Texas Department of Transportation Commission Meeting

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

Thursday, February 24, 2005

COMMISSION MEMBERS:

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

STAFF:

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

PROCEEDINGS

MR. WILLIAMSON: Good morning.

(Audience said good morning.)

MR. WILLIAMSON: It is 9:09 a.m. and I would like to call the February meeting of the Texas Transportation Commission to order. It is indeed a pleasure to have each of you here with us this morning.

I would note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of Secretary of State at 2:31 p.m. on February 16, 2005.

As we always do before we begin our meeting, if you would please take just a moment to stop and think about where your personal device is, reach in your pocket or purse and get it and put it on the silent mode.

MR. NICHOLS: I don't have one. You can't call me.

(General laughter.)

MR. WILLIAMSON: Thank you very much.

As is our custom, we will open our meeting with comments from the commission, and we traditionally start with the commissioner to your far left, Ted Houghton, from southern Beaumont -- oh, no, western El Paso.

MR. HOUGHTON: Western El Paso. Far left on the map too if you look at the map.

Good morning, everyone. And I've noted another historic first again in transportation here. I think we're going to, hopefully -- I'm not being presumptuous, I hope -- talk about the new pass-through toll, one of the many tools that were passed in the last several years by the folks across the street. I'm looking forward to that Montgomery County and looking forward to the other initiatives that we have, I think SH 121, some opportunities up north in North Texas.

And I bid you all a great morning and hope we have some fun today. Thank you.

MS. ANDRADE: Good morning and welcome to all of you. Thank you for your interest in transportation. For those of you who have come to make public comments, I look forward to listening to you. And finally, Mr. Chairman, I know we've got a busy agenda so I look forward to taking care of business so that we can keep moving transportation forward in our great state of Texas.

MR. JOHNSON: Good morning. When you bat third in the lineup, you see a lot of the same pitches, so what I would like to do is simply welcome you and thank you for your interest. And from the weather forecast that I've been seeing, it looks like a good day to be indoors and maybe attending a meeting. So thank you for being here.

MR. NICHOLS: Welcome. We appreciate all of you being here, and those of you who took time out of your work to leave your community to come be at our meeting, we especially want to welcome you. We look forward to your comments. When the meeting is over, please drive carefully. Thank you.

MR. WILLIAMSON: Thank you, commission members.

Let me just add once again my sincere appreciation for each of you taking the time out of your day to be with us and attend to matters of interest in the transportation world.

We have a saying around TxDOT that time is the most valuable thing that people have to give or to have taken away from them, so we appreciate your giving some of your time to this matter.

We are going to take up several, I won't say controversial, but I will say interesting topics today. I want to direct your attention to discussion Item 4 wherein we will delve into the world of the procurement of professional services.

I observe that at most of our meetings a large percentage of the audience probably are individuals who are employed in the world of the procurement of professional services. We're going to be asking our staff some questions about how that process works, and we might be giving our staff some direction about what we want to do, whether or not the legislature chooses to make some changes itself.

If you fall into the category of being a professional person from whom we procure services and you wish to offer a comment or a response to the day's discussion, I encourage you to fill out one of our cards, and that little soliloquy bought my staff enough time to go get the cards where I can show them to you from the podium.

If you intend to comment on an agenda item, I need for you to fill out the yellow card, and you can find blank cards in the lobby or the foyer of the Greer Building. If you intend to comment on any other thing in the open comment section, I need for you to fill out a blue card. And in any event, unless we get into a great exchange of philosophy, we would ask you to keep your comments limited to about three minutes.

We are also going to take up and perhaps act upon the first formal pass-through toll provision, one of the many great tools the legislature authorized the commission to use to catch up from 20 years of under-investment in the transportation world. And at the appropriate time, we're going to commend Montgomery County for its forward thinking approach to solving its own problems.

Finally, we are going to take up and discuss and probably make a decision on what could be the next significant private sector investment in the state's highway infrastructure. It comes later in the agenda, and traditionally when we got through some of the things towards the middle, people leave. We hope that some of you who might be interested in ascertaining how the commission will approach the future, stick around a little bit and watch the dialogue on that matter. It should be pretty interesting.

Mr. Behrens, where would you like to start?

MR. BEHRENS: With the minutes.

MR. WILLIAMSON: Then we will start with the approval of the January minutes. 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, the minutes are approved.

And Mike, I think I'll hand it off to you and take us forward, please.

MR. BEHRENS: Thank you, Chairman.

Our first item will be agenda item number 2 which will be the presentation of an award, and I'll call Kathy Murphy who is representing the Travel Division this morning in place of Doris Howdeshell who is still off on some medical leave but she's doing fine, we understand.

So Kathy, I'll turn it over to you and you can introduce our guests.

MS. MURPHY: Thank you. It's my pleasure to introduce Stacy George Cantu. Stacy is currently the executive director for Keep Texas Beautiful. KTB has been known as the grassroots arm of the Don't Mess With Texas campaign since its inception. KTB's partnership with TxDOT goes back even further in history to the 1960s when KTB was formed.

Currently Stacy and the KTB staff work under contract to manage the Don't Mess With Texas Trash-off, providing a local network of 339 affiliates, manage the Governor's Community Achievement Awards, and other litter prevention initiatives for the department.

Stacy?

MS. CANTU: Thank you, Kathy.

I am Stacy Cantu, and I get to be the executive director of Keep Texas Beautiful and I come with good news today. The first piece of good news is that TxDOT is a winner. You once again won the Keep America Beautiful/U.S. Department of Transportation Partnership Award for your partnership with our program. You won a very special award this year -- you were the only DOT to win it -- and that was an award for special recognition for Great American Cleanup achievements. Both of these awards will be presented later by Keep Texas Beautiful President Joanne Weik.

We were happy to nominate the Don't Mess With Texas "Excuses" TV and radio campaign. They both placed first and you were presented those awards last December. I think that's good news.

Numbers are up. Keep Texas Beautiful's Lake and River Cleanup Program in 2004 supported 133 cleanups. That's up 38 percent in the last two years. Of the 33,000 participants statewide, nearly 40 percent were kids, youth under the age of 18.

Texas Recycles Day Public Awareness Campaign had 662 events last year statewide, up 98 percent from 2003. We reached millions with the recycling message.

Keep Texas Beautiful does manage the Don't Mess With Texas Trash-off. It's the signature event of the Great American Cleanup which is held March through May of each year. Last year more than 130,000 Texans participated in cleanup activities statewide.

We are so happy to announce that we received an EPA grant this year to fund our Stop Trashing Texas, It's the Law Program. We expect to reach and train 800 law enforcement officials on illegal dumping and littering violations.

So our programs are growing, numbers are up, we're reaching more people, more people are hearing about our programs. What does all of this mean? Well, it means less trash in our parks, waterways, roads and communities, and that's good news.

I'm excited to report we received a record number of entries on the Governor's Community Achievement Awards last year. As you may recall, the Governor's award honors communities for their achievements in improving community environment.

I want to tell you about Munday. Munday is a town out in west Texas with a population of 1,476, and they won the Governor's Award last year. When businesses in a nearby town began closing their doors, community leaders in Munday thought the same thing could happen to us. So organizers for Keep Munday Beautiful said, "We're going to teach these citizens about the benefits of a clean and beautiful community."

They came up with the 5 Ps: Plan, Project, Promote, Protect and Procure. These 5 Ps help volunteers, teachers and project organizers stay focused. In Munday they educated kids in grades K through 12; they appeared before city council and encouraged enforcement of local ordinances; they cleared abandoned and overgrown lots; they removed an old eyesore of a water tower; they made numerous improvements to their downtown; and probably best news to you guys, they adopted 15 miles in all four directions -- they formed new Adopt-A-Highway groups and adopted 15 miles in all four directions from their town.

After ten years of losing at least one business per year, Munday has six new businesses which have opened since 2002. Isn't that good news?

It's always about money -- I'm not here to ask for any today, though. I'm happy to report that Keep Texas Beautiful is doing more with the resources we have. We always have our eye on more funding to help us reach our vision to make Texas the cleanest, most beautiful state in the nation.

Our affiliates locally match every government dollar with $10.21 of in-kind services and volunteer time. Ultimately that means cost savings to government entities. Keep Texas Beautiful and our 339 affiliates are good stewards with your money and our natural resources, and that's good news.

More good news. Doris Howdeshell is recovering well, and we're glad to hear that, but we've been very happy to work with newly-hired Brenda Flores-Dollar in the Travel Division.

Now I have the honor of introducing you to KTB President Joanne Weik. Joanne is the community outreach representative for BASF Corporation in Freeport, Texas and has served as our volunteer president since June of this year.

This means I'm finished with my report, and that's definitely good news.

MR. WILLIAMSON: Wait, wait, wait. First of all, we appreciate all of your hard work.

MS. CANTU: Thank you.

MR. WILLIAMSON: And in the Keep Texas Beautiful projects you described, does any other state agency participate with us?

MS. CANTU: Yes. TCEQ funds the Lake and River Cleanup Program and Texas Recycles Day -- those are two programs that I mentioned. And we partner with the Texas Forest Service on the Arbor Day poster judging contest which we'll be judging on March 3 right after our skeet shoot.

MR. WILLIAMSON: Do we do some stuff with the GLO?

MS. CANTU: We partner with the GLO. There's no funding but we help with their Adopt-A-Beach Program and they help by giving publicity to our programs as well. So it's a partnership.

MR. WILLIAMSON: So in addition to the recognition our department employees get, we want to point out that the effort to address this problem is statewide and agency-wide and there are many other state employees doing what they can to contribute.

MS. CANTU: Yes.

MR. WILLIAMSON: And we want to recognize our colleagues and peers in the other state agencies for what they do.

MS. CANTU: Great. Thank you.

MR. WILLIAMSON: Members, anything for this lady?

MR. JOHNSON: I have one observation. People that know me think that I'm reluctant to speak on behalf of others -- which I am -- I'm not reluctant to speak on behalf of myself.

MR. WILLIAMSON: We know that too.

(General laughter.)

MR. JOHNSON: I do believe that I speak for a huge number of people who love this state and love to drive this state and love to have their recreation in this state, and expressing thanks to Keep Texas Beautiful for all the hard work that you do and the results that that hard work has produced.

MS. CANTU: Thank you very much.

MR. NICHOLS: I would almost echo the comments of Commissioner Johnson. We want you to know how proud we are of what you do. It really is great. I see people smile and things better all over the state because of the work you do, and we just want you to know that we really are supportive.

MS. CANTU: Well, we couldn't do it alone, and we sure appreciate the funding from the Texas Department of Transportation. More than that, we really appreciate the partnership. It's been a wonderful win-win situation since the late '60s, and again, we can't do it alone. We have great partners at TxDOT, we love working with you, the Adopt-A-Highway coordinators at the district level, certainly the wonderful folks in the Travel Division, and it's really a great opportunity for our affiliates to work with the local TxDOT reps as well. So I will now introduce --

MR. HOUGHTON: I have a question. How many people are involved overall? I mean, how many people touch Keep Texas Beautiful? Have you ever gauged the number, put a number to it?

MS. CANTU: Hundreds and hundreds of thousands because of our grassroots efforts. I will tell you that our affiliates in 339 communities represent about 16 million Texans, so those communities represent a majority of the state. But there's hundreds and hundreds of thousands of people that are involved with our program on an annual basis. And we get numbers from our affiliates so it's hard for us sometimes to get all of the numbers in one place.

MR. HOUGHTON: I've got one last question.

MS. CANTU: Yes.

MR. HOUGHTON: Can you point out Munday on the map? I'm from west Texas but I'm having a devil of a time finding it.

MR. WILLIAMSON: It's just down the road from Knox City, just north of Aspermont.

MS. CANTU: Do you think that's central Texas?

MR. HOUGHTON: I think that's more central than west.

MR. WILLIAMSON: Although I have some trepidation about whether or not 1,000-plus is the actual population. The last time I went through Munday, it looked like there were around 650 to 700, so I guess it's growing.

MS. CANTU: It's growing.

MR. HOUGHTON: Was that on your way to far west Texas and El Paso the last time you went through Munday?

MR. WILLIAMSON: You know, Munday, I think -- and people from Munday who are here can correct me -- but I think that is near the headwaters of a major tributary of the Brazos River, I believe. I believe there's a spring in the area that ends up being the headwaters of one of the major tributaries of the Brazos. It's a great place; there are a lot of fun people in Munday, Texas. All the sore heads are in Knox City.

(General laughter.)

MS. ANDRADE: I have one comment to make also. Stacy, I just want to thank you for the work that you do. As I travel throughout Texas, I really appreciate the work that you do, and your enthusiasm is great. The state of Texas is lucky to have you. Thank you for your hard work.

MS. CANTU: Thank you so much.

MR. WILLIAMSON: And Mike Behrens just kicked me and reminded me that the most important aspect of Munday is it's only about 40 miles from the birthplace of Governor Perry, Paint Creek. That's the other thing that's important about it.

MS. CANTU: I'll add that to my story.

MR. HOUGHTON: And I guess we'll have Arbor Day in El Paso soon?

MS. CANTU: The state ceremony is in April.

MR. HOUGHTON: We're still looking for a tree.

(General laughter.)

MS. CANTU: I haven't heard the announcement on where the state program is; that's why I was looking back to see if we had any information on that.

MR. WILLIAMSON: You think that the lady behind you thinks we're trying to drag it out where she can't have any time? Okay, I think we're through.

MS. CANTU: This is Joanne Weik.

MR. WILLIAMSON: Wait a minute. We've got to give you a hand.

(Applause.)

MS. WEIK: You can see why we're all so proud to have Stacy as our executive director; she really keeps us going.

I'm Joanne Weik, as she said. I come here from Brazoria County, so not out in west Texas.

But you know, the wonderful thing about our volunteers is they figure out how to have an Arbor Day when you have no trees, they do something to substitute. And when you have no lakes or rivers to clean up, they figure out a way to still do some water cleanup. They're very innovative across the state.

As Stacy said, I'm the president for 2004-2005 and it is such an honor to serve this organization and to work with you guys as a partner.

I would want to recognize a few people that are here. One of our newest volunteers with us, John Howard, he's on our Fund Development and Government Partnership Committee. John, thank you for coming.

And our staff, the backbone of this organization that keeps us going. I'm going to ask you to stand, and if you'll do that quickly, I won't have to argue with you. We have Cecile Carson, Katie Sternberg, Stacey Langhout, Kim Carlson, Jami Gigliotti, and Michelle Newkirk. Thank you so much for all that you do.

(Applause.)

MS. WEIK: I'd also like to take this opportunity to invite you to two events coming up with Keep Texas Beautiful. One is March 3, it's our skeet shoot. It's an opportunity to have guns and legislators in the same place -- they're unloaded, though.

MR. JOHNSON: What's unloaded, the guns or the legislators?

(General laughter.)

MS. WEIK: Our honored guest this year is U.S. Congressman Don Young. He's the chairman of the Transportation and Infrastructure Committee. We're very excited about getting him onboard to join us. Again, March 3 at one o'clock at Texas Disposal Systems, and Stacy will leave you some information or send you some information on details if you could join us for the skeet shoot or even for the dinner. We'll be there from about 1:00 to 6:00 and would love to have you out there at any time during the day that you could make it.

We also have our annual conference, our 38th Annual Conference scheduled in Houston this year, June 27 through 30. There's four days of opportunities for you to join us and again, Stacy will get you some details on that, and if your schedule allows you to be there, we'd love to have you there and see what we do and the excitement that these volunteers bring.

I had one of my major managers attend a conference with me one time, kind of begrudgingly, doing his duty, but by the time he got back, he said the hair on the back of his neck was standing up from all the excitement. So there's a lot of energy there and a lot to be learned.

We were honored this year to nominate TxDOT for the awards from Keep America Beautiful, and we're so pleased that you have received those. Again, the Department of Transportation won the Keep America Beautiful/U.S. State Department of Transportation Partnership Award, and then the special award for the Great American Cleanup.

On behalf of the directors and staff and the thousands of volunteers, I would like to present these awards to you. We do have some plaques, and if we can present those to you now?

MR. WILLIAMSON: Let's go down, members.

(Pause for presentation of plaques and photographs.)

MR. BEHRENS: We'll now go to agenda item number 3, and I'll call Kathy back up here and have her present the recommendation on increasing the subscription to Texas Highways Magazine.

MS. MURPHY: This minute order covers a subscription increase for Texas Highways Magazine. The last increase was in 1996. The domestic rate would move from $17.50 per year to $19.95, single issue cover price $3.50 to $3.95, and the international rate $25.50 to $29.95.

MR. WILLIAMSON: Discussion, members?

MR. NICHOLS: Go ahead.

MR. JOHNSON: Just out of curiosity, how much additional revenue will this raise?

MS. MURPHY: With the assistance of the Finance Department, we have calculated that with revenue, assuming no change in subscribers, this would mean a plus of $189,000. If we had a 2 percent decrease in subscriptions, it would still mean $114,000 in revenue, and with a 5 percent decrease in subscribers, we will see still a $78,900 increase.

Now, one thing I want to mention which is typical of a magazine when they do deal with a subscription increase is to give everyone an opportunity to renew at the old rate. So we will be doing that over the course of the next six months, and that should actually lift response for us and help cash flow.

MR. JOHNSON: Thank you. I think the Texas Highways Magazine is absolutely a sensational piece and it shows that a lot of hard work goes into it and the product is terrific.

MS. MURPHY: Thank you. It's a labor of love.

MR. JOHNSON: The ability to keep the same cost since '96 I think is a credit also.

MR. NICHOLS: I was going to say that we get compliments all over the state on the quality of that magazine. My mother subscribed to it for years before I ever got on the commission even, so it was at our house all the time.

Only in the last few years did we start selling advertisements.

MS. MURPHY: That's right.

MR. NICHOLS: And I was going to ask you, I think before we did that the magazine was losing a few hundred thousand a year.

MS. MURPHY: That's right. Advertising has definitely helped us address the issue. Fiscal year '03, after expenses, we realized that with advertising comes expenses. The pub rep firm, commissions, added paper, production costs, pre-press, but net in fiscal '03 in revenue, $239,000, in '04, $296,000. And '04 was really a low year for us; we were coming out of a struggling economy, but '05 already we're seeing a 60 percent increase in advertising.

MR. NICHOLS: Sixty percent?

MS. MURPHY: Sixty percent in advertising, and I think that speaks to the way that we handled this which was to limit the kind of advertisers we would allow in the magazine. So we have people who are involved in unique Texas products but primarily travel destinations, convention and visitor bureaus, chambers and so forth. So it's kind of a love fest.

MR. NICHOLS: So I know a number of years ago, especially during the legislative process, we used to have elected officials ask us if we were having to subsidize the magazine, and now basically the magazine is self-sufficient. Or very close to it?

MS. MURPHY: It's very close to it. Two years ago we were in the black; last year we had a bit of a slip because, frankly, subscriptions and product revenue were down, but it was down across all magazines and across all markets regardless of the industry. We've seen an increase in advertising.

One of the problems with magazine publishing is that you always have these issues with paper and postage and added increases. We've had four paper increases in two years and we'll see another one in '05, so while we try to balance the issue of promoting and bringing on new subscribers, we're also doing everything we can to keep costs down.

In October '04 we adjusted the trim size of the magazine which I'm sure no one even noticed, but we adjusted the trim size, brought the cover weight down, and eliminated poly bags, and over 12 months that's going to save us $153,000.

So while we continue to work on adding revenues with advertising and things like that and with the subscription increase because that's important, we're also always looking at costs.

MR. NICHOLS: Thank you very much. So we can truthfully say we've made substantial improvements and still have a quality magazine.

MS. MURPHY: Without question.

MR. NICHOLS: So you are doing a good job. Thanks.

MR. JOHNSON: I have a request. As I advance in years, please don't reduce the font size.

(General laughter.)

MS. MURPHY: I'll let the art director know that; he's younger than both of us.

MS. ANDRADE: Kathy, I have a question. So in 2003 you said there was a surplus of $6,000. What caused that? Was it increased subscription?

MS. MURPHY: Well, there's no question that advertising revenue really helped in that, and we also had the steady income related to product. In fiscal '04 we saw a drop in that generally overall. We belong to an association called the International Regional Magazine Association which is about 43 magazines, and last year was a tough year across the board. People were traveling less in general and just a tighter pockets.

But we've already seen in the first few months of this year an increase, a significant increase.

MS. ANDRADE: I think it's a great magazine. Last year I used it as a gift, bought a subscription for someone. I got so many compliments that I'm going to use it more, and I encourage my fellow commissioners to do the same.

MS. MURPHY: Excellent.

MR. HOUGHTON: Is that a challenge?

MS. ANDRADE: Absolutely.

MR. HOUGHTON: I'll take it, absolutely.

How many magazines do we sell?

MS. MURPHY: Our distribution is about 250,000, but we just finished a major readership study by an independent firm, and I'm glad you brought this up. Our pass-along readership is 1.3 which means that the magazine reaches almost a half million people each month.

And from this readership study what we learned is that the average reader takes 3.6 leisure trips per year; 65 percent of them travel to a destination because of something they read in the magazine or an advertisement they saw; 63 percent of them responded that Texas Highways is the major resource in planning trips.

I mention this because the Travel Division enabling legislation is about promoting Texas and the magazine is just one way we do that, but its return on investment is very serious in terms of -- our readership is incredibly responsive and we see that all the time when we write about something and someone calls and says: Oh, my lord, the phone hasn't stopped ringing -- which is not an unusual event.

MR. WILLIAMSON: I wasn't going to say anything because I knew the other commissioners would, as Mr. Johnson said earlier, see all the pitches, but you used some terminology in your explanations that I just want to take a moment to step out and compliment you for using.

It is pleasing to this small business person's ears to hear state employees talk about the importance of rate of return and cash flow. So often, I think the public that we represent or that we work for suspects that state government doesn't understand those concepts, and I can't speak for the other agencies, but I know in our agency we try to run ourselves as a business.

Whether it's our magazine, our Keep Texas Beautiful, our toll program, our regular highway program, things like cash flow and rate of return and what our investment of tax dollars means to the taxpaying public are important concepts for us, and I appreciate you weaving those terms into your presentation.

MS. MURPHY: Thank you.

MR. WILLIAMSON: I thank you for your report. I suppose you'd like a motion, Michael?

MR. BEHRENS: Yes, sir.

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. Thank you.

MS. MURPHY: Thank you.

MR. WILLIAMSON: We have some people in the audience, Mike, that need to exit probably. Why don't we take three minutes and let them exit and then we'll resume, if it's okay.

MR. BEHRENS: And if I could make just one comment, I failed to mention that Kathy is the editor of the Texas Highways Magazine.

MS. MURPHY: Actually, Mike, I'm the publisher, I'm the paper-pusher.

MR. WILLIAMSON: Well, we want to recognize you for being the publisher.

Let's take three and let our guests exit.

(Whereupon, a brief recess was taken.)

MR. WILLIAMSON: Back on the record, and Mike, back to you.

MR. BEHRENS: Thank you, Chairman. We'll go to agenda item 4 which will be a discussion item, and it will be led by Amadeo Saenz and the item will deal with the procurement of professional services. Amadeo?

MR. SAENZ: Good morning, commissioners. For the record, my name is Amadeo Saenz, Jr. I am assistant executive director for Engineering Operations for the Texas Department of Transportation.

Several years ago, members of the commission made the department staff aware of the need to identify opportunities to reduce costs of planning, building and maintaining our state highway infrastructure. In response to your instructions, we have amended our construction contracts to reward contractors who finish projects ahead of schedule and at the same time penalize contractors who finish projects behind schedule.

We're in the process of approving comprehensive development agreements which will lower the overall cost of our project development. We're in the process of reviewing and approving several pass-through toll proposals which will allow local and regional governments to develop improvements to the transportation system much faster and cheaper than we could possibly do because of our funding limitations.

MR. WILLIAMSON: And Amadeo, I don't want to break your train of thought, but the whole purpose of this discussion item is not only to inform commission members about certain aspects of our relationship with the private engineering world, it's also to inform those who might be interested of the steps we've taken to alter our behavior such that we design and build assets faster.

Frequently, I think, because of our words and actions, we fixate the state on our toll program, at the expense of pointing out the things we're doing outside of the toll program to reduce costs and speed the process up.

What I heard you say is several years ago these commission members said we need to start doing things faster and cheaper, and so the first thing we did -- at, I might opine, great discomfort to the contracting industry, not the engineering industry but the contractors that we deal with -- is we slowly but steadily began to implement rewards for doing things faster and punishments for doing things slower -- not something the construction industry was comfortable with, much like some of the things we suggest that the engineering world might not be comfortable with today.

MR. SAENZ: That's correct.

MR. WILLIAMSON: We began to pursue comprehensive development agreements which combine engineering and construction into one process which makes a lot of people uncomfortable but reduces the time it takes to get a project to completion.

And we're now moving to our pass-through toll program which in effect surrenders a lot of decision-making to regions, counties and even cities -- decision-making and one might say power that this department used to retain to itself.

So our interest in the engineering world is just the next step in a long series of steps we've been taking to reduce costs and improve project delivery.

Please continue.

MR. SAENZ: Thank you.

Late last year, the Chair made the department staff aware that Governor Perry intended to propose an inspector general program for our agency, along with other state agencies of state government. As we understand it, the governor intends the inspector general program to focus in two subject areas: fraud and inefficient contracting practices.

In December, you, the Texas Transportation Commission, adopted your 2005 legislative agenda pursuant to the requirements of Transportation Code 201.0545. One of the positions advanced in the agenda concerned the process you, the members of the commission, believe we, the employees of the department, should follow to obtain the services of private consulting firms to assist the department in the preparation of planning and design work.

On February 8, 2005, Commissioners Nichols and Andrade, along with other witnesses, appeared before the House Transportation Committee to discuss the commission's legislative agenda. During the committee meeting, several statements were made by witnesses prompting you to ask us for an explanation. Also during the committee meeting, several House members asked questions which could not be completely answered at the time.

The Chair then directed us, the staff, to prepare a brief summary of the private sector contracting process to clarify some of the statements made during the legislative hearing and to be prepared to answer any questions that you may have concerning this issue.

TxDOT employees have been using the private sector consultant firms to assist the department in the preparation of project planning and design work for more than a quarter of a century.

The slide on the overhead there basically shows that starting in 1980 we paid out about $9 million for consultant services, and through the years this has increased, and our estimate for engineering consultant services -- this is basically just for design consultant services for this year, is $227 million.

MR. WILLIAMSON: Hang on a minute. I think all of us want to absorb this as you go.

MR. NICHOLS: Yes. In the latest LAR request we had for outside professional services, how much per year or how much for the biennium was in that legislative appropriation request?

MR. SAENZ: James is here, but I think we had close to $400 million per year, so close to $800 million. That includes all consultant services. These numbers here that I'm showing you are strictly what we're using to pay for planning and design of highway projects.

MR. NICHOLS: But the total consulting, all the professional services together over the next two years is about $850,000?

MR. SAENZ: $850 million.

MR. NICHOLS: $850 million. Okay.

