Audit rebukes corridor costs

Report says TxDOT estimates unreliable for Trans-Texas plan

February 23, 2007

By CLAY ROBISON, Houston Chronicle Austin Bureau

AUSTIN — The State Auditor's Office issued a sharply critical report on the Trans-Texas Corridor on Friday, concluding that taxpayers may never know how much they could end up paying for a toll road that parallels Interstate 35 from San Antonio to Oklahoma.

And if the Texas Department of Transportation doesn't improve its accounting of project costs, taxpayers won't know if the public costs are appropriate, auditors said.

The route, known as TTC-35, is the first phase of an ambitious, long-term transportation network proposed by Gov. Rick Perry to help ease congestion on Texas highways.

Eventually, TTC-35, stretching from Laredo through North Texas, could cost more than $105 billion, it has been estimated.

Although costs for the Trans-Texas tollway, including financing, are to be provided through a developer, some costs could be partially paid by the state, the audit report said.

Texans could pay $13.6 billion in financing costs for the initial phase of TTC-35 plus a possible $16.5 billion for additional rail line projects, according to the audit.

A TxDOT spokesman defended the "corridor concept" and said the agency disagreed with some of the auditor's recommendations.

The corridor concept "is the most logical, most attainable way for us to relieve congestion," spokesman Randall Dillard said.

But the report, released less than a week before a scheduled Texas Senate committee hearing on toll roads, is sure to add fuel to a political controversy that has raged for months.

The Department of Transportation in March 2005 entered into a $3.5 million contract with Cintra Zachry LP, a private consortium, to develop a long-range plan to design, build, finance, operate and maintain the TTC-35 project.

Cintra is a Spanish company; Zachry is based in San Antonio.

The state agency has succeeded in carrying out part of the agreement with the consortium, auditors noted.

"However, weaknesses in the department's accounting for project costs create risks that the public will not know how much the state pays for TTC-35 or whether those costs are appropriate," they concluded.

The audit noted a "lack of reliable information regarding projected toll road construction costs, operating expenses, revenue and developer income."

The transportation agency plans to enter separate contracts with developers for each segment of TTC-35 and is negotiating a contract for the first segment, Texas 130 near Austin.

Although the state could receive $3 billion in concession payments from developers, such payments could be reduced if inflation, interest rates and other factors increase the developers' costs, auditors said.

Auditors recommended more legislative oversight of the Trans-Texas Corridor, the transfer of toll revenue projections from TxDOT to the state comptroller and increased public access to information about the project.

They also proposed that TxDOT officials provide regular financial forecasts to the governor, the Legislature and the comptroller and submit development agreement contracts of more than $250 million to the attorney general for review and approval.

David Stall, co-founder of Corridor Watch, a citizens group critical of the project, applauded the audit.

"They brought up certainly a number of valid points and things Corridor Watch has been concerned about," he said.

TxDOT's Dillard said the agency cooperated fully with the auditors and said the agency already has implemented some of the recommendations.

Perry spokesman Ted Royer said the governor "always appreciates new ideas for improving transparency and accountability in government."

The Texas Transportation Commission also has been seeking proposals for development of TTC-69, between Northeast Texas and the border. It would pass near the Houston area.