RIC WILLIAMSON, CHAIRMAN
JOHN W. JOHNSON
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

PROCEEDINGS

MR. WILLIAMSON: Good morning.

AUDIENCE: Good morning.

MR. WILLIAMSON: It is 9:14 a.m. and I call the January 2006 meeting of the Texas Transportation Commission to order here in Conroe and Montgomery County, the birthplace of the Lone Star Flag. It's a pleasure to be here this morning and we thank each of you for being here.

Please note for the record, public notice of this meeting, containing all items on the agenda, was filed with the Office of Secretary of State at 2:40 p.m. on January 18, 2006.

For those of you who attend our meetings each month, you know what's coming next; for those of you who are new to our meeting, we ask that you participate with us. We take this moment to all pull out our phones, pull out our PDAs, our Blackberries, our communication devices, and put them on the silent mode. We'll all do that together where we won't be disrupted by someone's communication device. Thank you very much.

This is the Transportation Commission's first official visit to Conroe. It is our practice to take the commission meetings on the road three or four times a year. This gives us the opportunity to learn firsthand about local transportation projects in an important part of the state, and it gives people who pay taxes in this state the opportunity to see how their state government works each and every day.

We hope that your participation today will give you some insight as to the transportation challenges of this part of the Houston area, and we also hope that you will gain some insight in how we make our decisions, how we discuss problems, and how we try to arrive at solutions.

It is our custom to open our meetings with comments from our commissioners, and we always start with the commissioner with the least amount of tenure on the commission, and in this case I think he's also the youngest commissioner, so we'll start with Commissioner Houghton.

MR. HOUGHTON: Thank you, Mr. Chairman, for giving me my youth back.

I appreciate being here. This is a great venue, and for the hospitality that has been accorded us and myself, I thank you very much.

There's a lot that we'll go over today and I hope it is a fruitful meeting for everyone that is here today, and I again thank you for having us here in Conroe, Texas.

MS. ANDRADE: Good morning. I think I'm going to save my voice for the meeting, but thank you for having us here, thank you for your hospitality, and look forward to hearing your presentation.

MR. JOHNSON: Well, I'll echo the good morning part. It's indeed a great pleasure to be here. I did not have to travel as far as most people to attend. I look around the room and I see a lot of friends and a lot of people who have been so actively engaged in solving the transportation issues that we have around the state, and it's wonderful to see you here this morning.

I wanted to thank the local people, especially Judge Sadler and Mayor Metcalf, for the reception that they had for us yesterday, and wanted to say particular thanks to the area office and area engineer, Karen Baker, of TxDOT. Seldom do we get the hospitality that we received here yesterday. We get great hospitality all around the state because no state is as welcoming as Texas is, but yesterday was very special for us in a number of ways, and one of the ways is that it was the chairman's birthday, and so you can wish him a happy birthday a day late if you so desire. At any point you can interrupt the meeting and sing happy birthday if you'd like.

MR. WILLIAMSON: Or we could try to forget that that occurred yesterday.

(General laughter.)

MR. JOHNSON: We'll wait 364 days for the next opportunity. Great to see you here.

MR. WILLIAMSON: I echo the comments of my fellow commissioners with regard to the thank you and the recognition of the great staff we have here in the northern end of the Houston District. Karen does a great job.

And Mayor and Judge, we appreciate your hospitality, and Judge, we particularly are appreciative of a county commissioners court with a vision to look ahead and say this is what we have to do today to solve a problem that will occur 20 years from now. I think your leadership and the leadership of your commissioners is admirable for the entire state, I mean that sincerely.

What we will do next is listen to the direct comments from public officials across this area before we start the formal part of our meeting, and I don't know what the preferred agenda is for local leadership, but it is my preference to ask my former colleague and good friend and great state senator, and soon to be agricultural commissioner, Todd Staples, to illuminate whatever needs to be illuminated for us and to take it wherever you choose to take it.

SENATOR STAPLES: Mr. Chairman, commissioners, thank you very much. I'll do my best on illumination here this morning. Happy birthday. I didn't realize that. I'm not going to lead in a happy birthday song, I'll tell you that. But it is a pleasure.

I do want to thank the commission for being in Montgomery County here today and being in Senate District 3. This is a dynamic part of our state, it's a growing part of our state, it's represented here today in Montgomery County, all the way to Smith County, and then Northeast Texas, and there's a lot of projects.

I thank you for using the tools that you have helped develop with the legislature the last few years to meet the needs of a growing Texas right here in this region of the state. The pass-through tolling projects that the local leadership here in Montgomery County have worked on, the RMA that was developed in Smith and Gregg counties, these are things we know that have to happen in order to meet the needs of a growing population.

Texas today has 22 million Texans; we're going to have 40 million Texans plus, if our state demographers are right, by the year 2050. We cannot wait to meet those needs in the future, they have to be met today, and you're doing that. And I know with growing there are growing pains, but I've got to tell you, I would much rather work on those growing pains than work on issues like New York and other states have with a declining population and trying to meet those needs.

We're growing today and this last legislative session, these members with former Commissioner Robert Nichols, helped me, as chairman of the Transportation Committee, that I think developed legislation that will move our state forward. We thank you for your commitment, for your timeless efforts to get things done, and I appreciate the leadership of the elected officials that are represented here today from Smith County, from Montgomery County, from all of East Texas, for their willingness to roll up their sleeves and get the job done.

Thank you for making good things happen for our state. We appreciate it.

MR. WILLIAMSON: We appreciate your kind remarks, Senator.

Ted, anything?

MR. HOUGHTON: Senator, thank you very much for your leadership, and they were tough decisions, but those decisions now are being looked at, emulated all over the United States as Texas as the model and your chairmanship of the Transportation Infrastructure Committee of the Senate, and I thank you very much, I can't tell you enough. And I think Mike Behrens and Amadeo, in Washington, D.C., and everyone is pointing to Texas as the model now as to a lot going on down here and emulating the things that we do.