MR. WILLIAMSON: Thank you.

MR. SAENZ: Moving forward, if I add a couple more things to the previous slide -- and I've physically added our letting dollars which shows how much we let to construction each year, as well as the number of FTEs that the department has had through the years -- we can start to see a few other things.

In 1980 the amount of taxpayer money invested for constructing and maintaining our state highways was about $1.1 billion. We had over 15,000 employees, FTEs that were working for the department.

As you can see, through the years our letting volumes have increased and our estimate for 2005 is about $4.7 billion.

At the beginning of 1996, the departments FTE cap was capped by the appropriations. TxDOT was only able to --

MR. WILLIAMSON: Wait. When was this?

MR. SAENZ: 1996. Beginning in 1996, the department's FTEs were capped by our appropriations.

MR. WILLIAMSON: So at what level?

MR. SAENZ: They were capped at the levels that are shown there, so in '96 and '97 we were stepping down, and if you look after '97 we have been pretty much capped at about 14,700 employees since 1999 till today.

MR. WILLIAMSON: I want to be sure I understand these figures. In 1995 we had -- that's an actual count -- 16,621 employees.

MR. SAENZ: Yes, sir, or full-time equivalents. But for the sake of this, this is employees.

MR. WILLIAMSON: In the '95 session, the appropriations bill reduced the number.

MR. SAENZ: And we were capped at 15,091 for '96 and 14,641 for '97.

MR. HOUGHTON: Is that a self-imposed cap?

MR. SAENZ: No, sir. That was from the legislature; that was in our appropriations bill.

MR. HOUGHTON: I understand, but did we ask for that cap?

MR. SAENZ: I think we were asked to reduce at the time and we said we can come to these numbers, and then since then they've been basically stepped down and those numbers have remained and have not increased.

MR. WILLIAMSON: So from '95 to '96, we effectively lost 1,500 employees?

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: How many of those were engineers or support persons in the engineering function?

MR. SAENZ: I would have to go back and research that.

MR. WILLIAMSON: I tell you what, I suspect that we're going to talk about this again in March, so I hope there's someone on your staff taking notes because that's a question I want answered in March: How many of the 1,500 that were reduced from '95 to '96, as a result of the legislature's direction, were engineers or employees in support of the engineering function? I want to know the answer to that question.

MR. SAENZ: We will get that for you, sir.

MR. JOHNSON: Amadeo, one further question, the numbers that you presented, are those the actual employees, full-time equivalents, or are those the caps that have been in our appropriations bill?

MR. SAENZ: The FTE number that is there are the full-time equivalents that we had. Those were actually full-time equivalents because we did not have a cap. From 1980 to 1995, I'm showing the full-time equivalents that the department had.

MR. JOHNSON: What about from '95 on or whenever the cap was put in effect?

MR. SAENZ: From '95 on I'm showing what is in our cap.

MR. JOHNSON: But in actuality we have never -- never is probably an inappropriate word -- we have seldom reached the maximum FTE count.

MR. SAENZ: Through those years there have been several retirement incentives and as our employees retire, because it takes some time to get employees back onboard with the department, we have never been able to reach our caps that have been put in our appropriations bill. That's correct.

MR. WILLIAMSON: And in '95 to '96 the same year we lost 1,600 employees, our payout to professional engineers doubled, almost doubled.

MR. SAENZ: Yes, sir. Right. 1995-1996 that was around the time we were also implementing a new federal bill, so there was additional funding. Our lettings also increased if you look at '95 and '96, so we had to come up with additional resources to get the work product out, so we were beginning to use consultants to help us put out that work product.

MR. WILLIAMSON: Okay, continue.

MR. SAENZ: This slide here basically indicates our use of consultants, how it has tracked with our letting volumes through the years. As the slide indicates, there's a rough correlation between the increase in letting volumes versus the increase in pay-outs to the design-related services. Both have increased as our transportation program has grown.

MR. WILLIAMSON: Wait a second; let us absorb this.

MR. SAENZ: If you notice, the blue line, of course, is our letting volumes per year. If you notice like 1984 to 1985 there was a big spike. Our commission back then identified and we had a pretty extensive rehabilitation program, so we wound up increasing our lettings to get that work out and improve our highway system. And you can see also between '84, '85 and '86 that we also had the spike; we started using consultants at that time to help us.

Once we got the program going, our lettings began to drop and you can see the same correlation that as our lettings dropped, the use of consultants kind of goes back down.

MR. WILLIAMSON: Well, not exactly, but that's okay. It dropped some.

MR. NICHOLS: But in 1997 the very year after the caps were set on the FTEs, the legislature also passed a law that required us to out-source at least 35 percent, taper up over a period of years to at least 35 percent.

MR. SAENZ: That's correct. In 1997 the legislature passed a law that required us to out-source beginning in the year 2000 -- well, I take that back -- in 1998 we were required to consult a certain amount. In 1998-99 biennium I think it was $207 million, and then beginning in the year 2000 we were --

MR. WILLIAMSON: Wait. They prescribed a dollar amount?

MR. SAENZ: Yes. It was prescribed by rider. The '97 session included a rider that prescribed that we had to contract with outside consultant sources in the amount of $207 million, I believe, in the biennium.

MR. WILLIAMSON: So in '95 we got 16,000-and-something employees, the legislature directs we reduce that to 15,000, and then two years later directs us to spend a hard dollar amount with private engineers.

MR. SAENZ: That's correct. And then beginning in the year 2000, we were supposed to increase our expenditures by 1 percent until we reached 35 percent of what we call our plan-design-manage strategy.

MR. WILLIAMSON: Okay.

MR. SAENZ: One thing to look at is by the year 2000 we were already very heavily into the use of consultants because from 1995 forward, our forces had been basically capped, and because we had new federal bills and a lot of additional money, our letting volumes were increasing. So therefore, we were using consultants more, and we were already using consultants up to about 50 percent.

MR. WILLIAMSON: What you meant to say is we had a lot of additional money for construction.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: But from what you presented here, we didn't have additional money for employees because we were capped at the number of employees we could hire.

MR. SAENZ: Correct, so we used the consultant industry to help us meet that.

MR. WILLIAMSON: So we had additional money for construction and private sector engineer contracts, but we didn't have additional money for employees.

MR. SAENZ: We were capped on the number of employees that we could have.

MR. NICHOLS: So in effect, it was illegal for us to hire more employees, but illegal for us not to out-source more engineering.

MR. WILLIAMSON: We know you're a professional engineer, and we understand this is a sticky business for those of you who have civil engineering certificates, and we don't wish to put you or any civil engineer in the department in an uncomfortable position. So when we ask questions, use good judgment, don't jeopardize your own good standing in your profession.

MR. HOUGHTON: What's the percentage of consulting work now outside?

MR. SAENZ: Right now we are a little bit over 60 -- we're about 62 percent, and it's 62 percent of our plan-design budget. As the prior slide, our estimate is that this year just for design consultant contracts we're going to spend over $227 million.

MR. JOHNSON: Amadeo, I'm curious about, it looks like from my angle, 2001, 2002, 2003, during that period there was a decline in the dollar volume of professional service expenditures.

MR. SAENZ: If you recall, sir, that was the year I came to Austin, so I'm not going to take the blame for it, but that was the time that we were going through some cash flow problems, and we had to reduce our construction work as well as our design work so that we could make sure we stayed within our cash flow requirements.

MR. JOHNSON: I'd forgotten.

MR. WILLIAMSON: I came in right about that time, that was the 2001 session. Was that the two years following -- I don't remember the chairman at the time, but one of the chairmen had been on the department pretty steadily about having any cash in the bank at all, and so finally the department, in response to -- it might have been Mr. Junell on the House side -- in response to the aggressive leadership of the chairman of Finance and chairman of Appropriations, maybe we let more contracts than we could pay for?

MR. SAENZ: Just looking at that '99 to 2000 --

MR. WILLIAMSON: I remember what it was. We had good weather and we knew that we should reserve for bad weather -- for good weather but you couldn't make the argument, and so the chairman forced you into putting more engineers on contract and letting more construction contracts, and all of a sudden it didn't rain for two years.

MR. SAENZ: And the contractors did their work and did it very fast, and resulted in a cash flow problem.

MR. WILLIAMSON: That's what it was. Okay, continue, Amadeo.

MR. SAENZ: This slide here, what I've tried to do here is basically show that during the years how the projects that we've let to construction, how much work was done by consultants and how much work was done by in-house staff. The slide indicates that the projects done by out-sourcing versus in-house staff since 1980. The blue line is the value of the total letting amount, the green line represents the value of projects let to contract that were designed in-house, and the red line represents the value of contract work that was performed by design consultants. If you add the green and the red, it should equal to the blue.

Given the current staffing levels -- I looked at the recent past history -- from 1997 forward, the department has been able to produce approximately the average of about $2 billion worth of projects annually, and has utilized the private consultant industry to take care of the remainder of the design so we can meet the letting volumes that we had identified that we wanted to go to contract with.

So it's safe to say that the employees of the department and the taxpayers of the state of Texas are dependent on private sector consultants to get our work accomplished.

MR. WILLIAMSON: Or another way of saying it is because of the cap on the FTEs, if for some reason we were to wave our wand -- which we wouldn't -- but just say we're not going to do any more private sector consulting, the current construction program of $4.7 billion would have to be reduced by 50 percent because that's all we could generate since the legislature caps us on the number of employees we have.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: So a less than kind way of putting it is in order to build roads, we have to contract, no matter what.

MR. SAENZ: That's correct, based on the number of people we have right now, yes.

MR. WILLIAMSON: You may be going to address this in a moment, I don't know, but I think the obvious question that jumps in my head is is it cheaper to contract, is it cheaper to do it in-house. Do we know? Is there a diversion of opinion? Are there studies in that regard?

MR. SAENZ: There have been some studies, and of course different people did different studies and the studies do not really agree.

What we've looked at is because of the demand on our transportation system and the need to be able to let these projects, we have tried to make sure that we do as much as we can with our own resources as efficient as we can, and then anything that we need above and beyond that, we use the additional tools that are available to us which is to go to the consultant industry.

But there have been some studies done in the past and the studies basically did not really agree as to whether consultant engineering was cheaper whether it was done in-house or whether it was done by consultants.

MR. HOUGHTON: Depends on who's doing the study. Right?

MR. SAENZ: That's correct.

MR. WILLIAMSON: My second request for next -- for March, I'd like a summary of the studies that we're aware of.

MR. SAENZ: We will get that to you.

MR. WILLIAMSON: I don't care if it's for our employees or for the private world or neutral, it doesn't matter to me, I just want the information.

MR. SAENZ: We will get that to you.

MR. WILLIAMSON: Let's contact the -- who's the trade association that speaks primarily for the engineers?

MR. SAENZ: The Consultant Engineering Council.

MR. WILLIAMSON: The CEC?

MR. SAENZ: CEC, yes, sir.

MR. WILLIAMSON: Let's contact them and see if they have studies that they would provide the public. I guess architecture and surveying. All of those are represented by some trade association.

MR. SAENZ: We will try to contact trade associations and the industry to try to get as many studies as we can, as well as studies that we have done in the past.

MR. WILLIAMSON: Let's compile those and maybe even summarize them, Mark, because we don't want to sit up here on the podium and read everyone of them, but let's try to summarize as to what their conclusions were and what the basis for the research was.

Okay, proceed, Amadeo.

MR. SAENZ: The employees of the department have developed a well understood process for selecting private sector consultants.

MR. WILLIAMSON: Wait. Go back to that slide, I have one more question. So am I to infer the last three years it would appear that the private sector is providing somewhere between 50 and 60 percent of our work?

MR. SAENZ: They're providing about 60 percent, yes, that's true.

MR. WILLIAMSON: Okay, thank you.

MR. SAENZ: I'd like to go ahead and review the process by which TxDOT currently undertakes the selection of an engineering firm. We have been working throughout the years with industry to develop and maintain a list of pre-certified firms. Now, these are firms that can perform professional services for TxDOT in the various work categories that have been identified based on their qualifications.

The process begins with the department issuing a notice of intent, or what we call an NOI -- and I probably will bore you with a lot of acronyms before I'm done -- to contract with a professional service provider. The NOI gives a project description. It provides the general scope of the requested services and the evaluation criteria that will be used to evaluate these requests.

MR. WILLIAMSON: You don't pre-certify a firm, do you, you pre-certify the individual who is a part of that firm?

MR. SAENZ: We pre-certify individuals and we also pre-certify firms. The firms are pre-certified by the individual; this individual worked for this firm so this firm is pre-certified.

MR. NICHOLS: How many firms do we have that are pre-certified?

MR. SAENZ: Right now we have over 900 firms that are pre-certified in our database.

MR. WILLIAMSON: And are some of those firms one-woman firms?

MR. SAENZ: The person that is certified and we have certified that person and that's the only person we have certified for that firm, so it could conceivably be a one-woman firm.

MR. NICHOLS: But a firm could also be a large firm.

MR. SAENZ: Yes, sir, because we could have seven, eight, ten, twelve, fifteen, twenty people that are certified and they all work for the same firm.

MR. NICHOLS: Was it like 930, give or take, right in there? So when somebody has gone to the trouble to come to us, go through the process to get pre-certified, that's something that has to be updated, I think, every year or so or something like that, then that means they have expressed a desire to do business with the department.

MR. SAENZ: That's correct.

THE WITNESS: Be it a big firm, little firm, we want to do business with TxDOT.

MS. ANDRADE: Excuse me. I have a question, Amadeo. Since you're going to get us information for the March meeting, out of the 930 firms that have been pre-certified, can you tell us how many of them are small business or women-owned?

MR. SAENZ: Yes, ma'am, we can do that.

MR. WILLIAMSON: I'd even be interested to know, if it's possible, do any of them qualify as minority-owned.

MR. SAENZ: We can get that; we have that in the database.

MR. WILLIAMSON: Since we have to run a DBE/HUB program, surely we know what that information is.

MR. SAENZ: Yes, sir. And we also track that in our firm because all our consultant contracts have a DBE requirement. Usually about 30 percent is what we require.

MR. WILLIAMSON: So basically at all times you're aware of the individuals in the firms that are certified to do certain kinds of work for us, you decide or someone decides -- you'll tell us about that in a moment, I suppose -- that we want to hire somebody, contract with somebody, so you issue the notice of intent. Does that go in the newspaper? Does that go in a letter?

MR. SAENZ: It goes in a local paper; it is also on our internet site. It goes on Texas Marketplace, and it also goes on the Texas Register.

MR. WILLIAMSON: So the world who would be interested in this work knows about it.

MR. SAENZ: That's correct.

MR. WILLIAMSON: Who issues the notice of intent? Do we do that here?

MR. SAENZ: The notice of intent is issued out of our office here in Austin, but the request is initiated either at a district or a division. It is initiated based on a request that they would like to procure the service of an engineering firm to do certain type of work. It is approved by either Mr. Marek, myself or Mr. Behrens, depending on the value of the cost of the engineering service. And once that is done, then the district develops the notice of intent.

And the notice of intent, as I mentioned, includes: the general description of the work that's going to be done, the services that we want, the general scope. It includes the evaluation criteria that will be used to evaluate these consultant firms. Evaluation criteria includes: project understanding, the approach of the project, the manager's experience, the team's experience, their experience with similar type work.

MR. WILLIAMSON: What team?

MR. SAENZ: Most of the time when a consultant replies to a notice of intent, they put together a team that is going to perform this work for us.

One of the requirements, as I mentioned earlier, would be that it requires a 30 percent DBE goal. If a consultant firm is not a DBE, they will bring in firms as part of their team to satisfy the DBE goal.

Most of the time a lot of firms, whether they're big or small, will team up together to, what I would say, capitalize on the expertise of the different firms to put together the best proposal.

MR. NICHOLS: So you can't get there by contracting directly with the DBE or the HUB. So instead of getting there directly, by contracting directly with these minority- or women-owned businesses, are we getting there by issuing contracts to them, or are we issuing contracts to firms that aren't qualified but who subcontract out a portion of their work to them to meet the quota.

MR. SAENZ: We're really doing it both ways. There are some DBE firms that team up and they come in as the prime consultant.

MR. NICHOLS: So if we've got 20 percent -- what is the goal, 20 percent?

MR. SAENZ: Thirty percent. Thirty percent is what we put in our proposals.

MR. NICHOLS: So if we have a 30 percent goal, you're saying that in the contracts we issue dollar-wise maybe 30 percent of them go directly to minority- and women-owned groups?

MR. SAENZ: Yes, sir.

MR. NICHOLS: Directly.

MR. SAENZ: We pay through the prime, and then the prime --

MR. NICHOLS: Through the prime.

MR. SAENZ: Through the prime, yes, sir.

MR. NICHOLS: So it's not a contract that goes to the minority firm, it's a contract that goes to the prime, then they subcontract out.

MR. SAENZ: That's correct.

MR. WILLIAMSON: Like our construction contracts, we require them to keep track of that so we can certify that we're meeting our goals under the Appropriations Act and the appropriate federal law.

MR. SAENZ: That's correct.

MS. ANDRADE: Amadeo, we do not have primes that are minorities?

MR. SAENZ: Well, we have contracts with primes because DBEs and minorities can submit as primes and we have some -- I can't tell you exactly how many, but we have some that have --

MR. WILLIAMSON: That would be a third subject area.

MR. HOUGHTON: That would be a good number to know.

MS. ANDRADE: That would be a good number. Would you furnish that?

MR. WILLIAMSON: Let's add that as a third subject area question for next month, Mark.

MR. NICHOLS: And I would suggest you do it in dollar amounts as prime contracts to minorities as well as the physical number of contracts. It's not just how many contracts, dollar-wise and how many contracts.

MR. WILLIAMSON: How many separate contracts would you think that we've executed with the private sector in the last six years, say: 50, 100, 97?

MR. SAENZ: In the last six years we've probably executed about 1,500.

MR. WILLIAMSON: Well, if the number is 1,500, then here's what we want for March: we want to know, to the extent we can identify without being intrusive in people's lives, how many of those contracts were minority- or women-owned firms and the dollar volume of those contracts, minority-owned or female-owned.

MR. NICHOLS: And that's for the prime contracts.

MR. WILLIAMSON: Right, for the prime contractors.

MR. HOUGHTON: Do we have a matrix of the 900 firms? Do we know what the makeup is, the demographics of the 900 firms? I mean, that may be a lot of work, but do we know what the demographics of those 900 firms are?

MR. WILLIAMSON: Little Tommy Bohuslav.

MR. SAENZ: We probably know if they're minority- or women-owned; I don't think we have it by physical location.

MR. HOUGHTON: Well, when I talk about demographics, there's 900 firms that are certified with us, what DBEs, women-owned, how many of those firms are entrepreneurial, small.

MR. SAENZ: We will research the database and be able to get it.

I want to make sure I go back and clarify one thing, and that is our state DBE goal for consultant contracts is 20 percent. Normally in our requests for proposals, we go with 30 percent, and most consultants that submit will basically use 30 percent in most of their contracts. The 20 percent is a state requirement, state goal.

MR. NICHOLS: For DBEs and HUBs?

MR. SAENZ: Yes, sir, that's a state goal, but most of the time our NOIs will require a 30 percent and most, if not all our consultants bring in the 30 percent.

MR. HOUGHTON: What happens if you move it to 50 percent?

MR. WILLIAMSON: I guess the reason we use 30 is because --

MR. HOUGHTON: Arbitrary number. Where did that come from?

MR. WILLIAMSON: Well, my guess is we want to be sure that the members of the legislature and the members of congress that are interested in that goal.

MR. SAENZ: Thomas works with the BOP office and he can tell us how the goals are set.

MR. BOHUSLAV: My name is Thomas Bohuslav and I'm director of the Construction Division which is where we have the BOP office, Business Opportunity Program.

In regard to our goal, it's based on the nearest study that was performed a while back by the GSD at the time, it's now TBPC, and the statewide goals were based on those studies, and it was adopted by GSD, and of course, the other entities are required to use it or show why they can establish some other goal. So it is based on a state study.

Now, we have two programs in the department, we have the DBE program and the HUB program, and if we use federal funds, we use the DBE program, if we have state funds, it's the HUB program, but we still use that same goal that was established here for the state.

In regard to the ethnicity and the gender, only if a firm is registered as a DBE or HUB will we know what category they may be in in that regard. So there may be a firm that is a minority firm that is not registered as a DBE or HUB and we wouldn't know that would be the case. So we can answer the question if they're registered as a DBE or HUB, but if they're not registered as such, then we would not know.

MR. HOUGHTON: That becomes problematic.

MR. ANDRADE: Right now you're saying that the goal is 30 percent and you're saying that we do meet it. Okay.

MR. BEHRENS: Amadeo, didn't we have our commitment on engineering last year was like 31.9 percent? That was what we used as far as DBEs and HUBs.

MR. SAENZ: Right.

MR. WILLIAMSON: So maybe a different way of saying it is our hard goal is 20 percent and our stretch goal is 31.9, and every two years we amend our stretch goal to stretch a little bit further, and hopefully we're raising that 20 percent up as we do.

Continue.

MR. SAENZ: As I was talking about, the NOI gives the project description, the general scope of the requested service, and the evaluation criteria that will be used.

The evaluation criteria includes the project understanding and approach, the project manager's experience with similar projects, similar project experience of the different task leaders that the firms will identify to do those major work items, and other criteria that may be specific to the project.

For example, if it's a planning project that involves a lot of public information or public involvement, we may require that this firm have a strong public involvement member on their team. So those would be specific at the district or the division, the office that is wanting to solicit those firms to do work would put in there. But all of that is spelled out in our notice of intent.

MR. WILLIAMSON: And one more time, generally speaking, the folks who choose to reach out to contract are normally district engineers or division directors here in Austin, depending what the work product to be designed is.

MR. SAENZ: Each district is headed by a district engineer, we have division directors, they are the final say-so that they need a consultant. They make the request, it's approved by administration.

MR. WILLIAMSON: That's not the question I'm asking. I need to have this clear in my mind. Maribel can decide she needs a private sector engineer in Fort Worth for a project in the Fort Worth District.

MR. SAENZ: Yes, that's correct.

MR. WILLIAMSON: Or the Bridge Division in Austin can decide they need to secure someone for division work that may or may not be of benefit to Maribel but that's their decision.

MR. SAENZ: That's correct.

MR. WILLIAMSON: And we know both of them flow up to a higher power for approval based on dollar amounts, but the point I want to get straight in my head is either David Casteel in San Antonio or a division director in Austin can decide to reach out to the private sector.

MR. SAENZ: That's correct.

One more thing, only pre-certified firms can respond to the notice of intent. Only the firms that are within our database are the firms that can respond.

The firm then responds through what's called a letter of interest, or an LOI, and notifies the department that they are interested in doing this work.

The next step is the department's consultant selection team. The district engineer in this case or the division director would put in place a consultant selection team. This team is made up of district people, it's made up of division personnel. They determine a short list of providers based on the qualifications for the type of project design work that was indicated in the NOI.

Once a short list is determined, then those providers will then be required to either submit a proposal or be required to come forward to do an interview as the process continues.

MR. WILLIAMSON: So if Bill Hale in Dallas wanted a study, his committee would be made up of employees of the district.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: If the Bridge Division director wanted a study of bridges, those employees would be made up of division employees in Austin.

MR. SAENZ: That's correct.

The selection then is based on the results of the interview or the proposal, whichever process was used. The majority of our time, interviews is kind of the standard that the districts and divisions are using.

MR. WILLIAMSON: So you've got this short list of say three firms.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: And they all three are notified that the way you're going to be ranked is we're going to interview you and rank you based on your responses. That's an oral interview?

MR. SAENZ: That's an oral interview.

MR. WILLIAMSON: It's not a written interview?

MR. SAENZ: Some districts have some written questions. We leave the interview process to the district. There is some set criteria that they follow, and I'll review that in a few seconds. But some districts do require a written response to their questions so that they can document; other districts just conduct the interviews and then based on the responses, they make their selection.

MR. WILLIAMSON: And so if you decided to select or rank based on proposal as opposed to interview, would you say submit your proposal to us for review on how you would address the scope of work we've given you?

MR. SAENZ: Yes.

MR. WILLIAMSON: As opposed to the interview where I would walk through the door and you would ask me, among other questions, what would my proposal be or not.

MR. SAENZ: The evaluation criteria at the stage of the interview is basically the understanding of the scope of services --

MR. WILLIAMSON: You hired the wrong engineering firm to put your document together for you.

MR. SAENZ: I tried to type it myself.

MR. WILLIAMSON: That's their point.

(General laughter.)

MR. SAENZ:  -- understanding of the scope of services so there would maybe be some questions about their understanding of the scope of services; the experience of the project manager and they would probably there make a presentation on similar experience that this project manager has had based on this scope that they're trying to compete for; the experience of the team specific to the scope; their ability to meet the proposed contract schedule; and of course, response to other interview questions that the district may have put certain specific requirements to that particular project.

Also we look at past performance scores of references from other TxDOT work or other work that the entity has done. For example, we look at some specific questions with respect to type of work that we'll maybe be asking them to design. For example, if we're trying to design an interchange, multilevel interchange, we will ask questions about their experience or how they would do a project like the design of a multilevel interchange.

All that goes into the interview process, and based on the responses of the teams, the consultant selection team then will score them and rank them one, two, three, four, five, depending on the number.

MR. NICHOLS: Can I ask a couple of questions?

MR. WILLIAMSON: Sure.

MR. NICHOLS: In that list, as I understand it, they build kind of a matrix of these different kind of things that when they're interviewing they're evaluating and they're doing a ranking in each one, and then they have a weighting of each of those categories and then they add all that up to a score.

MR. SAENZ: That's correct.

MR. NICHOLS: And then whoever ends up with the highest score is the firm selected, and there's usually several people on the team so each one may have their own thing and then they combine them. But that's that particular contract team in a particular district.

But that same project and same firms -- let's say you had three firms short-listed -- with the very identical project with the same three firms, if a different contract team in a different district was making that evaluation for theirs, they may change the weighting of how much they would weight each of those factors.

MR. SAENZ: That's correct.

MR. NICHOLS: And so when you add them all up, that team might end up selecting a totally different firm than the other team would for the same project.

MR. SAENZ: Right. Every project is basically --

MR. NICHOLS: So it's not necessarily which one was the best, it was the subjective weighting of the particular team and their interpretation of the interview.

MR. SAENZ: That's correct.

MR. NICHOLS: Okay. There are some things that you can measure, like years of experience, certain certifications, things like that, so that's things you really can add up. And you have some things that are of a subjective nature, our person's opinion of how they felt the firm may have understood it, or the contract team or something.

But let me kind of back up one step. Just before we short-list, after we've had our notice of interest with 900 firms, particularly a lot of small firms -- we might have a small off-system bridge or several bridges that may need to be built -- we might have -- I'm not saying we do, I'm just speculating because I really don't know the number -- but let's say we advertise that and it's in a particular area of the state and we might have 20 or 25 firms that have expressed an interest in that, who are pre-certified, all of which may have very good experience in that type of work, all of which could probably do a very good job and would like to do that work.

