did a most excellent job of talking about the critical role that public transit plays in their day-to-day lives from going to medical appointments to going to the grocery store to going to church.

But I was a bit troubled because they painted a very good picture about how the services were meaningful to them, but I think if folks could have been questioned a little bit further, they all would have told you that they not only did not want their services cut but they would not want anyone else's cut as well.

And I was troubled because they didn't have enough information to know the complexity of the problem that you all are dealing with and that you have so clearly articulated as commissioners today, and the balancing act that you all are faced with in trying to take the dollars that you have access to and equitably distribute them around the state.

And unfortunately, rather than just saying don't cut my services, as many of them did, they needed to be helped to understand that the place they should have gone is to the Capitol to request new and additional revenue for the work that this commission does to provide transit to every individual who needs it across the state.

And I was particularly troubled by the fact that the individuals didn't seem to have all the information they needed because it perpetuated the stereotype that people with disabilities and seniors only know how to complain and they don't know how to be part of the solution.

And so I want to make a commitment to you all that I look forward to being part of the process and part of the solution of finding ways in the days and years and legislative sessions to come to getting more money so that everyone in Texas who needs transit can have it in an equitable way.

Additionally, I want to say that I am very pleased with the proposal, particularly the section that deals with the discretionary funds that the commission will have the opportunity to allocate to meet specific needs that they might become aware of over time.

I think that that is extremely innovative and that is certainly the direction that we as a state need to be going.

Thank you very much for the opportunity to provide these comments. I'll be happy to answer any questions.

MR. NICHOLS: Thank you very much.

Vastene Olier, Colorado Valley Transit.

MS. OLIER: Good morning. I'm Vastene Olier, and as most of you know -- I was here last time -- I'm with Colorado Valley Transit which is one of your rural transit systems. I've also had the pleasure of serving on your advisory committee, I've had the pleasure of visiting with some of you all individually.

I will not go over all of the things that have been said, but something came to me as I was sitting there praying and just thinking about the overall picture of what you all are looking at.

You have choices, and when I think of choices, we talked about human faces, we talked about two different things that we had in the report, we talk about transportation and then we talk about the service part of it, but they go hand in hand.

Today we are at a unique point and an opportunity for all of us to do what I think is most dear to us, and that is to make a difference in the state of Texas.

This choice that you all make today will have, perhaps, one of the greatest effects that I've seen in the 19 years that I've been in this industry.

We have talked about coordination, we have talked about regional planning, the House bill put it in place for us to be able to move forward, you are doing your study, Commissioner Andrade.

And as I see all of those components coming together, I say that this is an opportunity. Today you will decide whether you are going to take your original proposal that you had which does take away and cut services, or you have an opportunity to take a look at what the advisory committee presented to you which says don't cut, allow to grow.

If you do and you take that proposal, you have laid the groundwork for the report that we got before. That report that we got before talking about regional mobility and all the whole regional plan for the state of Texas, meeting the goals and accomplishments that we would like to see for the great state of Texas, will have been in place.

The choice is yours on whether you want to take the time today and look at it as an opportunity for us to go forward or whether you want to take away something and we're trying to go forward.

When you take away, that means you have to go back and restart and revisit those, and it costs to do that.

The services that are in place right now in the state of Texas have been developed over a period of time, and yes, we talk about equitable funds of money, but those have been in place for a long time. They're in place and we want to utilize those to go forward.

When you look at the regional part of it, making sure that they're seamless, there are only a few places in the state of Texas where we don't have transportation in place, and as I understand it, one of my neighbors is Fort Bend County and they're getting ready to get their service in place.

So I'm a part of the Houston-Galveston Area Council and we have worked on regional ideas and concepts for a number of years. Now we have an opportunity to go even further than that, to make sure that it's seamless.

We don't want to make a step forward leaving out the most important part, and that is to make sure that funds stay with those systems to make sure that they don't lose any of those services.

There are a number of opportunities in those choices that will be made today that will allow us to be able to continue to grow.

Yes, there is no endless pot of money, we all know that, but there are opportunities, and I visited with you on that yesterday.

I just don't want us to see us take away something that we have in place when we have that opportunity to go forward. That's just the way I see it. I think it's ironic that today those two things were on the agenda and you all are making a choice that will either help move us forward in the direction that we want to go, or we very well could put a kink in it and have to redo some of those things.

MR. NICHOLS: Thank you. Anybody have any questions or comment?

MS. OLIER: Thank you very much.

MR. NICHOLS: John Wilson.

MR. WILSON: Thank you very much, Mr. Chairman, members of the commission.

I am your newest member of the Public Transportation Advisory Committee. I appreciate that. I also serve on the Coordination Committee. I appreciate that.

I have also 30 years experience in transit. I also serve on the American Public Transportation Reauthorization Task Force so I know about the legislation that's coming down.

I also serve on the MPO for the city of Lubbock or the Lubbock area, so I know how you view highway funds and local funds.

I'm saying all this because in the last three weeks we've had quite a bit of local input and I think it's been over 300 people and they have been strongly pretty much against the formula that was originally presented back on March 31.

I also want to say I serve on the TTA board of directors, and the reason I say that is that I want you to know that Texas Transit Association is very supportive of TxDOT, we are not in any way not supportive of TxDOT. We are very supportive of getting more transportation in this state. I just want to make sure we have worked with the department.

Now, to what I want to say. There's been a couple of people stand up here today and I wanted to say from some of the things that was presented last Friday, because I have history on my side, I'm one of the 14 cities that had public transportation under 200,000 in 1975.

In 1989 this commission granted us operating assistance. Prior to that we had no state public transportation funds in operating costs. When you did that there were several small cities that reduced their local funds and replaced it with state funds.

We then changed in the mid-'90s to allow more -- we got more state funds. I appreciate that. I worked very hard to get those state funds. We got state funds for three years straight. And I watched different cities reduce their local match because we did away with local match, and the cities reduced their local share.

What I'm saying, there was something that was brought up by one of the commissioners up here a while ago, well, we have 14 cities that's losing over here but 12 cities gaining. Who knows if those 12 cities are actually going to produce more transportation, or are they going to reduce their local funds because you're going to give them more state funds.

This commission has gone on record as wanting more cities and metropolitan areas to do more for transit and more for us. You have gone on record for local tollways. That's local money. And I applaud you for that.

I think that there's got to be a combination from cities, local, state and federal, and I think that's why some of the recommendations came forth from the PTAC committee last Friday, and I believe very strongly in that.

Some of the other things, I think there's need to understand that those people are going to lose transportation in the state if we adopt the formula as it has been presented. I want you to know that. People are going to lose transportation in the state. And some local funds will be reduced also because of the formula. I want you to know that.

Those are the things that I wanted to make sure you understood, and I want to answer any questions you have on the recommendation that was made. I was elected the vice-chair of your committee.

And with that, I don't have any prepared remarks because I thought that Bobby was going to present the recommendations from the PTAC committee. But I'll answer any questions.

MR. NICHOLS: First of all, I'd like to thank you for the work that you are willing to do and have done and are going to continue to do. It is needed and we appreciate it. I can tell you're passionate about it and I like people that are passionate about subjects.

Question I had was that in one of the PTAC recommendations -- and it goes to the core of what you were talking about, the local vesting or the local contribution -- as you said, we have always supported and tried to encourage and tried to set up incentives for local entities to contribute which leverages it all.

It also is an indication that it is important to that community, because if a community is not willing to put something in it, then that shows a pretty low level of local support. It's a vested interest, I call it.

However, in your recommendations you said if they do not -- I want to make sure I've got it right -- in the recommendation it said, If the locals do not contribute, you don't get any funding for your provider.

MR. WILSON: I don't think we ever said that.

MR. NICHOLS: That's the way it read.

MR. WILSON: Okay.

MR. NICHOLS: What did you actually mean?

MR. WILSON: Well, first of all, now we're talking about small urban here. Every small urban should have a 20 percent local contribution, I think you're right there.

I also think that they should have, if you're below 200,000 urbanized area, you should have a one-to-one with TxDOT. And this is a good thing because it makes coordination work.

You have several good systems like Hill Country that has gone out and got a lot of local funds and coordination and they're using it as local match. That's a good thing.

You have other systems who have not done anything for coordination and they're not getting very much local match.

The second thing is those urbanized areas over 200,000 -- which I am one -- we would have to match three-to-one to the state funds, and there's two cities like McAllen, they're already doing it, Lubbock is already doing it, there are some cities in the Metroplex that's not doing it. But we have other resources that cities under 200,000 do not, I realize that.

But I guess I say this on the recommendation, I think that should be a requirement but I think it's up to the commission to look at that to see that are these people really producing, are these people standing up, coming up to the plate and doing their fair share. That's what I'm saying.

MR. NICHOLS: And I agree, it should be somewhere in there as an incentive or a penalty. But the way I kept reading that, if it's mandatory they put it in as a requirement for the funding and they don't, then they don't get any funds.

MR. WILSON: Well, I would think they wouldn't get an increase for sure.

MR. NICHOLS: I think I know what your intent was, but the end result -- which was scary to me -- was if the locals didn't do it, then you lose all your funding.

MR. WILSON: I understand what you're saying but that's not our intent.

MR. NICHOLS: Then if they don't lose their funding, how do you mandate it? I spent ten years on city council and we always hear about unfunded mandates coming out of either Washington, D.C., or Austin, and we're not a legislative body, but if we send a mandate, that's an unfunded mandate to a community, with a penalty being quite dramatic.

And I'm not quite sure how we get to where you're talking about and where we would like to go without endangering some provider's funding.

MR. WILSON: Well, I guess my intention of that was there's some cities that are going to get some increased funding. For example, if they gave less than 10 percent local funds, I don't think they should get the increase is what I'm saying.

I think that was the intent of the PTAC committee, not to let these cities get an increase in funding if they don't have a local match, what we recommended is what I'm saying.

MR. NICHOLS: I think that's different than the way --

Bobby, would you clarify what was actually recommended in that category?

MR. KILLEBREW: This is Bobby, again, for the record. I actually drafted that language out of Mr. Wilson's letter that he wrote to the different committee members. He read it into the record at the advisory committee.

I can't speak for the advisory committee, because I do not have a vote on the committee, on how they interpreted those words.

MR. NICHOLS: I'm not talking about interpreting the words, I'm talking about what the words said. Because I think the words said it was like a "must" or a "shall."

MR. WILSON: I understand what you're saying. I was more concerned about the increase, if these cities get an increase.

MR. NICHOLS: But the way it was actually voted on, it was a "must" or a "shall."

MR. KILLEBREW: The word that I believe was used was "require."

MR. NICHOLS: Yes, that's it. That's pretty solid. I'm not a lawyer.

MR. WILSON: I apologize for that.

MR. NICHOLS: Anyway, I'm just trying to let you understand.

MR. WILSON: I understand, I appreciate that.

MR. NICHOLS: Thank you. Does anybody have any questions? John, we had some more questions up here.

MR. JOHNSON: Ted, did you have anything?