SENATOR STAPLES: You've got a great team put together, and I think that sends the right message, and it's economic development, it's all of those things. We heard testimony in our committee where Texas businesses chose not to expand in Texas and move those jobs to other states because of congestion and delay, and you are addressing that, and that just bodes well for our state.

MR. HOUGHTON: Thank you for your support.

MS. ANDRADE: Senator, thank you for your leadership, thank you very much.

SENATOR STAPLES: Thank you, Commissioner.

MR. JOHNSON: Senator, I guess I'm going to repeat a lot of what you've heard, but working with you over the last two terms in the Senate and what we've been able to accomplish -- and you've been a leader, especially as chairman of the Senate Transportation Committee, for establishing a lot of that -- and it was not an easy road to pave in certain instances, and you were always a true stalwart for getting solutions to where there seemed to be no light, and I'm deeply appreciative.

I did notice that in order to stay as close to the situation as possible, we've had to infiltrate your office via a marriage proposal.

SENATOR STAPLES: And it's beyond me, as hard as we worked, how that would have time to develop.

(General laughter.)

MR. JOHNSON: But we're going to miss you, and I'll miss you personally, but I know the state is going to be very well served in your capacity when you're elected as agricultural commissioner.

SENATOR STAPLES: Thank you, Commissioner, appreciate that.

MR. WILLIAMSON: Thank you, sir.

SENATOR STAPLES: Thank you, Mr. Chairman.

MR. WILLIAMSON: How do you wish us to proceed, Karen? Okay, so Gary Trietsch will take it from here.

Well, let me just make a sidebar remark. Todd Staples is a great transportation senator, but you're blessed actually with an unusual situation in Montgomery County and the counties touching you: you have two state senators and three House members, all of whom, in the face of some fairly sharp criticism about decisions we had to make, have been steadfast in adopting the laws that are necessary for this state to reduce congestion, improve air quality, bring economic opportunity to the state, make our roads safer, and preserve the value of our system.

Tommy Williams has been a great advocate of transportation, as has Mr. Hope and Mr. Eissler and Mr. Otto, John Otto -- all three have been good House members for the state of Texas transportation system.

Gary Trietsch, our great district engineer, Houston, Texas. Mr. Personality.

MR. TRIETSCH: Mr. Personality, sometimes.

MR. WILLIAMSON: We had dinner last night and his wife made a passing comment that will stick with me the rest of my life.

MR. TRIETSCH: And I will repeat that. She introduced herself as Gary Trietsch's personality, which is very true.

MR. WILLIAMSON: In front of 200 people.

(General laughter.)

MR. TRIETSCH: She's done more than that, Chairman.

We do want to thank you for attending here. The county of Montgomery and the folks of Montgomery County and the city of Conroe have helped out, and I think, as you said, had a warm welcome.

Our dinner last night, which was kind of a potluck supper in the garage at the area office, perfect time of year, perfect type of weather. At least it wasn't in July with no air conditioning. Karen has some presents, if you want to distribute those.

MS. BAKER: Just a small memento of your meeting here in Montgomery County and Conroe, and it's an honor to have you here. And a belated happy birthday to you.

MR. WILLIAMSON: Thank you.

MR. JOHNSON: Thank you, Karen.

MR. TRIETSCH: You each got a pickup. Did you get District 12 on there?

MS. BAKER: No.

MR. TRIETSCH: Well, that's good enough; it will work for any district.

I would like now, it's kind of grown into our custom to do a video -- now it's not videos, it's DVDs -- and as you met the folks in the Montgomery County area office, I have a great staff all up and down the line that do marvelous work. And with that, Janelle, if you'll show our DVD -- that just doesn't sound right -- film.

(Whereupon, a video was shown.)

MR. TRIETSCH: Karen Baker is the only person I know that can look good in a hard hat.

With that, I'd like to first introduce Judge Sadler, Montgomery County judge, he's got a few comments, and then following him will be the mayor of Conroe, Tommy Metcalf.

JUDGE SADLER: Good morning, commissioners. Good morning, Mr. Chairman.

MR. WILLIAMSON: Good morning.

JUDGE SADLER: I think we've heard thank you about 85 times over the last ten minutes, but I'm going to make it 86 times. Thank you so much for coming to Conroe and Montgomery County. This is a big event for this county and we do appreciate it.

Before I go any further, several commissioners couldn't make the event last night. I'd like to introduce the other four members of the best commissioners court in Texas. Mr. Mike Meador, where are you? Right over here we have Precinct 2 Commissioner Craig Doyle, Precinct 3 Commissioner Ed Chance, and Commissioner Rinehart, Precinct 4, Porter, Texas. Thank you for coming.

One thing I want to talk about, we all know that the day of just federal funding passed down to the counties, those days are pretty much over. We cannot continue with pay-as-you-go like we've done in the last 50 years in Texas.

You all, including Senator Staples -- Senator, are you still here? He had to leave -- you are the ones that came up with these innovative methods of financing, commissioners, the pass-through tolls, the toll roads. Toll road is not exactly a great word in Texas, but you're exactly right, that is the reality we have to face. And as long as we have toll roads where you have an alternative free route, I have no problem with that. It is very innovative and it is a reality we have to face, and we accept that.

I want to also thank Steve Simmons. Steve, where are you? Steve, thank you.

I want to conclude my brief comments today to tell you about a new committee we have on public transportation. We have Steve Sumner here, and Julie Martineaux. If you all would stand up, please. These people are looking at the public transportation needs in Montgomery County. This has been an area we've talked about for ten years, nothing has been done. We do have Brazos Transit in Montgomery County that's done a great job with our park-and-ride lots. We probably need to expand that. Through HGAC we're doing a study on public transportation needs, Mike. We'll be getting back with you on what those needs are, but we will be asking you to please earmark about three-quarters of a million dollars for these public transportation needs, as per the study we're getting ready to do with HGAC.