When we short list, whoever scores the highest on the qualifications and certifications and stuff -- I call it the number of plaques on the wall -- if the small firm that could do a really good job doesn't have as many plaques as the big firm, then they don't even get on the short list so they get a chance to interview and show their stuff.

MR. SAENZ: That sometimes is correct. Now, sometimes on some of our contracts when we know that it is a small project or a project that may require some local knowledge of the area -- say for example in drainage -- you can put that criteria, but that criteria would have been spelled out in our notice of intent that we were going to be evaluating on local knowledge for this project.

And a lot of times what teams do is they go and they team up with a consultant from the area that has the local knowledge so that they can meet that component.

MR. HOUGHTON: And do they team up because they have to meet the DBE, the 30 percent, instead of teaming up because there's local knowledge, or a combination of both?

MR. SAENZ: I would say it's probably a combination of both.

MR. HOUGHTON: So we've got a lot of subjectivity here in the scoring.

MR. SAENZ: That's correct.

MR. NICHOLS: Would it be reasonable to assume that often on the short-listing, particularly on small jobs like off-system bridges or things like that, that there might be some very good firms that are well qualified but they never even get a chance because they just don't score as much as a big firm?

MR. SAENZ: I would probably venture to say yes in as many contracts as we do.

MR. NICHOLS: Okay, thanks.

MR. WILLIAMSON: Well, that triggers a question in my mind then. In all of this pre-certification, notice of intent, short list, interview, subjectivity give and take, do you ever talk with these firms about what they're going to charge the taxpayer for their product?

MR. SAENZ: No, sir.

MR. WILLIAMSON: Why not?

MR. SAENZ: Under present law we cannot discuss a fee amount until we select a consultant, and then at that point we discuss the -- negotiate a contract and discuss the fee amount for them doing that work.

MR. WILLIAMSON: So at this moment in time in this process you're describing to us, you are forbidden by law to discuss what it's going to cost the taxpayer for this product.

MR. SAENZ: That's correct.

MR. WILLIAMSON: Let me ask you something. Do civil engineers who have certificate numbers that work for the state, do they qualify for their certificate any differently than civil engineers that work for the private sector?

MR. SAENZ: No, sir. Now you've got to pass two examinations; at the time that I was registered, they were optional and then we submitted our experience. We had to work for a number of years, four years, and then we submit our experience and that experience is reported and evaluated, and then you're licensed.

MR. WILLIAMSON: So whether a civil engineer, an employee of our department, designs a bridge, or a civil engineer, the employee of a private sector firm in my hometown Fort Worth, designs a bridge, they both live with the same professional standards and have the same professional liabilities.

MR. SAENZ: That's correct.

MR. WILLIAMSON: Well, then are we permitted to talk to our own employees about what their salary is before we let them design a bridge?

MR. SAENZ: We control our own employees' salaries.

MR. WILLIAMSON: So if we have an employee that we pay $60,000 a year to design bridges, we know what it's going to cost us, we know what the taxpayer is going to pay for that bridge. But we're not allowed to know that when that very same employee walks out of our door and goes to work for -- and we're going to try to avoid naming firms in this colloquy because we don't want anybody to think we're picking on them; we'll pick on some of our friends in the free press -- when this guy walks out the door and goes to work for Hartsell Design Firm, we are no longer permitted to ask what it's going to cost for his service.

MR. SAENZ: Not until after I have gone through an evaluation and it's been determined that he is selected as the top-ranked firm. Then at that point I can start negotiating a fee.

MR. WILLIAMSON: Interesting.

MR. JOHNSON: Amadeo, a point of curiosity. You referred to top-ranked firm. Do the finalists know the order in which they were ranked?

MR. SAENZ: Once the consultant selection team goes through and evaluates and ranks the firms, and of course then they go back to the district engineer who approves that, then that is forwarded up to our Austin office for final disposition. Then they go back and the firms are then notified of how they were ranked, and we start negotiating with the top-ranked firm.

MR. HOUGHTON: We're getting ready to issue a pass-through toll, and you and I have had discussion on pass-through tolls that the private sector, depending upon if they want to, they can use their credit facilities to build assets for transportation. They can also procure engineering services, can they not?

MR. SAENZ: Yes.

MR. HOUGHTON: And they're going to build a state highway for us, pass-through toll, they're going to use their debt structure, their debt facility, and they can negotiate the engineering contract.

MR. SAENZ: There are several things here. This is a public entity --

MR. HOUGHTON: It's a private entity wants to build.

MR. SAENZ:  -- it's a private entity that is using their own money. The only caveat is because we're going to have to reimburse them, and we're probably going to reimburse them with state and federal dollars, they will have to follow the process on the selection.

MR. HOUGHTON: On the procurement?

MR. SAENZ: On the procurement.

MR. HOUGHTON: The engineering procurement?

MR. SAENZ: Right. Now, if it is a private entity that is doing this, they want to build a facility for themselves, then they do not have to follow the process, unless it's a public project.

MR. WILLIAMSON: A public project is defined by what: publicly owned or available to the public?

MR. SAENZ: I think it's available to the public.

MR. WILLIAMSON: So you're saying when Jerry Jones builds the new Cowboys stadium in Arlington, Texas, he's going to have to follow this same process in securing engineers?

MR. JOHNSON: I would say whether it's funded by public money or not.

MR. BOHUSLAV: Thomas Bohuslav, director of the Construction Division.

The rules, the regulations tied to a public project -- and I don't want to step outside my bounds here, but I know if it's tied to a public project, I can't say whether or not the Jerry Jones stadium is going to be a public project or not.

MR. WILLIAMSON: I see that we have one of the best transportation lawyers in the state present with us. Perhaps Mr. Jackson can help us understand this.

MR. HOUGHTON: Well, I'll go back. We're working with Cintra/Zachry, we're not negotiating anything regarding their engineering contracts.

MR. WILLIAMSON: My question, Bob, if you may permit me, let's assume Cowboy stadium, Arlington, Texas and the ownership of that stadium will be the Dallas Cowboys, Inc. Obviously it's going to be open to the public, people are going to buy tickets and go in and attend the events -- and maybe you don't know the answer, and if you don't, we'll talk about it in March -- but do you happen to know the answer? Will Mr. Jones have to follow the same process Amadeo is outlining in building the Cowboy stadium and the securing of engineering services?

MR. JACKSON: No, sir.

MR. WILLIAMSON: You're so good. You knew that question right off the bat. Thank you.

MR. JOHNSON: I think that what follows is why.

MR. JACKSON: The Professional Services and Procurement Act applies to governmental entities. It's not focused on the nature of the project, it's focused on who's procuring the engineer.

MR. NICHOLS: When you say governmental entity, who's procuring. In other words, when we did State Highway 130, we did a comprehensive development agreement in which we got groups of proposers who teamed contractors with engineering firms into three different consortiums to make that proposal. That's a state project. But the contracting companies that employed the engineering firms, or they teamed up, whatever, they're not required on that same state highway to follow that process.

MR. JACKSON: Right. And also our CDA statute specifically overrides the Professional Services and Procurement Act.

MR. NICHOLS: So the contractor who hires an engineer on our state highway, if we use that process, does not have to follow that law.

MR. JACKSON: Correct.

MR. NICHOLS: But we do.

MR. HOUGHTON: Which we're getting ready to do today on another state highway in north Texas. Correct?

MR. JACKSON: Correct.

MR. WILLIAMSON: Thank you, Bob.

Amadeo, we kind of zipped through something. I didn't really mean to get to talking about the money so fast, but I want to go back to this proposal interview business.

You said most of our DEs and division directors use the interview process to select and rank their firms.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Specifically in the last six years, how many times have we used the proposal process that you know of?

MR. SAENZ: Mr. Marek says it's less than 5 percent of the time; I would venture to say it's less than that.

MR. WILLIAMSON: Why don't we use the proposal process as opposed to the interview process? Let me rephrase that. Did we use the proposal process ever?

MR. SAENZ: Our process has evolved through the years and for many years we used -- when we first got started, that was the mechanism, we would get full proposals from the consultant industry. Before we set up the process that we have today of the notice of intent and the letter of interest, we used to get full proposals.

MR. WILLIAMSON: That was back like in 1980?

MR. SAENZ: That was back in about late '80s, early '90s.

MR. WILLIAMSON: So we originally got full proposals or robust proposals from those responding to the notice of intent.

MR. SAENZ: Prior to that, basically we would put out a request for proposals and all the firms would submit proposals, and those proposals varied from a half-inch to three-quarters of an inch to two or three inches.

MR. WILLIAMSON: So were the proposals focused on qualifications, or as my colleague Nichols says, plaques on the wall, or were they focused on what the bridge is going to look like?

MR. SAENZ: They would focus on the team, the qualifications of the team, their interpretation of their past experience. They would also identify, if they knew what the project was they were bidding, they would put a summary of what they thought the project was going to look like.

MR. WILLIAMSON: So in the case of the bridge, they might say we need a pontoon bridge here, and one firm might say we need a concrete bridge here, and one firm might say we need a steel girder bridge here?

MR. SAENZ: I don't think that it would go into the detail. They would basically concentrate on our past experience in the designing of this type of facility and not necessarily go into the detail of what exactly they were going to design. But each one of the proposals was different.

MR. WILLIAMSON: So when did we start transitioning away from proposals and towards interviewing?

MR. SAENZ: I guess in the early '90s when we started working together, just like we have a joint TxDOT/Association of General Contractors committee that we meet quarterly, we started putting together this same type of a group with the Consultant Engineering Council. And at that time we started looking for ways to improve our consultant selection process and tried to make it more efficient because in the early times there was no control on the size of the proposals.

We would get proposals that were all sizes; we would get 40 or 50 or 60 teams that would propose for an individual project, and it was taking too long to basically go from the request for proposals to the selection of the team. So we started working together and put in place a process that has evolved to what we have today for improving or shortening the selection time.

MR. NICHOLS: Let me ask a question at that point. You referred to the committee. I know that I think quarterly TxDOT staff meets with like contracting association members and they try to resolve issues or ways to improve things, and obviously we have a committee with TxDOT and the outside consulting firms to help work processes through more efficient or whatever.

The committee -- I don't want people's names or firms' names -- but how do we go about selecting people to represent the engineering community to be on that committee that helped establish the process?

MR. SAENZ: We were working early on with the Consultant Engineering Council, the CEC, and they would name different members from their side to the committee, TxDOT would put in place some of our staff to the committee, and that subgroup would then work together and come up with the process.

MR. NICHOLS: So we don't go to the Texas Society of Professional Engineers and ask them to recommend somebody for the committee, and we don't go out necessarily to the 930 firms and try to pick what we think is a representative sample that would represent all that group, large, small, medium, we go to the CEC and they recommend who is on that committee?

MR. SAENZ: Yes, sir. We have a very similar group like we do with our contractors.

MR. NICHOLS: I'm just trying to understand who decides who's representing the engineers, and you're saying it's the CEC that makes a recommendation of who is going to be on that committee?

MR. SAENZ: Right.

MR. NICHOLS: To help establish the process. So we don't go out and pick them and the Texas Society of Professional Engineers does not go out, the CEC picks them.

MR. SAENZ: Yes, sir.

MR. HOUGHTON: We're not precluded by any statute that we have to do it that way through the CEC, are we?

MR. SAENZ: No, sir. It was something that we used the model that through the years with the Association of General Contractors worked out pretty well to identify big issues and stuff, and as we were getting into the use of the consultants in our business, we wanted to try to start to foster and improve the processes that we have in place to become more efficient.

And that was basically the whole gist at the beginning, that you're able to become more efficient and try to get that part of the operation to become -- work more similar, more smoothly as our contracting industry works with us.

MR. WILLIAMSON: And this isn't meant as a criticism towards staff, Amadeo, but I think I have to observe it. What it sounds to me like what you said in a very professional way was we and the private world needed to find a way to cut down the time it takes to prepare and look at these proposals. We were spending too much time. They were spending too much time preparing them, we were spending too much time looking at them.

The legislature is starting to cap, lock down on us on the number of employees we've got, we've got a big maintenance program, our highway system is getting older every year, we've got to spend more of our money on hiring maintenance and oversight employees, less of our money on engineers and engineer technicians because we have a hard number of people we can hire anyway.

The consulting engineering community was spending too much time preparing 50 big proposals and we were having to review them all, so all of us looked for a way to do this faster, and this is what we came to.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: And again, at this point, whether it's proposal or interview, we're still prohibited by law from asking the question what's this going to cost.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Can we ask the question what is the product that you're going to design going to cost?

MR. SAENZ: If we have enough details in the scope of service, we can ask the consultant to put together their best proposal of what they think the facility will look like and their best estimate of what it will cost. We can ask that.

MR. WILLIAMSON: So if we were to direct you to go back to the proposal process, and if we were to direct you to include a scope of work and a basic description of the final product and a cost estimate, that would not be illegal.

MR. SAENZ: No, sir.

MR. WILLIAMSON: It's just illegal to ask Mike how much he's going to charge us when he's working for Hartsell Engineering. It's not illegal to ask him when he's a public employee working for TxDOT, but when he's working for Tony, we can't ask him what he's going to charge us.

MR. SAENZ: Yes.

MR. WILLIAMSON: But you're going to tell us here in a moment when we can ask it?

MR. SAENZ: Yes, sir.

MR. NICHOLS: I think you said price, you were referring to the estimated construction price.

MR. SAENZ: Estimated construction.

MR. WILLIAMSON: Right, not the design price because I've had Amadeo say it eleven times now, and I'll ask you four more.

MR. JOHNSON: Amadeo, is our statutory inability to discuss price at this point of the process with the engineering design service, is that consistent with all the other state agencies? Do they basically go through the same methodology and have the same requirements that TxDOT has?

MR. SAENZ: Yes. When they're hiring professional engineering services, they have to follow the same process.

MR. WILLIAMSON: But Jerry Jones doesn't have to follow it.

MR. SAENZ: No, if he's doing it himself.

MR. WILLIAMSON: Have we got somebody from Southwestern Bell here? Could I borrow you a minute? Would you mind?

MR. NICHOLS: Uh-oh.

(General laughter.)

MR. WILLIAMSON: I'm just kind of curious. Now, we've been arguing back and forth, you and me, about when we're going to make you hire an engineer and certify when you put something in people's right of way, and hopefully later on in this meeting we're going to get that resolved.

MR. GARZA: Yes, sir.

MR. WILLIAMSON: But I'm curious. When you go to lay that line in the people's right of way, do you follow the same procedure in securing a consulting engineer to design that line as we're following in building the highway you're going to lay in?

MR. GARZA: I'm Bob Garza with SBC External Affairs.

Would you ask me the question again? I'm sorry.

MR. WILLIAMSON: When you're getting ready to lay that line in the right of way owned by the people, do you go through the same process of securing an engineer to design that telephone line as the people went through in designing the highway in the first place? Or do you just go select the engineer you wish to use, or do you know?

MR. GARZA: At this point, the engineers we use are internal employees and we don't go through a selection process as they are throughout the state.

MR. WILLIAMSON: If you were going to use an outside engineer, are you required by law to follow this process?

MR. GARZA: You know, I'm not sure. I don't know that I can answer that.

MR. WILLIAMSON: We have someone back there who thinks he knows. Could you come up here and tell us? We're curious. We're uninformed commissioners and we're trying to inform ourselves about the facts.

MS. LEU: I'm Lori Leu, counsel for SBC on right of way issues.

We are not under any obligation to follow that consultant process or any other. We assign our contractors based on their proposals and what works best.

MR. WILLIAMSON: Are you allowed to ask them about what they're going to charge?

MS. LEU: Yes, we are. That's an important part.

MR. WILLIAMSON: Are you still rate-regulated in Texas on what you can charge me for your services?

MS. LEU: Yes.

MR. WILLIAMSON: Okay, that's interesting. Thank you. Sorry to catch you off guard. You performed well.

So let me see if I understand this, Amadeo -- this will be time number twelve. We can't ask the guy or the gal that's going to design the bridge that's going to be built on the right of way owned by the people what he or she is going to charge us for designing the bridge, but Southwestern Bell who is going to lay a fiber optic line in conjunction with that bridge gets to pick whatever engineer they want to pick that's in their judgment best for their private operation and they're not subject to the same provisions; they get to find out what their engineer is going to charge them.

MR. SAENZ: That is my understanding.

MR. WILLIAMSON: And in fact, it could be the same -- let's pick on Ben a while -- it could be the same Ben Weir Engineering Firm employee or team or designs the bridge for which we can't ask the question what's this going to cost, the people, who also designs the fiber optic chase and security wire that goes through the bridge in laying the telephone line.

MR. SAENZ: That's correct.

MR. WILLIAMSON: Probably the same answer would hold true for TXU if it were a 980-volt electric line laid through our bridge at the same time.

MR. SAENZ: Yes.

MR. WILLIAMSON: I wonder how the private sector world -- you know what we need to do? We need to change what you wanted to do, we need to bring the private sector world under the same procurement provisions as the State of Texas is under. Don't you think?

(General laughter.)

MR. WILLIAMSON: Continue.

MR. SAENZ: After the selection of the provider is complete, and only after that is complete, the department begins to negotiate with the top-ranked provider. If we cannot negotiate a fair and proper fee with the top-ranked provider, then we can terminate negotiations and we let them know we are terminating negotiations, and then we can go to the second-ranked provider.

MR. HOUGHTON: How many times has that happened?

MR. SAENZ: Very few times.

MR. HOUGHTON: Why? You were successful in negotiations.

MR. SAENZ: I guess we've been successful in negotiations.

If we cannot do it with the second-ranked provider, then we can terminate negotiations with the second and go to the third.

MR. WILLIAMSON: And I don't want to gloss that over, and again, I don't want you to take offense, Amadeo, but seriously, you pick three people in this contract and you start negotiating with your first pick, on a percentage basis, how often do you pass and go to the second one?

MR. SAENZ: I would think probably less than 1 percent based on the data that we've looked at.

MR. WILLIAMSON: When you get ready to negotiate with that person, do you have a minimum amount of money you're permitted to tell that person you can pay for that scope of work you've agreed on? In other words, do you sit down and say, Okay, Ben, the Ben Weir design firm has been picked as the best for this job, and I'm telling you right off the bat all I can pay is $4 million, so how much do you propose to charge me per hour for an engineer, an engineering tech, a cad operator, a secretary, and my overhead?

MR. SAENZ: What our people normally do -- and I'm going to work around this, I'm going to try to respond -- what our people normally do, they've identified what scope of work they want to accomplish on this project, and they have what they think is a fair fee or a fair and proper fee for this scope of work.

MR. WILLIAMSON: Our people.

MR. SAENZ: Our people. They meet with the consultant, top-ranked consultant, and they ask them: Okay, here's our scope that we think it is, bring me your fee structure. And they also -- because we want to make sure that we capture all innovations -- ask them if you think there's something else, tell us what your fees are going to be and tell us what your scope is based on.

MR. WILLIAMSON: Do they also tell you how many hours it's going to take?

MR. SAENZ: Yes, sir. They will tell us how many hours it's going to take for particular work items. For example, they will say that if this is a curb and gutter job that requires a storm sewer, they'll say the storm sewer design will require, we think, 150 hours for a design engineer and 50 hours for a design technician, and such and so forth.

So they will break down their scope, they will break down their fee estimate based on work items and hours.

MR. WILLIAMSON: So during the -- we've selected you as the preferred provider process, during that process you just discuss the work to be performed, what's going to be designed and the amount per hour for each individual within their firm or the team they're bringing in that's allowable to be charged, the number of hours it's going to take to produce the product. And is there anything else?

MR. SAENZ: We normally will agree on the hours and the type of person that will be doing the work, and then they will give us the name of the people and the fee structure, and of course, they also have an audit that has what they are paying their people, and a lot of times we will use those fee amounts that come out of the audit.

The audit will also provide us an overhead rate, a company overhead rate, a firm overhead rate.

MR. WILLIAMSON: And why is that important?

MR. SAENZ: The overhead rate is then applied -- once we determine the number of hours and we agree on the fee amount, those numbers are multiplied and then the overhead is then a multiplier to that amount of work.

MR. NICHOLS: Let me ask, on the hours billed, the direct hours, the person paid a certain amount of retirement benefits, medical, health, all those kind of things that go into the direct cost per hour, and then we add a percent profit to that, that's what they call the fee.

MR. SAENZ: Yes.

MR. NICHOLS: So we add however many hours of real cost it is direct billing that person worked, then they get a percent profit on that.

MR. SAENZ: Before we do that, we get direct hours, we then get the overhead.

MR. NICHOLS: That was the second thing I was going to ask. So then you also have the overhead, whatever their overhead is, and I know we negotiate a level in there and it has to meet certain audit requirements, but as I understand it, most of the overhead factors are like 150 percent, 160 percent.

MR. SAENZ: They vary from 150 to 180 to 175.

MR. NICHOLS: That we normally put in and negotiate?

MR. SAENZ: Yes.

MR. NICHOLS: I mean, I recall when I talked with our auditor that he said if you do a bell-shaped curve, you've got some on the low end that are about 125 percent overhead, on the other end of the curve some that have overhead as high as 225 percent, the medium being in kind of the 150 to 160 percent range or something like that. But the more overhead you've got, you get a profit on your overhead.

MR. SAENZ: Yes.

MR. NICHOLS: So you get a profit on the hours you bill and a profit on the overhead too.

MR. SAENZ: Yes.

MR. NICHOLS: So if you had an incentive -- I know when I had my business and most people that run businesses, small independent businesses, you get a certain amount of money and the more overhead you have, the less profit that you make. But in this case, the more overhead you have, the more profit you make.

MR. WILLIAMSON: So the goal is to be selected as the number one, and then to be able to persuade the team -- I'm taking Robert's question from a different angle -- to be picked as the number one and to persuade our team that you're the best at what you do and that the hours you offer to do the job in are acceptable. And then and only then do you really begin to find out how much it's going to cost for Mike Behrens, the private sector employee of Ben Weir, Inc., and how much Ben Weir, Inc.'s, overhead is, and then how much profit is going to be allowed on that salary and overhead.

MR. SAENZ: Yes.

MR. WILLIAMSON: Only then are you allowed to know that.

MR. NICHOLS: It's almost a disincentive to try to lower your overhead because if you lower your overhead, you don't really make as much money.

MR. SAENZ: Yes. My understanding is that the profit is calculated after the first multiplier, so yes.

MR. NICHOLS: I'm sure we'll probably have testimony on that.

MR. WILLIAMSON: And when you say we audit, if I understand the way this world works, cities audit professional firms, counties audit them, we're all sort -- school districts, I presume audit.

MR. SAENZ: Yes.

MR. WILLIAMSON: School districts are subject to this also. Right?

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: So the way the school, Weatherford Independent School District recently built a new high school, they went through the same process to get their architect, their engineer? They went through the same process, I suppose, because it wasn't a CDA school, I don't think, it wasn't a toll school.

So what happens is you get picked top, you've convinced the consultant team that you've got the best qualifications and your scope of work is appropriate, and then you negotiate what you're going to get paid, and you're guaranteed not only recovery of your overhead but a profit on all of that.

MR. SAENZ: Yes.

MR. WILLIAMSON: As long as it falls within the amount of money you've told your team up front they can pay.

MR. SAENZ: Right. Our team had a number that they were working with. When they submitted the original request, they had an estimate. As they refined their scope, they may have refined that estimate. And so they have a number that they're going to compare the finished product.

A lot of times, as they sit down with the consultants to negotiate, they identify that maybe our original scope maybe was not as thorough or complete as it should have been, and we modify the scope and we kind of reach a higher number.

MR. HOUGHTON: But that number has got to be driven off of, obviously, experience from past design work. I mean, there's got to be a benchmark down here.

So we go right back to what Robert and Ric are talking about is the profit margin from previous types of similar projects. They'll say that's what it was, we'll bring that number forward.

And in the private sector, though, if I'm going to go -- I hate to say bid -- procure that in the private sector, I can negotiate all day long on your profit margin and if you've got too much overhead, that's your tough luck. If you want to do the work, this is what I'm willing to pay. SBC can do that all day long, we can't.

I mean, there's got to be a benchmark somewhere and established that your people out in the field are looking to from past experience.

MS. ANDRADE: I have a question, Amadeo.

So during this process it sounds like we don't encourage a lot of innovation or new way of doing things. In other words, they kind of know that this is a $4 million project that we're looking for. Right? So nobody comes in and says, Amadeo, I can do this for $3 million?

MR. SAENZ: I think that as we're negotiating, once we've selected, if that firm has some good ideas of how they can reduce the cost, they will probably come up in the negotiations. I think our people ask them that.

MS. ANDRADE: But does that happen, or is it 90 percent of the time pretty much they come close to the $4 million?

MR. SAENZ: I think from what we've seen, based on what our original estimate was, the original estimate that came in with the request versus what was negotiated, for the most part most of them are usually higher or right at what was estimated. But the majority were higher than we originally had estimated.

MS. ANDRADE: That's what I'm afraid of is that we're not encouraging them to be more innovative in the way of how they can do things less expensive.

The second question was --

MR. SAENZ: There's one thing, Commissioner, that we need to look at is that you may come up with an innovation that may cost you more in the design but may save you money in the construction. So all of those are balanced out. That's why it's very hard to be able to say it's tied to one number and a fee amount.

MS. ANDRADE: The second thing is how long does this process take from the time that you send out the LOI?

MR. SAENZ: It used to take about 18 months at one time. I think now we're getting closer to about six to seven months.

MS. ANDRADE: On each project?

MR. SAENZ: On each project.

MS. ANDRADE: Okay, thank you.

MR. NICHOLS: Once we arrive at a negotiated price, as I understand the process, it's not like -- let's just say it's a $3 million contract, the firm doesn't just get progress payments and then eventually when they complete, we pay them the $3 million or $4 million, or whatever I said. As I understand it, most of the contracts, if it's $4 million or $3 million or whatever, we issue the contract not to exceed $4 million and that we are billed based on hours -- and if they had to acquire materials or whatever or special things, we certainly pay that -- but the bulk of it is based on hours that you actually worked, or somebody on the staff at some level plus the overhead plus the profit.

MR. SAENZ: It all depends on the type of contract that we negotiate or put in place. We have several types. We have contracts that are cost specific fee, and that's basically exactly you describe it: we have identified a fixed fee that we would pay the consultant.

MR. NICHOLS: Fixed fee being the profit?

MR. SAENZ: Fixed fee could be a profit or a fixed amount that if we were to terminate the contract, the consultant would get at least this amount.

MR. NICHOLS: Would that be the whole amount of the contract?

MR. SAENZ: No, sir. It's a cost plus fixed fee and you add those two and that's the total amount of the contract.

The cost is the cost that the consultant would spend based on hours, and most of those we do for contracts where we do not have a very defined scope, a planning contract that we know that we're going out there and we may have to have ten public hearings, maybe 20 public hearings, we may have to go back and redesign.

MR. NICHOLS: I understand.

MR. SAENZ: So those we do based on hours.

MR. NICHOLS: There's many of those that there's really no way to understand until we get into it what the total amount of work is going to be.