I want to go down this same path on the increases, and one statement that you made was that -- at least my interpretation is that if a provider gets a decrease in funding, that transportation services will be lost.

MR. WILSON: In some cases that's a very true statement.

MR. JOHNSON: The amount of the loss could be made up by local contributions, could it not, and therefore there would not be -- we can't assume necessarily there's going to be a loss. The difference could be made up somewhere else.

MR. WILSON: I would say you are correct, but also cities are strapped. But what I was trying to get at is we should have a level playing field. There's a bunch of cities that don't contribute nearly what I think they should be. That's my point.

MR. NICHOLS: I understand your point.

MR. JOHNSON: And back to this idea of the suggestion on those areas that are getting an increase, and whether it's a requirement or not, where did we land on that as to a requirement for an increased amount of local participation?

MR. WILSON: Where did we land on that?

MR. JOHNSON: Or have we landed? Did PTAC come up with a conclusion there and a recommendation?

MR. WILSON: We came up with a recommendation that required a local match for small urban cities.

MR. JOHNSON: And it was one-to-one for smaller and then three-to-one if you're over the 200,000 threshold.

MR. WILSON: 200,000 over in the urbanized areas.

MR. JOHNSON: Is that part and parcel to the recommendation that staff is putting forth?

MR. WILSON: I don't know about the staff but that was our recommendation.

MR. NICHOLS: Any other questions of John? Thank you.

MR. ANDRADE: I have one question. John, thank you so much for all the work that you do for us.

Let me ask -- and I attended the meeting on Friday for a short while -- didn't the providers already know that they would be facing these cuts with the proposed formulas?

MR. WILSON: Well, when it came out in March we did.

MR. ANDRADE: So we've known for a while.

MR. WILSON: Yes.

MS. ANDRADE: And we haven't come up with any other recommendations for them or solutions for them in their local communities that could make up the difference of the losses?

MR. WILSON: I will say in some communities where transit is very important, the locals are coming up with the money. Those that do not, that cannot, they probably will lose that public transportation service.

And I don't think it will be made up with the increases in the others, I just don't think so. It takes a while for a transit system to see increases in ridership, you just don't see it the first year.

MS. ANDRADE: Thank you.

MR. NICHOLS: Any other questions of John?

MR. HOUGHTON: Bobby, what is the final outcome of the match?

MR. NICHOLS: Thank you, John.

MR. WILSON: Thank you.

MR. HOUGHTON: I think we need to get to that. What is the match issue of the PTAC committee on the small urban?

MR. KILLEBREW: As I stated earlier, some of the recommendations from PTAC are not staff recommendations. In talking with legal counsel, for this rulemaking process -- not that we disagree, but for this rulemaking process, they were pretty extensive, and what we did was reported PTAC's recommendations and the match was reported just had PTAC had voted on it and approved it unanimously.

And that was, as John said, a 20 percent match requirement for the operating, and one-to-one small urban, and three-to-one for larger urbans.

MR. HOUGHTON: That's reflected in this.

MR. KILLEBREW: It is not in the minute order before you today. That is one of the recommendations from PTAC that we felt was extensive and should not go forward during this rulemaking process but to be considered for the future.

MR. WILLIAMSON: Other questions, members?

(No response.)

MR. WILLIAMSON: Thank you, Bobby.

James Bass, are you out there? Come forward and tell all who you are and what you do for the department, please, sir.

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

MR. WILLIAMSON: Are you familiar with the appropriations bill pattern as best the public understands it at this point in time?

MR. BASS: Yes. Hopefully in about half an hour we'll have a lot better understanding when the conference committee meets.

MR. WILLIAMSON: Do you have any reason to believe that the total amount of money was increased to public transit?

MR. BASS: I believe it was slightly increased as compared to the '04-05 appropriation. The House version was higher than the Senate version. The Senate version was in the neighborhood, I believe, of $6 million higher than '04-05; the House was going to add an additional $10 million for the biennium.

Our understanding is that the conference committee went with the Senate version for the public transportation strategy.

MR. WILLIAMSON: In the bill pattern, either in the riders or anywhere else, instructing us on how to spend our money, are we permitted to transfer money into that section on our motion, the motion of the commission?

MR. BASS: From certain strategies within the department, yes. It's not unlimited.

MR. WILLIAMSON: Such as?

MR. BASS: There are limitations on transferring appropriation out of highway construction, right of way acquisition, contracted maintenance, and the new strategy of contracted engineering.

Funds transferred out of those four strategies can only be transferred amongst themselves. Any other strategy of the department could, at the will of the commission, transfer funds amongst themselves into public transportation.

MR. WILLIAMSON: So what would some of those strategies be?

MR. BASS: Highway design, routine maintenance of the department representing department staff work on maintenance, administration strategies, vehicle titles and registration, travel information, traffic safety.

MR. WILLIAMSON: And is it the case that revenue attributable to the Mobility Fund, whether it's debt revenue or tax revenue, is available for allocation to public transit, subject to the appropriations restrictions that you just mentioned.

MR. BASS: Correct. And one other thing on the Mobility Fund, it must be used on a project. And as you correctly stated, it can be a public transportation project but any project that uses Mobility Fund must have a useful life of at least ten years.

And so I would say it would be eligible for certain public transportation projects but it would not likely be eligible for operating costs.

MR. WILLIAMSON: So for example, the asset that might be delayed in The Woodlands, that the Brazos Transit folks indicated might not get built, could possibly be built using Mobility Funds.

MR. BASS: I apologize, I didn't hear the details of that earlier discussion.

MR. WILLIAMSON: It would last longer than ten years.

MR. BASS: Then yes.

MR. WILLIAMSON: And then finally, the governor and the Senate and the House, through the budget execution authority, can always transfer money out of highway construction directly to public transit services if they so wish.

MR. BASS: Correct.

MR. WILLIAMSON: Anything else you want to share with us about public transit?

MR. BASS: Not at this time.

MR. WILLIAMSON: Would you congratulate your son for me? I'm very proud of him.

MR. BASS: I certainly will. Thank you very much. We were a little concerned there a few months ago.

MR. WILLIAMSON: Any questions of James?

MR. JOHNSON: What was the bottom line expectation from the conference committee?

MR. BASS: We believe it will be very close to what the department requested in our original appropriation request which I believe in round numbers it was around $6 million higher than what was initially appropriated for '04 and '05, and that is not for the medical transportation program, this is strictly for the public transportation strategy of TxDOT.

MR. WILLIAMSON: Other questions for James?

(No response.)

MR. WILLIAMSON: Thank you, James.

Steve Simmons, could I talk to you a moment, please?

MR. SIMMONS: Good morning. For the record, my name is Steve Simmons, deputy executive director for the department.

MR. WILLIAMSON: And at the commission's special request, you have been the commission's administrative leader of the public transit area.

MR. SIMMONS: Yes, sir. That's one of the areas that falls under my responsibility.

MR. WILLIAMSON: Steve, I want to be sure that the record is correct. I can't change people's minds but I can be certain that the record is correct.

Is it the case that the proposed minute order allows for any increases in revenue, that the commission doesn't know about right now, to be allocated to one or all of the transit systems in the state based on criteria that we will develop at our discretion?

MR. SIMMONS: Yes, sir, that is my understanding, and in discussion with the general counsel, that is the interpretation.

MR. WILLIAMSON: So for example, if the legislature appropriates more than we're planning right now, that more would be distributed on a discretionary basis?

MR. SIMMONS: Yes, sir. And that more is based on the 2004 funding levels.

MR. WILLIAMSON: Or if the federal government sent us more money that was somewhat discretionary, we would distribute it based on the commission's developed formulas.

MR. SIMMONS: Yes, sir.

MR. WILLIAMSON: Or if the Legislative Budget Board decided to transfer money from construction to public transit and instructed us to invest more in public transit.

MR. SIMMONS: That is correct, sir.

MR. WILLIAMSON: Or if the commission on its own motion decided to reduce our salaries and transfer money from administration to public transit.

MR. SIMMONS: Yes, sir.

MR. WILLIAMSON: And is it your understanding, in visiting with the commission members, that all the commission members are focused on what we call performance criteria as opposed to historic distribution patterns?

MR. SIMMONS: Yes, sir, performance and need.

MR. WILLIAMSON: And is it the case that our legal staff and our administrative staff have told the commission members that because contracts start on September 1 and because this requires commission action, we have to act today, we can't wait.

MR. SIMMONS: Yes, sir, that is correct.

MR. WILLIAMSON: Okay. Thank you, Steve.

MR. SIMMONS: Thank you.

MR. WILLIAMSON: Members, I came to the legislature in '85. The very first call to my office concerned rural public transit. I served on the Appropriations Committee beginning in '87, and I cannot recall a session where public transit was not a contentious matter before the Appropriations Committee.

The legislature did two things last session aimed directly at public transit. The legislature specifically instructed us to develop formulas for the distribution of funds that as best we could would reflect performance and would live beyond just the next two or four or six years, a formula that all transit systems, those that have been around forever and those that haven't, could look to and say is fair. That's the first thing they did.

The second thing they did is assign responsibility for health/medical transportation to us with the express instruction to find a way to blend public transit and health transit to make both systems more efficient.

I would suggest to you that we have not much choice about adopting a formula today. I would suggest to you that the formula before us is the best we can do.

I would suggest to you that we will have ample resources to incent both new start-ups and institutional start-ups who fear they're losing cash flow in the next 90 days to assure no one is without service.

And I should make you aware that the governor contacted me several weeks ago and made it clear that we would do whatever is necessary to see to it that no one who is currently served is not going to be served in the future.

And the lieutenant governor made it clear to me this last week that his senators have great concerns about this and we should be focused on that problem as well.

They understand that we have to adopt a formula. They've both indicated that this is something that we'll have to put our attention to this summer and make sure it's tended to in the right way.

So having said that, considering the situation we're in, open for a motion.

MR. JOHNSON: Mr. Chairman, a question. Can we basically accept the recommendation with many of the aspects of the preamble that you just made as part of it?

MR. WILLIAMSON: I'm looking at the lawyer. Particularly since we know Mr. Russell now is not going to sue us.

MR. RUSSELL: I did not say that.

MR. JOHNSON: Well, I don't think the statute of limitations has run on that issue.

MR. MONROE: Commissioner Johnson, I didn't really understand your question.

MR. JOHNSON: Well, good. It gives me a little more time to understand it myself.

(General laughter.)

MR. JOHNSON: The Chair very eloquently stated the situation that we're in, that it's obviously the interest of the governor and lieutenant governor and everyone involved that we believe are very desirous -- as I think the members here are -- that there not be cuts in services.

We really can't control services, we can control spending, and so I'm going to short-circuit that and say a cut in spending or allocations at the 2004 level as a base.

And so what I'm asking, as a preamble to the adoption of the recommendation of our Public Transportation group, is that that be part and parcel of it, that it be the desire of the commission that the year 2004 serve as a baseline, and that if possible, through additional funds that come through the appropriations process, that we are able to maintain those levels.