But I want to conclude again, for the 98th time, thank you for coming here to Montgomery County.

MR. WILLIAMSON: Thank you, Judge.

(Applause.)

MAYOR METCALF: Mr. Chairman, commissioners, it's indeed a pleasure to be here today to really tell you something that you already know, it's how good a people that you have on your staff in this Houston District. Your Houston District are people that in the past two years since I've been mayor have worked diligently to make a difference in Conroe and Montgomery County, and I would be remiss if I didn't mention them specifically.

The first person I'd like to mention is your leader, Gary Trietsch. Gary is a very able and capable leader, he has great people underneath him. The two people that I'm most familiar with at the Houston office are Gabe Johnson and Pat Henry. But it's not without Gary's leadership that great things are being accomplished.

And also I'd like to specifically mention Karen. Karen, as you well know, runs the Conroe office, and Karen Baker is a credit to you, a credit to Gary and the Houston District. She shows bold leadership in what she tries to do with the limited amount of funds that she has available, but that's good bold leadership in both Gary and Karen and what they're trying to do here in Conroe and Montgomery County.

And I wish Senator Staples was still here, but I know he's a busy man, but that's another person that has done a great job to help you as commissioners in your job. He has bold leadership, and that's the reason why he's going up in the state, that's the reason why instead of being our senator for the next coming few years, he's going to be our agricultural commissioner, and I hope one day he's our governor of Texas because that's the type of bold leadership that we need in this state.

And I would also be remiss, Mr. Chairman, if I didn't mention one of your commissioners specifically, and that's Commissioner Johnson. Commissioner Johnson is a great tribute to your commission. He represents the whole state of Texas very well, but I've gotten to know him in the last year or two on his bold leadership.

And Commissioner Johnson, thank you for this lapel pin that you gave me, I'm going to wear it very proudly, because it's a pin that your great commission I think has commissioned. And I just want to thank all of you for coming to Conroe and Montgomery County and your bold leadership.

MR. WILLIAMSON: Well, thank you, Mayor, thank you for your kind words.

(Applause.)

MR. TRIETSCH: And I would conclude with a statistic, the engineer that I am, that I saw Alan Clark sitting in the audience, and I just did read one of your reports that in 2035, 30 short years from now -- and it gets shorter all the time -- this county's population will be over three-quarters of a million people. I think that tells you that Karen and I have job security as long as we can hold up to it.

With that, again I appreciate your coming, and the door is always open. Any questions?

MR. WILLIAMSON: Thank you, Gary, thank you for the presentation.

Just so the audience will be aware of how we do things, the next few minutes we'll be approving the meeting minutes of the last meeting and we'll be taking up what we call routine matters, and then we will enter our first discussion item, and after that discussion item we will take a break which will permit those of you that need to go on to other things to leave, or whatever else you need to do.

I need to make you aware that if you are going to testify on a specific matter on the agenda, I need for you to fill out one of the yellow cards -- you can find them on the desk in the lobby -- and please specify the agenda item upon which you wish to speak. If you don't wish to speak about a specific item but you want to offer comments at the end in our general comment period, you can fill out the blue card, and again, that can be found on the table in the lobby.

Members, the first thing on our agenda is the approval of the minutes for December 15, 2005.

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. Thank you.

Mike, it looks like we've got aviation and public transportation.

MR. BEHRENS: That's correct. Thank you, Mr. Chairman.

We'll go to our aviation item for the month of January, and this is to recommend funding for airport improvement projects throughout Texas. Dave?

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

This minute order contains a request for grant funding approval for six airport improvement projects. The total estimated cost of all requests, as shown on Exhibit A, is approximately $7 million, approximately $2.7- federal, $3.7- state, and $700,000 in local funding.

A public hearing was held on December 14 and no comments were received. We would recommend approval of this minute order.

MR. WILLIAMSON: Dave, are any of these grants going to this airport here in the Conroe area?

MR. FULTON: I don't believe so, no, sir. We have a very large planned project and we're building an air traffic control tower here as well.

MR. WILLIAMSON: But we could have made headlines.

(General laughter.)

MR. WILLIAMSON: Members, you've heard the explanation by staff. Do you have questions?

MR. HOUGHTON: So moved.

MR. JOHNSON: I have one observation, and it's about the local airport.

MR. JOHNSON: Dave, I know you've taken a very keen interest in the local airport. I had a little time yesterday and drove over there and visited with Judge Sadler last evening about it, and it's great to see what's going on. It's becoming a mini economic engine for this area and it's a great resource not only for Conroe and Montgomery County but some of the surrounding areas, and I take particular delight in the role that TxDOT Aviation Division has played in getting it to where it is.

MR. FULTON: Well, thank you, but I think the real credit, as always, goes to the community support, the leadership here, and the airport management which is excellent.

MR. JOHNSON: Second the motion.

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.

MR. BEHRENS: Agenda item number 3 is our public transportation item. We have three minute orders under that topic and they'll be presented by Eric Gleason.

MR. GLEASON: Good morning.

The minute order in front of you, the first minute order of the three, awards federal funds under the 5310 Elderly and Persons with Disabilities Program to public transportation operators across the state of Texas who provide elderly persons and persons with disabilities transportation.

The Exhibit A details out the specific awards included in this minute order for a total of $7,392,000. I will make a note that the amounts that we are awarding are a combination of Fiscal Year 2006 federal apportionments plus some remaining balances from last year.

The one note to make in addition to that is that the federal amount in here was on the basis of a December 20, 2005 publication in the Federal Register by the FTA. Subsequent to that, Congress did pass the 2006 Defense Appropriations Act which included a 1 percent recision that will affect these funds.