But once we arrive at a bridge design or an interchange or something, if it's a $3 million contract, it's not to exceed $3 million, where we have a specific project and the hours billed plus the fee and overhead and stuff work their way up to that amount. Is that fair to say?

MR. SAENZ: What we try to do on contracts where we have a very specific scope that we know what's going to be designed is that we have moved forward to what we call the lump-sum contracts where we agree upon, for example, that for this contract the bridge design element is going to be done in 200 hours at this rate so that equals this amount of money. And that is the lump sum, that is all that we will pay for that.

MR. NICHOLS: But why do they have to keep up with hours then?

MR. SAENZ: For that type of contract, they don't. In that type of contract we have agreed up front that we're willing to pay X amount of money for this design.

MR. NICHOLS: Just straight dollars.

MR. SAENZ: And if you take six months more to build it, it's on his nickel, and if he does it in a faster time, then he made more money.

MR. NICHOLS: We might want to get a breakdown of how many dollars we do in each of those categories.

MR. JOHNSON: How many projects, how common is the lump sum.

MR. SAENZ: Yes, sir, we will get that.

MR. JOHNSON: The other question I had that you mentioned is the termination of contracts. How common is it that contracts are terminated?

MR. SAENZ: They're not very common. We have terminated some contracts because of problems with the consultant in that the work was not done or the work was not done satisfactorily, but there are not very many. We can give you that number also.

MR. NICHOLS: I don't think that really happens that often.

MR. SAENZ: No, sir.

MR. NICHOLS: I think most of them have done good work.

On those types of contracts, I know that you have the fixed fee and then you have the one not to exceed. I got kind of involved in trying to get some information on that a couple of months ago, and that is based on hours billed to get the job done but not to exceed a certain amount.

MR. SAENZ: Yes.

MR. NICHOLS: And checking with our auditor, he told me that virtually every single one of those type contracts, the hours billed pretty much ran right up to the number.

MR. SAENZ: That's correct.

MR. SAENZ: Okay. Let's go on?

MR. NICHOLS: Go ahead.

MR. SAENZ: This slide basically shows kind of the process. I think, Commissioner, you asked how long it would take. There's a little flow chart that shows the process that we follow to bring a consultant onboard.

Of course, the managing office prepares a notice of intent. And I've summarized it, this chart is really about two or three times as big. It requires careful coordination, but a couple of things is that we kind of tried to show the number of days between the different major functions.

We post for 21 days. And then the biggest amount of time is spent from going from the evaluation of the letters of interest, to the short-listing, to setting up the interviews, to going through the selection process. That takes about 50 days.

Once that 50-day period is up, within five days we basically turn it over and then they start negotiation. In our rules we have identified and set a set period that we allow our staff to negotiate on a contract. We set that at 30 days. They can ask for an extension.

MR. NICHOLS: Is it 30 or 90?

MR. SAENZ: Thirty days. They can ask for an extension that has to be approved. The first extension is approved by me and they need to justify if, and then if they need an additional 30 days after the 30-day extension, then they have to get approval of Mr. Behrens. But normally, all our districts try to negotiate and get their contracts ready within 30 days.

We have basically two types of contracts that we use. We talked about the project-specific contracts; these are contracts where we know the scope of services. And then we also have the indefinite deliverable contracts, or otherwise known as evergreen consultant contracts.

If the contract is for a project such as one that is producing a set of plans that is for a final design where we know a lot of the specifics on what we want, then of course we go with the project-specific contract and we go through the negotiation process like we've talked about.

If the contract is basically a contract that we know that we are going to have to do quite a bit of work over the next two years in bridge design but I don't have those specific bridges identified yet, or I'm going to have to do a lot of traffic signal design work but I don't know the specific locations, then we go through and we use the indefinite deliverable contract.

And those contracts basically are for certain scopes of services and certain engineering expertise that we want to have onboard, and we select this consultant based on their experience and knowledge of that type of work.

So then after that consultant is selected, we basically only negotiate on their fee structure and the total amount of contract is set by the cost not to exceed. And then that consultant would be in place for the next two years and several districts have limits of $5 million in those types of contracts, other districts have limits of $2 million in those types of contracts.

Then during the year as the traffic signal projects are identified then we can issue what we call a work authorization to these consultants so that they can go out there. We negotiate this work authorization and then we assign them that particular project.

The work authorization basically then is negotiated like if we were negotiating the original contract, but we save the time in having to go through the consultant selection process for each individual project.

MR. NICHOLS: So on the indefinite or --

MR. SAENZ: Let's call them evergreen.

MR. NICHOLS: Yes. On the evergreen contracts, you basically know that you're going to need some engineering work in bridges or some of these other things, so districts, as well as maybe the division -- I'm not sure -- will sign up firms on evergreen contracts without knowing specifically what that project may be, and during the year as a project comes up, then actually begin negotiating on how much of that evergreen contract?

MR. SAENZ: Then at that point when we identify, for example, this bridge that we're going to build, now we know a very defined scope, we then will bring the contractor onboard, the consultant onboard, and will sit down and negotiate it as if we would have done it if it was an individual contract.

MR. NICHOLS: So evergreen contracts typically run how much?

MR. SAENZ: Typically basically we have the metro districts as well as the border districts have a maximum of $5 million.

MR. NICHOLS: Per contract or total?

MR. SAENZ: Per contract. Then they can issue as many work orders as they can up to that $5 million.

MR. NICHOLS: So a medium-sized district can only issue one $5 million contract?

MR. SAENZ: A medium-sized district has a cap of $2 million, so they can have an evergreen contract for $2 million and that contract is for two years, and then during that two-year period if they have a project that requires $500,000 in design, they'll do that one and then they've got $1.5 million left over to do other projects.

MR. NICHOLS: Can they do multiple $2 million contracts?

MR. SAENZ: Yes, sir, they can do multiple.

MR. NICHOLS: The district is not capped to a total of $2 million for an evergreen, it's a total of $2 million per contract, or the larger the district, the larger the amount.

So they can issue a whole series of $2 million or $5 million contracts in a district.

MR. SAENZ: That is correct.

MR. WILLIAMSON: So that would be a question to be answered in March: How many of those do we have current?

MR. SAENZ: And we will get you that.

MR. WILLIAMSON: I probably missed something important but I had a question that as I was leaving it occurred to me to ask. If you can't get agreement with the first firm, then you go to the second one. Correct?

MR. SAENZ: That's correct.

MR. WILLIAMSON: Now, what happens if in the process of dealing with the first one you discover that you could get a satisfactory product -- step back. You decided you've got $4 million to spend on this contract, you negotiate with your preferred provider, and you just can't get to $4 million, $6 million is the least you can get to. So you say, Look, I just can't do the deal with you, I've got to go to the second one.

You go to the second one and start negotiating and you find out she wants $9 million. Can you then go back to the first and say, Well, maybe we can work something out?

MR. SAENZ: No, sir. Once we terminate negotiations with the first one, we cannot go back. We cannot go back to the first one.

MR. WILLIAMSON: So you get to the second one and it's $9 million. And that's taken about six months, you said, to that point?

MR. SAENZ: Well, hopefully if we're following our process, within 30 days we would have said we've reached this --

MR. WILLIAMSON: From the time you decided to issue the notice of intent, you're at six months.

MR. SAENZ: Six months, yes, sir.

MR. WILLIAMSON: And the first one you can't work it out. So you go to the second one and it's $9 million and you can't get them down to $4-, so now seven months, eight months have elapsed?

MR. SAENZ: Well, if there was only two and we cannot go back to the first one --

MR. WILLIAMSON: Let's say there was four.

MR. SAENZ: Well, if we terminate negotiations with the first one, we've gone through the process and we've been there say six months or five months, and within the 30-day period, within that last month I cannot negotiate and I terminate, then I can go to the second one and my 30-day window opens again.

MR. WILLIAMSON: Let's say you can't reach agreement with that second one.

MR. SAENZ: Then I can go to the third one and my 30-day window opens with the third one.

MR. WILLIAMSON: And so you go to the third one and find out that it's $12 million, can you go back to the second one?

MR. SAENZ: No, sir. Once we terminate --

MR. WILLIAMSON: Can you go back to the first one?

MR. SAENZ: No, sir. Then in essence, if we cannot negotiate, then we have to start the process all over again, go back to the beginning and start the process all over again.

MR. WILLIAMSON: And you can't shortcut, it's another five to six months.

MR. SAENZ: We would have to go through the exact process that we followed before which would be put out the notice of intent, the letter of interest, the short-listing, and move forward.

MR. WILLIAMSON: And just out of curiosity, who in the world thought up the term A indefinite deliverable@ ?

MR. SAENZ: I will not take credit for it. It's been there for a long time.

MR. WILLIAMSON: Is anyone else bothered by that?

MR. NICHOLS: I think it's a term in the industry.

MR. WILLIAMSON: Indefinite?

MR. HOUGHTON: Well, if it's only for two years, there is a definite period of time.

MR. WILLIAMSON: Do we use that with the construction guys?

MR. SAENZ: Well, it's indefinite deliverable. We can do a lot of deliverables until we run out of money. There's an indefinite number of deliverables that we can produce out of this work product until we run out of money, so I guess it is still definite.

Evergreen contracts were done in the Yoakum, Pharr and Corpus Christi districts. We called them evergreen back then; I don't know how they became indefinite deliverable.

MR. WILLIAMSON: Going back to where we were before I left, one more question and then you can proceed from my standpoint. How often do we negotiate with the first provider a price less than the amount we set in our heads as being what we could pay before the negotiations started?

MR. SAENZ: It does happen, I don't know the exact percentage, but I would like to get you that information next month.

MR. WILLIAMSON: So maybe in March you can tell me out of 1,000 contracts completed in the last six years, our target amount was at or above 888 times and below 120 times.

MR. SAENZ: Yes, sir, we can get you that information.

MR. WILLIAMSON: Sorry. Continue with your discussion of indefinite deliverables.

MR. HOUGHTON: Evergreens.

MR. SAENZ: I think this pretty much covers the existing processes as we have them today.

What I'd like to go over now is, of course, your 2005 legislative agenda which included a recommendation to amend, not to replace, the current private sector consultant selection process. As understood by staff, we're to reach three goals.

Our first goal is your desire to encourage and reward innovative engineering concepts that will reduce costs to TxDOT and to TxDOT projects.

Second, you desire to involve more private sector consultant firms and individuals in the contracting relationship with TxDOT, with the department.

And third, you desire to increase the number of minority- and female-owned firms and minority and female professionals who compete for contracts with the department.

Those are the three goals.

MR. WILLIAMSON: And when we say contracts, we mean as prime contractor. Those are our goals.

MR. SAENZ: All right.

MS. ANDRADE: I have a question. Amadeo, I heard you earlier say that at times we request local firms for their knowledge in the area. You know, my concern, or what I've heard out in the community is that we may not be using local or state-owned firms but the larger firms go out and seek smaller firms in other states. Is there anything that we could include to help them by saying they must be -- on the subcontractor or the HUB firms, could we say they must be HUB-certified in the state of Texas? I mean, what can we do to protect them or to help them?

MR. SAENZ: Well, I think part of the thing is it depends on the project, and of course, it's very specific, we have to bring the consultant firm based on qualifications.

MS. ANDRADE: Right.

MR. SAENZ: But a lot of times local knowledge of the project, local knowledge of the area is a great benefit because you have local knowledge of what are the requirements to do a utility coordination, what are the local drainage issues/concerns, what are the local other problems. So that is one way that you can use on some of your projects there that they really have that requirement in them and you can put that in and you can weigh that criteria.

MS. ANDRADE: We can't make that a standard?

MR. SAENZ: That is something that we use under the other criteria that's listed.

MS. ANDRADE: Okay.

MR. SAENZ: So I guess if I understood, you want these three goals are to get the minorities and females as primes, more involved in the contracts and also as primes.

MR. NICHOLS: And to also make sure we're hiring the firms that have the most -- the innovations that are best value.

MR. SAENZ: Right.

MR. NICHOLS: Best value is not necessarily the up-front construction cost but a combination of the up-front construction cost and long-term maintenance -- which is the way we do the matrix on some of the CDAs and stuff so we do a comparison of both and found out which one is the best value.

MR. SAENZ: In brief, basically your recommendation is to come up with a process that can be summarized something like this for all those: We want to be able to advertise to see who's interested; then we will narrow down this group to a short list of very best qualified firms, people that can do the work, have the history, have the reputation that they can do this work; and then once we short-list those people of qualified firms, then you can scope out the work as best as you can and as definite as you can, and then give them a reasonable time to put together a proposal where they bring us their innovations, their ideas of how they're going to develop this project, and at the same time tell us how much time it's going to take and also give us a price of what the project will cost as well as what their work will cost.

From what I hear, in summary that's what your process is.

MR. WILLIAMSON: And that's what Mr. Nichols laid out with House Transportation.

MR. SAENZ: That was basically what Mr. Nichols laid out at House Transportation.

MR. WILLIAMSON: And the reason I ask that question is because I had a phone call from an unnamed Fort Worth area engineering firm expressing some irritation that we were asking the legislature to change the process to a low-bid process. Is that what we were asking for?

MR. SAENZ: No, sir. Basically we're still going to select on qualifications.

MR. WILLIAMSON: Why would anyone in the engineering world express to this unnamed firm that we were proposing to go to a low-bid process? Have we ever said that?

MR. SAENZ: No, sir.

MR. WILLIAMSON: Have we ever put that in writing anywhere?

MR. SAENZ: No, sir.

MR. WILLIAMSON: Why would anyone think that, you being an engineer?

MR. SAENZ: I guess by word of mouth and rumors, things change and eventually that's what it worked out to be.

MR. WILLIAMSON: Okay, continue.

MR. SAENZ: Let's go over a little bit on the proposed process.

The revised process is still qualifications-based. It would apply to only project-specific contracts where we know a very definite scope. The alternative process would be applicable only to projects with very definite scope, and the process would bring in elements of design and project innovation. It's geared to bring in elements of design and project innovation as we make the selection for the best value for the department.

The proposed alternative selection process that you propose is still a two-phase process with a two-step process. The firms submit letters of interest, then a short list is selected based on qualifications, the short-listed firms then submit proposals.

These proposals would include their innovations, all the information we talked about a few minutes ago. Then selection will be based on their understanding of the project scope, the experience, the ability to meet our schedule. And as it was laid out and, of course, it adds two new items: we want to make sure that they give us their innovative techniques or innovative ideas that they're going to put into the project, and then they're also going to show us what the design costs will be.

And taking all of those, after we have gone through and short-listed the qualified firms, will we then basically be able to select the best value firm and finish negotiation and execute the contract.

That pretty much is my presentation. I'll be happy to answer any more questions, or Mark or some of my other staff can assist me in answering any more questions.

I think the 64-dollar question is going all the way back to the first slide. How many primes get how much of our work?

This gives me only my first opportunity since Mike gave me my Christmas present to use it. Focusing on that number right there.

MR. SAENZ: That's not it. Hold on.

MR. NICHOLS: That's a different chart.

MR. WILLIAMSON: That was the first slide, wasn't it?

MR. JOHNSON: That was the second slide. The first one was just engineering services.

MR. SAENZ: There we go. You were asking about how many engineering firms get our work.

MR. WILLIAMSON: And this is as primes.

MR. SAENZ: These are primes. These are actual number of contracts and contract amounts that we have with engineering firms that were executed between 2000 and 2004.

MR. NICHOLS: And this is all public information.

MR. SAENZ: Yes, sir.

MR. NICHOLS: So in that period of time, that five years basically, would we have 930 firms that are pre-certified who want to do work with us, and 20 firms ended up with 90 percent of the contracts?

MR. SAENZ: Yes, 20 firms were selected and have contracts for the amount of 89 percent of the amount of contracts.

MR. NICHOLS: So those 20 firms got $1.1 billion in contracts in that period of time.

MR. HOUGHTON: But they're under mandate, though, that 30 percent of that number. And they probably hit that actual target. Right?

MR. SAENZ: I would venture to say yes. And there probably is some additional -- our contract is only with the prime, we have one contract. As we mentioned earlier, it is a team that is put together so you could have the prime with some DBE consultants to give you the 30 percent, but they also could subcontract additional work to other firms.

MR. NICHOLS: Let me ask you a question on subcontracting. If a prime engineering firm, when they go to subcontract out to other engineering firms, can they get a second price, or do they have to have to follow the same type process we do where they qualify them, they rank the first, they negotiate, and then if they can't work out a price they have to go to the second, or can they talk to two or three firms, find out how they're going to do the work and how much they charge and that kind of stuff?

MR. SAENZ: As far as when we are selecting, we are selecting basically the team, so the prime comes in with his entire team because it could be that the DBE firm or one of the sub-consultants is a major bridge designer, and that is a major item of work in the contract. So we select the consultant based on the team. So if the consultant wants to change a team member, then we have the right to basically not execute a contract.

MR. WILLIAMSON: But Nichols asked a good question.

MR. SAENZ: I couldn't tell you, sir.

MR. WILLIAMSON: Based on the process that you just described to us -- let's take Parsons who is the number one for this period, a good firm -- Parsons is the prime, Parsons is going to have to bring in four subs, one for HUB/DBE purposes, one for bridge expertise purposes, one for how well they know the local terrain, whatever.

In selecting that sub, is Parsons required to follow the same procurement procedure as we are required to select Parsons in the first place?

MR. SAENZ: I am not familiar with that.

MR. NICHOLS: Is Bob Jackson?

MR. WILLIAMSON: Mr. Jackson, are you around?

MR. SAENZ: We would have selected this prime with the subs that he identified. Now, how he came to identify and bring those subs on to his team, we don't have the knowledge, but when we negotiate the contract, we also negotiate the fee amounts for the prime, we negotiate the hours and fee amounts for the sub work because we know what work that sub is going to do, every sub is going to do. So all of that is negotiated when we put together the negotiation and the contract.

MR. WILLIAMSON: Let's let Bob see if he knows the answer. He may not.

Go ahead, Mr. Nichols.

MR. NICHOLS: The question is if you have a prime contractor on a consulting firm, any government entity has got to follow the Professional Services Act, but a prime contractor, when he's negotiating with a subcontractor, does he have to follow the same process where he has to rank them and he can't ask for price and that kind of stuff, or can they sit down and work that out like you would in the non-government business world -- I guess is the best way to put that -- or do they have to go through the same Professional Services Act we do?

MR. JACKSON: They are not subject to the Professional Services Act.

MR. NICHOLS: Even on government projects?

MR. JACKSON: Even on government projects. But if federal funds are involved, they may have to follow our procedures, and I defer to Mark, he may know more about that.

MR. NICHOLS: Mark?

MR. MAREK: I'm Mark Marek, the director of the Design Division.

Almost none of our contracts -- we have a few but very few that involve federal funding for preliminary engineering. We're able to obligate all our federal funds for construction. So since we do not take federal funding in our preliminary engineering contracts, we're not subject to that federal regulation.

MR. NICHOLS: So since most of it is paid by state funds, it doesn't fall under federal regulations.

MR. MAREK: Yes, sir.

MR. NICHOLS: So the prime contractor can work out whatever kind of deal they can with the subcontractor.

MR. MAREK: Right. If they went to three HUBs and had work to do for them, they could discuss price.

MR. NICHOLS: Okay, thanks.

MR. WILLIAMSON: Well, well, don't run off, Mark. Do we use our state funds for preliminary engineering work because the reimbursement rate from the fed is less, or is it the same as if we were laying asphalt?

Is it lay asphalt or pour asphalt? I never have learned. Lay?

MR. SAENZ: It's the same, it's 80 percent.

MR. WILLIAMSON: Then is there a particular reason why we use state funds only for our preliminary design work?

MR. SAENZ: I think it was just through the years we always obligated our federal dollars to construction and we used our state dollars for design.

MR. WILLIAMSON: I learn more about this business every month.

MR. NICHOLS: Okay. So we've got 930 firms who want to do business with us who have gone to the trouble to go through the pre-certification process, who updated, who have got their hand out trying to get state contracts, but 90 percent of our prime contracts go to 2 percent, and the other 98 percent of the consulting firms that are pre-certified, 98 percent only get the 10 percent of the work?

MR. SAENZ: As primes, yes.

MR. NICHOLS: I would think I would want to be a prime. That way I can control all my stuff. But that is correct.

MR. WILLIAMSON: You said earlier that as part of our negotiation when we select the number one, we determine their per-hour charge and their overhead and then rate of profit on top of those two figures. Do we keep historical data on, for example -- and if any of you employees are out there of these firms, I'm not picking on you, I've just got to use some names -- do we know what the overhead for Parsons Brinckerhoff is and do we know what the overhead for KBR is?

MR. SAENZ: Yes, sir. We would go back to the contracts and be able to draw those numbers.

MR. WILLIAMSON: And do we know what the overhead and profit for Ben Weir Engineering is, engineering firm certified to do business in Texas but never a prime for different reasons, always a sub?

MR. SAENZ: We would have that information because if he came in as a sub, we do have their information because the sub fee schedule as well as overhead are used to run their numbers through in our contract.

MR. WILLIAMSON: And is that information public information or would we be disclosing something proprietary that is protected from the Open Records Act?

MR. SAENZ: I'm going to defer to our general counsel just to make sure.

MR. WILLIAMSON: If I asked the question of staff, Bob, next month I want to see the overhead and profit rates for every engineering firm that does business with us, would we be violating any laws?

MR. JACKSON: I'd predict that that would be an open record, but we'd have to check, and the company may want to protect it, and if they do, then we have to go to the attorney general.

MR. WILLIAMSON: Well, we probably ought to get that process going then to determine that.

MR. NICHOLS: Let me ask another question related to the subcontracting by a prime. The 30 percent minority and disadvantaged businesses, do we do a verification that the hourly rates they're paid are equivalent and the profit margins are equivalent and the overhead and profit is equivalent to -- I mean, do we any kind of test in our audit work to make sure that they're getting fairly paid or at least an equivalent basis as the other categories, or do we not do that part?

MR. WILLIAMSON: Or do we just audit to be sure the figures they gave us are correct internally?

MR. NICHOLS: In other words, if the sub is 30 percent HUB and minority, are they getting 30 percent of the profit, do they get 30 percent of the hourly rate?

MR. SAENZ: We monitor the amount that the subs are being paid to make sure that if they did have a 30 percent goal that they met the 30 percent goal.

MR. NICHOLS: So you don't know if they're getting paid at two-thirds the amount and half the profit margin, all you know is just the total dollars they get is that 30 percent.

MR. SAENZ: Yes, sir.

MR. NICHOLS: Okay.

MR. SAENZ: But I will check with staff to find out exactly what we're monitoring and we can provide that.

MR. HOUGHTON: The overhead of a sub in a smaller firm, it's very obvious. The principals in a smaller engineering firm are hands-on, they have hands-on these projects; the principals in a larger firm do not have the hands-on. They have the plaques on the wall; they have people that work. So the overhead in a smaller firm is significantly less.

I've been through this before on the Water Utility Board. Smaller firms, the principals are not making more money but they have their hands on and their overhead is less, but are they getting the same profit margin that the prime is getting? Is that an Open Record Act?

MR. NICHOLS: That might be something we can ask to see if we can find out the information by the next meeting. I'd think the legislature would certainly like to make sure that the HUBs and minority businesses are getting a fair amount of profit and stuff. If we can get that information, fine; if we can't, we'll try it a different way.

MR. SAENZ: We'll try to get it.

MR. WILLIAMSON: Well, going back to, I guess, the original point of the proposal in December when we adopted it as part of our agenda, the commission, as a matter of business, wishes to acquire goods and services in the name of the taxpayer in the most cost-effective manner possible while maintaining safety. So we put you on the task, Mike, of finding ways to do that, and we've done some things pretty significant to reduce our costs.

We get to the engineering world and we realize that the governor is going to be focused on the Office of Inspector General in all of the ten big agencies, and that that focus is going to be on fraud in contracting practices. And no one at this table has alleged fraud in this business today; this is a contracting practices matter.

And we make a proposal to the legislature that attempts to address that by saying that there are two ways we can further reduce our costs while maintaining good engineering practices, and that's to know what we're paying ahead of time, not to award the contract based on that but to know what that is, and to know the cost of the product the company would most likely design ahead of time so that we don't waste six months and then another year developing a bridge made out of titanium steel when a pontoon bridge would do the job.

And for that, I understand that we've been characterized as wishing to go to the lowest dollar bid for engineering services.

MR. SAENZ: That's correct.

MR. WILLIAMSON: Does that pretty well summarize it?

MR. SAENZ: Yes, sir.

MR. HOUGHTON: I'm not sure, Mr. Chair, that we may be going far enough. I understand the statutes, but then there's policy, and the policy -- I agree with the statute. I agree with competitive business. My business is a competitive business, but at the same time the folks, the 980 that aren't being selected maybe from our standpoint we ought to raise the threshold, and I arbitrarily said 50 percent, it could be 60 percent.

That makes our people work a little bit harder out in the field saying there's some quality firms out there, instead of going just willy-nilly to these folks because, as Robert said, they've got plaques on the wall. There's some innovative and creative techniques in small business that we may be missing, and I think we are missing.

MR. WILLIAMSON: Well, unfortunately, Ted, our staff is burdened with a commission made up of self-employed business people who find these kinds of things a little bit disconcerting, might we say.

MR. HOUGHTON: Absolutely.

MR. NICHOLS: In the March meeting, while we're working on these other issues, I would like you to try to figure out, since 90 percent of the work is driven to 2 percent of the people who are trying to do business with us, is it the process that we've established that drives it, the process that's established by this committee composed of CEC members and our staff, is it that process that we've established, or is it the law, or is it a combination of both.

Because I think when I'm talking to members of the legislature, I know they want to make sure that we do a good job and we try to have the best project, the best long-term cost and that type of stuff, best value, but they also want to make sure that there's a level playing field with business practices, and that all small businesses have a fair opportunity to do business with a state agency, particularly in the area of minority businesses and historically underutilized businesses.

And I'm not quite sure if it's the process or the law. As I've looked at it, I keep coming up with it's the law because you have to hire the best.

MR. HOUGHTON: I think it's a combination of both, Robert.

MR. NICHOLS: But see if you can come up with that.

MR. WILLIAMSON: In fact, that's your last charge from today's activities. I think we need a robust and not boring presentation of the appropriations bill, the statutes, and the interplay between the words of the appropriations bill and the statutes and our processes over the last -- let's go all the way back to 1980 which is about the year we started really using private sector services in a noticeable way, and take us forward in March how did the law change, what instructions were given by the appropriations bill, at what point did the legislature give us instruction.

I mean, I was a little bit surprised -- of course, I was out of the appropriations business by 1997, but it's a little bit interesting that the appropriations bill picked a dollar amount and said you will contract with these people for this amount of money. That's an unusually direct instruction from the legislature, and I'm curious about how that came to be.

MR. SAENZ: We will get that.

MS. ANDRADE: Mr. Chairman, can I add one last thing?