I don't know if that's agreeable to my fellow commissioners or not. So I'm going down two different paths here.

MR. MONROE: It is now a matter of public record. I think that would be sufficient for anyone to judge the desire of the commission.

MR. NICHOLS: The intent?

MR. MONROE: Yes, sir.

MR. NICHOLS: Bobby, have you already read into the record your recommendations from where we proposed to what was included? In other words, you've got a proposal and a recommendation.

MR. KILLEBREW: Yes, I do.

MR. NICHOLS: Did we read that into the record a while ago?

MR. KILLEBREW: My opening comments included all the recommendations for the changes.

MR. NICHOLS: Okay. And then we have the stated intent of some direction from our statewide leadership. So I'm just going to go ahead and move that we adopt the recommendations as read in, and then for the record have the intent as stated by the Chair and I think Commissioner Johnson.

MR. WILLIAMSON: I have a motion.

MR. JOHNSON: I'll 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.

I want to thank, first, everybody that participated in the witness process. Here's what you're going to see happen:

The new formulas will be put in place, we need to do that, we need to get out contracts negotiated and outgoing; we will be working with the governor and the lieutenant governor over the next few weeks to ascertain the best place to fill in the gaps.

Now, Sam, tell your members it's not going to be a check, there are going to be some strings attached. They're going to say things like -- John Wilson made a great point -- which one of your cities is fixing to cut their local share because we're changing the formulas. We're not going to like that too much.

We're going to ask questions like: Are your books clean; do you have any problems out there that we need to know about; are there any allocation problems that we're not aware of; is this a direct service grant or is this just underpinning your administration, which might not be bad. We have to pay our people to do administrative work too, so we understand those things.

But it won't be just like a make-up check, there will be some strings but they won't be onerous strings, they'll be with dignity and respect for what we do.

But Mr. Perry and Mr. Dewhurst have made it pretty clear to me that we're not going to have anybody sitting at home waiting to be picked up for dialysis. That won't happen.

MR. NICHOLS: I want to make one more comment. I think everybody could tell from the early presentation where we're kind of going and trying to blend and merge, that even though this formula as adopted impacts the next budgets and sets those, that between now and this time next year that we need to all of us be working together to continue to improve and refine the formulas.

MS. OLIER: I'm sorry about interrupting. Bobby, one thing that we did not mention and since you said that, PTAC at our last meeting endorsed hiring TTA to give us the expertise that we need.

I assure you that our very next meeting we're moving forward to continue to work on this formula process. It's not forgotten, and we do appreciate what you've done for us today. It's an opportunity for us to still go forward. Okay?

Thank you.

MR. WILLIAMSON: Thank you, Vastene.

Okay. Well, I think we've got that one put to bed and we can go to the next chapter of it. We think that's an important segment of the state budget -- as long as we don't get sued.

(General talking and laughter.)

MR. WILLIAMSON: Michael, let's plow forward, buddy.

MR. BEHRENS: We'll go to agenda item number 5 which is the special item, a continuing discussion on our consultant selection process and a recommendation of an action plan that we're going to implement to the commission. Amadeo.

MR. SAENZ: Good morning, Mr. Chairman, commissioners, Mr. Behrens. For the record, I'm Amadeo Saenz, Jr., assistant executive director for engineering operations.

Over the last three months we have discussed a wide range of information and issues concerning the consultant selection process as it relates to the goals of the commission.

These goals include: first, to promote and reward innovation; second, to have more participation of private sector providers; and third, to increase the number of minority- and female-owned firms competing for contracts with the department.

District and division staff met to discuss these goals identified by the commission members. Staff identified several ideas that I presented for discussion in April on how these goals might be accomplished.

Based on that, you directed us to take action in implementing appropriate changes. Today I am presenting for discussion our action plan progress for the changes of the process and internal procedures that have been implemented during this last month. They were discussed last month and we've implemented them during the month of May.

On May 5, 2005, an administrative memo was distributed to staff directing that the following changes be implemented immediately. And you have a copy of the memorandum from Mr. Behrens to our district engineers and the remainder of staff.

The first change is internal to the department. In order to receive approval to proceed with the selection process for a project-specific contract, TxDOT staff must first submit the scope of work and the cost estimate to support the funds identified.

The scope will still be subject to negotiation and refinement during the negotiation with the selected provider, but emphasis on the early scope development will assist in a more thorough identification of TxDOT's needs and priorities.

This change also provides documentation and verification of the contract development steps that are needed to accomplish the work.

The early identification of scope will allow these needs and priorities to be communicated more specifically to the consultants in our notice of intent so that they can provide better letters of interest in their response.

We will also include an additional criteria for design innovation in our notice of intent.

The next change related to project-specific contracts only is a requirement of a written proposal from the short-listed firms. The emphasis of the proposal is intended to be on project approach and innovation.

It would also allow for additional information, for example, on related project experience, the quality control plan and procedures that the consultant would use, the availability of their staff, in addition to the construction cost and the time that it will take to design the project.

In addition to the proposal, there will also be an interview where the consultant will have an opportunity to come and sell their proposal and provide answers to questions to our consultant selection team.

The key here is to try to do an evaluation and base the evaluation of the short-listed consultants on the innovation that they're bringing to the project and looking at the total project.

For evergreen contracts we also have made some process changes as part of our May 5 letter.

Again, at the beginning of the process we're requesting staff, where right now they just make a request to do an evergreen contract, to identify one project that is representative of the work that they anticipate to be doing under this evergreen contract.

The NOI will very clearly identify the needs and priorities as appropriate for the project identified and it should show the consultants that they need to focus their response on that project.

This is something that several districts have done in the past; we're now requiring it of all districts to follow this same format.

For evergreen contracts, the requirement for the proposal will still remain optional, depending on the project. The interview presentation would be focused on the project identified in the NOI with the opportunity for the consultants to sell the approach and ideas for the specific project in addition to questions and answers.

And usually what will happen is this project that you identified in the NOI will be the first project that we will move forward with development.

Also on the evergreen process, for contracts that are already in existence or active contracts, we've put in a new procedure that will be implemented before we issue major work authorizations under those contracts.

Let me emphasize that what I will describe would not be intended for the issuance of every work authorization on that contract but for selected major work authorizations involving projects that may not be completely predictable and routine.

The process that we will follow is this: prior to issuing a work authorization for a consultant to do work on a project, we would bring in all the consultants that have evergreen contracts with the particular district and provide them an opportunity to prepare a proposal.

For instance, we would allow, say, $10,000 to each consultant and give them a task to go out there and prepare a proposal, very similar to what we did on the project-specific contracts, for this particular work authorization for this particular project.

The proposal would be focused on the design approach, the innovative ideas related to the project, the specific project to be assigned. In addition, the proposal will address construction costs, time to do the design work, the firm's ability to meet our design schedule.

Then these would all be evaluated during the process and then the work would be assigned to the consultant that provides the best proposal.

There are two districts that are actively pursuing this option of assigning work at this time. We will learn quite a bit from the way they've followed this process in the next couple of weeks and months, and we'll be able to hopefully refine our process if it needs to be refined.

But this can be done under our present rules and so we're already doing this.

Other changes that we are implementing are in support of the second and third goals which is to have more participation of private sector providers and to increase the number of minority- and female-owned firms competing for contracts with the department.

We are looking primarily for ways to increase the number of contracts or opportunities for firms, primarily small or medium sized, to compete for work and gain experience working for TxDOT.

Rather than specific changes to our selection process, the changes we're implementing here are associated with internal decisions related to project development staging and outsourcing strategies that are made early in the overall process prior to ever requesting approval to use a consultant.

One way to encourage more contracting opportunities is to offer more evergreen contracts at smaller units. For example, rather than having two $5 million evergreen contracts, let's advertise for five $2 million evergreen contracts. This will allow more opportunities to bring more consultants onboard.

Our rules allow metro districts and border districts to go up to $5 million, but our May 5 letter basically brought them down and have limited them to $2 million evergreen contracts. So this will generate more evergreen contracts which will allow more opportunity. It doesn't require a change in rule to be able to implement that.

Additionally, in our May 5 memo the districts were directed to develop more discipline-specific contracts when possible. This will help provide more opportunities for small and medium firms to participate.

These contracts might be for hydraulic studies, for traffic engineering studies, for traffic engineering design, for some bridge design, et cetera.

These contracts can be smaller in nature which will allow more firms to compete and also have an opportunity to come work for us.

With respect to the overall distribution of work among providers, we will require documentation of availability and commitment of their key staff as part of our consideration in the selection process.

One thing that we want to start looking at in this area is as we get proposals from these potential providers, we want to make sure that key staff that they have identified to be working on a project are not overcommitted in other projects across the state that will not allow them to provide the services that they are committing to in their proposals. That's one of the things that we are looking at.

Last month we also discussed letting firms know that we also now allow joint ventures. And as you may recall, a joint venture is a partnership formed for a limited purpose, in our case, one particular contract.

The joint venture comprised of two or more firms basically as one prime would allow those firms that are small in nature that maybe could not manage a project on their own to come together, and then they together as a whole could develop this project.

This was also included and has been included in the NOIs that were effective after our May 5 memo. So joint ventures are now included in the NOIs, so all our potential consultant contracts know that this is available to them.

With respect to that now a joint venture is a different firm and is there an issue with pre-certification, each firm is already pre-certified is enough so that these firms can submit as a joint venture.

We have also directed staff to evaluate more closely projects that are to be outsourced to make sure that we make better decisions as to whether we go through the evergreen process or whether we go through the project-specific contract process.

This should result in more opportunities for projects to be developed as project-specific contracts and more opportunities for firms to have an opportunity to be able to get a contract with us.

We remain committed to providing opportunities for education of interested firms about doing business with the department. We continue to encourage our districts to have meetings and activities where they will bring some of these potential firms over to the office or at places and let them know how do you get into business with the department.

Our Business Opportunity Office out of the Construction Division is conducting several outreach meetings and will continue to focus, especially interested in trying to get more HUB providers.

One opportunity that we're taking advantage of is we have a Design Bridge conference scheduled for August, it will be a two-day conference in August. Our Business Opportunity Program section and the Design Division are sponsoring booths for interested HUB providers, and also include some of the interested HUB providers that are recognized under the mentor-protege program to come there and kind of start communicating with some of the other firms as well as also gaining knowledge as to what is available as far as contracting with the department.

In addition to these changes that we've done and we've implemented with respect to our May 5 memo, we are also looking at several other changes that we want to implement, and that has to do with changing our selection process and our evaluation process.

We are currently discussing with our office of general counsel as to the need for rule changes to accomplish these improvements. If general counsel determines that we need to do that, we will bring the rule changes to you during a short time frame once we determine that we actually need them.

The first change that we would like to bring into effect is look at the criteria that we use to evaluate the letters of interest.

Currently our letters of interest are evaluated according to project understanding and approach, the project manager's experience with similar projects, similar project-related experience of the task leaders responsible for the major work categories identified in the notice, and additional criteria as approved by the Design Division.