MR. WILLIAMSON: And a recision is a reduction?

MR. GLEASON: That's correct.

We have not yet received the revised amounts from the FTA and so the minute order addresses that by saying that when we do get those revised amounts that we will revise the amounts in here on a pro rata basis.

We would recommend approval.

MR. WILLIAMSON: Members, we have three matters of public transportation that come right in a row, and we have our worthy colleague, Ben Herr, from the Texas Transit Association, who wishes to comment.

Mr. Monroe, if it's okay with you, I'd like to leave pending, let him lay out all three, and then let's take Ben's comments, and then we'll vote in order.

Go ahead and lay out, if you don't mind, the other two.

MR. GLEASON: The second minute order awards federal funds from the FTA Nonurbanized Program, the 5311 program, to rural transit districts for rural public transportation.

Consistent with the formula that was adopted by the commission last year, the total award to the rural transit districts included in this minute order is just over $13.1 million. The funds are distributed among all of those districts per the allocation formula adopted by the commission, and again, these funds are also subject to the 1 percent recision when it does go into effect, and accordingly, we would reduce the amounts shown in Exhibit A per the formula once we do have that amount of money.

MR. WILLIAMSON: Do you happen to recall when did we adopt that formula? Was it recently?

MR. GLEASON: I believe it was in May or June of last year. And the Public Transportation Advisory Committee is considering changes to that formula that we would anticipate bringing before you in some proposed rules in March.

MR. WILLIAMSON: Very good. And then item 3? We're going to ask all our questions at once.

MR. GLEASON: Item 3?

MR. WILLIAMSON: Yes.

MR. GLEASON: All right. The third minute order authorizes allocation of unobligated funds to small urban and rural transportation operators for replacement of fleet. The minute order awards $643,000 to a variety of different small urban and rural providers to help them replace their aging fleet. These funds actually have become available to us because previous awards, the projects have been completed and we have some unspent dollars, and so we are re-obligating them to the next set of needs in the system, and so we recommend your approval.

MR. WILLIAMSON: Members, in keeping with our habit of the past, if we have a witness, we prefer to hear from that witness before we question our staff, so with your indulgence, I'll ask Ben Herr. Please identify yourself, sir.

MR. HERR: Thank you, Mr. Chairman, commissioners. My name is Ben Herr. I'm the executive director of the Texas Transit Association in Austin. The Texas Transit Association represents the large urban, the small urban and the rural transit providers in the state. I'd like to comment this morning in favor of all three minutes orders, the public transportation minute orders.

I've just returned from a regional transit conference where I had the opportunity to speak with officials from the FTA, and they told us at that conference that the 2006 federal funds would be available to the states very soon. Knowing that these funds have not yet been released by the FTA, the Texas Transit Association appreciates the proactive stance by the commission and TxDOT in making these funds quickly available to the transit operators once the FTA does release these funds to Texas.

At the conference I also had the opportunity to meet with numerous transit operators and the vendors that provide goods and services to the public transportation community. In our discussions, the importance of federal funding was very evident. These federal funds that are awarded by the commission in these three minute orders have a significant economic impact on the communities that are served by the transit operators and on the businesses in the state of Texas that sell their goods and services to the transit operators.

There is a need for these federal transit dollars throughout the state and awarding these transit dollars by approving these minute orders helps to satisfy this economic need and provide for expanded economic opportunity.

The Texas Transit Association is strongly in favor of these minute orders and would like to thank the commission for making these federal funds available to the transit providers in the state. Thank you.

MR. WILLIAMSON: Members, are there questions of this witness?

(No response.)

MR. WILLIAMSON: Thank you, Ben. We appreciate the role you play in the transportation system.

MR. HERR: Thank you, sir.

MR. WILLIAMSON: Members, we've heard the explanation from our staff on items (a), (b) and (c). I shall take them up in order. Item number (a), do you have questions of staff? Do I have a motion?

MS. ANDRADE: 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.

Item (b), do you have questions of staff?

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.

Item (c), do you have questions of staff?

MR. JOHNSON: So moved.

MS. ANDRADE: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you very much.

How are you enjoying Texas?

MR. GLEASON: I'm enjoying it quite a bit. I haven't got a chance to travel as much as I want yet, but we'll get there.

MR. WILLIAMSON: Well, we're glad you're here.

MR. HOUGHTON: Have you missed that 30 consecutive days of rain in the Seattle area?

MR. GLEASON: I think it was just 27.

MR. HOUGHTON: I'm sorry, 27. Pardon me.

MR. GLEASON: Yes, just 27, not too bad. I was watching that closely, you bet.

MR. BEHRENS: Thanks, Eric.

Item number 4 is a discussion item, you know, we're a little bit less than a year before the start of the next legislative session, so Coby Chase, who is the director of our Government Business and Enterprises Division, is going to start planting some seeds on what we need to be thinking about for our next agenda for the upcoming legislature. Coby?

MR. WILLIAMSON: And by way of explanation to the audience, Mike, we should probably share the fact that the legislature doesn't normally authorize state agencies to formalize recommendations to them about changes in the law. Several years ago, for whatever reason, the legislature decided that they wished the Transportation Commission to adopt recommendations to them for their consideration on changes to the law. We take that responsibility very seriously.

This is the beginning of the commission's communicating to Ruben Hope and all the other members of the legislature, Rob Eissler, Tommy Williams, whomever you choose to take Mr. Staples place, Mr. Otto, and also to our transportation partners, whether it's Alan Clark in Houston or Michael Morris in North Texas, whether it's Judge Harris in Collin County or Judge Eckels in Harris County, this is the beginning of our communicating what we're going to stand for.