Amadeo, I would echo what Commissioner Nichols has just said about the minority firms, but I want to make sure that we don't exclude them from the process. I want to make sure that if it's wording that we have to include in our contract process that we can do that, but let's protect them because I think that at times they are taken advantage of, and at times their profit is reduced by the larger firms because of their pricing. So let's make sure if we can do that, then let's do that.

While you're doing all this research, think of ways that we could help them and encourage them to participate with us.

MR. SAENZ: Yes, ma'am, we'll do that.

MS. ANDRADE: Thank you.

MR. WILLIAMSON: Okay, members. I think we'll take about ten minutes to absorb what we've done or maybe un-absorb what we've done, and at twelve o'clock -- we're not going to break for lunch today. We have folks who need to get across the street and answer questions for the legislature -- we're going to take about ten minutes here and then we're going to jump around, Mike, and we're going to do what?

MR. BEHRENS: We're going to do the finance item and do the pass-through toll.

MR. WILLIAMSON: And we just beg patience with our out-of-town visitors because we've got some staff on the financial part that have got to get across the street and we need to get their business out of the way.

Let's take ten, please.

(Whereupon, a brief recess was taken.)

MR. WILLIAMSON: We're back on the record. Take it away, sir.

MR. BEHRENS: Thank you. We'll go to agenda item number 10 and these minute orders will be presented by Mr. Bass.

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

Agenda item 10(a) would authorize the department to proceed with the development of a short-term borrowing program, as authorized by the 78th Legislature and approved by voters through a constitutional amendment in 2003.

In order for the department to obtain the necessary approval from external entities, such as the Cash Management Committee and the attorney general, we need preliminary authorization from the commission so that we can move forward.

Staff would recommend your approval and we'd be happy to answer any questions.

MR. WILLIAMSON: Members, questions? The floor is open.

MR. NICHOLS: That's the borrowing that we use only in the event where we run out of cash, like what happened two summers ago?

MR. BASS: Correct, strictly cash management.

MR. NICHOLS: We went down to zero and just had to shut down jobs. So if we end up in that kind of situation, then by activating this, in that event, then we could do some borrowing, take our bubble in the winter and move it in the summer or something like that.

MR. BASS: Exactly.

MR. NICHOLS: Okay. That's all.

MR. WILLIAMSON: Other questions or comments, members?

MR. NICHOLS: So moved.

MR. WILLIAMSON: I have a motion. Do I have a second?

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BASS: Thank you. Item 10(b) would revise the investment policy to have it apply to the funds of the commission that are not otherwise required to be invested by the comptroller. These would include the Texas Mobility Fund and the funds of the Central Texas Turnpike System.

In addition, this item would improve a new investment strategy for the Texas Mobility Fund and would revise the existing strategy for the Central Texas Turnpike System.

One last item of note is that the list of qualified financial institutions with which the commission is authorized to engage in investment activities is also amended.

Again, staff would recommend your approval and would be happy to answer any questions.

MR. WILLIAMSON: Questions or comments, members?

(No response.)

MR. NICHOLS: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BASS: Agenda item 10(c). As part of the indenture for the Central Texas Turnpike System, the commission agreed to present audited financial statements and an annual update of financial and operating data to the bond market. This agenda item asks that you accept these items so that we may distribute them to the market.

Although the exhibits are quite large to this minute order, I would point out that much of the exhibits are items that have already been accepted by the commission or have already been distributed. Exceptions to that statement would be: Exhibit A, the annual update of financial information and operating data for fiscal year 2004; Exhibit B which is the audited financial statements of the Central Texas Turnpike System; Exhibit D, an update to the debt service schedules; and lastly, Exhibit G, a statement of investment earnings for the construction fund for fiscal year 2004.

Staff would recommend your approval and be happy to answer any questions.

MR. WILLIAMSON: Is there anybody here from the Central Texas Turnpike System?

MR. BASS: I believe you are the Central Texas Turnpike System.

MR. WILLIAMSON: I know that, but staff members here familiar with the item. Change your nickname from Fast Jimmy Bass to Wise Jimmy Bass.

(General laughter.)

MR. NICHOLS: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BASS: Agenda item number 11 which is a pass-through toll agreement, the first one for the department, with Montgomery County.

This item would authorize the department to enter into a pass-through toll agreement with Montgomery County and under the agreement, improvements to FM 1484, 1485, 1488, and 1314, as well as a tolled direct connector from State Highway 242 to Interstate 45 would be constructed and initially financed by Montgomery County.

The department would then reimburse the county over time based on actual traffic to the improved roads. Within the agreement there would be a minimum reimbursement payment each year of $10.5 million and a maximum of just under $17.5 million. So the quickest the reimbursement could be made is in the neighborhood of ten years, and the longest it might take under the agreement would be in the neighborhood of 16 to 17 years.

In addition to that, the county has committed to reinvesting at least $76 million of that reimbursement amount into future transportation projects that would be selected jointly by both TxDOT and the county.

I would be happy to answer any questions, and I believe there may be some officials from Montgomery County that would like to discuss this item with the commission.

MR. WILLIAMSON: There are some officials, members, and we have at least one witness affirmation, and we want to spend a few minutes talking with these persons from Montgomery County, but I have a couple of questions of James that have come to me since our discussion on engineers, and I suspect I want to ask those questions before we hear from Montgomery County.

Also, we did spend a lot of time on the procurement act, but we don't want to diminish what's probably what I view is the most important thing we'll do today which is set the pass-through toll program in this state moving forward, as the legislature, the governor and we intended. So with your indulgence, I'd like to ask Mr. Bass a few questions.

There's some concern from some legislators and perhaps from some commissioners about the long-term unintended impact of the pass-through toll program in this context: because of the changes in the way we're distributing the state's money to the people, we have perhaps less flexibility or control at the division and commission level over future expenditures; we're distributing a lot of authority to our district engineers, to regional transportation planners, and to local governments such as Montgomery County.

We have, I think wisely, reserved what the world knows as Category 12 or Strategic Priority funds to ourselves, but the long-term impact of the pass-through toll program might be that we are diminishing the ability of future governors and commissioners to make decisions about Strategic Priority funding, and that's a legitimate concern.

The question has occurred to me in all of these pass-through toll projects we ought ask -- were we not doing it this way, were we doing it the old way where Montgomery County gathered up cash and came in and said we've got $30 million to put up if you'll put up $60-, or whatever, we've got $5 million to put up if you'll put up $40-, that's the leveraging effect.

What's the leveraging effect of, for example, this pass-through toll project? What amount of money will be invested in the state's transportation system immediately as a result of our actions?

MR. BASS: The total cost of the projects on this first round is in the neighborhood of $215 million, and those projects that I listed on the various farm to markets and the direct connector are being accelerated somewhere between six and ten years from when they would otherwise be built.

In addition to that, the county's agreement to make a reinvestment of $76 million of that pass-through toll reimbursement would take eventually the total infrastructure up to $300 million or just shy of $300 million that would be built under this agreement with Montgomery County.

MR. WILLIAMSON: And over the life of the reimbursement, what money will be moving each year from SP or Category 12 to pass-through toll?

MR. BASS: Under this agreement, the minimum amount would be $10-1/2 million each year and the maximum amount would be just under $17-1/2 million, and within that band established by the floor and the ceiling, the actual traffic on those roads will dictate the amount of the actual payment each year.

MR. WILLIAMSON: And the total payment maximally would be what?

MR. BASS: Over the life of the agreement it's just under $175 million.

MR. WILLIAMSON: So another way of looking at this is over a ten to 15 to 16 year period, whatever you said, we're leveraging -- how much did you say?

MR. BASS: $175-, just under.

MR. WILLIAMSON: $175 million of state money with $125- to $140- of local money.

MR. BASS: Correct.

MR. WILLIAMSON: So it's a one-to-one match.

MR. BASS: Yes, sir.

MR. WILLIAMSON: So a comparable would be if they walked in and said we have $150 million, if you'll give us $150-, we'll go do $300 million worth of projects.

MR. BASS: Yes to that, and if you don't mind, if I can jump back to one of your earlier comments of this agreement perhaps restricting the flexibility of future commissions from Category 12, I believe I can make an argument that it would actually increase the flexibility.

As you know, one of the key questions asked of the commission as we go through this process is are these projects something you would normally fund using the Strategic Priority funding anyway. If the answer to that is yes, as it is in this case, normally what would happen is you would see those funds spent in years six, seven and eight.

What we're doing is, through this reimbursement based upon the actual traffic, that payout is now being spread over a ten to 17 year period, and so time value of money, this is actually present value a cheaper payment for those same projects than if we just did it under the traditional method. And that's due to the fact of Montgomery County stepping up, realizing the importance of these projects, and they're willing to initially finance the projects in return for that reimbursement over time.

MR. WILLIAMSON: So what we really have to be cautious about, if those in the legislature -- and they're few -- who have expressed concern about this, and if there are commissioners who are concerned about it, what we have to be cautious about is to keep a time line of these commitments going all the time so that we know at what point are we truly restricting sort of the flexibility of future commissions. Because we don't have to fund this out of SP, it's the route we've chosen to try to control ourselves.

MR. BASS: Yes, sir.

MR. HOUGHTON: It's also, James, restricted to the capacity to finance at the local level too, to put that debt structure on top of the municipality or county. I mean, they don't have an unlimited ceiling.

MR. BASS: Correct, and this one is somewhat unique -- the county can probably speak to it better -- they're using a couple of different mechanisms to initially finance it, both some of their general obligation debt of the county, as well as revenue debt from the project to provide that initial financing to build the infrastructure.

MR. HOUGHTON: So it's constrained city to city, county to county.

MR. WILLIAMSON: But you know, one of the objectives of the pass-through toll program, from the governor's perspective, to the extent that it's possible, the governor wished to eliminate, for lack of a better term, the begging nature of cities and counties coming to the commission and saying please help us.

So this is one of many things we've tried to put in place that says to the local community and regional leadership: Begging is not necessary, we're partners, we've just got to figure out the best way to maximize all of our dollars to get infrastructure on the ground or trains bought or whatever.

Okay, that's all I had. Members, if you need to visit with James, this is the time.

MR. JOHNSON: I had one observation and a question.

The observation is that basically what TxDOT is getting is almost $300 million in project improvements and added capacity and we're basically paying for it on an installment basis.

MR. BASS: Exactly, and we're paying $175 million in installments.

MR. JOHNSON: Well, we're paying $175 million for $300 million, and we're paying the $175- over time.

The second question has to do with what the chairman stated of our committing future governors' and future commissions' ability to distribute special SP money, and my question there is that we're somewhat in uncharted waters in that this is the first, and I think whether we get to a critical zone is dependent upon how often this vehicle or this tool is used, and then the funds that are dedicated utilizing this tool.

Is that a fair assumption?

MR. BASS: Yes. And one of the questions, if I may, on the reinvestment, at least $76 million of that will be reinvested in there, so you get $175 million of state investment and $300- of infrastructure. One approach could have been well, let's not do that other $76 million and have the county reinvest it, let's take that off. But then you start adjusting the math, obviously, and you're $100- and you're only delivering $200- of infrastructure, and if the commission is comfortable with the process for the $300 million of the infrastructure, then that's the way this agreement is laid out.

MR. JOHNSON: I think it's very additive, and you know, if one of our stated goals is project delivery, we want projects that are meaningful to communities like Montgomery County, we want to figure out ways to assist them in getting those projects done, I mean, this is just an absolute win-win situation.

MR. NICHOLS: In the minute order on the reinvestment of the $76 million, is the intent of that be reinvested back into the state system?

MR. BASS: Yes, sir, and the projects on the state highway system would be jointly agreed to by TxDOT and the county.

MR. NICHOLS: Okay, I just wanted to make sure that was the intent.

MR. BASS: On-system projects, yes.

MR. NICHOLS: Are we going to be hearing from the Montgomery County people?

MR. WILLIAMSON: Yes.

Any other questions of Wise Jimmy Bass?

(No response.)

MR. WILLIAMSON: If you'll step back for a second, we would love to hear from all of you, but we want to sure hear from at least the one that we have a card on. And by way, Commissioner Chance, of asking you to come forward, let me just express to the entire court and if you would express to the judge and anyone else, how very pleased we are with this and with you.

We need successes to build upon in the state so that people know that the uncharted waters we travel on many of our initiatives will produce a good public purpose. And from what I can tell, you guys and gals have been a pleasure to deal with, you're forward-thinking to solve problems, and we're appreciative.

MR. CHANCE: We appreciate it. This has been a great opportunity for us.

About a year ago, in fact, February a year ago, Mike Behrens gave a speech in College Station that myself and some of the other commissioners heard, and it was apparent then that we had to change our method of doing business if we needed to continue to grow and attract the state and federal dollars that we have to have for our growth.

Our county population is rapidly approaching 400,000 people. The projects that we picked out are major projects that we needed to move forward, and this process is the only way to move them up, and we think it will certainly move them up in the six to eight year range.

It's a good relationship for the county with the state, and we think it is for the state and Highway Commission with Montgomery County to make these projects happen in a more timely, and we believe in a more cost-effective manner.

The ability of the county to go out and finance these projects is probably our greatest asset that we bring to the table, but when you look at the cost of these projects and you mentioned tying up future dollars, we feel like these roads are being built today and will be reimbursed at present value dollars over this ten or 12 or 15 year period.

It is an excellent program. We appreciate the opportunity to do it and we appreciate the state engineers that helped put this program together for us, and we think it's one that will work very well for us. Thank you.

MR. WILLIAMSON: Well, I can tell you I get phone calls from the governor officially and then we are on business, and then we have personal phone calls. And I know over his four more years of serving as the state's chief executive officer, one of his many goals in transportation was to figure out a way to build things before the congestion occurred, and to build things in ways that don't block traffic while you're building them because he believes those are two of the irritants to the public that someday has to be addressed.

And the fact that we wait for congestion to occur before we build something, and then when we build it we're blocking one and two lanes while we build it, and everybody has got to go through that agony. And this is one major step toward addressing both of those things: building the road before it's in bad shape and building it in a way that it doesn't tie everybody up while it's being built.

MR. MEADOR: I didn't sign a card, but you just struck a great note there. I'm commissioner up on the north end of Montgomery County, and Commissioner Chance and Commissioner Doyal are pretty much on the south and west where all of our congested roads have been.

Up on my end we've still got time, we're ahead of that curve right now. We can make some of these projects happen with this pass-through toll system before we do get to that point that we are in south. We're behind the growth curve down there. So right now, this is going to allow us up on the north end to really make a difference before we get to that critical point, and we really look forward to making this thing work, and we really appreciate your input.

MR. WILLIAMSON: That's great.

MR. MEADOR: And another thing we've got working on my end is our airport. Our Montgomery County Airport is in the process of expanding through some TxDOT dollars with matching funds. And one of the projects that we've got there is to reroute Farm to Market 1484 to allow for the runway expansion, and just to be able to do that is going to be a tremendous economic impact on Montgomery County.

So it just works wonderful for us, and I think the taxpayers are going to get a double boost out of this thing, and as Commissioner Chance said, Pate Engineering has done a great job on working through this thing, and we appreciate their job and we appreciate being here today for this momentous occasion.

Thank you.

MR. WILLIAMSON: Sir?

MR. DOYAL: I just want to echo the comments that the other commissioners have made in thanking you for the opportunity to help better the mobility conditions in Montgomery County. And I think the taxpayers down there will greatly appreciate the efforts of this commission, as certainly we do.

So I won't take a lot of your time, I just again wanted to thank you for your efforts, so thank you very much.

MR. WILLIAMSON: Members, any questions for Commissioner Chance?

MR. HOUGHTON: Do we have a quorum of the county court here?

(General laughter.)

MR. JOHNSON: I was wondering is it going to be a requirement that the judge and all the county employees have to drive over each one of these roads, whatever the traffic count is each day?

MR. CHANCE: We're starting on a new program to help with these traffic counts. We're trying to begin and in fact have started our traffic management program in Montgomery County in our precinct in the Woodlands area that mimics the Houston Transtar, and we will have in place the ability to count some of the vehicle traffic.

MR. JOHNSON: Well, I know Mayor Metcalfe of Conroe will be happy to have the city employees do the same.

One other note. I know that you worked very closely with the Houston District on all these projects, and I understand that's been a great working relationship and I think it really symbolizes so much of what this department is all about.

It's a two-way street. We value our partners -- in this case, Montgomery County -- and our districts, all 25 of them, work within their communities to improve the system, to improve mobility, to improve safety, and this is just a shining example of sort of going down an uncharted path and working together, and I think the result is going to be sensational.

MR. CHANCE: I think so too. And you're correct, we have a great working relationship with District 12 and Gary Trietsch. We've done a number of other projects with him in the past, but without the assistance of him and his staff, we certainly wouldn't have got to the point where we are today.

MR. NICHOLS: Thank you very much. We appreciate you all taking the time to be here today with us.

MR. CHANCE: It's important to us.

MR. NICHOLS: And I know you had to sit through a long morning, and we appreciate it, we really do. It's difficult sometimes to leave your county and your job and your work and spend a day coming over, and don't think it's not noticed, it is.

MR. CHANCE: Well, we appreciate the opportunity, and we certainly recognize this as a good relationship and we think it will be a long-term relationship for both Montgomery County and TxDOT that will benefit all the transportation needs of the county and the state. Thank you.

MR. WILLIAMSON: Thank you, sir.

Anything else, James?

MR. BASS: No, sir. Just staff would recommend approval.

MR. JOHNSON: I'm honored to move approval.

MR. WILLIAMSON: John Johnson of the Houston area moves.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Good job. We are moving forward in Texas.

(Applause.)

MS. ANDRADE: Mr. Chairman, I have a question. Gentlemen, do you mind if we go around the state bragging about you?

MR. CHANCE: Please do.

MS. ANDRADE: Thank you.

MR. HOUGHTON: This first hit the radar screen in Childress and it was one of those we didn't see it coming, but it hit us real hard.

MR. WILLIAMSON: And we're supposed to be careful about people that we do a lot of business with, we're not supposed to either criticize them or uplift them, but I've got to tell you, Gary Pate, you've done a fine job, and we've watched this one and we appreciate what you've done.

MR. HOUGHTON: I want to ask Gary if he negotiated his contract with the county.

(General laughter.)

MR. WILLIAMSON: We thank the folks from Montgomery County very much.

Okay, James, carry on, buddy.

MR. BASS: Item 12(a) seeks preliminary approval of a State Infrastructure Bank loan to Hidalgo County in the amount of $1.38 million to pay for right of way acquisition made necessary by the reconstruction of Farm to Market 1015.

Staff recommends your approval so that we may begin negotiations with the county.

MR. WILLIAMSON: Questions, members?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BASS: Item 12(b), one thing I'll point out, this is what we consider to be a small loan, something under $250,000 out of the State Infrastructure Bank, so this will be the one and only time that this item comes before the commission.

It seeks final approval of a loan to the City of Gregory in the amount of $125,000 plus a 20 percent contingency to pay for utility relocation associated with the expansion of US 181. Interest will accrue from the date funds are transferred from the SIB at a rate of 4 percent, with payments being made over a period of 12 years.

Staff recommends your approval.

MR. WILLIAMSON: Questions, members?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BASS: Thank you.

MR. WILLIAMSON: And since James Bass is exiting, if you gentlemen need to leave on about your business, this would be a good time to exit as well. Thank you very much.

MR. BEHRENS: We'll go to agenda item number 5 now, back on our regular scheduled agenda, and this will be our Aviation item, monthly airport improvement projects. Dave?

MR. FULTON: Thank you, Mike. 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 cost of all requests, as shown in the Exhibit A, is approximately $9.8 million, approximately $7.5 million federal, $1 million state, and $1.3 million in local funds.

A public hearing was held on January 21, 2005. Comments pertaining to two of the grant requests were submitted. Responses have been made to comments received.

We would recommend approval of this minute order.

MR. WILLIAMSON: Members, as we always do, it seems like, going through the Robert Nichols section of the agenda, we have witnesses. I think the best thing to do is to go ahead and take those witnesses up, Dave, and let's hear what they have to say.

We're going to start with -- I apologize -- Lin Libecap. I'm not beyond being corrected, the son of a schoolteacher. Tell me.

MS. LIBECAP: Okay, two syllables: Libe-cap.

MR. WILLIAMSON: Libecap.

MS. LIBECAP: There you go. I was a former teacher so I had to give you a quiz on that.

MR. WILLIAMSON: I'm sorry. I was sitting there thinking how would I do that. But Lin is correct?

MS. LIBECAP: Yes, it is.

MR. WILLIAMSON: Welcome to the commission.

MS. LIBECAP: Thank you. This is the first time I've been here in Austin doing all this, so am I timed or how does that work?

MR. WILLIAMSON: Well, we ask for three. But you're a citizen of the state, we're pleased you're here.

MS. LIBECAP: I tried to time it be around three minutes.

I'm just going to read a statement, basically. I might do a little ad libbing but I'm not too good at that, so bear with me.

The federal government offers free money to states, it sure does, in the form of Block Grants. And of course, we all know that that's our tax dollars, they're federal, but they're our tax dollars.

TxDOT is responsible, I believe, for awarding some of this money to applicants who can prove their project is deserving, has met all the criteria of the grant, and will indeed be of benefit to the public.

Free money, boy, who wouldn't jump at the chance for some of that. But is this money really free and should it be given to just anyone?

A lot of people who run McKinney and its 25-year-old airport -- and that's where I'm from, by the way -- think that they're entitled. They want to expand a business that has been losing money for years. Still they feel it's okay to ask Washington, not Austin, for more freebies.

Here's why I believe they are wrong. Collin County Regional Airport expansion will bring with it pollution of noise and lead airplane fuel which has been linked to cancer and birth defects, among other disorders. Unlike roadways where pollution falls within about 100 feet, airborne aircraft can contaminate an area 20 miles or more from an airport.

There is the Lake Lavon Reservoir, to mention one of many bodies of water which supplies drinking water, et cetera, to approximately one million people in north Texas, and that's less than five miles away.

The airport is losing money, not generating it. The only ones profiting are private entities. McKinney's own records bear out these facts. They bear rechecking.

Expansion continues, new roads and taxiways are built before full environmental impact studies are completed. The airline industry has been in financial free fall since 9/11. Expanding regional reliever airports will mean a loss of more business for the major airlines. DFW and Love Field will have to compete with 12 regional airports for fewer passenger dollars.

There is a way to solve this problem and it's called a Way Port, and if you pair a Way Port with the Trans-Texas Corridor, you'll be able to minimize the noise pollution, help avoid existing residential areas, and give Texas a chance to put full environmental systems into place. We would take care of that and relieve the businesses of having to do all the environmental up front.

It would realize billions in revenue, thousands of good jobs would be created, and we're talking global, NAFTA, South American trade would be more convenient with the Trans-Texas Corridor/Way Port connection, and this Way Port is a combination of airports and trucking industry in concentric circles all the way out to residential areas, all tied together in one neat package, easily accessible by the Trans-Texas Corridor.

A thought to conclude with. In considering Collin County Regional Airport improvement projects, I urge you to take a hard look at the big picture for Texas. Double check the facts you've been given by the applicants, please. You are the last hope for proponents of fiscal responsibility in the airport expansion business. Please let the buck stop with you.

Thank you.

MR. WILLIAMSON: Questions of this witness, members?

(No response.)

MR. WILLIAMSON: Don Keathly.

MR. KEATHLY: Good afternoon. My name is Don Keathly. I'm from the unincorporated area of McKinney, Texas. I've seen most of you before, but thank you for allowing us to attend today.

I'm here today to present a formal opposition to the current request for the City of McKinney for the approximately $270,000. The facts do not support the award of this or future funding.

Collin County Regional Airport is not growing, as being told to this commission and to the taxpayers of Collin County. In fact, air traffic has decreased approximately 38 percent since 2001, and is expected, according to consultants' statements, to continue to decline for some time.

The document I will hand in to you today, McKinney's annual report, depicts air traffic operations for the life of the McKinney Airport. As you will see, not only are the numbers of air operations steadily and significantly decreasing, but the itinerant, usually jet traffic -- whichever one is led to believe is growing -- is in fact stagnant and has been stagnant since 1989.

Growth in general at this airport is nothing more than a mirage. Only when the City of McKinney's alter ego, MEDC, steals major tenants from Love Field or Addison Airport with taxpayers' money does McKinney gain major corporate status.

For example, McKinney taxpayers have been indentured through the MEDC to pay for a new EDS hangar and facilities lease of a tune of $34,500 per month for the next ten years. EDS also receives a 25 percent tax abatement. It is my understanding that previous to this agreement, EDS had a lease and was a full tax-paying customer at Love Field.

Activities surrounding this airport is questionable at best. With the most recent appointments of both a McKinney City Council member to the TxDOT Aviation Board and also a McKinney Airport staff member to TxDOT Aviation Administration, it is no longer possible to understand where the City of McKinney stops and TxDOT Aviation begins.

The proposed refurbishment of the existing runway has been publicly acknowledged to be in actuality a change of the runway beyond its original design to accommodate larger and heavier jets. Due to this refurbishing, the runway must only be approved after the TxDOT Aviation and FAA acknowledges targets of 180,000 operations for design and 240,000 operations for construction are met, and a full environmental impact statement is performed.

One of the documents I'm going to hand in to you today will show that in 2004 -- which is last year -- the total operations had fallen to 117,000 operations. You can see that that is well below the 180- to even start design.

This request includes money for taxiways, cement that links a private hangar to another area of the airport is a driveway. The federal government's public money should never be spent on covering expenses for private business concerns.

2005 is the year of fiscal restraint and accountability, and it's time for this commission to exercise its oversight authority by denying this funding request and by forcing the City of McKinney and its airport to follow all rules and regulations including accomplishing required operational targets and presenting the true facts before any funding is approved either now or in the future.

I would like to hand in those documents, please. Thank you very much.

(Pause.)

MR. WILLIAMSON: Thank you, Don, for that information. It was good to see you again, sir.

Cynthia, Ms. Kaminsky. How are you?

MS. KAMINSKY: I'm okay. How about you?

MR. WILLIAMSON: Fine. It's been a while.

MS. KAMINSKY: It has. Hopefully it will be a lot longer until next time. Right?

(General laughter.)

MS. KAMINSKY: As you know, I have been addressing this commission at various intervals since late 2001. Interestingly enough, my comments always deal with the same issues: rule and regulation non-compliance, and above the law actions at McKinney's airport.

The results have always been the same: citizen input is put aside, funding is granted, and business continues as usual.

MR. WILLIAMSON: Now, Cynthia, we don't put your input aside. We've tried every time to tell you that we think the way we conduct ourselves is almost the only way we can.

MS. KAMINSKY: Actually, can I go off the clock for a minute and ask you a question?

MR. WILLIAMSON: Sure. I don't own a plane.

MS. KAMINSKY: He's in here; you made it in my speech.

Anyway, what we would really love to do and what we had tried to do before, what we would request and put out on the table, we would love to meet with you -- if McKinney wants to be present, that's fine -- and we would also ask a couple of other representatives from the area. Let's all sit down and try to work through these problems. This is a tough place to work through it because you have to make decisions, we're trying to get things into small amounts of time, and really there are ways to solve all of these problems.