This has been the focus of the letters of interest for the last few years. Staff, when we got them together, recommended removing the project understanding and approach from the LOI level and have the emphasis be on qualifications and experience of bringing a firm into the short-list.

Project understanding and approach would then be the focus of proposals in the interview of the short-listed providers instead of doing it up front. It will cut down a little bit of the work up front for the consultant but it will come back as we evaluate the proposals as we move forward with the selection process.

Another potential change would affect a short-list determination. Currently our short-listed providers are evaluated based on the following criteria: understanding the scope of services, the experience of the project manager and the project team, the ability to meet the project schedule, responses to interview questions, and last, the past TxDOT performance scores or references.

Our group that we brought together is looking at reviewing the references of past performance for the providers as we short-list them as we review the LOIs.

So before moving forward with the final short-list, we would review past performance evaluations and references to make sure that the firms that are moving forward to the proposal and the future selection process do have good references and they had good evaluations on work for the department.

This change also may require some rule changes and OGC is evaluating that at this time.

The Design Division is also looking at coordinating with the office of general counsel to see what options may exist with respect to still meeting the requirements of a qualifications-based process to identify an expedited process for selecting a firm for a small project. This may be a project-specific contract, it may be an evergreen contract.

This type of work could typically be included in evergreens, but it's for a simple project. And we'd like to have a process where we could very quickly look at maybe what's in our pre-certification process, and based on a letter of interest, select a firm to do this small job.

We're looking at that and that will require some rule changes, and OGC will be guiding us on that and get that scheduled to come to you all.

Any questions so far on that?

MR. WILLIAMSON: Questions so far, members?

MR. HOUGHTON: How do we monitor this at the district level when you're talking about the two $5s and the five $2s?

MR. SAENZ: All the requests have to come to the Design Division for approval. The request to use a consultant has to be submitted to the Design Division for approval, so at that point we would be checking and working with the districts.

MR. HOUGHTON: This takes more coordination from the district level to say okay, I'm going to break this down from two where I'm used to, now to five which means more work.

MR. SAENZ: It may do more work and there will be a balance there between whether we just want to have two firms onboard or whether we have a pool of five firms onboard to be able to pick from as we move forward.

MR. HOUGHTON: Or a joint venture.

MR. SAENZ: Or it could be a joint venture, yes, sir.

MR. HOUGHTON: Now, the joint ventures we hadn't allowed to happen. Is that correct?

MR. SAENZ: Joint ventures, even though they were allowed, we had not focused on them. This is something that came out of the working group that we put together as a recommendation. We checked with our general counsel and this is allowed.

So now we are basically letting the word out so that the firms know that they can come in as a joint venture and they don't have to go back and get pre-certified as a joint venture independent because they are pre-certified in and of themselves.

MR. JOHNSON: Amadeo, you mentioned that certain components of this will require some changes in some of our administrative rules?

MR. SAENZ: Yes, sir.

MR. JOHNSON: What is the time frame that you envision that it will take to accomplish that?

MR. SAENZ: We'll be working with OGC, and based on the extent of the rules changes, I would like to be able to bring those to you all as quickly as possible. We could bring some rule changes for some of the immediate changes very quickly, within the next couple of months.

We also, just to let you all know, as we end the legislative session, we do have quite a few rules that we have to implement, so I will be coordinating with OGC to see how we can make it fit our schedule.

MR. JOHNSON: Thanks.

MS. ANDRADE: Amadeo, since the May 5 memo, what feedback have we gotten from our DEs?

MR. SAENZ: So far the feedback, there have been some questions from our districts and there may be a little bit of confusion. We're planning to have a video teleconference to go back to them. We're planning on putting together an additional memo that will clarify some of the issues.

Some of the questions came in is do I have to do it on every contract, this, that and the other. I think we will take care of that through those two means.

We have received some calls and questions from the consultant industry really wanting to know exactly how this works and what projects. But overall, I don't think any negative has come out of it.

MS. ANDRADE: I have to tell you might have been to our San Antonio District office, they've done a great job on this. I wonder if they got the memo before everybody else did because they did that already.

MR. SAENZ: Well, I think David has ESP and he knows what we're thinking up here and he just kind of gets started off on his own.

MR. HOUGHTON: He watches the commission meetings.

MS. ANDRADE: He listens to them. Thank you.

MR. SAENZ: Any other questions?

(No response.)

MR. SAENZ: On a separate topic, I think when we presented information last month, Commissioner Nichols, you were wanting information on the number of contracts and the percentage of contracts based on dollar figures instead of a percentage. This chart depicts that.

For contracts over the last five years between 2000 and 2004: 24 of our contracts were cost plus fixed fee -- there's the dollar figure and percentage as well as the number of contracts -- 29 were lump sum, 18 percent were specified rate, 7 percent were unit cost, and 22 percent involved a various litany of payment types as part of the contract.

MR. WILLIAMSON: Questions about that, members?

MR. NICHOLS: I had one comment. Wait, are you fixing to get into an action?

MR. SAENZ: No, sir. I think our action we've taken with our memorandum. What we would like to do is continue to work with OGC, and basically the recommendation is if they determine that rules need to be made, we will move forward with trying to get the rules in place to let us move forward to implement some of the additional changes.

MR. NICHOLS: I was going to ask a question, and it relates to something I've had people ask me about, and Commissioner Houghton has said publicly here that he has had people ask him about, and it has to do with geography.

Sometimes we have projects issued in a particular area or part of the state and then we go halfway across the state to get a firm to come in and do it when the local area seems to think there's enough qualified firms there.

I know that we want to make sure on qualifications and ability to do the work and things of that nature that anyone we choose is very good and capable of doing that work. And if we end up and one we believe is better, could contribute better, then it's better to go out of that area to bring somebody in.

But when we have situations where they're real close, we have no way to factor in using somebody local to work on a local project.

I'm probably not saying that very well. I would think that just from an understanding of the project and being close proximity, there's got to be savings and communication and stuff which doesn't seem to be factored into our stuff.

MR. SAENZ: Yes, sir, and normally what we do, like in the notice of intent we can identify additional criteria that we want to be able to evaluate these firms on.

In the weighting of that criteria we could, if we feel the local knowledge -- for example, you have a drainage project and having knowledge of how the drainage is for that particular area is an important factor.

Instead of having to reinvent the wheel by a firm that comes from the outside, you can add criteria that you can evaluate with respect to local knowledge and weight that criteria accordingly so that you can have firms from the area that will help you in the design. That could be incorporated into the design theme.

I guess your question was if I get to a point and I have a local firm or an outside firm, can I make that distinction. I'd have to check with staff.

MR. NICHOLS: I mean, I wasn't even suggesting that you try to pick a local one over somebody from out of town because they're local, but there are factors, like some of the ones you just mentioned, that I would think -- just my personal opinion -- would impact some of that.

But I remember when we went through some of this before that consideration wasn't in there anywhere.

MR. SAENZ: We don't have it as a specific criteria that is looked at for every project, but we do have the flexibility to add it onto projects that really would require something like that by adding it either at the NOI stage for the letter of interest as well as at the final selection criteria. It can be added.

MR. NICHOLS: That's all I had.

MR. WILLIAMSON: Anything else, members?

(No response.)

MR. WILLIAMSON: Okay, Amadeo, proceed.

MR. SAENZ: As I mentioned, we have implemented some of our recommendations of our action plan, some of the things that were done without need for rule change.

We will work with OGC and continue with the additional recommendations that we had identified to try to meet the three goals, and as rule changes are needed, we will bring them forward through our rulemaking process. And I will coordinate with OGC to get them scheduled as quickly as possible.

MR. WILLIAMSON: Mike, do we have any public comment on this?

MR. BEHRENS: No, sir.

MR. WILLIAMSON: CEC is not here to tell us what a good job this is?

MR. BEHRENS: I don't see a card.

MR. WILLIAMSON: Okay. Members, absent change in legislation across the street in the next 72 hours that instructs us otherwise, unless you have other comments, I'm going to ask Amadeo and second floor staff to move forward posthaste.

MR. SAENZ: And what we will do is we will keep you all posted as the changes are being made, and of course, any changes that do require commission action will be coming to you.

MR. WILLIAMSON: Thank you very much, Amadeo. We appreciate all the hard work on this matter.

MR. SAENZ: I want to thank Camille because Camille did most of our hard work. I just couldn't convince her to make the presentation.

MR. BEHRENS: Agenda item number 6(a) under Transportation Planning. 6(a) pertains to Bexar County and Loop 1604 and the development of expansion projects along that roadway.

MR. WILLIAMSON: Is this where we approve the recent unsolicited CDA in San Antonio? Aren't we going to approve that today?

MR. NICHOLS: That woke him up.

(General laughter.)

MR. RANDALL: Good afternoon, commissioners. My name is Jim Randall, director of the Transportation Planning and Programming Division.

Item 6(a), this minute order authorizes development activities for two expansion projects along Loop 1604 in Bexar County.

The projects are from State Highway 151 north to 1.2 miles south of State Highway 16, a distance of approximately 4.3 miles, and from 1.2 miles south of State Highway 16 to I-10 West, a distance of approximately 7 miles.

Project development activities will be limited to preliminary engineering and developing the plans, specifications and estimates.

The two projects are included in the San Antonio Bexar County Metropolitan Planning Organization's 2030 Metropolitan Transportation Plan and the current Texas Metropolitan Mobility Plan.

Authorizing development activities for the projects listed in Exhibit A will help expedite the project development process which will ultimately alleviate traffic congestion and enhance mobility and safety in the San Antonio metropolitan area.

It is anticipated that these projects will be included in the 2006 Statewide Mobility Program.

We recommend approval of this minute order.

MR. WILLIAMSON: Members, you heard the explanation. Are there questions of Jim?

(No response.)

MR. WILLIAMSON: Do we have any public comment on these matters? That's odd.

In seriousness, then, I'm not privy to the details, but I understand that a private consortia has made an unsolicited proposal to the department on certain roads in the Bexar County area. Do you know, Jim, is this project part of that unsolicited proposal?

MR. RANDALL: Personally I'm not aware of that, sir. This project is in plan authority right now, it will just move it up to some limited development authority.

MR. WILLIAMSON: Maybe Amadeo Saenz, Jr., can tell us about that.

MR. SAENZ: For the record, Amadeo Saenz.

Yes, sir, this project is part of the proposal. This is a project also that we were working with the RMA. As part of whichever process moves forward on the development of this project, whether it's through the CDA process or through the RMA, environmental studies and preliminary engineering studies need to be handled, and this would be one way to get those studies done.

MR. WILLIAMSON: So it doesn't matter what method the Alamo RMA decides to pursue in the constructing of this expansion, this work has to be done.

MR. SAENZ: Yes, sir, this work has to be done.

MR. WILLIAMSON: And Mr. Saenz, while I have you on the record, is it your understanding that the commission has said consistently that with regard to RMAs and with regard to unsolicited proposals in areas that aren't even covered by RMAs, that the department intends local leadership to make the final decision about those things?