And what I've learned in my four years here is frequently what we at the commission stand for isn't necessarily met with arousing amount of applause by every county judge and every House member and every Senate member and every transportation advocate, and we understand that, but this is one way of avoiding the unfounded accusation that you surprised us, you caught us off guard, you didn't include us in the process, whatever the excuse people have. This begins it so this is a very important part of our meeting, and we hope you'll enjoy listening to the dialogue.

Okay, Mr. Chase, tell us how we should shake up the world a year from now.

MR. CHASE: For the record, my name is Coby Chase, and I'm the director of the Government and Business Enterprises Division of the Texas Department of Transportation.

Thank you for this opportunity to begin what I believe will be a year's worth of appearances on the commission's state legislative proposals, our strategic plan, and our federal legislative priorities.

Because I cannot miss an opportunity to limit my career at every turn, I'm going to go a little bit off script. I couldn't resist this.

I've been with the agency for 12 years, and I have had the benefit of working with a commissioner who is no longer on the commission, Robert Nichols -- who I saw this morning -- and one of the joys of working with Robert Nichols was that he always shot straight with people that he talked to, always without exception. You never, ever didn't know where Commissioner Nichols stood, you never didn't know where your project stood, and you never didn't know how he was going to get it funded if it was ever going to be funded. It was a bit of a shock and awe, but we got used to it and we built it into our business to help those recover from people who were telling them directly the truth.

When he decided to resign to run for the Senate, we thought those days were over, but apparently not -- the governor gave us Ted Houghton.

(General laughter.)

MR. CHASE: And I have always been a great admirer of Robert Nichols, and this is kind of an interesting story, and it will make sense to you if you know Robert Nichols.

I got to know him over the years he was on the commission, and one of the things -- I don't know if everybody knows this, but when you know Robert, it makes perfect sense -- his family, maybe it was his father, maybe his grandfather, or both, made their living by making and selling to all of us the cap guns we used as kids.

MR. WILLIAMSON: The what?

MR. CHASE: Cap guns, bang-bang, pop-pop.

MR. WILLIAMSON: The red rolls with the black powder on them?

MR. CHASE: You were playing with a Nichols cap gun. You go on E-bay, they go for a fortune right now. And you go to his house and if you go beyond all the hunting trophies, there's a big glass case that looks like you could start a war with it but they're cap guns. And I looked at that and said, first of all, I should have kept some of these, and two, it's an impressive collection to those of us whose families let us play with cap guns -- that might not be so true anymore -- and we had a Nichols cap gun.

Well, we found one, we found a Nichols -- I'm going to call it a Saturday Night Special, but an authentic Nichols cap gun, and we didn't know what to do with it until Ted showed up. And so we created the Nichols Straight-Shooter Award for eradicating mythological transportation funding creatures in the false hope they spread. And that's a little bit of an inside joke.

But we had the Nichols cap gun framed for you, and if you don't want to fly home with it, that's okay, we'll mail it to you. No, actually, Ted, it's fine, just get on the airplane with it.

(General laughter.)

MR. CHASE: But it is the Nichols Dynamite model and we found it at an antique toy store in Austin.

MR. WILLIAMSON: Now, is this because he shot the Road Fairy?

MR. CHASE: This is because he shot the Road Fairy in a number of places in the state.

MR. HOUGHTON: Wait until you see what I shoot next today.

(General laughter.)

MR. CHASE: I can't afford any more of these guns, so this is the first and last award.

MR. WILLIAMSON: Well, let's please present that to him.

(Applause.)

MR. WILLIAMSON: We sometimes get locked up in our center and don't recognize that there are people watching or participating who don't know our world, so for those of you who don't and wish to know -- and it may not be any of you -- for the last several years I have been fond of commenting that there is no Road Fairy, that you won't wake up one morning and find $500 million under your pillow to fix Interstate 45, it just doesn't exist. And when Ted came on, he began to carry the tradition on, and John and Hope and Robert, when he was with us, about the Road Fairy.

Well, Ted was in South Texas speaking to a group of articulate and compassionate transportation people who have been waiting a long time for a project. I mean, these people are really compassionate. And just out of the blue he said, Look, there's no way this project is ever going to be built unless it's a toll facility, the Road Fairy is dead. And that was the headline in every newspaper in South Texas: Commissioner Says Road Fairy Dead. So we recognize Ted as the commissioner that shot the Road Fairy.

(General laughter.)

MR. CHASE: You can get me back later, Commissioner, it's okay.

Now let me start out by saying there is a handful of people in the audience -- I would hope everybody but I know not everyone is as enamored of what I'm going to say as much as I am, but there are people who do follow the commission's legislative and strategic plan priorities very closely, and my comments are available from my office, everything that I'm going to say, plus some. We'll be more than happy to share them with anyone and e-mail them to anyone and explain them to anyone. But like I said, I'll probably be up here a number of times between now and December, so there will be a long, healthy dialogue.

I'll begin with the state legislative agenda, but before I dive right into that, I think it's important to note some of the external drivers, so to speak, that define our operating environment. They've been touched on quite a bit here this morning, but let me reinforce some of them.

We are well aware of the growth trends we are expecting for the state in terms of congestion, population, the number of vehicles and vehicle miles traveled. Relying primarily on the gas tax is no longer the best long-term approach to these challenges. In fact, a recent report from the U.S. Chamber of Commerce stated that the Federal Highway Trust Fund could become insolvent as early as 2008, leaving a serious gap in the ability to maintain and improve the nation's transportation system.

I've been working on this issue with the department for almost 12 years now, and I can say when it comes to the gas tax there's nothing really new. Predictably, I hear groups again talking about stopping the reallocation of gas taxes for other uses and seemingly failing to remember that the trend grows and shows no sign of abating.

MR. WILLIAMSON: And by that you mean not only is the habit of transferring state and federal funds from the transportation item to other items of the budget, not only is it continuing but it actually grows every year.