They can have their airport, they can conduct business, we can improve our quality of life, but there has to be changes made, and it can't just continue being their ram rodding through of what they want, there are actually things we can do to make a good business environment for everyone.

And so if it's okay, I would ask then, I'll even skip reading the rest of my thing, I would ask that you would table the funding today and let's set up a time. We'll come back to Austin and we'll meet with you on this.

MR. WILLIAMSON: Well, you're not yielding your time, but would you let us talk to Dave for a minute?

MS. KAMINSKY: Absolutely.

MR. WILLIAMSON: Once again, Dave, just so I understand, our role in this is to react to their actions and not to regulate the McKinney Airport's actions. Now, if I'm wrong about that, educate the commission on our role.

MR. FULTON: That's exactly correct. We act in the TxDOT Aviation Division in the grant role on behalf of TxDOT and the FAA. We receive funds from the Federal Aviation Administration and TxDOT to help improve the airport system in the state.

And the City of McKinney, in this specific instance, has requested funding to do engineering to determine a remedy for existing pavement. There's no upgrade here. What's happened at McKinney, the community has been very successful in recruiting business aviation. EDS, Texas Instruments, as has been mentioned, has moved to McKinney, bringing in heavier aircraft than the airport was intentionally designed to support.

This would be step one in preventing further deterioration in existing pavement sections. The city has asked us for a grant and that's the purpose of this request today.

MR. JOHNSON: Can I phrase your question just a little bit different?

MR. WILLIAMSON: Sure.

MR. JOHNSON: Our charge or role in all these aviation grants is not one of enforcement. Is that correct?

MR. FULTON: I apologize for not answering the second part of your question. That's absolutely correct. The airport at McKinney belongs to the City of McKinney, they're solely responsible for its operations, as long as they comply with federal guidelines of equal opportunity and those sorts of things.

MR. JOHNSON: And the FAA would be the primary enforcement.

MR. FULTON: The only enforcement the FAA could have is if the city violated any of their previous grant agreement conditions, and I have a letter signed of last October saying -- this is from Washington saying that they are fully in compliance with all of their grant conditions.

MR. JOHNSON: And our role here is predominantly simply a conduit for state/federal funds.

MR. FULTON: And to administratively manage the project to make sure the funds are spent in the appropriate way.

MR. JOHNSON: Thank you.

MR. WILLIAMSON: And you can sit down, Dave, I don't wish to pit you against a citizen.

We're just real sensitive around here because we have to do a lot of things all the time that tread on people's liberty.

MS. KAMINSKY: And the reason why I'm asking for the meeting is that I feel Dave Fulton's statements to you are misleading, that is not the way the Block Grant reads. TxDOT is responsible for compliance and you have signed up for that; you are responsible for a number of other things.

Furthermore, EDS is not an existing tenant that has worn out its cement; it's a brand new tenant and they have brand new cement. This is not to handle their planes.

So there are a number of things that you are not being told that can be done better when we have a little more time to actually work through the issues and go through point by point. So it's not a bickering back and forth but more a put everything on the table and let's work through to a resolution.

MR. WILLIAMSON: We may well be interested in facilitating that.

MS. KAMINSKY: That would be great.

MR. WILLIAMSON: We can't delay our responsibility today to facilitate that meeting.

MS. KAMINSKY: Actually, my understanding is you can. And that's part of the reason why we do need to have this. You can delay the funding because you have the responsibility and you have said to the Federal Government: I am the Federal Government's agent, I am saying that yes everything is in compliance, and all of these other pieces have been met, and I know the full facts. And right now you don't.

All I'm asking for is a delay of the funding so we can come back down and meet with you before the March meeting.

MR. HOUGHTON: If I were sitting in a meeting with you, when you walk in and you sit down at the table, what is the stated goal?

MS. KAMINSKY: The stated goal is to, first of all, put everything on the table so that you guys understand exactly what's --

MR. HOUGHTON: I don't understand everything on the table.

MS. KAMINSKY: That's what I mean.

MR. HOUGHTON: What do you want with McKinney Airport? Do you want to close it down? Do you want to expand it? Do you want to get rid of EDS?

MS. KAMINSKY: No, we are not asking to close the airport. We are asking for them to follow all the rules and regulations, the environmental law, we are asking for all of the studies to be done thoroughly and completely and in complete compliance with FAA orders.

MR. HOUGHTON: That's FAA's oversight.

MS. KAMINSKY: No, it's not because TxDOT has responsibility for compliance, they share it with FAA.

MR. HOUGHTON: But if they've passed on it, we would then challenge the FAA's [indiscernible].

MS. KAMINSKY: That's the interesting thing because FAA is looking to you guys for initial approval, and they're saying TxDOT -- and we have had this conversation numerous times with them -- TxDOT, they are our agent, they are the ones who go through every project and tell us if it's okay, they're the ones doing the footwork, and if they say it's okay then we believe them because we trust them.

And we're saying you're not getting all the facts, and so you need to have all of that, and they expect you to come back and tell them.

MR. HOUGHTON: I get back to the stated goal is you don't like EDS on the premises?

MS. KAMINSKY: No, that is not what I'm saying.

MR. HOUGHTON: You like EDS on the premises.

MS. KAMINSKY: What I'm saying is that I want it to be an above-board business operation, follow all rules and regulations, follow completely FAA Order 5050.4(a) which we have outlined. It has pages of infractions, and yet that's all being crossed over. Every time you hear that we're in full compliance environmentally with the studies, that is not true.

You also have 1051.1(d)FAA order, they're not in compliance with that. You have Federal Grant Assurance problems.

All of this can be worked out, we can create a plan of action to go forward so that the citizens and the airport are working together.

MR. JOHNSON: Do you have elections?

MS. KAMINSKY: We have elections, but guess what, we don't get to participate.

MR. JOHNSON: Why?

MS. KAMINSKY: Because we are outside of the area. We are affected severely by the airport, but we are not allowed to vote on anything.

MR. WILLIAMSON: I think Don disagrees with you.

MR. KEATHLY: Excuse me, Cynthia. The reason I gave you those documents which are City of McKinney documents, the numbers that I quoted, the 180,000 operations, the 240,000 operations, those are FAA numbers.

At an open forum meeting, FAA was there. It was a public meeting at McKinney during their process of going through the master plan update, Bruce Ehly with the FAA -- no TxDOT, I'm sorry, and then Dave Compton with FAA both confirmed to me personally at an open forum, me at the microphone and them at the dais, that those numbers are correct.

So I think what Cynthia is trying to explain to you the documents that we've given you, the information that we've given you indicates that they're not in compliance because those numbers of operations are the guidelines that FAA operates from. They're asking for funding when the operations are decreasing, they don't even comply with the minimum of 180- to even start design work, and in '04 they're at 117-, and yet they're here before you to receive funding.

That's just one item that we've brought to the table. We can bring more and I understand that this is difficult for you because you're a conduit and you're the pass-through, you're the final vote, but you're also the final decision-maker here as to let's get it right the first time instead of continuing on this path of just continuing to give them the money and let this thing continue to grow without any recourse of making them follow their own rules of FAA and TxDOT.

Thank you very much. I appreciate the extra time.

MR. WILLIAMSON: Thanks, Don.

MR. FULTON: Commissioner, could I respond to a couple of those comments?

MR. WILLIAMSON: Please.

MR. FULTON: First of all, as far as who's responsible for compliance for the McKinney Airport, we have a contract with the FAA, it's called the State Block Grant Contract, and I'll be happy to provide the members here with a copy of that. FAA reserved the right for compliance assurance at designated reliever airports, which McKinney is. So in this case, FAA has the sole authority to ensure the compliance of the McKinney Airport.

As far as I think it has been said that McKinney Airport is not in compliance, Mr. Keathly filed a petition with the FAA alleging that, and the finding was: "This complaint is dismissed. The director finds the City of McKinney, Texas and the Collin County Regional Airport are not currently in violation of applicable federal law and its federal grant obligations.@

That's signed by David Bennett, the director of FAA's Office of Airport Safety and Standards in Washington. So Mr. Bennett's view is they are in compliance.

MR. JOHNSON: David, what's the date of that?

MR. FULTON: It's October -- 10/13/04.

I asked Mr. Mike Nicely -- excuse my voice here, I'm having a little allergy problems -- the director of the Texas Airport Office -- he's been here before to address you on these issues, however, he's in Washington today and was not available. He will come at another time if so needed.

MR. NICHOLS: Let me ask a question. The associated city is McKinney but it's Collin County Airport?

MR. FULTON: They changed their name to the Collin County Regional Airport and the airport manager is here, I believe, and would be able to address that.

MR. NICHOLS: Do you have any indication whether or not the City of McKinney supports this funding?

MR. FULTON: Oh, absolutely. We have an application.

MR. NICHOLS: Does the county support the funding?

MR. FULTON: We require a commitment and a letter of interest from the local governing body that owns it, and that's the City of McKinney, and we have that.

MR. NICHOLS: So we do have something.

MR. FULTON: Oh, absolutely. They've requested this funding.

MR. NICHOLS: So we have elected officials of the City of McKinney, it's their airport, they're supporting that we do this.

MR. FULTON: They've asked us for this funding.

MR. NICHOLS: All right, thanks.

MS. KAMINSKY: The City of McKinney Council has financial interest in the airport: one of the council members is a businessman on the airport; numerous board members have interests in various ways.

So let me explain to you one thing that just recently happened. I think it was June 29, 2004 there was a memo sent to TxDOT Aviation by the airport manager, saying we have someone operating commercial charter operations onsite. Doesn't have the appropriate FAA certification. They have FAA charter certification for another airport, but you have to have certification for the airport you're at.

Didn't have it, didn't have insurance to cover McKinney at the time or at least couldn't produce it, didn't have appropriate documents, were trying to pass in documentation for other airports saying that it qualified for McKinney. They were allowed to continue offering these commercial charter operations until this year.

This is the type of stuff that goes on and on. We did submit that to the FAA. And you're saying that because they didn't come in and in front -- it was in that Part 16 -- because they ignored it, that's okay? It's not okay, and you guys will be held to task.

So what I'm saying is I'm a taxpayer of Texas, I don't want to have to pay taxes for big lawsuits. I would rather work it out with you up front.

MR. HOUGHTON: My question is work what out. I mean, I still don't understand the goal.

MS. KAMINSKY: The goal is to set a plan of action.

MR. HOUGHTON: To do what?

MS. KAMINSKY: To get them to follow all rules, regulations, orders. They're not doing that.

MR. HOUGHTON: The FAA says they are.

MS. KAMINSKY: They are not doing that.

MR. HOUGHTON: Then I guess that's the disconnect.

MS. KAMINSKY: Let's bring FAA in. Let's work through these issues because there are real problems out there.

MR. WILLIAMSON: It would be enjoyable to see if we could force FAA to come down and talk to us.

MR. NICHOLS: Didn't we have one representative here?

MR. FULTON: Yes, sir. He came the last time that McKinney had a request.

MR. NICHOLS: Yes, he did come, and he stood right there and said it's in compliance.

MS. KAMINSKY: At that time it was not in compliance.

MR. WILLIAMSON: Well, I don't think we're the judge and the jury, but we're reserving opinion here for a few minutes, and we are glad you came.

MS. KAMINSKY: Thank you.

MR. WILLIAMSON: Ken Wiegand. Correct?

MR. WIEGAND: Yes, sir. I think I helped you with that at that time.

MR. WILLIAMSON: A couple more years and we're going to be having you over for dinner.

MR. WIEGAND: Yes, Mr. Chairman. Thank you, sir. My name is Ken Wiegand and I'm airport director, Collin County Regional Airport in McKinney.

And I came down to first of all thank you very much for considering our application for the design engineering for the pavement rehabilitation of our about 20-year-old runway and taxiway system. It's been deteriorating. I think the state Aviation director explained that to you in enough detail, so I won't get into it any more than that.

But I can tell you that this is one of our first highest priority projects because we believe that we've got to take care of the infrastructure we have before we build new, and that's what we're doing with this rehabilitation project.

With that said, I want to assure you that we are in compliance and that we are following all of the rules. We are aware that we have concerned citizens that watch us very closely, we are also aware that we have a responsibility and an obligation to the taxpayers of not only McKinney but to the region, and that's one of the reasons why we've renamed our airport because we do have an impact on all of Collin County.

I mean, Texas Instruments corporate headquarters is in Richardson and their flight department, we're very proud to say, is in McKinney on Collin County Regional Airport and they do very well there. They have certain requirements they require us to maintain for safety and security, and of course environmental, to ensure that their operations aren't impeded. They want to keep that airport open too. EDS feels exactly the same way.

I'd like to say, too, I hear talk all the time when I'm down here that we're not generating revenue. We do have an operational shortfall, as do most of the general aviation airports in the country. However, our airport in 2004, according to the Collin County Appraisal District, generated approximately $2 million in tax revenues that come back to the city, Collin County, and to the MISD, and to the Collin County Community College District.

And this past year in '04, the money that we raised for the McKinney Independent School District was about $1,340,000, and according to the chairman of the MISD, she says that's enough to educate 171 school children, or employ the entire teaching staff at Fanny Finch Elementary School. So you know, we're really proud of that. That's the kind of thing we do for our community.

Plus, we make a base for international operations for the corporations in Collin County. We're very proud of it.

We thank you for your support, we appreciate it very, very much. And I'll be here to answer any questions you might have.

MR. NICHOLS: Does anybody have any questions?

MR. WILLIAMSON: Do you want to ask them about being closely watched?

MR. NICHOLS: No.

MR. WILLIAMSON: Well, thank you.

MR. WIEGAND: Yes, sir. Thank you.

MR. WILLIAMSON: Dave, do you have any closing remarks?

MR. BEHRENS: Isn't there one more, Ric?

MR. WILLIAMSON: No.

MR. NICHOLS: Did you get all of them?

MR. WILLIAMSON: Unless Genny wants to testify.

MR. FULTON: Maybe just one other comment, if I may.

It was mentioned by Mr. Keathly about taking traffic away from Dallas Love and DFW. The concept FAA determined 30 years ago for reliever airports was to try to help relieve congestion on the large urban airports so they could grow for passenger services. I just want to put that in the record, please.

MR. WILLIAMSON: Now, is it Genny or Gerry?

MS. KISTNER: Genny.

MR. WILLIAMSON: It appears to be a lady. Ms. Kistner. I'm assuming you don't want to comment on McKinney?

MS. KISTNER: I do not. I just wanted to come today. My name is Genny Kistner. I'm the airport manager at Houston Southwest Airport in Arcola, Texas, and I wanted to thank you for your consideration of our grant request, and I'd be happy to answer any questions that you have.

MR. WILLIAMSON: Now, let me ask you something. We had some contact, I think, written contact with some in your community who apparently felt not unlike the persons who testified on the McKinney Airport. Are you familiar with that concern?

MS. KISTNER: I have heard at city council meetings some talk about expansion of Houston Southwest Airport. In September of 2003, the Fort Bend County Commissioners Court voted unanimously against public acquisition and expansion of the airport. I, at the mayor's request, went to answer any questions that the citizens might have.

The grant request is not for expansion. It is for replacement of some navigational aids that don't work. It's for replacement of runway lights that are dim at best, and it trips the breaker every night, so we want to make sure that those are working correctly.

It also covers some grading at the ends of our runway and possible land acquisition to the east to create a runway protection zone and possibly an overrun area.

The footprint of the airport is the footprint. There won't be, as far as I know, what they're talking about expansion. I saw a flyer that had been circulated through the neighborhoods questioning citizens about whether they wanted to see a 747 land within a mile of their doorstep, and I thought I hope that doesn't happen because we're about 10,000 feet short of runway.

(General laughter.)

MS. KISTNER: I don't know how we possibly could ever make that happen, I don't expect that to happen and I don't expect ever to have 10,000 more feet of runway. And that's what I know.

MR. WILLIAMSON: Members, questions for Ms. Kistner?

MR. JOHNSON: I want to thank you for coming up here. From what I understand is this grant is almost entirely to deal with improving the safety at the airport, and not for, as you say, expanding its capability to handle larger aircraft or anything of that nature.

MS. KISTNER: That's correct.

MR. JOHNSON: The Chair referred we've gotten several emails and letters from citizens I'd say primarily from Arcola, although I got one email I'm aware of from Fresno, and I think what I'm going to say now goes not only to those people's concerns and also the people who have testified here from McKinney.

I think we all have great sensitivity for what they're saying and what the people who are affected by what's being requested for the McKinney Airport. We all live where we live and have concerns with our quality of life and safety and the environment and all the issues attendant to.

In both of these cases, in terms of the specificity of the grant, in one case it's for engineering services in McKinney and at Arcola it's for safety, and I think in each of those cases these are well qualified.

It's difficult for me to sit up here and pass judgment and say that the Federal Aviation Administration is wrong, and so from that standpoint, I still refer to what is our role here.

But anyway, I think the bottom line is thank you for being here, and also please understand that we do take very seriously the comments from the people who are affected by these things.

MR. WILLIAMSON: Thank you, ma'am.

MR. NICHOLS: Anything else? I move we accept the minute order as recommended by the Aviation Division.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

Don't tire of coming up here more than we tire of listening to a citizen that appears to have legitimate concern. We ask about these things even when you're not around. We're just not persuaded that it's our role to intervene in your disagreement with the airport or the owners of the airport. We've never been persuaded of that or I think maybe we could be persuaded to try to do something.

I am going to ask Mr. Fulton to advise me on what role we could serve in sitting everyone down and seeing if we don't have to go through this again. And someone from TxDOT will contact you as soon as possible after he's given that advice.

MS. KAMINSKY: Are there any facts that I could bring to you?

MR. WILLIAMSON: Pardon me? I think you said are there any facts that you could bring. The problem is that we're not a fact-finding board. Come on up, you're welcome here.

And frequently we're cast in that role. Citizens come to us on a lot of policies that we develop as if we are fact-finders or triers of fact. We're not lawyers, we're not a regulatory body in most cases; we are a policy body in most cases.

And even if you were right -- I'm not saying you are or you aren't -- even if you were, our role is not to interfere in that process. Our role is to accept the recommendation of our staff or not accept it based upon what we understand the law to be. And we don't like telling citizens no; we work around here under the concept of find a way to say yes.

That goes for the citizens of McKinney and Collin County and the owners of that airport; they're citizens also. It doesn't go just for the one who's against something or the three or the four.

MS. KAMINSKY: Actually, the number with the representatives who have been here directly, you've seen representatives who represent about 30,000 people.

But you had said that we hadn't convinced you, and that's where I wanted to say what do we need to bring to you so we can start that discussion?

MR. WILLIAMSON: We have a saying around here: You can show me the truth but you can't make me believe it. You have a set of facts, there's no question that you bring a set of facts or an opinion. That doesn't mean that that set of facts or that opinion are important in terms of our responsibility.

You could walk outside and say the sky is blue and that would be a truthful statement and read into the record, but that wouldn't mean that we had anything to do with that or should react to it.

All I'm saying is this is the third time you've been here or fourth, since I've been here? I can't remember. Third or fourth. And you feel strongly about your position, I have no doubt that you speak what you view are important facts and information that we should consider. We're just not persuaded that the information and facts you give us are any of our business.

MS. KAMINSKY: I guess that's what I'm asking. How do I persuade you that it is your business?

MR. WILLIAMSON: I don't know. But what I've told you is I'm going to ask Mr. Fulton to advise me about that. Because I grow weary of having to say no to anyone, I like to say yes to everyone around here. Sometimes we can't.

MS. KAMINSKY: I'd love for you to say yes to me; that would be great.

(General laughter.)

MS. KAMINSKY: Anyway, I look forward to the communication.

MR. WILLIAMSON: Thank you.

MS. KAMINSKY: Thank you.

MR. BEHRENS: We'll move on to agenda item number 6, Public Transportation. Sue Bryant will present two minute orders that refer to distributing funds for public transportation and one that would be asking for authorization to apply for a grant.

MS. BRYANT: Thank you, Mr. Chairman, commissioners, Mr. Behrens, and Mr. Polson. Good afternoon. For the record, my name is Susan Bryant and I'm the director of the Public Transportation Division.

The first minute order we have for your consideration would award Federal Transit Administration, FTA, Section 5311 funds to rural transportation providers. Exhibit A details the amounts that would be allocated per provider according to formula.

Because Congress has only authorized a portion of the funds, this minute order authorizes approval for that portion of the funds which is currently authorized. This amount, less amounts set aside for the Inner-city Bus Program and for program administration, comes to $10,964,970. The total expected allocation for this fiscal year is $15,455,353.

I'd be glad to answer any questions, and your consideration is appreciated.

MR. NICHOLS: Do we have anybody signed up?

MR. BEHRENS: No, nobody is signed up.

MR. WILLIAMSON: Did you have any questions?

(No response.)

MR. NICHOLS: I had a question.

MS. BRYANT: Yes, sir.

MR. NICHOLS: On the PTAC on distribution of funds between small urban and rural -- and I understand this is rural -- this past year we went through some revisions in the formula, and they've been meeting for the last several months to try to come up with a new formula. I know I've visited with them a couple of weeks ago.

MS. BRYANT: Yes. Thank you very much.

MR. NICHOLS: As I understand it, they're still working toward that goal, though, but we do have some recommendations, as I understand it, from the small urban? Have they finalized on some changes?

MS. BRYANT: The recommendation from PTAC right now is for the small urban -- although there is also a recommendation -- this is on the state funding side, not the federal funding side.

MR. NICHOLS: But the federal funding side is distributed by the formula we use at the state level, isn't it?

MS. BRYANT: That's correct, but what is important is on the state side, there is a split that the state makes between the urban providers and the rural providers. For the federal funds, the FTA allocates the funds to the urban providers; then for the rural providers, designates TxDOT as the pass-through agency on the federal side.

MR. NICHOLS: So the feds give us the rural to distribute.

MS. BRYANT: That's correct.

MR. NICHOLS: As we see fit, and we try to do that by formula. So in effect the same formula that we adjusted last year would be the ultimate distribution.

MS. BRYANT: It is the same formula on the rural side.

MR. NICHOLS: Okay. And so we will shortly, as I understand it, be going through a set of changes over formulas for the small urban.

MS. BRYANT: Yes, sir.

MR. NICHOLS: And then I think they had a recommended 65-35 split?

MS. BRYANT: That's correct.

MR. NICHOLS: We don't know as of yet whether or not they're going to have any rural change recommendations other than that 65-35?

MS. BRYANT: At this point the only recommendation they have made on the rural side is for the 65-35 split. We will be setting up a meeting for them prior to the March commission meeting, however.

MR. NICHOLS: So at the March commission meeting, our very next one, we probably will have a minute order for transit to go out with a proposed set of changes?

MS. BRYANT: Yes, sir.

MR. NICHOLS: And then the process begins with the notices and comment and stuff like that.

MS. ANDRADE: But is that for the next funding year?

MS. BRYANT: It's for next funding year, yes, ma'am.

MS. ANDRADE: Thank you.

MR. NICHOLS: But on this you've got the $10 million that's available and then you've got the additional approximate $5- that's expected.

MS. BRYANT: That's correct.

MR. NICHOLS: Okay. If there were changes for the rural formula and they were adopted within several months, and then what is expected does come in, then those could be divided or distributed based on whatever changes might occur.

MS. BRYANT: My understanding, Commissioner, is that that would depend on when the commission decided to allocate those funds.

MR. NICHOLS: Okay. So we're not impacting necessarily at this time that amount?

MS. BRYANT: That's correct.

MR. NICHOLS: Does anybody else have anything?

MR. JOHNSON: Move approval.

MS. ANDRADE: Second.

MR. NICHOLS: All in favor say aye?

(A chorus of ayes.)

MR. NICHOLS: Any opposed?

(No response.)

MR. NICHOLS: Motion carries.

MS. BRYANT: Thank you.

The second minute order we have for your consideration is the allocation of FTA Section 5310 funds for elderly and disabled transportation.

Funds are allocated per TxDOT district. With 25 percent divided among all the districts and 75 percent divided according to a district's proportion of elderly and disabled population based on the U.S. Census. Projects are selected by the districts according to a local plan.

Exhibit A includes amounts for, again, the currently available funds -- these are listed as Category A -- in the amount of $3,879,101, apportioned but not yet available funds -- again, due to reauthorization -- listed as Category B in the amount of $2,020,595, for a total expected amount of $5,899,696.

These projects will provide approximately $2.2 million to purchase or rehab vehicles, $1.5 million in preventive maintenance, $1.4 million for third party contracting of transportation services, and the remainder for equipment and administration.

I'd be glad to answer any questions, and again, your consideration of this minute order is appreciated.

MR. NICHOLS: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MS. BRYANT: Thank you. The third minute order we have for your consideration is to request your authorization to apply for $2,379,023 of federal FTA funds for a Job Access/Reverse Commute, also commonly known as JARC -- project that would specifically assist the border colonias.

When this project was first conceived and submitted over two years ago, the department anticipated that $1,104,000 would be available in toll credits to provide match to assist the colonias. In order to now apply to FTA for this project, the department needs to indicate the source of the match. In order to request proposals for this project, the potential for toll credits also needs to be known.

Due to the timing of the original request for this project and the dire need among the colonias, we request that the commission authorize application of this project to FTA to include toll credits. Actual approval of toll credits to projects would be submitted at a later date once local proposals were received and evaluated.

Your consideration, again, is appreciated, and I would be glad to answer any questions.

MR. WILLIAMSON: And Sue and members, we have one witness who cares to comment on this matter.

Permit us to recognize Glenn Gadbois, who I suspect had something to do with this.

MR. GADBOIS: I'm not sure what you're referring to.

(General laughter.)

MR. GADBOIS: Commission, I appreciate your time. I'm up here just to thank you. This is a long time in coming. I do want you all to know that TxDOT, as of last week, took an absolutely incredible step that is innovative in and of itself.

We had a video conference with every one of the counties that were affected. They had a diverse range of interests involved in that video conference to help them understand how to do an RFP for this JARC program.

That is something we encouraged them to do in the initial formulation of this project because we know that getting this kind of program out and its success will depend on the involvement of the local community, and how invested they are and how many partnerships they can develop around this project.

That was done, it was done very well. It was very well attended, and so I am very encouraged that this money will be greatly invested and well used. I appreciate your help in finding what will be a critical component to this, the local match.

MR. WILLIAMSON: Hang on a second. I'm sure there's questions for you.

Does anybody else on the commission have a question for Mr. Gadbois besides me?

MS. ANDRADE: We had all the counties participate?

MR. GADBOIS: Yes, ma'am, and it was not only district staff and it was not only transit operators, although they were people involved, but you had a number of community organizations and health and human services organizations that were involved in the conversation.

One of the great things about JARC grants is they require all of those interests to be involved in the administration of this, and there were a lot of great questions about what the latitude will be.

MS. ANDRADE: Great. Thank you.

MR. WILLIAMSON: Glenn, first of all, I congratulate you on your hard work on this program. I'm aware that you were instrumental in making it happen and you should be recognized for that.