MR. SAENZ: That's correct, sir.

MR. WILLIAMSON: Without reducing in any way the state funding that would otherwise be appropriated or allocated to that district.

MR. SAENZ: That's correct.

MR. WILLIAMSON: Thank you. There's been some confusion about that.

And I don't know, I've even been told that some people that live in San Antonio are just absolutely convinced that they're going to get highway robbed on this thing -- or no, was that us that were highway robbed.

MR. NICHOLS: Highway robbery?

MR. WILLIAMSON: No, we were henchmen.

MR. NICHOLS: Land-grabbing highway henchmen.

MR. WILLIAMSON: I forget. We just want to be clear that's not going to happen.

(General laughter.)

MR. WILLIAMSON: Anything else you need to add, Jim?

MR. RANDALL: No, sir, just to make sure that this does not include right of way acquisition, it's only for the development of preliminary engineering and planning and estimates.

MR. WILLIAMSON: Well, do you need the money to go and get the right of way while you're here?

MR. RANDALL: No, sir.

MR. WILLIAMSON: Okay.

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. Loop 1604 is moving fast.

MR. BEHRENS: Agenda item 6(b) is to consider adjustments to participation ratios for economically disadvantaged counties.

MR. RANDALL: Yes, sir. This is the third quarter program for the Economically Disadvantaged Counties Program to adjust matching fund requirements.

In your book is Exhibit A that lists the projects and staff's recommended adjustments for each of them. The adjustments are based on the equations approved in earlier proposals.

There are eight projects in five counties. The total reduction in participation for these projects is $540,836.

We recommend approval of this minute order.

MR. NICHOLS: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BEHRENS: Agenda item 6(c), it's been expressed that we defer that item for this month, and Mr. Chair, I'll yield to you for any comments.

MR. WILLIAMSON: Members, I asked Mike to visit with each of you about deferring, not canceling but deferring the two or three items we had come to believe needed to be done this month.

I did it based upon the unexpected announcement of the BRACC process and whether or not that impact might change where we need to allocate our SP money.

I think that if we give staff a month to kind of consider whether or not we may have to spend more money, for example, in El Paso or Corpus Christi than we first thought, perhaps in Texarkana, the northeast corner of the state than we first thought, we would at least be aware of those potential obligations before we move forward in other parts of the state.

If there are not any objections, I would prefer for us to defer this.

MR. HOUGHTON: Well, there's no doubt you're going to spend more money in El Paso.

MR. WILLIAMSON: Well, there's two matters that we've said consistently. We're going to do everything we can to help preserve our bases, but the other side is we're going to have to be making some investments on those areas that have gained, such as El Paso.

I don't know that it's going to change much the projects that members had selected for this month, but I think we ought to give the staff a month to look at it.

MR. NICHOLS: I think deferring is fine.

MR. WILLIAMSON: Okay. Then it will be deferred.

MR. BEHRENS: Moving on to agenda item number 7 concerning the regional mobility authority in Bexar County. Phil, will you lay that out, please?

MR. RUSSELL: Be happy to, Mike.

Good afternoon, commissioners, Mike and Roger. For the record, I'm Phil Russell and I'm the director of the Turnpike Division.

Commissioners, as you remember, we recently received a toll equity request from the Alamo RMA. That request was primarily for the western extension of the starter system on 1604 from about I-10 down to 151.

It is composed of three basic elements: $13 million for environmental and design work; $2 million for traffic and revenue analysis; and $5 million for early right of way acquisition.

Through our discussions with the RMA, we have determined that the $5 million for right of way acquisition should be deferred to a later date, the $2 million for traffic and revenue we can subtract from this total as well because we have some existing traffic and revenue consultant contracts with TxDOT and we can initiate that work right now.

So the remainder amount, the $13 million is the toll equity minute order that's before you.

Recalling last month you all provided the preliminary approval for that $13 million toll equity request, by approving this minute order, you would provide final approval and would direct Mr. Behrens to move forward with the financial agreement.

We would recommend approval of that, and I'd be happy to address any questions you might have.

MR. WILLIAMSON: Members, we have one witness. Do you wish to visit with Phil first, hear from the witness and then visit with Phil, or a combination thereof?

MR. NICHOLS: I prefer to wait for the witness.

MR. WILLIAMSON: Mr. Bill Thornton.

MR. THORNTON: Thank you, Mr. Chairman. I was reminded of city council; you guys get down to the level of individuals and I'm impressed. With the size budget you have, I've been very impressed today, favorably so.

I'm representing the Alamo RMA and I'll give you just a brief report as to where we are.

Hope and our judge, Nelson Wolfe, and I had lunch about a week ago which was very good. Hope is guiding us through this, is opening our minds to new ideas, and I think is doing a wonderful job and a very effective job in communicating TxDOT's view of what we can do in the future.

Secondly, we are here for that extension, and things changed a little bit from the last time. Let me tell you how we are resolving the unsolicited proposal.

We have a working group which has David Casteel, who is here in the room, and many on his staff, and Joanne Walsh.

Joanne, are you still here? She's here, which is our MPO, and Tom Griebel.

People who are simply aware of, one, what can be done, and who are also aware of what the challenges are. Those seem to be the three entities that are working through what can be done.

It was clear that our board was anxious to accelerate the transfer of these projects, simply in the spirit of local control. But in that acceleration from not just months but in some ways a year of taking projects over, we need to learn -- which I think you've guided us well, Mr. Chairman -- we need to learn what that means, what are the costs, what are the implications, what are the difficulties in doing it earlier.

And that's what that group is doing. It's a work group of professional people that are involved in the industry, both planning and construction and mobility, and we will probably, I think, no sooner than two months from now start getting some recommendations from them of how we should pursue to best meet our needs.

And let me say this very, very clearly. Our board is committed and we want to be your favorite RMA, and I think we're going to do that by performance.

I will tell you I have two children. The one that was the hardest to raise is the one I'm closest to today. I had to tell my wife at times to just leave us alone, we will resolve this, and when we do it will be just fine.

And just as in families, the challenging child is often the one that you bond to the most. I truly believe that's what you're going to find here.

In your partnership with us, you have a united RMA that's well integrated into our community without controversy, the support of the mayor, the support of the county judge, minimal public opposition because they see that what we're doing through your leadership is meeting a need, addressing a need that exists for our citizens.

And so in that sense, as we go along please know that our goal is to be literally your favorite RMA.

In line with that, I must mention Mr. Behrens and your staff, the people that are here, Amadeo Saenz, Phil Russell, Doug Woodall, James Bass and Jack Ingram are helping us and we're looking to them for guidance along the way of what can be done and what should be done.

Specifically at our level at the district meetings where they attend regularly, David Casteel, Julie Brown, Clay Smith, Frank Holtzman and Jennifer Moczygemba are the ones that we're working with closest there.

This $13 million seems to us to be essential for us to continue on with purpose, and what that purpose is I've told you from the beginning is being defined by that work group of MPO, TxDOT and RMA, but we would greatly appreciate your continuing your support.

Mr. Chairman, your word is, to me, as good as gold, and you don't confuse me at all, and thank you for that on a personal level.

(General laughter.)

MR. WILLIAMSON: But what about the comptroller, is she keeping a pretty close eye on you?

MR. THORNTON: You know, at the end of our meetings where I sit where you do -- is Will Counihan here today?

MR. WILLIAMSON: Oh, I'm sure they're here.

MR. THORNTON: Well, I always offer, I say after the meeting we have a tent, the Comptroller's Office is serving barbecue and beer, we invite everybody in the back when this meeting is over. I choose to call on them throughout the meeting so that we can involve them in participation.

We usually have four, they never sit together, so it's sometimes hard to identify the new ones. But we're working with them diligently and respectfully.

MR. WILLIAMSON: That's good. We would want to be respectful and diligent with regard to those people.

MR. THORNTON: Well, I say this jokingly a little bit about the barbecue, but seriously, we've taken our task very seriously and are trying to do a good job. We watched what happened in Austin and we want to be a model for the RMAs that will follow us, and we think that we can be a model.

MR. WILLIAMSON: No question about that.

Members, questions or comments for Bill?

MR. JOHNSON: Bill, you mentioned that you had lunch with Judge Wolfe?

MR. THORNTON: Yes.

MR. JOHNSON: Who paid?

MR. THORNTON: I did, and one of the things that's fascinating in terms of the Comptroller's Office, do you know how many reimbursements our board has had through the RMA? Zero.

Life gets real simple when you spend your own money. You can't talk to me about what I spent it on and how much it was when it was mine.

There's a lot of things we're doing, we're as straight as can be. We have a no-lobby clause which has been different in Bexar County, made some of the elected officials a little nervous. People want to call us and talk and I go, Well, can't do that. It's made it very up straight in how we're doing things.

MR. WILLIAMSON: Yes, and that's a good way to do it too.

MR. NICHOLS: I just wanted to thank you for the time that you are spending on the RMA and doing what you're doing. It will make a lot of difference, and it takes people like you and others working on those things to make it happen.

I also wanted to say I think you chose a very good executive director in Tom Griebel.

MR. WILLIAMSON: So far.

(Outside noise.)

MR. NICHOLS: They're proud of what you said so they're shooting cannons.

MR. WILLIAMSON: That's my alumni doing that.

MR. THORNTON: Let me ask you this in that light. We would like for our board members, either in small groups or committees or the entire board, to come to Austin to meet with you and your staff at times. You've seen me now twice, but over these next few months because of our partnership and relationship, maybe through Commissioner Andrade's office we can set up some times where we can bring different people to meet with your staff, if that's fine with you.

MR. WILLIAMSON: Sure. That's always a good idea.

Other questions or comments?

(No response.)

MR. WILLIAMSON: Thank you so much, Bill. Thank you for the work you do.

MR. THORNTON: Thank you.

MR. WILLIAMSON: We're appreciative of all the RMA board members. It's all volunteer for everybody across the state.

MR. RUSSELL: It's a 21-gun salute for all the RMAs. Right, Chairman?

MR. WILLIAMSON: I think Griebel had something to do that because it's 12:22, that means they're 22 minutes late in doing it, and I saw him pull his phone out, so I think he paid off our school, Phillip, and gave the code and said, Shoot those guns now.

MR. RUSSELL: I saw him talking into his sleeve a moment ago so that probably had something to do with it.

(General laughter.)

MR. WILLIAMSON: Questions of Phillip?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MS. ANDRADE: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: The commissioner who resides in San Antonio, Texas, moves and is seconded. 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. RUSSELL: Thank you, commissioners.

MR. BEHRENS: Agenda item number 8 under Finance, will be discussion of our revised investment policy.

MR. WILLIAMSON: Fast Jimmy recruited Johnny.

MR. MUNOZ: For the record, my name is John Munoz, the deputy director of the Finance Division.

Agenda item 8, this minute order would amend the commission's investment policy by adopting an investment strategy relating to funds held under a trust agreement related to the department's lease with option to purchase for the Houston District headquarters complex.