MR. CHASE: Yes.

MR. WILLIAMSON: So while you've got a group on one side saying we need to stop that, the reality is not only is it not stopping, it's increasing.

MR. CHASE: Right. And at some point you just have to stop beating your head against the wall, at least a little bit, and look for other solutions. And that's true on the state and federal level.

I mean, recently all state DOTs were told to slow down or not to spend $2 billion, and Texas's share of that was, off the top of my head, between $150- and $159 million.

MR. WILLIAMSON: So out of the most recent apportionment, the federal government has already reduced that?

MR. CHASE: Yes. All states were hit proportionately. Texas is so large, our share was huge, it was -- I'm just going to round or average -- $155 million.

MR. WILLIAMSON: So $155 million that would have been programmed or has been programmed into our four-year budget has now been removed.

MR. CHASE: Yes. And the way the federal government and state government is so tightly wired, there's not room for emergencies, there's not room for whatever the case may be, hurricanes, so in that case, we all have to take a hit at different places. And I think what I'm pointing out is that we can't rely just exclusively on political bodies to keep sending the gas tax in the right place, and not to put too fine a point on that.

You'll also hear discussions about raising gas taxes or creating local option gas taxes which I believe will not occur at the end of the day -- that's simply my opinion.

The last gas tax hurrah, really, was a six-year effort of, well, Robert Nichols to move the point of collection, and that was a six-year effort. Without going through that entire history, the concept was very simple: all the state had to do was collect tax from higher up in the chain and a few layers of costly fraud would be eliminated. Other states did it which resulted in billions more in combined revenues. That simple move here in Texas brings in more than $110 million a year, and frankly, in my opinion, that is a very conservative approximation.

Taxpayers didn't pay a single dime more, collection paperwork was reduced and more state and federal money was put into the road system. I believe a technical term for that would be a hat trick. But that's really about the last thing you can do with the gas tax.

MR. WILLIAMSON: That's what's called point of collection.

MR. CHASE: Point of collection, yes, sir.

MR. WILLIAMSON: So prior to the legislature moving collection from the retail point at the station to what we call the rack, the terminal, there was conservatively $150 million in fraud somewhere in between, or uncollected taxes somewhere in between there. The consumer was paying the tax when he or she filled up at the Exxon station but the tax wasn't making it to the Transportation Fund.

MR. CHASE: You're exactly right. And it was actually moving it from the distributor to the rack, and it was quite a fascinating six-year lesson in the way you can lose an entire tanker of gas. It's phenomenal what can be done, big money.

MR. WILLIAMSON: Are you going to be making recommendations about additional changes or things we should do? Is that going to be part of our legislative discussion or part of your recommendations?

MR. CHASE: To the gas tax?

MR. WILLIAMSON: Point of collection.

MR. CHASE: No, sir, at this point I do not. I think the process could be streamlined but I'm not making any further recommendations on the point of collection.

MR. WILLIAMSON: Do you have an opinion about that, Robert? Where are you Robert? I know you're out there. Do you have an opinion about any additional changes that can be made at point of collection?

And in fairness, there's no secrets here, we know that Robert is in an election and we know that there are other persons who are in that same election, and we're going to give the opportunity to comment as well because everybody should have their shot, so if Mr. Kleinman or Mr. Denton -- and who is the other fellow?

MR. NICHOLS: That's his job to tell you.

(General laughter.)

MR. WILLIAMSON: If you're here, you will be given the opportunity also to comment, if you wish. It's in all fairness.

MR. NICHOLS: The point of collection issue, the numbers that we had calibrated, both combination state and federal, had saved approximately $1.4 billion to the taxpayers as of January 2005. It was to preserve the integrity to make sure that the taxes that are paid at the pump by the people actually get to the school and transportation system of the state. That's what was picked up; took six years.

Your question has to do with?

MR. WILLIAMSON: Coby indicates we won't be asking the legislature to make any additional changes. Are there additional changes we should make?

MR. NICHOLS: The ones you might consider is to monitor it very closely to make sure that there is not an erosion. Last session there were a number of bills that went in and tweaked that began to erode that process somewhat. Most people are not aware that there are other fuels that do work in big tractor-trailer rigs and stuff, like aviation fuel will work in trucks, has no tax. I'm not talking about taxing aviation fuel, but monitoring the collection and distribution of it.

MR. WILLIAMSON: In other words, there are instances where the consumer thinks he or she is paying the tax and the tax isn't really ending up in the system.

MR. NICHOLS: That's correct. Fuels that are outside the system that get in the system is something that needs to be watched very carefully.

MR. WILLIAMSON: Any other recommendations for us about that?

MR. NICHOLS: The primary is to prevent the continued erosion in that system.

MR. WILLIAMSON: And by erosion you mean legislature going back in and exempting certain --

MR. NICHOLS: Yes. Special interest groups that want to make little changes that benefit them that breaks away the collection of that tax paid by the public to ensure it goes to schools and to transportation.

MR. WILLIAMSON: Who is responsible for collecting the tax? Refresh my memory.

MR. NICHOLS: The Comptroller's Office.

MR. WILLIAMSON: And then from there is it the distributor that seizes it whenever the gas is purchased, or how does that work?

MR. NICHOLS: The way it's set up right now, the way it was set up, the people in the middle sent the tax in to the state. The change that we primarily made, the legislature approved, was the collection at the refinery. Previously there were over 4,000 entities reporting taxes that had to be audited; now there are approximately 33 terminal owners, like Exxon, people like that, that everything is done electronically and automatically wired into the system on computers, internal and external audits. So now there's only 33 to 35 entities that really pay that.

MR. WILLIAMSON: Are they paid or compensated somehow for collecting taxes for the state?

MR. NICHOLS: They are paid. The refinery gets a fee as well as the distributor for the administration of that tax.