You know, we've struggled with toll credits up here for a while in that we want to be sure that we're getting the maximum amount of public transit investment for our toll credit investment possible. We receive requests to use the state's toll credits a lot, and I suspect we're tumbling toward some sort of procedure to begin to release some of those based on criteria we all feel comfortable about.

We do have a problem in that we, for all of our efforts, have been unable, it seems, to convince some of our congressional leaders of the need for their active and aggressive intervention in the reauthorization act to assure that their state gets maximum value for its toll credits.

I wonder, could we prevail upon you to become an activist in the army of trying to convince our two senators and our legislative leadership of the importance of this measure?

MR. GADBOIS: I will commit in public to this commission that we have already spoken with a lot of our local partners as well as our state partners about that very issue, and everybody is very onboard to working with the department and the State of Texas to convey that message to our congressional members.

And we have been talking with our national partners about conveying that and getting it conveyed from other states as well because some of the other states are actually the ones that are going to be harder to convince.

MR. WILLIAMSON: It is beyond some of us how it is so difficult to convince some of our congressional and senatorial leadership as to the importance of this. Perhaps you can succeed where we have failed.

MR. GADBOIS: Surely not, but I will try.

MR. WILLIAMSON: Thank you.

Anything else, Sue? Do you want a motion or do you want us to defer this?

MS. BRYANT: No. I would like a motion.

MS. ANDRADE: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MS. BRYANT: Thank you.

MR. NICHOLS: While we're still on this subject, I don't know if it's proper to have an open comment either through Mike or Sue, but this has to do with toll credits. I know we've kind held back quite a bit. We still have, I think, 114 million in toll credits, something like that, we've held back waiting for like a year for the feds to do the reauthorization so we know where we're going to be on toll credits, and that may be coming soon, early summer.

But even after that bill, if it's voted on then, it may take us months after that to sort through and find out what came out of that and then adopt rules. By the time we go through all that process, we may be this time next year.

In the meantime, we've got a lot of small transit providers who could be benefited if we could release some form of toll credits to them. And if we as a commission or the administration want to come next month, if it were possible, with some type of a toll credit process for transit providers, capping it at 100,000 each or something like that, I think it would be perceived quite well.

Would you think it would be perceived well?

MS. BRYANT: I think it would be perceived with a great deal of joy and appreciation, yes, sir, I do.

MR. NICHOLS: It probably would get a lot of good out. I know we've been trying to hold back and blend this with the same thing on the health and human services, waiting for another bill and stuff.

MS. BRYANT: Commissioner, also a number of the transit providers are looking at earmarks that may expire, and the intent, on their part at least, was to use toll credits for those earmarks, and I know there are a number of transit providers that are concerned about losing those federal funds.

We have started, just shortly, but we have started a little bit of dialogue with the providers in terms of bringing to you.

MR. NICHOLS: So we've got some out there that may be fixing to lose some earmarks?

MS. BRYANT: Yes, sir.

MR. WILLIAMSON: Yes, but Sue, you wouldn't want to mislead us.

MS. BRYANT: No.

MR. WILLIAMSON: There are earmarks that need some sort of local match.

MS. BRYANT: That's true, not necessarily toll credits.

MR. WILLIAMSON: Whether it's toll credits or contributions from the county or private contributions.

MS. BRYANT: That's correct.

MR. WILLIAMSON: We wouldn't want to saddle the toll credit category of assets with the burden of that guilt.

MS. BRYANT: Not of that entire local match, no. That's true. We are not necessarily always aware or always informed as to what that community or what that transit provider has submitted to FTA as to their intent for using local match, so we're not advised necessarily ahead of time that they have intended to use toll credits for that match.

MR. WILLIAMSON: That makes sense what Mr. Nichols says, so we'll probably -- already have, I guess, by our dialogue asked the administration to give us some ideas about how to do that.

MR. BEHRENS: We'll put some recommendations together.

MR. WILLIAMSON: It's time for us to do that.

MS. BRYANT: Thank you.

MR. JOHNSON: Might I also ask you at the same time to analyze and review if we have applied for all the toll credits that we believe we're eligible for. I have in the cobwebs of my mind that somewhere along the way I don't think we have, but I'm not certain as to that. And what the critical mass is, if it's just a very insignificant or small amount or whether it's a big deal.

MR. BEHRENS: I think your memory is correct. I remember when James had made a prior presentation, there were some that we hadn't made that application.

MR. NICHOLS: Thanks.

MS. BRYANT: Thank you.

MR. BEHRENS: Agenda item number 7, our rules for this month. We have a rule for final adoption, agenda item 7(a)(1). This would be new utility accommodation rules. John?

MR. CAMPBELL: Thank you. Good afternoon. For the record, my name is John Campbell, director of the Right of Way Division.

I'd like to present for your consideration Minute Order 7(a)(1) which provides for repeal of existing 43 TAC Sections 21.31 through 21.51 of the utility accommodation policy, and the final adoption of new sections 21.31 through 21.41.

This represents the first comprehensive update of the utility accommodation rules since 1993. The amendments are necessary to reorganize the rules for clarity, to allow for the use of updated utility construction methods and materials, and improve the state's management of its real property assets.

We encourage the better quality of utility plans and record drawings through these revisions, the improved accuracy of utility location information, and also to provide for earlier identification and resolution of utility conflicts with transportation projects.

The minute order was presented for proposed adoption at the October 28, 2004 commission meeting. We have received several public comments. Additional opportunity for public comment was afforded on November 23 of '04 here in Austin. Staff recommends your approval.

MR. WILLIAMSON: We have one witness -- we've already drafted this poor guy once -- Mr. Garza with Southwestern Bell.

MR. GARZA: Thank you, Mr. Chairman. For the record, my name is Bob Garza. I'm executive director of Municipal Relations for SBC.

As you'll recall, my colleague at the last meeting in Houston spoke before you and asked perhaps for a re-clarification of some particular items concerning the requirement of professional engineer sealed projects, and with that you were able to grant us that.

I must commend Mr. Amadeo Saenz, as well as John Campbell and Tim Anderson.

I have had an opportunity to review the language and feel comfortable that there's flexibility that I think will achieve both the utility's goals as well as TxDOT's goals.

And just to brief you, what's been presented now new from the previous version of this language is that there's an escalation process to verifying the accuracy of the placement of the utilities within the right of way, and this escalation process would lead up to and include the requirement for a PE seal to the project.

The first step would basically be the certification done by the utility or its representative. In the event that that proves to be problematic and issues arise, we would swiftly move in to try to resolve those issues. However, if that doesn't resolve the issue or the problem, then there's an escalation process that takes it to step two.

Within step two in the language it actually gives you three options, not necessarily in the order: TxDOT staff could request that the plans be certified by either a third party professional engineer or a professional land surveyor.

And those are fine with us with the exception that I'd like to recommend that within the procedural manual this further gets clarified such that we could have some consistency in the way that the escalation process would take place.

And basically we would recommend that the third party be the first step in the escalation, followed by the land surveyor, followed by the professional engineer seal requirement which would be the last resort.

I think if that is further explained and clarified in the procedures manual, then we would be satisfied and comfortable with the changes that have been made.

And again I thank your staff for the work that they've done in a short period of time.

Any questions?

MR. WILLIAMSON: Yes, I have a question I want to ask you.

Our staff is in the process of preparing legislation that will address the matter of who pays for moving utilities when and under what circumstances in state rights of way.

They tell me that they've attempted to negotiate -- if that's the right word -- with the telecom, electric and water utilities across the state, and in all probability there's no room for negotiation, the status quo is what is preferred by everybody.

And I don't talk here of the matter between your company and other companies in the cities, I speak here of state business only.

Is there a scenario -- and if you can't comment now, would you at least go back and talk with world headquarters -- is there a scenario by which we could all work together and get this resolved?

Because our guys and gals say that the system permits you to hold us up, and you say the system is not clear enough about when you should do what, and it always comes down to money.

And what we're trying to do is get to a point where we've got to start moving a lot of utilities fast. We're fixing to start building a lot of new footprint in the state, and it would be much better on all of us if we could figure out a way to do it together.

MR. GARZA: Yes, sir. Let me comment that we have addressed that issue and we've been trying to address that issue for close to two years because I know it's problematic not only for the state but also counties and municipalities.

You're probably familiar with a bill that's been filed in regards to relocation. There's also been two bills filed on overall telecom.

We have been working primarily with municipalities, TML, and trying to see how we can address that issue of relocation and who pays for relocation.

At the moment I can tell you that we're working towards some type of resolution and we're anxious to resolve it. I don't know how that will play out but I do know that there's been discussions at the capitol in regards to that, and it's my hope that we come to some type of resolution this particular session.

I don't know exactly how that's going to play out. I would hope that your folks would be there as well as the counties and municipalities.

MR. WILLIAMSON: Well, if you'd pass along from us to Ed, maybe, that we're probably going to ask for that party because we need to get it resolved for our state roads as well.

MR. GARZA: I'll take that message.

MR. WILLIAMSON: We seek to do it in a way that maybe costs us all a little bit and none of us a lot, and we get it resolved. Because we're fixing to start building a lot of new footprint and it's going to be a mess if we don't figure out how to make it work.

MR. GARZA: Absolutely. As a matter of fact, if I may comment, I'd like to recommend that we hold meetings with your staff and look at those projects as they're coming in. So we'd like to work with you, and a lot of this relocation issue, expenses can be resolved sometimes with redesign or carefully designed projects to eliminate or avoid having to relocate facilities, and we've been successful at times.

MR. WILLIAMSON: Then we'd have to hire a private sector consultant engineer to certify it.

(General laughter.)

MR. GARZA: Hopefully not. But we'll work with you.

MR. WILLIAMSON: Thank you, Bob.

MR. GARZA: Thank you very much.

MR. WILLIAMSON: John, do you wish to defer or do you wish a motion?

MR. CAMPBELL: I wish for a motion.

MR. JOHNSON: Could I make a comment?

MR. WILLIAMSON: Please, Mr. Johnson.

MR. JOHNSON: Actually two. I want to talk about the process. I want to congratulate John and the other members of our Right of Way Division -- which Mr. Garza also alluded to -- but also the enterprises that were involved.

I think this is a wonderful example of the way the process can really work and we can take delicate issues, meaningful issues that affect a lot of people and come to a resolution which hopefully will satisfy everybody involved or most everybody involved. I know that it's difficult to satisfy all parties all the time.

And having made that observation, I want to advise the Chair, I am a shareholder too of the affected parties and I feel like I ought to abstain from voting on this issue.

MR. WILLIAMSON: Oh, Lord, I was going to vote against it and so was Nichols. We're in a pickle. I guess we'll have to change our votes.

(General laughter.)

MR. NICHOLS: I so move.

MR. WILLIAMSON: For the record, before we move and second, Mr. Johnson removes himself from voting on this matter. He will recuse himself from any further statement until we take a vote.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries with Mr. Johnson recusing himself and abstaining from the vote.

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

MR. WILLIAMSON: Yes?

MS. ANDRADE: What about the suggestion that Mr. Garza made, was there any consideration for that?

MR. CAMPBELL: Yes, and I think it's the suggestion referring to our policy manual?

MS. ANDRADE: Uh-huh.

MR. CAMPBELL: Yes. In fact, the dialogue with SBC in this case has been good because it's helped us to come to the realization that we both have the same desire. We get the opportunity through our guidelines and our policy manual to make that clear, so yes, we will do that.

MS. ANDRADE: Thank you very much for doing this, and it's great to see what we can do when we all sit at the table and have the same goal. Thank you very much.

MR. BEHRENS: Commissioners, we have agenda item 7(a)(2) and we're choosing to defer that item to a later date.

MR. WILLIAMSON: Would that be in regards to Fort Bend County?

MR. BEHRENS: Yes, sir.

MR. WILLIAMSON: We will defer to 7(a)(2) at your recommendation, Mr. Behrens.

MR. BEHRENS: Then, moving on to agenda item 7(b), our rule review, Bob Jackson.

MR. JACKSON: Bob Jackson, deputy general counsel.

The commission is required to consider readopting its rules every four years. Notice was posted in the Texas Register on the readoption of your environmental rules. No comments were received, and we recommend adopting the minute order that does readopt these rules.

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BEHRENS: We'll move to agenda item number 8 under Transportation Planning. We have five topics that Mr. Randall will present.

MR. RANDALL: Good afternoon, commissioners. I haven't seen you all in a while.

MR. WILLIAMSON: Howdy, Jim. Where you been?

MR. RANDALL: Hiding, you know. There's a lot to hide too.

(General laughter.)

MR. RANDALL: Item 8(a). In accordance with Section 201.602 of the Texas Transportation Code, the Texas Transportation Commission conducted a public hearing on December 16, 2004 to receive testimony concerning the highway project selection process and the relative importance of the various criteria on which the commission bases its project selection decisions.

In order to more clearly distinguish between preservation and enhancement of the state's transportation system, the Unified Transportation Program encompasses two documents. The Statewide Preservation Program consists of funding strategies used to maintain the existing transportation system. The Statewide Mobility Program focuses on funding strategies used to enhance the transportation system.

There were no oral comments at the public hearing. Written comments were accepted through January 18, 2005, but none were received.

Exhibit A contains a summary of the UTP categories and their development criteria. The project selection process as proposed in this minute order is consistent with the agency's objectives to provide reliable mobility, improved safety, responsible system preservation, streamlined project delivery, and economic vitality.

This minute order authorizes the project selection process for developing the 2006 Statewide Preservation Program and the Statewide Mobility Program under the Unified Transportation Program.

We recommend approval of this minute order.

MR. WILLIAMSON: Discussion, members?

MR. NICHOLS: I'm amazed with the no comment. I mean, this is the layout for the process we're going to use for the entire preservation and the entire mobility for the state for the next ten years?

MR. RANDALL: Yes, sir.

MR. NICHOLS: And so no one commented at the public hearing, and all these entities that are involved in transportation, it seems like all year long I keep hearing these different coalition groups talking about we need to tweak it this way or tweak it that way, but when we actually lay it out, there is no comment.

MR. RANDALL: Correct.

MR. NICHOLS: Okay. Thank you.

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RANDALL: Item 8(b). This minute order approves the department's use of a variance from federal-aid apportionment formulas when allocating funds to various parts of the state.

Texas Transportation Code Section 222.034 requires the commission to distribute federal-aid transportation funds to various parts of the state through the selection of highway projects in a manner that is consistent with federal formulas to determine the amount of federal aid the state of Texas receives.

This section does not include deductions made for the State Infrastructure Bank or other federal-aid funds reallocated by the federal government.

The commission may vary from the distribution procedures provided it issues a ruling or minute order that identifies the variance and provides particular justification for the variance. Your evaluation is required prior to each annual update of the Unified Transportation Program.

Exhibit A contains an individual evaluation of each federal-aid apportionment program, including particular justification for any variance from the federal-aid apportionment formula, and proposes distribution of the transportation funds through the 2006 Unified Transportation Program.

Staff recommends approval of this minute order.

MR. WILLIAMSON: Discussion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RANDALL: Item 8(c). This minute order appoints one member to the Port Authority Advisory Committee for a term expiring February 26, 2007, to represent lower coast ports.

House Bill 3588, 78th Legislature 2003, amended Transportation Code Section 55.006 to create the Port Authority Advisory Committee. The amendment merged certain duties from the former Texas Department Economic Development's Port Transportation Economic Development Advisory Committee with the department's Port Authority Advisory Committee.

The committee provides a forum for the exchange of information between the Texas Transportation Commission, the department, and the committee members representing the Texas port system and others who have interest in Texas' water ports.

One member needs to be appointed to the committee to fill the unexpired time of Mr. Raul Besteiro who passed away on November 14, 2004.

The Texas Ports Association and five ports of the lower coast have recommended Mr. Robert Van Borssum, port director for Port of Lavaca/Port Comfort, to fill this vacancy for the term expiring on February 26, 2007. Mr. Van Borssum previously served on the Port Authority Advisory Committee from December 1998 to December 2000.

Staff recommends your approval of this minute order.

MR. WILLIAMSON: Discussion?

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RANDALL: Item 8(d). This minute order accepts the 2005-2006 Port Capital Program from the Port Authority Advisory Committee.

As mentioned earlier in item 8(c), House Bill 3588 amended Transportation Code Section 55.006 to create the Port Authority Advisory Committee. Section 55.008 requires the committee to prepare and update a two-year Port Capital Program and to submit it each year to the governor, the lieutenant governor, the speaker of the House of Representatives, and the Texas Transportation Commission.

The committee met on February 15, 2005 and formally adopted the 2005-2006 Port Capital Program and submitted the program to the department.

Staff recommends your approval of the 2005-2006 Port Capital Program as shown in Exhibit A.

MR. WILLIAMSON: Discussion?

MR. NICHOLS: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion -- excuse me. The motion and second is withdrawn, and Mr. LaRue, I apologize. Where are you, John? It says 8(d) and I read 8(e). My fault.

MR. LaRUE: John LaRue, executive director of the Port of Corpus Christi. I'm left-handed so my Ds and Es look the same. Sorry about that.

Thank you for the time. I will just take a minute or two.

As Jim mentioned, the Port Capital Program is a two-year compilation of projects that ports consider to be important, and these are the 15 deep-water and shallow-draft ports from Orange, Texas to the border at Brownsville.

They include projects related to basic infrastructure for ports, national defense related issues, security which is a very important part of what we are about at ports these days, and intermodal related projects.

Again, this was considered, the ports helped put this together, worked closely with TxDOT staff, especially Jim Randall, Mario Medina and Paul Douglas, and we appreciate their support and the continued support that we have received over the past six or seven years from both TxDOT staff and this commission. I think we've come a long way, so we thank you for that.

If I could take my Port Authority Advisory cap off for a second and put on my Corpus Christi Port hat, I just wanted to thank the commission, especially Commissioner Andrade. She was in Corpus Christi last week with the governor for the announcement on $5.2 million to help us support in some of our military infrastructure improvements that are vitally needed to be able to load out the support equipment for the troops going to the Middle East.

And the governor's support and his staff, along with TxDOT has been phenomenal in the past 60 to 90 days since we started working on this project. And it is, as I said, vitally important to our port but also to the military installations not only in this state but throughout the central part of the United States.

Just as an example, Corpus Christi and Beaumont have been responsible for loading out 40 percent of everything that's moved to Iraq in the past two years.

So this is vitally needed and we're working with the Governor's Office and TxDOT, and hopefully we can get some federal support for some of these projects also.

Thank you.

MR. WILLIAMSON: Discussions or questions for John? It's always good to see you, John.

MR. LaRUE: Thank you, sir. Good to be here.

MR. WILLIAMSON: All we can say is keep growing that port; we're here to help.

MR. LaRUE: We're trying. Thank you.

MR. WILLIAMSON: Jim, do you wish a motion or do you wish to defer?

MR. RANDALL: I wish a motion, yes, sir.

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. RANDALL: Item 8(e). We bring to you the second quarter program for the economically disadvantaged counties to adjust matching fund requirements.

In your books is Exhibit A that lists the projects and staff's recommended adjustments for each of them. The adjustments are based on the equations approved in earlier proposals. There are 46 projects in 15 counties. The total reduction in participation for these projects is $677,265.

We recommend approval of this minute order.

MR. NICHOLS: I have a question. Is there any indication that -- I remember when this was established by the legislature. We've gone through a couple of sessions with it. Is it something that has to be readopted, or does it just stay on the books until it's changed?

MR. RANDALL: As far as I understand, it stays on the books. I know there's some legislation wanting to tweak it some.

MR. NICHOLS: Okay, there is some because I didn't know.

MR. WILLIAMSON: What county are you from?

MR. NICHOLS: Cherokee.

MR. WILLIAMSON: Is it disadvantaged?

MR. NICHOLS: I doubt it.

MR. WILLIAMSON: Do you want it to be?

MR. NICHOLS: It's not up to me to say, it's about a formula. No, I don't think we're disadvantaged.

MR. WILLIAMSON: We'll go over to the legislature and get it amended.

MR. NICHOLS: That wasn't what I was talking about. I was just wondering if the program may be changing.

MR. WILLIAMSON: I know John wants Harris County to be disadvantaged.

MR. JOHNSON: It is disadvantaged.

MR. WILLIAMSON: It is? They tell me it's the economic center of Texas.

MR. JOHNSON: Too crowded.

MR. NICHOLS: If Harris County is disadvantaged, Cherokee County has got a real problem.

MR. WILLIAMSON: That's enough discussion. Do I have a motion?

(General laughter.)

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RANDALL: Thank you, sir.

MR. WILLIAMSON: You had an easy time of it.

MR. BEHRENS: Agenda item number 9 concerning Traffic Operations. We have a proposed minute order to initiate some proposed lane use restrictions in Harris County.

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

The minute order before you authorizes the creation of a left-lane restriction for trucks on I-45 in Harris County between Greens Road and the Montgomery County line. Trucks would only be allowed to use the left lane to pass other vehicles on the highway.

The department, working in conjunction with local jurisdiction in Harris County, conducted a traffic study and determined that such a restriction could be beneficial to safety and mobility.

The department published a notice in the Texas Register for a 30-day comment period on September 10, 2004, and held a public hearing on the proposed restriction on September 21, 2004. No comments were received at the hearings or through the mail.

We believe that this restriction will be beneficial to safety and mobility and recommend approval of the minute order.

MR. JOHNSON: Questions. Have any other counties taken advantage of this ability or cities?

MR. LOPEZ: Yes. In fact, we're doing it here in Austin. They did the Williamson County portion in the middle of last year and they're about to do the Travis and Hays County portion later on in about a couple of months. San Antonio has got a restriction on I-10 and US 90 inside the loop also.

The Metroplex was talking about doing it on I-30 between Fort Worth and Dallas but I don't know if they've reached an agreement on doing that.

MR. JOHNSON: This has to be sponsored at the local level.

MR. LOPEZ: Yes.

MR. JOHNSON: And is this not an extension of I-45 truck lanes?

MR. LOPEZ: That's correct, it's an 11-mile extension of the current restriction.

MR. HOUGHTON: How is the enforcement?

MR. LOPEZ: In Houston it's really good. The numbers we're getting, it's about 85 percent enforced.

MR. WILLIAMSON: That's because of Carlos's hard work on the Safe Clear Program.

(General laughter.)

MR. LOPEZ: I'll leave that to Mayor White.

MR. JOHNSON: Carlos, I understand, was involved in some enforcement of the truck-restricted lanes.

MR. LOPEZ: Yes. Before the commission meeting last month I went on a ride-along with a truck enforcement unit in Houston, and they park on the other side of the crest of an overpass on the left side. I was on the passenger side of the vehicle. It's an eye-opener, it's real interesting.

But they do a great job in Houston and they're going to a 24-7 type of operation and they think they can do a good job on enforcing it for that amount of time.

MR. HOUGHTON: What type of violations, what are the numbers?

MR. LOPEZ: They say they have about 85 percent compliance is what they're telling us in Houston.

MR. JOHNSON: One of the keys, if not the key, is enforcement.

MR. LOPEZ: That's correct.

MR. JOHNSON: That's why this has worked so well on Interstate 10 East and reduced accidents by such a measurable percentage is because there is enforcement, and I think we'll find that it will be the case as long as these are enforced.

MR. LOPEZ: That's right. And that's why we're doing them step by step and not a blanket all the way across is we want to make sure we have that commitment from enforcement.

MR. NICHOLS: What is the trucking industry saying about this? Because they have less and less lanes for all those trucks to drive on.

MR. LOPEZ: Well, early on we heard some opposition, but I think after they've seen it work, they're okay with it. Because in the places we've installed these restrictions, the operating speeds of the freeways are actually a little better. And they're all about time and money so if they're going to get to Point B a little quicker, that's just better for them.

MR. JOHNSON: They're probably involved in fewer accidents.

MR. LOPEZ: That's right.

MR. NICHOLS: I had expected a major negative reaction.

MR. HOUGHTON: I did too. That surprises me.

MR. NICHOLS: From the trucking industry I literally have not had one single one contact me or anybody.

MR. LOPEZ: I think the proof is in the pudding. Once they see it work, they're okay. But that's why we've got to plan them carefully.

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 those opposed, say no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. LOPEZ: Thank you, commissioners.

MR. BEHRENS: We'll move on to agenda item number 13; we completed 10, 11 and 12 earlier. 13 is concerning turnpike projects and a request for authorization to put out a request for competing proposals on the State Highway 121 turnpike project. Phil?

MR. RUSSELL: Thanks, Mike. Good afternoon, commissioners. For the record, I'm Phillip Russell with the Turnpike Division.

Recently the department did receive an unsolicited proposal from the Skanska group for State Highway 121 in the Dallas area. Specifically the project is in Denton and Collin counties and roughly runs from Business 121 to US 75 on the east side.

Now, the minute order as shown, if you approve it, would initiate a 90-day competition period. We would publish it in the Texas Register and other newspapers and would provide a 90-day deadline for competing proposals to be submitted. I think that probably could be reduced to 60 days if that's your desire. Either way, I think we're okay with it.

And of course, commissioners, this is a basic two-stage process. This would be the first stage, and depending on the time line that you would select, we would anticipate coming back to you in the June time frame with the results of that period.

We would short-list any competing proposals and then make a recommendation to you all about moving forward to the second stage, the detailed proposal stage.

I think Commissioners Houghton and Nichols in the past have inquired about when the issue of a stipend would kick in. It would not kick in at this point. If you so desire to move forward on the second stage, the detailed proposal stage in June, then that would kick in the stipend issue.

Commissioners, I'll be happy to address any questions you might have.

MR. HOUGHTON: There's one here that says the Dallas Morning News would like to see the proposed financing methods.

MR. RUSSELL: Yes, sir.

MR. HOUGHTON: Are you going to hand it to them?

MR. RUSSELL: I suspect we'll let Skanska talk about that and see what their thoughts are on that. Typically, Commissioner, of course, they work very hard on that and they like to keep that a bit proprietary at least until they get through the process.

MR. NICHOLS: So just to make sure everybody understands, advertising to see who might be interested in proposing gives 90 days for people to come forward and say we've got a team, we've got financial, we've got construction, we've got engineering, we're interested in it. They don't actually have to put together a proposal.

MR. RUSSELL: It's called a proposal and qualifications statement.

MR. NICHOLS: It's primarily to show that they've got the resources to get on the short list.

MR. RUSSELL: They typically put enough meat so that we can compare it against the existing proposal that we have.

MR. NICHOLS: So they actually have to start putting some core parts of a proposal together?

MR. RUSSELL: Excuse me?

MR. NICHOLS: I got confused on what you said. I thought, first of all, they're trying to show that they got a consortium or group that is qualified to do all these things, but they don't actually have to make even a preliminary proposal at this point.

MR. RUSSELL: Well, actually they put together typically a conceptual financial plan, not of any great detail, information that they have available, and they do come forward with a conceptual plan of how they would deliver this project.

So the purpose of this notice is to serve notice to those competitors that we have received a proposal essentially from Business 121 to US 75, and that sets kind of the framework. So that they would move forward with a very conceptual proposal, engineering proposal, and a very conceptual financial plan.

But the second stage, if you all did authorize it in June, that's where we get into the more detailed financial plan, detailed analysis and detailed development plan.