I'd be glad to answer any questions you have, and staff would recommend your approval.

MR. WILLIAMSON: Members, you heard the layout and the recommendation. Do we have questions?

MR. NICHOLS: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BEHRENS: We'll go to agenda item 9(a) concerning Pass-Through Tolls, or would you rather defer that one?

MR. WILLIAMSON: No. Nice try. How much did Nichols pay you to say that?

(General laughter.)

MR. MUNOZ: This item would authorize the department to enter into a pass-through toll agreement with the City of Weatherford.

Under the agreement, improvements to various state highways would be constructed and initially financed by the City of Weatherford.

The department would reimburse the county over time based on actual traffic on the improved roads at a rate of 15 cents per vehicle mile with a minimum of $3.4 million and a maximum of $5.2 million being reimbursed each year until a total of just over $52.4 million is reimbursed to the city.

Staff recommends your approval.

MR. WILLIAMSON: Don't move yet. First of all, Mark, are you and George still out there? Do you want to say anything? It's not necessary but you're always welcome here.

The city manager of Weatherford and the county judge from my home county who had to leave but is a good, close friend of mine.

I'm going to turn the chair over to Robert. This is a complicated thing, members. It's one thing to approve projects when John Johnson lives in Houston. Houston is big and we can approve virtually nothing that would have the kind of impact on Houston that this will have on the city of Weatherford.

Now, I don't own any real estate anywhere near any of this improvement, but I suppose someone could argue that by voting on something that improves a city as small as Weatherford with so much money, I might be conflicted and I don't want to be conflicted.

So out of a great deal of caution and cognizant of the upcoming election season and knowing that I've already been called a henchman --

MR. NICHOLS: Land-grabbing.

MR. WILLIAMSON: Land-grabbing henchman. Thank you. I think the wise thing for me to do is turn the chair over to Robert and ask to be shown as present and abstaining, although I want to make it perfectly clear that none of these assets are close to land I own.

I think the closest is nine blocks to a city lot that I have that's below the flood plain, so I don't see how this could help.

So Robert, you're the chair.

MR. NICHOLS: Okay. So any action taken, the record will reflect that Williamson abstained, he did not participate in the conversation.

So you want to go ahead and lay it all out?

MR. MUNOZ: I can redo that or just say staff recommends your approval.

MR. NICHOLS: Open it up for questions then? Do you have any questions?

MR. JOHNSON: I have a couple of questions.

MR. MUNOZ: Sure.

MR. JOHNSON: John, they have to do with the amount of money and the reimbursement rate. Have we satisfied ourselves that $52,443,517 will be spent on these improvements?

MR. MUNOZ: Yes, sir.

MR. JOHNSON: A minimum of that amount.

MR. MUNOZ: Yes, sir.

MR. JOHNSON: On the reimbursement rate of 15 cents per mile, that's per vehicle mile?

MR. MUNOZ: Yes, that is.

MR. JOHNSON: How is that tabulation or calculation made, and how does this compare -- we only have one other of these in force right and that's the Montgomery County one.

MR. MUNOZ: Yes.

MR. JOHNSON: How do they compare in terms of the reimbursement rate calculation?

MR. MUNOZ: The vehicle miles traveled, first question, would be based on an estimate of the actual amount of the roadways utilization, and that would be divided by the length of the project, of the improvement.

As far as the rate for this particular project at 15 cents per vehicle mile versus the Montgomery County project, this one is at 15 cents and the other is at 7 cents per vehicle mile.

A number of factors go into a determination of a reasonable amount per vehicle mile. Some of the things that we considered were the timing of the improvements and the completion of those projects, as well as the types of improvements and the safety aspects as well as the overall utilization.

MR. JOHNSON: Do we have the technology whereby we could put on Commissioner Williamson's vehicle some device that when he drives back and forth over the counter that it not register?

MR. MUNOZ: We can look into that, no problem.

(General laughter.)

MR. JOHNSON: Thank you.

MR. NICHOLS: Ted or Hope, do you have any questions?

MS. ANDRADE: No.

MR. NICHOLS: Do I hear a motion?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

MR. NICHOLS: Have a motion and a second. All in favor say aye.

(A chorus of ayes.)

MR. NICHOLS: Any opposed?

(No response.)

MR. NICHOLS: Motion carries with the record showing Commissioner Williamson abstained.

MR. BEHRENS: And John, if you'll go ahead on agenda item 9(b), a pass-through toll for the City of San Marcos.

MR. MUNOZ: Yes. Item 9(b) seeks authorization to begin negotiations with the City of San Marcos on a pass-through toll agreement. If negotiations prove to be successful, we would come back to the commission for final approval.

The city submitted a pass-through toll proposal providing for the city to make improvements to FM 3407. In their proposal the city listed pass-through tolls of $42.1 million to be paid over time based on actual traffic on the project.

Your approval today would in no way be an agreement to these specific terms but would allow the department to begin negotiations with the city to arrive at mutually beneficial terms to bring them back to the commission for final approval.

Staff recommends your approval of this minute order.

MR. WILLIAMSON: We have one witness, members, the mayor of the City of San Marcos, Susan Narvaiz.

MR. HOUGHTON: Question, John. Who is the project manager?

MR. MUNOZ: I'm not sure who the project manager is -- I'm sorry -- District Engineer Bob Daigh.

MR. HOUGHTON: It says external project manager.

MR. MUNOZ: Oh, Dannenbaum Engineering is the external project manager.

MAYOR NARVAIZ: Good afternoon. I'm Susan Narvaiz, mayor of the City of San Marcos.

I wish to thank the commission for your consideration of our pass-through toll project and would also like to express and acknowledge the work that Bob Daigh and his team have done in working on and paying attention to the needs of San Marcos as it pertains to transportation.

The extension of FM 3407 from FM 249 westward to RM 12 is an important and needed limited access facility focused on regional mobility from southwest central Texas to IH-35.

I have with me today our city manager Dan O'Leary, and our department engineer Laurie Anderson, and we're just here to answer any questions if you have them. Thank you.

MR. WILLIAMSON: Questions for the mayor?

MR. NICHOLS: Welcome, number one. And number two, have you been here since 9:00?

MAYOR NARVAIZ: Shortly after 9:00 but I've really enjoyed watching how you run your meetings, I've learned a few things from you today.

MR. HOUGHTON: I'd like to know what you learned.

(General laughter.)

MAYOR NARVAIZ: I won't state that for the record. But again, thank you very much.

MR. WILLIAMSON: Other questions for the mayor?

MR. HOUGHTON: Just welcome, congratulations.

MAYOR NARVAIZ: Thank you very much.

MR. WILLIAMSON: Mayor, is it your belief that these projects, had you not taken advantage of pass-through toll, would have been delayed years into the future?

MAYOR NARVAIZ: We've been working on this particular project for well over 12 years and we envision that it would be another 12 to 20 if we don't take advantage of this opportunity.

MR. WILLIAMSON: So the principal advantage is you come with your equity or your investment or your tax base, whatever it is, and you're able to do that knowing that the department over time will reimburse you.

MAYOR NARVAIZ: Exactly, and we've had many public discussions and our public supports this wholeheartedly. This is really important to our community.

MR. WILLIAMSON: We appreciate you taking the time to sit with us all these hours.

MAYOR NARVAIZ: Thank you so much.

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Congratulations to San Marcos. We thank you for being innovative.

MR. BEHRENS: Agenda item number 10 is our contracts for the month, both our maintenance contracts and our highway and building and construction contracts.

Thomas.

MR. WILLIAMSON: Notice how he kind of slipped that in: our construction contracts for May, then he said -- never broke a beat -- both our highway and our building contracts. That's great.

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

Item 10(a) is for consideration of award or rejection of highway maintenance contracts let on May 10 and 11, 2004, whose engineers' estimated costs were $300,000 or more. We had 21 projects, commissioners, we recommend award of all projects.

MR. WILLIAMSON: Members, do we have questions of or comments directed to Thomas?

MR. JOHNSON: 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. BOHUSLAV: Item 10(a)(2) is for consideration of award or rejection of highway and building construction contracts let on May 10 and 11. We had 67 projects, an average of 3.6 bidders per project.

We have three projects we recommend for rejection. The first project is Project Number 3044 in Burnet County. We had two bidders and 58 percent over on a very small project. It's for a left turn lane on US 281. It's 100 percent funded by a third party.

The district would like to go back and see if they could combine it with another project and try to get economy of scale and get better cost on the project.

The next project recommended for rejection is Project Number 3005 in Culberson County. We had one bidder, 24 percent over; it's about a $6 million project for rehab on State Highway 54.

They've had a previous project along the same route and they had better prices on that project and they don't see any reason that this one should be so high. They'd like to go back and re-advertise and solicit more bids for the project.

The last project recommended for rejection is Project Number 4024 in Travis County. We have two bids that we accepted on the project; the low bid was $3.6 million or about 24 percent over. This is for the south Travis area engineer and maintenance facility.

We're recommending rejection for two reasons: one, the 24 percent over; and two, that this proposal included a requirement that bidders include a HUB subcontract plan. This plan is required by the Government Code, the Texas Building and Procurement Code, as well as TxDOT's code, and it's in our rules in order for us to consider a bid to be responsive.

And so we actually received five bids for this project, we threw three of them out. Three of them were considered to not satisfy the requirements of that subcontracting plan.

In reviewing the plans, we found some conflicting notes in regard to some of the information that they had to provide in regard to supporting data. We had some notes that said that could be done prior to award and we had some that said they had to be submitted at the time of letting. So we didn't feel like we treated all the bidders fair in that regard.

So in that end, in order to address this in our future contracts, we'd like to go back and rebid this project and make it fair to everyone. In that end, we're going to try to address that.

We're going to try to go back and clarify the requirements for submission of the subcontracting plan, we're going to simplify that process and make it easier for our contractors to submit to meet the subcontracting plan requirements. We're also going to conduct pre-letting conferences with all of our building contractors out there to train them on how to submit the subcontracting plans so we don't have to reject bids and they understand it a lot better.

And again, as I said, we're going to relet this project if you concur with the rejection.

MR. WILLIAMSON: I'm glad you added that. Questions, members?

(No response.)

MR. WILLIAMSON: Members, we have one witness for item 10(a)(2), Ramiro Contreras. Are you for, against, or on?

MR. CONTRERAS: I'm against the rejection.

MR. WILLIAMSON: You're against the rejection.

MR. CONTRERAS: Yes, sir.

MR. WILLIAMSON: So you're against the motion.

MR. CONTRERAS: Right.

MR. WILLIAMSON: I'm going to mark you against.

MR. CONTRERAS: Good afternoon, commissioners. My name is Ramiro Contreras. I represent a minority contractor by the name of Galaxy Builders from San Antonio, one of the responsive bidders, one of the two that were opened, and it was advertised that we were the low bidder and low contractor.

I'm here this afternoon to try to clarify the ambiguity that has revolved around this contract.