MR. HOUGHTON: Let me ask a question, Mr. Chair, on that before you move away from that point. In the old regime, when you received the gasoline, the distributor, how long did he have or she have to pay that tax?

MR. NICHOLS: It's roughly whatever is collected in one month is paid toward the end of the following month, roughly 30 days. That timing mechanism stayed the same. So the amount that the public paid was exactly the same, the amount that the distributor was supposed to pay stayed the same, and the cash flow, the time in his hands was exactly the same, so none of those terms were changed.

MR. HOUGHTON: Why the resistance then? What was the resistance?

MR. NICHOLS: What was the resistance?

MR. HOUGHTON: Why the resistance, in your opinion, to the change?

MR. NICHOLS: The resistance to the change, change creates fear and fear sometimes drives out common sense. There were billions of gallons involved each year, there obviously was money missing, and I'm not going to say that part on the public speaker, but there were funds missing. There were a lot of people, very good, honest, taxpaying citizens that ran their businesses well, that paid their taxes; there were some that did not. The ones that did not hurt the schools, hurt the transportation system, as well as competitively had an unfair advantage to the ones that did pay their taxes well, and the public's money that was entrusted to them was not getting to the schools and to the transportation system.

Likewise, every gallon or dollar that was not reported, we lost at the federal level the same dollar, or 86 percent of it, or now 90 cents.

MR. WILLIAMSON: But fuel distributors, for example, in Conroe, continued to be paid a percentage of the tax?

MR. NICHOLS: Yes.

MR. WILLIAMSON: For, I guess, administering?

MR. NICHOLS: They, in law, several decades ago were allowed 2 percent, they get 2 percent.

MR. WILLIAMSON: Of the gross?

MR. NICHOLS: Of the gross.

MR. WILLIAMSON: Of the gross gallons or gross dollars?

MR. NICHOLS: Dollars of the tax.

MR. WILLIAMSON: So if I sell a million dollars a month gross in Conroe, Montgomery County, I get to keep 2 percent of that just for passing the money along?

MR. NICHOLS: Yes, under state law. That was not something we did. That was something that was already there.

MR. WILLIAMSON: What's the justification for doing that?

MR. NICHOLS: You would almost have to ask the legislature. When you go back and look at the records of when the law was put into place, it was to cover administration costs.

MR. WILLIAMSON: But they don't administer anything anymore.

MR. NICHOLS: That's correct.

MR. WILLIAMSON: Well, why do they get to keep the tax?

MR. NICHOLS: They did not change that portion of it. It's roughly $50 million a month.

MR. HOUGHTON: A month?

MR. WILLIAMSON: My goodness.

MR. NICHOLS: Excuse me. It's $100 million a year.

MR. WILLIAMSON: $100 million a year.

MR. NICHOLS: Yes.

MR. WILLIAMSON: I would think that would be something we would want to put on our list, or at least debate it and air it out and let's let everybody argue about it.

Are there any other things that you want to bring to our attention?

MR. NICHOLS: Related to fuel tax?

MR. WILLIAMSON: Right.

MR. NICHOLS: No.

MR. WILLIAMSON: Again, I am sincere. In the interest of fairness, I want to give everybody the opportunity to give their opinion. If Mr. Denton or Mr. Kleinman -- who is the other fellow -- seriously, we need to give them the opportunity. I can't remember his name.

If you have comments, please --

SPEAKER FROM AUDIENCE: I appreciate the opportunity but I will leave the politics out of it. Thank you very much.

MR. WILLIAMSON: Okay, Coby, go ahead.

MR. JOHNSON: Could I ask, Coby, one enlightenment issue here on the moving of the collection, how many years did the federal government move their collection point prior to the state moving theirs?

MR. CHASE: Well before we did, and I don't remember the exact year that they did it, it was quite a while back. And I remember, though, the alarming part of that was when they moved their point of collection from the distributor to the rack, nationwide they found, the first year, a billion dollars, and that's a very, very conservative estimate, and they stripped away every possibility. Just by removing a layer of fraud, it was a billion dollars, so there is money to be made in that.

My broader point is there might be a little more space to find some money in there, and we'll certainly do it.

MR. WILLIAMSON: Money to be made but who is making the money: the guy collecting the tax from me and not paying it to the state? Is that what you're saying?

MR. CHASE: Yes. And it's interesting, the 2 percent that's paid to distributors is high nationwide. In some states it's as low as zero, in some it's a half a percent. For instance, Foley's -- soon to be Macy's -- they handle millions and millions of transactions a year, and for processing their paperwork they're awarded a half a percent for what they do. Personally, looking at it, I've never really understood why 2 percent is a magic number.

MR. WILLIAMSON: I would think that needs to be on our list.

MR. CHASE: Yes, sir.

As in past years, we have started to poll the districts and divisions for their ideas -- I'm still on the state legislative agenda -- and we will continue that practice started by Chairman Williamson to ask legislators and the state's leadership for ideas as well.

Similar to last year, the agenda will be developed in the open and with an opportunity for the public to comment. While the chairman decides the frequency and duration of my appearances before you, I suspect this will be a reoccurring discussion in the coming months.

I will want to say to the listening audience, and I will try to remember to say this every single time, the staff in my office, led by Jefferson Grimes -- who is here, manager of State Legislative Affairs -- are open to anybody who wants to discuss this at any time and know what we're thinking at any point. There are no secrets.

MR. WILLIAMSON: Yes, no secrets. That's real important.

MR. CHASE: The agency has some research projects underway that I think will later in the year help to crystalize some issues with respect to rail. Our Transportation Planning and Programming Division is trying to determine the feasibility and method for obtaining revenue from freight movements, regardless of mode, and then there's an internal effort that's just started to suggest funding sources for the Rail Relocation and Improvement Fund.