MR. HOUGHTON: Well, that gets back to the weighting issue on the front-end. What kind of weighting are we giving to financial versus technical? How far out on this envelope are we going to go with financial versus technical and ability to construct?

MR. RUSSELL: Well, that's a great question, Commissioner.

In the past we've typically done it, again, fairly conceptual. In Waco, with our 820 proposal, we have requested much more detail on that first stage, as you remember on the 820/183 project.

MR. HOUGHTON: Right.

MR. WILLIAMSON: You mean Fort Worth.

MR. RUSSELL: Well, in the Waco commission meeting, I guess, about the 820 project in Fort Worth. Thank you, Chairman.

So I think that's purely the discretion of the commission whether to have a more conceptual nature or if you all need a little more meat and a little more detail before you make that determination whether to go to that second stage.

MR. NICHOLS: The reason I was inquiring at this level, once they came in and you establish three companies, four companies or whatever, then it would be the next step where we establish a stipend or something like that, and they do the detail and have a lot more time.

I just want to make sure that we send a clear signal, because a lot of people were not aware that we might be considering doing this, so they're going to be officially hearing about it today. And in 90 days -- which goes real quick -- they're going to have to put their teams together and put a proposal together and get it back to us. And that's not very much time.

MR. HOUGHTON: That goes back to the weight of the message that we send. Are we going to weight it on the front-end of this, are we going to say it's going to be weighted at 75 percent financial prowess, or is it going to be weighted 50 percent?

MR. RUSSELL: I guess, Commissioner, we are required to provide that weighting data in the general criteria that will be in the publication.

There has been some confusion in the past that when we provided that for the first stage and then naturally we adjust and refine it on the second stage, I think there's been some confusion that somehow we were hiding the pea or changing the rules, and certainly that's not the case. There's two different stages.

MR. HOUGHTON: Not to leave any stone unturned or any room for interpretation by the bidders as what don't you understand about what we went through on the TTC-35. I mean, that would be a message, but at the same time a picture is worth a thousand words. You say we are very interested in edge of the envelope type financial.

MR. RUSSELL: Again, in the Waco commission meeting, the message that you all sent me very loud and clear was you're very interested in equity and the ability to leverage limited state and federal dollars. So that's been our mission and we intend to move forward with that criteria on either stage of these proposals.

MR. NICHOLS: I just want to make sure, because it's proposals and qualifications is what we're saying, that what we're interested in are groups that can put a team together that are qualified and capable and are thinking along this path and make sure they have a shot at going for this thing.

MR. RUSSELL: Right.

MR. NICHOLS: We're not trying to sort anybody out at this step based on the actual proposal itself unless it's just a real weird one or something. It's almost more like a short list of consortiums to go to the next level, and I don't want some good consortiums not to come forward because we've got the proposal part on it.

Isn't that set in legislation?

MR. RUSSELL: Yes, sir.

MR. NICHOLS: And our request is actually to move the financial proposal part a little further in the process.

MR. RUSSELL: Right. The bar is typically fairly low, and I guess from my viewpoint, Commissioner, I haven't heard anyone complain -- I guess for lack of a better word -- that 90 days would be insufficient.

MR. NICHOLS: We want people to feel comfortable to come forward.

MR. RUSSELL: You bet. The second stage, obviously we provide more time for that, but there shouldn't be a problem in these guys putting it together, certainly in 90 days.

MS. ANDRADE: Phil, I have a question.

MR. RUSSELL: Yes, ma'am?

MS. ANDRADE: You were talking about the 90 days and you said if we wanted to we could move it to 60 days. Is there a guideline?

MR. RUSSELL: No guidelines.

MS. ANDRADE: Should we establish one so we won't be criticized?

MR. RUSSELL: Statutorily we are required to give 45 days timeline. Typically what we've done in the past, we look at somewhere between 60 and 90 days. I'm comfortable either way.

MR. WILLIAMSON: If I might, it may be that Phil is showing some deference to me because I feel like shorter is better, and I know at least Robert feels like longer is better and perhaps some of you others do also.

MR. JOHNSON: How about consistency?

MS. ANDRADE: That's all I'm looking for.

MR. WILLIAMSON: Well, I would argue that that might vary from project to project. There may be some projects where it doesn't take 60 days to figure out if you want to compete.

MS. ANDRADE: Could we establish some guidelines to protect ourselves?

MR. WILLIAMSON: I think that it always makes sense to establish guidelines. My only observation is a vacuum never lasts, people will take as long as you allow. And if we are to get transportation assets on the ground that are needed in this state, it seems to me we should always be asking ourselves how fast can we do it in a prudent manner.

Just to defend the staff a little bit: Phil knows I like 60 and he knows Robert likes 90.

MR. NICHOLS: It's written as 90, though, isn't it?

MR. RUSSELL: Yes, sir.

MR. NICHOLS: But you are the Chair.

MR. WILLIAMSON: It may be 120 by the time Hope and Ted get through with it.

(General laughter.)

MS. ANDRADE: You know, quicker is better for me too -- I'm sorry, Commissioner Nichols -- but I just want to make sure that we're consistent and that we have something to protect ourselves, that we're not criticized for one time we give it 60 and another time we give it 90.

MR. RUSSELL: Yes, ma'am. I think, Commissioner, there is some sense -- and again as the Chairman said, every project is going to be a bit unique. Statutorily we know that we are required to give 45 days.

Ultimately what I think you all have to grasp with, not just between two commissioners but all five of you, if we want people to come forward with unsolicited proposals, they put a lot of research and development money at risk, and so shorter tries to reward them a bit for that. What we have to obviously balance is it is in the best interest to have competition. That would head towards a longer competition period.

So every project is going to be a little different. 60 to 90 days at this stage, I'm very comfortable either way. I think whether it's 60 or whether it's 90, sufficient teams can get together, understand the project and put together a conceptual proposal and qualifications statement.

MR. WILLIAMSON: And as far as on this one, 90 is fine with me. My instinct is to always make it shorter for the very reason that Phil outlined, and that is this group -- who is it, Skanska?

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: They've spent some amount of money putting this in front of us, spurring us on to consider it, and if we give, for example, Cintra or Fluor or whoever else 120 days to put together an initial proposal, or 140 or 150, we're in effect watering down the investment Skanska made. And then eventually what happens is Fluor says I'm not going to make any more proposals because there's no advantage to pushing the envelope, so I'll just wait for TxDOT, and then we're back to doing business the way we did in many respects.

So I think the colloquy is we probably need to get some guidelines, start thinking about what those guidelines should be. On my end of the spectrum it's move as fast as possible; on the other end of the spectrum it's move not quite as fast, and we'll work through that and adopt something in the next few months.

Is that okay with everybody?

MR. HOUGHTON: Well, I'm not necessarily for a fast, hard rule on that. I like the flexibility.

MR. JOHNSON: You know, the template here is that these are going to be complex projects. These are not building sidewalks in front of your house; these are major crowded thoroughfares and they're going to be very complex projects. And I'm not arguing the 60-90 thing, I'm just saying we need to be consistent and uniform in our approach.

And regardless of who is the original presenter, I think they have an advantage because they have more in-depth knowledge of the issues because they have made that part of their investment, they've paid those costs to determine those, than the people who say that looks like an interesting project, I think we ought to put together a group of companies and indicate our interest. They have a time curve and a knowledge curve that they've got to rally to compete.

I think it's in the state's best interests to sort of meld those two approaches and come up with something that's consistent and uniform but is also very cost-effective.

MR. WILLIAMSON: So you would argue maybe for us just to back up and just say it's 45 days because that's what the law says.

MR. JOHNSON: I think we ought to go to the people that we're encouraging to participate in this process and ask them what they believe to be a reasonable amount of time, and then probably cut it in two-thirds.

MR. WILLIAMSON: We can follow the model that the CEC and the department did on whether to get a proposal or an interview.

Amadeo is too sleepy to react.

MR. HOUGHTON: I'd like to do 60 on this one.

MR. WILLIAMSON: I'm comfortable with 90. Are you comfortable with 90? Then let's go back to the proposal itself.

Phillip, for all of my aggressiveness in getting assets on the ground, I'm not aggressive about making a stupid mistake. I would assume that by bringing it to us, staff is totally convinced that the project has merit, whether others propose or not. In other words, if no one else proposed, we would still sit down and spend resources and work through and see if we could get a business deal that made sense to the taxpayer, this particular project.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: I mean, if we didn't, we wouldn't, we'd walk away. But you wouldn't be bringing us something that didn't appear to have transportation improvement merit.

MR. RUSSELL: We and the Dallas District both feel that this has very unique opportunities.

MR. WILLIAMSON: Starting several years ago, we slowly but steadily started moving towards this notion that we like regional planning and local execution. We've sent an awful lot of authority now to the north Texas region, Houston region, and so on and so forth.

Surely we are in communication with our north Texas transportation partners. We're not going to catch them off guard.

MR. RUSSELL: Yes, sir. I think Bill Hale has worked really closely with the counties, Denton and Collin counties. I believe the Denton County portion of this roadway is already in the MPO plan as a tolled way. My understanding is that Collin County now has created a work group to analyze what the best funding approach will be for that seven-mile unfunded portion in Collin County.

And so I think actually, Chairman, these two processes coincide very nicely. If we go ahead and move forward with this process, as the same time Bill is working with the Collin County group for them to make a determination of whether to move forward as a toll road. If the answer is no, then you all could easily pull the plug at the second stage; if the answer is yes, then we stand very nicely to move forward with this competition.

MR. WILLIAMSON: And I want to take this opportunity, as we always do around here, to talk about multiple goals of the commission.

Without indicating that I care one way or the other what the RTC does on their proposal about the preferred toll operator of record in north Texas, this is a good example of why the four counties of the NTTA should give some thought as to whether they want to bind themselves to that type of decision.

Because it's highly unlikely that Skanska or Skanskas of the future would have made the proposal they've made to the state if there were already a toll operator in a geographic area selected -- they would have made a proposal but it would have been different and perhaps not as beneficial to the area or the state financially if there was already determined that there was somebody out there that is going to operate any toll road or not at their option.

And this is something we've discussed internally and it would be only fair to point that out publicly that sometimes when you have rules that say I get first shot, nobody else does, it has a cold-water effect on everyone else.

MR. RUSSELL: I would agree.

MR. WILLIAMSON: Any other questions or dialogue we need to have with Phillip about this, members?

MR. JOHNSON: I just have one question. Phil, heretofore, the times that we have gone through this exercise has not the period been 90 days for response?

MR. RUSSELL: Commissioner, I think it's probably generally been 60 days. There may have been some -- we may have one at 90 days. I'll be happy to look at that and I certainly will to put together some guidelines what we've done so far.

MR. JOHNSON: I would appreciate your doing that.

MR. NICHOLS: The original rule had it fixed at 45 days.

MR. JOHNSON: I got that.

MR. RUSSELL: After that, Commissioner, I don't know that we've ever utilized 45 days, I think generally it's been 60 days. I'll check that, Commissioner.

MR. WILLIAMSON: But Nichols wins this one.

MR. NICHOLS: It's not a matter of winning. But the original rule when TTA was a separate board, in those rules it was fixed at 45 days, regardless of whether it was a billion-dollar project or a $50- or $100 million project. And it takes a substantial amount of difference in time depending on the size of the project, and so I think later -- I was on that board at that time -- later, as it was blended back --

MR. WILLIAMSON: As was Ms. Hope Andrade.

MR. NICHOLS: That's right, you were there that big day, weren't you? That was an interesting day.

But anyway, I think what we finally decided was because these things are different complexities that you need to be able to have different times.

MR. RUSSELL: Right.

MR. NICHOLS: So it would be hard to lock in a time.

MR. RUSSELL: I guess my sense, Commissioner Nichols, if I can, that first stage when we have to determine what's a reasonable period, 60 or 90 days, we have some flexibility. Even if they're complex, even if they're more simple projects, teams should be able to coalesce and put together a game plan fairly rapidly because it is a conceptual plan.

If we choose to go forward with that second stage, that's when it really kicks in and it's very critical, depending on the complexity of the project, that those teams do need a bit more time putting together a detailed proposal.

MR. NICHOLS: If we're successful on this piece of legislation where we move the proposal a little further back in the process and it's a matter of accepting a team to work with, I would certainly feel a lot more comfortable about moving the time shorter at that stage. It's the two-piece thing that concerns me.

MR. WILLIAMSON: If we go through with this, Phil, are you convinced that finally the private sector world we wish to deal with understands that we're very serious about don't bring us this stuff unless you're putting your money on the line?

MR. RUSSELL: I think they get it, Chairman, I think they get it.

MR. WILLIAMSON: We don't have the money to go out and build everything that needs to be built ourselves.

MR. RUSSELL: It shouldn't be any surprise to anybody that we're very focused on that.

MR. WILLIAMSON: Other questions or other discussion, members?

MR. NICHOLS: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second on this, one of the most exciting things we'll ever do. All those in favor of the motion please signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Congratulations to you and go forth and get us a good project -- cooperatively with the north Texas leadership.

MR. BEHRENS: I talk slow, Thomas, so you can raise that up.

Agenda item number 14 are our contracts for the month of February. Agenda item 14(a) is our contracts in maintenance and highway and building construction. Thomas.

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

Item 14(a)(1) is for the award or rejection of highway maintenance contracts let on February 8 and 9, 2005 whose engineers' estimated costs are $300,000 or more. We had nine projects, an average of five bidders per project.

Staff recommends reward of all projects.

MR. WILLIAMSON: Discussion?

MR. NICHOLS: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: There's 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 14(a)(2) is for the award or rejection of highway construction and building contracts let on February 8 and 9, 2005. We had 71 projects, an average of just over four bidders per project. We had just a bit of an overrun, .51 percent overrun overall.

We have three projects we recommend for rejection. The first project is in Eastland County, Project Number 3228. It was 60 percent over; we had one bidder on the project. It was for illumination, some ADA work for sidewalks, storm sewers and an overlay. The bid was just too high. We'd like to go back and see if we can solicit some more bidders for the project.

The second project recommended for rejection is in Hill County, Project Number 3225. It was 39 percent over; we had one bidder again. This is an upgrade to some arbor units at a picnic area with some ADA work as well. Again, the bid was too high. We'd like to go back and see if we can solicit some more bids for this project.

The last project we recommend for rejection is in Uvalde County, Project Number 3027. It was 45 percent over; it had two bidders on it. This is for some flood damage repair. It had an item in there for concrete pavement and we think we can redesign that and take out the concrete pavement requirements and make it more amenable to address the erosion problems that we're having at the area and change the design and reduce the cost of the project. So we'd like to go back and rebid that one as well.

Staff recommends award of all other projects with the exceptions noted.

Questions?

MR. JOHNSON: Mr. Chairman, I'm a landowner on a road in Houston County where one of these contracts is to be let, and I would request that I be shown as not voting on that particular one which is Farm to Market 229 in Houston County.

MR. WILLIAMSON: Farm to Market 229, Mr. Johnson has removed himself and recused himself from participation in this discussion and will not be casting a vote, if a vote is called for.

MR. NICHOLS: Is that part of that economically disadvantaged area down there?

MR. JOHNSON: It's Houston County, not Harris County.

MR. NICHOLS: Oh, excuse me, that's right.

MR. JOHNSON: Harris County is maybe a little overpopulated; Houston County might be a little under-populated.

MR. NICHOLS: Houston County is doing fine, it's Harris County that's in trouble.

MR. WILLIAMSON: Houston County is in your part of the world, isn't it?

MR. NICHOLS: Yes.

MR. JOHNSON: Crockett.

MR. WILLIAMSON: Are you teaming up to control the countryside up there? You and Cliff Johnson?

(General laughter.)

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. NICHOLS: You've got a motion and a second, but I've got a question. It's just a question, it's not going to change the motion.

On our sheet one of the things that you do is you indicate -- you do a number of calculations: total amount of dollars, number of bidders, amount overrun or whatever. But there's a section that we always keep track of which has to do with minority contracts. So you've got DBEs low bid, low bid amount, dollars received, number of bidders and all that kind of stuff.

And there's an indication here that 22 of these contracts are going to DBEs for a total of $21 million, or almost 7 percent of the total. And these are contracts directly as prime contractor to the DBEs. Is that correct?

MR. BOHUSLAV: Those are contracts to DBEs and SBEs. And a DBE is a disadvantaged and that does have the race and the gender aspects to it, and the SBE is basically a HUB except it's the size of the HUB except the race and gender aspects are removed. In other words, they're a small contractor but the race and gender doesn't come into play.

MR. NICHOLS: But these are directly as opposed to being subcontractors.

MR. BOHUSLAV: Yes, sir.

MR. NICHOLS: And then on the prime contracts on the rest of these, the other couple hundred million or so, we require that they subcontract out or we at least have goals where they subcontract out a certain percentage.

MR. BOHUSLAV: On some projects we do establish goals and then also come in with DBEs or HUBs or SBEs on their own and they participate without a goal requirement as well.

MR. NICHOLS: Okay.

MR. JOHNSON: Do we track those numbers of the subcontractor involvement?

MR. BOHUSLAV: Yes, we do, for the HUBs and for the DBEs.

Now, I would add one thing in regard to the SBEs. We probably do not have a lot of our potentially qualified SBEs registered here with the department. Some have come in and registered but we probably have a lot of them that are not. So there's probably more SBEs being utilized than what we actually show here.

MR. NICHOLS: I think the point I was trying to make is these are contracts going directly to them where they control the whole contract performance as opposed to like we were talking about earlier on the consulting thing where the percent was primarily going as subcontracts.

MR. BOHUSLAV: But I think that number is low.

MR. NICHOLS: So you think the number is actually higher.

MR. BOHUSLAV: It is because I know we haven't registered a lot of potentially SBE-qualified contractors out there. And for that matter, even potential DBE contractors. We have a lot of potential DBE contractors in the Valley area that are not registered, and we're working on trying to improve the certification of DBEs in the Valley area.

MR. WILLIAMSON: My understanding, Thomas, is there's some minority-owned and female businesses that don't want to be registered separately.

MR. BOHUSLAV: I get that word also, yes, sir. There's some, because of the additional administrative burden for that, they would just prefer to stay out of the program.

MR. WILLIAMSON: Anything else, members? Let's go ahead and move and second again, please.

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. WILLIAMSON: Mr. Johnson is not participating in the consideration of this agenda item, he's recused himself and he will not be voting on the agenda item.

I have a motion and a second. All those, other than Mr. Johnson, in favor of the motion, signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries with Mr. Johnson abstaining.

MR. BEHRENS: Item 14(b) is a contract claim.

MR. WILLIAMSON: Don't tell me you've got something involved in this, John. Did I hear you say something?

MR. JOHNSON: No.

MR. WILLIAMSON: I thought I heard somebody say Wait a minute.

What's the contract claim?

MR. SAENZ: Good afternoon, commissioners. For the record, Amadeo Saenz, assistant executive director for Engineering Operations, and also chair of the Contract Claims Committee.

The minute order before you approves a claim settlement for a contract by K-Bar Services, Inc., for Project RMC 609188001 in various counties of the Austin District.

On January 12, TxDOT's Contract Claims Committee considered this claim and made a recommendation for settlement to the contractor. The contractor did not respond within the required 20-day time frame, and based on our rules per Section 9.2, the committee's recommendation is then considered final and further appeal is barred.

The committee considers this to be a fair and equitable settlement of the claim and recommends your approval.

MR. WILLIAMSON: Discussion?

MR. NICHOLS: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. SAENZ: Thank you.

MR. WILLIAMSON: This is not the first time we've had this situation with these guys, is it?

MR. SAENZ: I think this contractor just does not like to respond.

MR. WILLIAMSON: Okay.

MR. BEHRENS: Agenda item number 15 is our routine minute orders. They're all listed there for you. They have all been duly posted as required. If you have any questions on any of those individually, we'd be glad to answer those; otherwise, we'd recommend approval.

MR. WILLIAMSON: Members, I'll give you a moment to consider whether or not any of these agenda items affect any of us personally.

I'll ask, Mr. Behrens, to the best of your knowledge, is that the case?

MR. BEHRENS: I am not aware of any of them that would impact anybody.

MR. WILLIAMSON: I know you can't be definitive, I just ask for your best guess.

Any discussion, members? Can I have a motion?

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.

Do we have any comments in the general comment section?

MR. BEHRENS: We have one, Mr. Chairman.

MR. WILLIAMSON: Jerry Roane.

SPEAKER FROM AUDIENCE: He just stepped out.

MR. WILLIAMSON: Did he step out permanently?

SPEAKER FROM AUDIENCE: [Inaudible.]

MR. JOHNSON: Do we have any birthdays to celebrate?

MR. WILLIAMSON: Nichols, but he's leaving, he doesn't want us to sing.

MR. WILLIAMSON: Mr. Roane, it's good to see you again. Mr. Nichols saw you coming up here and he's invented something like you and he didn't want to be charged with competing with someone so he left.

(General laughter.)

MR. ROANE: I'm sorry I stepped out for a second.

MR. WILLIAMSON: He had a meeting at 2:30 and he told me to tell you he was sorry he had to leave.

As far as yours, sir, what have you for us?

MR. ROANE: I just wanted to thank you for the last time you had me, and this is the model that was in the National Science Museum in London at the time, I just had the little wind tunnel model.

Some other new advances in the program, through your recommendation, I talked to Steve Simmons and Rick Collins within TxDOT, and all those meetings went well. And Rick suggested that we talk to Texas Transportation Institute at Texas A&M, and we also talked to UT Center for Transportation Research, with a good response from both of those places.

So in the process of understanding your 60-day rule, we put in an unsolicited proposal to TxDOT for a guideway between UT main campus and J.J. Pickle, and that would be operated as a toll road with a 2.6-year payback. So that is testing your little system of 60-day, 90-day.

But I think the toll road onslaught has kind of made those people a little too busy, so I guess all I'm asking for today is just keep us in mind and hopefully the toll thing will subside.

MR. WILLIAMSON: Again, where did you apply for this different kind of toll road?

MR. ROANE: Excuse me?

MR. WILLIAMSON: From-to where?

MR. ROANE: The main campus of UT to J.J. Pickle Research Facility. It's about eight miles north of the main campus. It has the ability to park 7,000 students at the Pickle facility which is empty; it's just a golf driving range right now, but it's owned by the university.

MR. JOHNSON: Be careful there.

MR. ROANE: Well, we can put it next to the driving range, get some windshields knocked out.

But the thought is because it's so energy-efficient, the cost of energy savings pays for the system really fast. And we've surveyed the preliminary civil engineering study of where the pilings would be and which buildings would have to be gone over the top of. Those preliminary numbers are in an unsolicited proposal.

Just real quick, there are some slides that are up. This is an article that's going to be in the Australian equivalent of Popular Science, but it describes the car more in popular mechanic's terms where it's a performance vehicle. The main feature on there is the 40 to 180 miles an hour in 6.4 seconds, so that's kind of the gist of that.

And this is the route, the red line between the UT main campus on the left and it goes down 22nd Street, turns left on Leon, goes absolutely north till it hits MoPac, and we do a little jog right there to save a few million dollars in real estate property rights. But when it goes up MoPac, there's absolutely nothing in the way. There's railroad track there right of way; we don't get on the railroad property, we're just on the city side, and there's nothing on that right of way.

So it's pretty clean. We could lower the property values a little from the unsolicited proposal I sent in by not going over about ten houses where I think the logistics of that, the way I envision it, would be that TxDOT buy the house, we build the track over the house, not touching the house, and then sell the house back on the public market so that the total real estate value, minus the abrogation rights, of course.

And then that way the state doesn't have to demolish any property, it just re-utilizes what's there and makes an agreement with the new owner that it's okay to have the cars driving over some portion of their roof line.

The other property, of course, is not affected at all.

And I think you saw the merge animation last time. This is just a reminder that you take three lanes of roadway and you merge them and it makes one guideway rail so the capacity is about three to one.

This is Rick Collins' drive to work. I was trying to impress him with how it would look. You see all the telephone poles and light things and stop lights and stuff, and then this is how it would look with the tri-track. All the telephone poles and wires and droopy transformer things would come off the skyline and it would be cleaned up with the rails, and you'll see the two levels of rails up there. And there's a car and there's one turning up there.

So it's kind of what the vision looks like for putting it in the city, not the UT shuttle.

This is the guideway construction. When I talked to TxDOT, I tried to call it a triangular highway. The outer skin is for form, it allows me to create the trajectory, allow for bow and sag and a lot of trajectory type things that you can't do with the current highway system.

Right now when a truck goes over a bridge, the bridge sags and everything goes boomp-a-doomp, boomp-a-doomp. This accounts for that ahead of time with the process that forms it.

And of course, the concrete is poured in after the fact, so the track is extruded, shaped. Some forms are put in those cavities for the utilities, and then the concrete is backfilled with a pumping-purging process.

And the pre-stressed steel is the key to any good bridge construction, so the steel is amazingly strong, the concrete is amazing stuff, and the aluminum just holds the shape.

And this is another follow-on to the UT-J.J. Pickle version. The J.J. Pickle one is to the left, the other squares would be if we were to replace Cap Metro's involvement in UT's shuttle program where they're spending like half a million dollars a year -- I'm sorry, more than that -- a lot of money with Cap Metro to do the student shuttle. We could do it for about $6 million in track.

This is just another example of the city; this would be San Antonio. You see there's a little bit of wiggling in the lines based on existing structures and the way roads have kind of formed over the history of San Antonio. But that's kind of how a typical city would look with a grid.

And I think that's all. And we're also proposing to California, so we'll get a little state competition going, or if you wanted to do a dual funding for research and development between California and Texas, that might be possible too.

We're looking at a route between Santa Cruz and San Jose, the southern tip of San Jose. It goes over a mountain pass through Redwood Forest. This has the ability to not damage that Redwood Forest hardly at all because we only put a spot every 60 feet that would be done gracefully within the Redwood Forest.

So that's pretty much where we are. And any encouragement from the commissioners down to the working guys at TxDOT would be appreciated.

Questions?

MR. WILLIAMSON: Very interesting. It's good to be persistent.

MR. ROANE: I didn't want to be persistent through all those other meetings that had all the clamoring going on, so I waited.

MR. WILLIAMSON: Thank you very much.

Are there other speakers signed up for open comment?

MR. BEHRENS: No, sir.

MR. WILLIAMSON: Is there any other business to come before the commission?

MR. BEHRENS: Not from the staff.

MR. WILLIAMSON: The most privileged motion is in order.

MR. HOUGHTON: So move adjournment.

MR. JOHNSON: Second.

MR. WILLIAMSON: I have a motion and a second to adjourn. Is there objection to the motion?

(No response.)

MR. WILLIAMSON: All those in favor will say aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

Please note for the record that it is 2:39 p.m. and this meeting stands adjourned.

(Whereupon, at 2:39 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: February 24, 2005

I do hereby certify that the foregoing pages, numbers 1 through 251, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Penny Bynum before the Texas Department of Transportation.

__________02/01/2005
(Transcriber) (Date)
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Austin, Texas 78731