On May 11, we submitted our bid. After an hour and a half of reviewing our HUB presentation, it was approved and the bids were opened and only two were accepted to be opened.

Shortly thereafter, I understand, some of the general contractors submitted a protest and we were advised then that was the case, so we in turn submitted another protest that we as a company were very clear as to what the requirements were.

And late afternoon I received a letter from the state and I'm here to try to clarify that for you in the sense of our procedures and what we did.

As far as the ambiguity, part of our due diligence and part of the instructions to bid, we are required to submit any questions that we have prior to the bid. We did that. Our estimator, Ramiro Ramos, submitted by transmittal specific questions regarding the HUB program itself.

There's four specific questions, one that states that the HUB form contracts are not required. The last paragraph states that the bid will be rejected if these forms are not submitted with the bid.

Question number two follows, the HUB subcontract with plan information. Number two, instructions state the document is to be submitted prior to award. There's two other questions that are related to that.

The questions were submitted and we had a response from the Texas Department of Transportation, Judy Gage. She says the SGC supplemental general conditions take precedence over of the UGC, uniform general conditions, and you have plans and forms inserted in the proposal are required for this project, the requirements of the HUB subcontracting plan to be submitted with the bid, as directed from the Texas Building Procurement Commission.

In answer to our question she says, Yes, the HUB plan is required for this project. There was only three forms and she said, Go ahead and make copies for more HUB subcontractors.

That was on May 5. On May 6 we had another reply from the lady, Carmela Saldana in which she says all HSP information which supports a good faith effort to solicit HUB subcontractors shall be included in the bid proposal as indicated in the specifications. So the HUB plan was indeed to be submitted with the bid.

Supporting documentation refers to letters -- that was a question we had, what do we submit with HUB -- supporting documentation refers to letters, fax, e-mails and other documents that can be used to verify your good faith effort.

Again, in a work area you subcontract out, you must make a good faith effort to solicit three HUBs providing five working days. And that's a prerequisite on the HUB program itself. You've got to have at least three minimum per trade and give them five days, which we did.

When we submitted our bid, we submitted all the documentation of who we solicited. And in addition to that, prior to the faxes going out, we had a package delivered to our office -- actually it was e-mailed to all the contractors, including Spaw Glass and others, and she says, Attached is the Building Opportunities program section in an effort to assist your company with any concerns you may have. And it's a real thick booklet.

But I took some excerpts of it that all the contractors had, that if they had any questions, they should call this number. We did. Our estimator and ourselves when we were preparing the bid, we had some questions because we're familiar with the HUB program, we know what it takes, and we asked the questions.

In addition, when we received that package, in the bottom of this paragraph it says very specifically: TxDOT will require the support documentation of vendor's good faith effort to solicit HUBs and supporting documentation and so forth. In addition that it be submitted with the vendor's response to the agency soliciting.

That's why I think when the State wrote back to me and said there was confusion or ambiguous, to us it was not ambiguous. We just feel that if in May it was not ambiguous based on the president's clause, so how can it be ambiguous now. If it was ambiguous then, an addendum should have been issued to everyone who was bidding the project to advise them exactly what the agency wanted.

It appears to us in taking the inconsistent position, what has happened to us is we've been prejudiced because now everybody knows what our bid is. Now they have the advantage of what the number is, so when this thing comes back for rebid, it's not fair and that's the problem we have with this project.

We also feel this is a deprivation of our property rights without due process.

What I'd like to do is ask the State, you invited me to do business with you guys, let's do business, I am here to do that today. I stand before you this afternoon ready to do that, and in keeping with the HUB program which underlines the need to hire minorities, we're here for you.

Better yet, I'd like for the State to award the contract to a company that accepted your invitation, to a company that took the time to research all that was needed, one that asked the right questions, and one who has invested the time to submit the lowest bid to you.

And better yet, I'm asking the State to award the contract to a company who complied with all your requirements. That is the only right thing to do. And please don't ask us to rebid this thing because all of us have invested a lot of time.

But we really feel it appears to us that you're going to punish the one contractor that complied with all your requirements.

Thank you very much.

MR. WILLIAMSON: We're going to ask you some questions here.

MR. CONTRERAS: Yes, sir.

MR. WILLIAMSON: You said some things during your testimony that if I leave on the record unchallenged may be bad for the department later. In particular, we hear you but we do not agree with you that you may have been deprived of any property rights claim. That may be an assertion your lawyers told you to make on the record but we expressly reject that.

Having said that, I want to know a little bit more about this, Thomas, because it sounds like the guy has got some concerns.

MR. BOHUSLAV: First off, they did a good job and we appreciate their bid and the way they submitted their bid.

MR. WILLIAMSON: Have they worked for us elsewhere?

MR. BOHUSLAV: Zane may have to answer some of your questions here, but again, this is a building contract, and remember, we're rejecting it for two reasons: one for the overrun of 24 percent and for the ambiguity that we had in the plans. We were unaware of that ambiguity prior to letting; we became aware of that during the time of letting.

In the proposal there are two statements: one statement says that you need to submit that with the offer or bid; the other statement says -- and this has to do not with the subcontracting plan, it has to do with supporting documentation. These are evidence such as letters, correspondence and bids that you receive from HUBs, it's supporting documentation.

All these contractors submitted their subcontracting plan, some did not submit the supporting documentation.

MR. WILLIAMSON: Did they submit supporting documentation?

MR. BOHUSLAV: They did, yes.

MR. WILLIAMSON: Just out of curiosity, Thomas, why would we care if somebody else didn't do it right?

MR. BOHUSLAV: We have two statements in the proposal: we have one statement that says it needs to be submitted with the offer; we have one that says it needs to be submitted prior to the award which would be after the letting and it can be done up to the point in time today.

And so some read it to mean that and some read it to mean others. Actually, they asked questions about it. I don't know that the other contractors had asked any questions about that issue or not.

MR. WILLIAMSON: Even though the lowest bidder was high, were they the low bid?

MR. BOHUSLAV: Do you mean with these other bidders that we did not read, would they have been lower.

MR. WILLIAMSON: Right.

MR. JOHNSON: You don't know the answer to that, do you?

MR. BOHUSLAV: Well, we believe that they would have been lower, yes. There is a total number on there that we believe that they would have been significantly lower. I don't have the exact figure but I am told that.

MR. WILLIAMSON: You know, we've been here a long time, and I can't recall, have we ever overturned a recommendation by Thomas?

MR. BOHUSLAV: Let me just say one more time, this is the first time that we've had a subcontracting plan process with us here. And in regard to we've discussed recommendations we've had before, and I think we've changed some here at the table.

MR. WILLIAMSON: Well, I mean I'm certainly only one vote in this matter, but what it sounds to me like is --

MR. BOHUSLAV: Before you make a decision --

MR. WILLIAMSON: I'm not fixing to make a decision, I'm trying to clarify with you my thoughts so that you can tell me if I'm wrong.

MR. BOHUSLAV: Okay.

MR. WILLIAMSON: I hear him say that he complied with the law; I hear you say that three didn't and were sent back. I hear him say of the two that apparently complied with the bid, he was the lowest; I hear you say well, it may be the other three would have been lower so he wasn't the lowest, but he was the only low one that complied with the bidding procedure.

Am I hearing that right?

MR. BOHUSLAV: The contract has an ambiguity in regard to what the bidding procedure is, in regard to submitting the supporting documentation.

He asked and got clarification from staff about that. It's not contractual when they do that, it is additional information. What is in the contract is ambiguity and that is a problem that we do see with the contract.

So our position on that is that there is a problem with our proposal, with our contract, with our solicitation out there and it can be read both ways, that it could be submitted prior to the award of the project as opposed to at the time of the letting in regard to supporting documentation.

MR. NICHOLS: The other three did submit but they submitted it at the other time that you had said?

MR. BOHUSLAV: They submitted their subcontracting plan and they met the requirements to submit a subcontracting plan.

MR. NICHOLS: So in effect, since you said you do it this way, your conflicting statement and you read it is do it here or do it here, they called and checked and did it up here.

MR. BOHUSLAV: That's right.

MR. NICHOLS: And the other three also did it but they did it over here.

MR. BOHUSLAV: That's right.

MR. NICHOLS: So if you allow both pieces, because that is the way you stated it, then you would have a total of five that would have been there.

MR. BOHUSLAV: Five bidders. Yes, sir.

MR. NICHOLS: And what you also said, if I understood it, was some of those others' bids were actually lower. It sounds like they complied too but were disqualified.

MR. JOHNSON: I don't think they complied. They would have if they'd been low, then between the opening of the bid and the awarding, then they'd have to comply under one or the other of the instructions.

The other instruction said that you have to comply by the opening of the bid or the submission of the bid.

MR. NICHOLS: And he said they did.

MR. JOHNSON: No. Two of them did and three of them didn't. I mean, that's my interpretation.

MR. BOHUSLAV: Right. There's two statements in there in regard to the supporting documentation that they submit, the evidence that you have solicited HUBs by letter or whatever else, fax or whatever else, and also the bids that you might receive, the supporting documentation of your contact with HUBs out there. That's what we're talking about. The subcontracting plan they met.

Now, statutorily and by rule, TBPC rule, that supporting documentation can come in after the bid. We're not specific in our rules, and what happened is our language in here, we have the TBPC plan that allows it to come in after the award, and we have a sheet that we have in here in addition to that from the department that says it has to come in at the time of letting.

MR. NICHOLS: So the other three that aren't getting their bids considered did, in effect, what they were instructed.

MR. JOHNSON: One of the instructions, not both.

MR. NICHOLS: Two instructions: one said do it this way, the other said do it that way. That's conflicting.

MR. BOHUSLAV: Yes, sir.

MR. NICHOLS: You had two of them that did it this way and three of them that did it this way.

MR. BOHUSLAV: Yes, sir.

MR. NICHOLS: So they all did one or the other.

MR. BOHUSLAV: Yes, sir.

MR. NICHOLS: Every one of them submitted the documents at one or the other time pieces that you directed. Do you see what I'm saying?

MR. WILLIAMSON: I see.

MR. NICHOLS: So I'm kind of wondering why these other three weren't considered. Well, you're saying toss the whole thing but you had two people that bid and got their documents in here and three that bid and got their documents in over here.

MR. BOHUSLAV: Let me give you a little process on this. Of course, this is our first time and now that we have the subcontracting plans we've got to review, staff had paid attention to this requirement.

MR. WILLIAMSON: Monroe is over there knocking his head against the wall.

(General laughter.)

MR. BOHUSLAV: Staff was aware of this requirement that we had added in our sheet, that we had added to the subcontracting plan, so they were following that requirement. So as they're reviewing these things and they don't see the supporting documentation, we do not read those bids at the table.

So they are considered at that time non-responsive and not until later are we aware of the conflicting notes in our requirements in the plans. So we try to make that decision there at the table as we read the bids before we consider them to be responsive.

In our new procedure we will allow the supporting documentation to come in after the letting, give them a time period to send in the supporting documentation.

MR. NICHOLS: Which is what the other three did.

MR. BOHUSLAV: Which is what the other three bidders did which is the way the TBPC is written.

MR. NICHOLS: I don't know why we don't count those three.

MR. WILLIAMSON: Well, Ted, do you and Hope have any comments? Do you want to try to reveal to the Chair where you're at on this matter?

MS. ANDRADE: No, because I'm totally confused, and I don't know whether it's because I haven't fed my brain and it's not working.

I have a question for Mr. Contreras. How long has your company been doing business with TxDOT?

MR. CONTRERAS: This is our first attempt at a state job. We've been in business for 12 years in San Antonio.

MS. ANDRADE: And this was your first attempt.

MR. CONTRERAS: Yes, ma'am.

Could I clarify something for you? We asked a specific question because we were concerned about the time frame too because we did it before at UTSA, the same program, we got rejected for the same reason, so we learned our lesson.

But we asked the same question, can we submit it later, and the answer was no. It may not have been from his office or him directly but it was from the specification that said call this person and they will give you the answer.

MS. ANDRADE: I have a question for Thomas. My concern is that his number has already been exposed to the rest of the community, and so if you rebid this exactly the same, I mean, I'm lost there.

MR. BOHUSLAV: That is an unfortunate aspect of this, of our recommendation, yes. And it's something that has occurred before where we've had to go back and rebid and the bidders that may have misread some aspect of the plan or had an ambiguity, those that didn't get their bids read didn't divulge their bids, and when somebody else interpreted it the way that we could read their bid, then we have that unfortunate incident where we've exposed only a few bidders and not all bidders.

MR. NICHOLS: The other three firms that got their paperwork in at the other time you said it was okay, their bids were not exposed?

MR. BOHUSLAV: They were not. We did not pursue anything else. Once we considered them non-responsive at the bid letting at the table, we didn't pursue any more information from those other.

MR. NICHOLS: If I were one of those three, I'd be complaining.

MS. ANDRADE: I think that's unfair to Galaxy.

MR. WILLIAMSON: Well, I think maybe, not by intention and not because we're hardheaded -- let me interrupt my soliloquy right in mid-sentence.

(Pause.)

MR. WILLIAMSON: I'm back on my soliloquy. It appears that there have been two unfortunate occurrences here: one is the unfortunate occurrence of the ambiguity which our great staff has identified, and we didn't do maliciously or on purpose; the other is the unfortunate incident of not looking at all the numbers and seeing who might have been low bid.

I doubt that we can satisfy two parties, but my view is this guy has got a legitimate complaint, and we ought to give Thomas the cover that we understand and we'll just hope that the three guys that got rejected or three gals that got rejected don't feel bad about it and they try again. But it's pretty clear to me this guy hasn't done anything wrong.

MR. JOHNSON: I concur with that.

MR. BOHUSLAV: Could I ask Zane about budget in regard to the budget for the project, if there's an issue in regard to problems that he might have with his capital improvement budget?

There is an overrun on the project and I want to make sure Zane is okay, if he has any more comments in regard to the budget for the project.

MR. HOUGHTON: Was that part of the bid issue that it was 25 percent over?

MR. BOHUSLAV: Right, there were two reasons for rejection: one was the ambiguity and the other one was the overrun.

MR. WEBB: For the record, I'm Zane Webb, director of the Maintenance Division.

We'll probably have to cancel some other project at this point if we have to go for a 24 percent overrun on this project.

MR. HOUGHTON: Because of budget?

MR. WEBB: Yes, sir. We don't operate under a program; with the capital budget, it's a budget, so that between now and the 31st of August somehow we've got to reconcile that $700,000.

MR. WILLIAMSON: What was the total cost of the project?

MR. WEBB: $3.6 million was the bid; the engineer's estimate was about $3 million.

MR. HOUGHTON: $600,000 over?

MR. WEBB: Yes, sir, $700,000 over.

MR. NICHOLS: Usually if it's 20 percent or over, that's when I start asking questions.

MR. WEBB: If I could kind of expand a little bit on what Thomas was saying. This is the first time we've tried to input some TBPC rules into our letting process as to how it works with building projects. So what we did was we took the TBPC rules and kind of merged them into our letting process.

We open all of our bids and read them immediately, so we have to make a determination right there at the table as to whether they're responsive or non-responsive. That call was made and three were called non-responsive.

Under the TBPC rules that we had tried to merge into ours, that call would not have been made until time of the award of the contract, and that's where the conflict comes in.

MR. HOUGHTON: Who would have won out of the five?

MR. WEBB: Can I share?

MR. WILLIAMSON: Whoa, time. I think maybe we need to have an executive session with our lawyer about this. Would that be appropriate, Mr. Monroe?

MR. MONROE: Yes, sir.

MR. WILLIAMSON: Do you want to wait till the very end or do it right now?

MR. MONROE: It's your pleasure.

MR. WILLIAMSON: Hang on a second, let me find the right words.

At this time we'll recess in order for the commission to meet in executive session. It is 1:01 p.m. The executive session will be held in the conference room of the executive director in exactly three minutes.

(Whereupon, at 1:01 p.m., the meeting was recessed, to reconvene following executive session.)

MR. WILLIAMSON: Members, we're back in regular session at 1:17. We held an executive session for the express purpose of discussing a matter of litigation, and is required by the law, no decisions were made during that executive session.

Let's return to the matter on the agenda, Mike.

Thomas, I can't speak for the other five and they'll, I'm sure, each speak for themselves, but it would appear to me that no one has intentionally intended to harm or deny anyone to do business with us, but that this is a very strange situation of fact and circumstance, and as painful as it might be to us, it appears to me that the fair thing to do is to not accept your recommendation to reject this bid and to move forward with the lowest of the two bids that were submitted to you.

I need a statement from each of the five, if you care to differ or offer something for the record. If not, well, that's fine.

I'm looking at Ted and he's got nothing to say; I'm looking at Hope; I'm looking at John.

MR. JOHNSON: Well, I have a question perhaps of counsel. Would it be appropriate to maybe take this one issue and vote on it separately and do the others? And after hearing your response, I'll at least say where I'm coming from on this particular issue.

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

Since the matter has been presented to the commission in terms of accept all except the three rejections, it might be better to make an exception for this one case and make it very plain, however the commission wants to vote on it, as a separate matter.

MR. JOHNSON: Thank you.

My impression, Mr. Chairman, is that in this case there were two bidders who complied, there were three who did not, and my sense is that the low bid of the two that complied, that party would be harmed if it were rejected. Obviously his bid is now public information and it would put him at a competitive disadvantage, and he did absolutely nothing wrong that I can determine, and my sense is that we ought to accept that as the winning bid.

MR. NICHOLS: If that's a motion, I'll second it.

MR. JOHNSON: I will present that in the form of a motion as soon as the Chair would accept it.

MR. WILLIAMSON: So Richard, do I need to propose a motion to remove this item from this agenda number?

MR. MONROE: No, sir, just to specifically approve that bid for that contract.

MR. WILLIAMSON: I have a motion from Mr. Johnson to specifically approve --

MR. NICHOLS: Job Number 4024.

MR. WILLIAMSON: -- proposed by Galaxy Builders, and I have a second from Mr. Nichols. All those in favor will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: Opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Can I now have a motion to approve all other construction contracts under this item?

MR. NICHOLS: As recommended.

MR. BOHUSLAV: We have two other rejections.

MR. WILLIAMSON: As recommended by staff which includes the two rejections that we understand. 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 will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: Opposed, no.

(No response.)

MR. WILLIAMSON: So in summary, for the record, we appreciate your recommendation on the building, we understand the dilemma, we will all work hard to make sure this doesn't happen again, but it's the commission's view that it's the fair and right thing to do to award the contract, and we've done so. And all other recommendations you made on this agenda item have been approved as you recommended them.

Where does that put us on the agenda, because I want to talk to Mr. Contreras. Routine items next?

MR. BEHRENS: No. We have one other that's going to be deferred.

MR. WILLIAMSON: We're going to defer item 11?

MR. BEHRENS: Defer item 11, and then on agenda item number 12 which is our routine minute orders, they have all been duly posted as required, they're all listed. If you want me to comment on any of them, I can, otherwise we'd recommend approval.

MR. WILLIAMSON: If Mr. Contreras will just wait a moment while we finish our other business.

Okay, members, we're going to defer agenda item 11 at this time. Do the members wish to discuss that?

(No response.)

MR. WILLIAMSON: Then it's deferred. And then we have agenda item 12 which is our routine minute orders, and as always, please take a moment to see if there's anything that jumps out at you that might be of specific concern. I'm sure you've already looked at all this beforehand.

Mike, knowing that you can't know everything in the world, but do you know of anything that any of the commission members should be concerned about in regards to having personal impact?

MR. BEHRENS: I'm not aware of anything that would impact any commissioner.

MR. WILLIAMSON: And as I say, you can't know everything.

MR. NICHOLS: Mr. Chairman, I move that we accept the routine minute orders as recommended by the executive director.

MR. JOHNSON: I 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.

Do we have any open comment witnesses?

MR. BEHRENS: No, sir.

MR. WILLIAMSON: Okay, Mr. Contreras, first of all, we want to say to you that we appreciate the lighthearted and yet direct way that you presented your argument.

And we're not in the habit of overruling our staff, we think they're the best in the world, and we know they never act with malicious intent towards anyone, but as it turns out, you made a pretty good argument.

I don't know how we're going to be able to afford the difference between what we budgeted and what you're awarded, but I'll leave it up to my construction experts and yourself to work out how the project is going to work.

We hope you leave here knowing that the Department of Transportation listens carefully to everyone, sometimes we agree, sometimes we don't. In your case we did and perhaps you'll remember that the next time you see a House or Senate member you know in the San Antonio area.

MR. CONTRERAS: Mr. Chairman, I appreciate your comments. And for the staff, you know, it's a business concern and it was a business decision on my part to at least challenge, but by no part is a personal deal.

We truly expect to give you the best job. As a matter of fact, we built one about a mile and a half from that that's an apartment project called Dove Springs if you're familiar with the area.

And I really thank the commission for listening to us, and if I came out too strong, it’s just that anybody would have done that too. I appreciate you and thank you very much.

MR. WILLIAMSON: You're a citizen of Texas and the system worked like it should. Thank you.

MR. WILLIAMSON: Okay, members, the most privileged motion is in order.

MR. JOHNSON: Filibuster.

(General laughter.)

MR. HOUGHTON: So moved.

MR. NICHOLS: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. We're adjourned at 1:25 p.m.

(Whereupon, at 1:25 p.m., the meeting was concluded.)

C E R T I F I C A T E

MEETING OF: Texas Transportation Commission

LOCATION: Austin, Texas

DATE: May 26, 2005

I do hereby certify that the foregoing pages, numbers 1 through 187, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Sunny L. Peer before the Texas Department of Transportation.

__________06/01/2005
(Transcriber) (Date)
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731