We're about to commence -- I believe we brought TTI, Texas A&M on board to do this -- a temporary tag study, and we've had this discussion before, but those tags, those red-and-white tags you get when you buy a new car, they are very, very easily counterfeited. Anyone of us can do that at home. Police will tell you that they are a complete pain in the neck to them, so to speak, because you can't tell from a distance if that tag belongs to that car, you have to get up and look close to find a dealer's signature, and then you have to call the dealer. They're used in the commission of crimes. There are places that make these and sell them, and there have been a lot of notable, I guess, police busts of these, and it has been brought to our attention that that needs to be made a more secure system.

Also, the legislature required a study of utilities in our right of way and how to maximize the use of highway rights of way by public utilities, and we'll have to submit a written report by the end of the year. Those are in process.

The legislature is also looking, as they do in off-years -- not that they have so many off-years these days -- at interim charges. The lieutenant governor has not yet issued interim charges for Senate committees, the House has, and let me go through some of the ones in the House and then a few others very briefly.

House Transportation actually had its first hearing yesterday, and Commissioner Andrade did an excellent job talking about rail and the statewide rail needs, as did Amadeo Saenz, and Dave Fulton touched on aviation. And if I may say, Commissioner Andrade, we hope to see more of you in that capacity. Thanks for coming down to do that before you came here.

But what the House Transportation Committee will be looking at -- and you'll notice some overlap in some of these things on some of these topics -- they will, too, be looking at utilities and how they are in our right of way, if they should be compensated for being removed from our right of way, and things of that nature --that is a giant issue, the rail fund, funding Proposition 1, the Rail Relocation Fund, and to determine the rail needs around the state.

This one is very important and kind of hard to make it sound glamorous, but I will try, but it is intensely important. This bill got out of the House last session but did not get out of the Senate, I don't believe it even got out of committee, if I remember correctly: county transportation planning.

As the state is undertaking the next generation of Interstates or it's version of the next generation of Interstates, the Trans-Texas Corridor and other very large projects, as our planners will tell you and our people in the field will tell you, a line you draw on the map, when you go and see it, when you go that piece of property you notice how difficult it is when you see businesses that have sprung up along there and the new housing developments without any planning and so forth and so on, and not only does it create congestion before there is even a road, it makes it much more expensive to build that roadway because you have to negotiate to take those properties and so forth and so on.

Legislation that the commission proposed last session and Representative Casteel got through the House last session would put counties in the position of planning for large corridors if they want to, so you don't have developments and hospitals and car dealerships and whatever the case spring up in places where they want to put future roadways. While that can be a painful process, at the end it works very well because you have reserved large corridors for future road use.

And I think everybody in this business knows we wish we had planned for more land and we might not be in some of the situations that we find ourselves in now. Chairman Krusee is taking that very seriously, will take it very seriously, and we'll see how that goes.

Eminent domain, in light of the last era, the Supreme Court decision on condemnation for economic development purposes, the legislature actually did a very good job of addressing that and actually were kind of ahead of the Supreme Court decision, however, that will be a topic of discussion during the interim and we'll be actively engaged in that.

MR. WILLIAMSON: What recommendations will we be making?

MR. CHASE: Regarding?

MR. WILLIAMSON: Eminent domain. I mean, the last couple of years has been dominated by the concern about the width of the Trans-Texas Corridor and the amount of roads we're building. I know in Harris County, for example, we have an issue with the court structure on condemnation hearings. Are we going to be recommending to the legislature that we be limited on eminent domain or on property rights matters?

MR. CHASE: I look at it and it falls along three lines: first and foremost is the court process, second is making sure no harm is done to the state's ability to acquire right of way for roadways, we don't go backwards on that; and then the third is the ability to acquire right of way in advance. It's a three-part approach, it's never just one.

The first is there is a compelling case that right of way cases do get tangled up in a certain level of court jurisdiction, especially here in Harris County. An efficiency argument could be made that it should be spread among more courts. I don't have all the details, I've forgotten then since last session, but there is a compelling case that that takes time and a lot of money and a lot of effort and it holds up projects.

MR. WILLIAMSON: Well, looking at it from the property owner's standpoint, should we be making recommendations to the legislature to strengthen the individual property owner's hand?

MR. CHASE: Absolutely. And I think part of the issue is they have been given more options than they ever had in the past, the ability to sell us an option. What we don't have yet, and I'll mention it here, was the ability to buy the right of way property from a willing seller in advance. That would be nice to be able to do that.

And it's kind of funny, as we're talking about Trans-Texas Corridor 35, there are a lot of discussions around that but I believe at the core of it is we will be acquiring a lot of land through that stretch of Texas, and you see a subset of that discussion is would you just hurry up and tell me so I can go on and plan with this.

MR. WILLIAMSON: Robert, do you have any recommendations to us in that regard?

(No response.)

MR. CHASE: But those are the three areas I see in eminent domain.

The governor, of course, appointed a tax reform commission, chaired by former Comptroller John Sharp, to discuss school financing, lowering property taxes, things of that nature, not that we have an active role in that, but 25 percent of the gas tax does go to fund schools, so we'll be, I guess, actively engaged in watching their deliberations.

There was an eminent domain also in the Senate, I believe a House and Senate committee set up also to look at eminent domain. We're going to be seeing that in a few places. So our guidance on those issues of eminent domain from you will be very important.

And frankly, the one that I find most interesting, and Senator Staples had mentioned it earlier, is the creation of a Transportation Finance Committee. Senate Bill 1713 creates a nine-member commission to study transportation financing. The speaker has appointed his members: Representative Warren Chisum, who is the chair of our appropriations subcommittee; Harris County Judge Eckels; Representative Mike Krusee is the co-chair. The lieutenant governor hasn't appointed his members yet, but the governor has appointed Mr. Houghton, our ringer, Joe Cryer from San Antonio, and William Madden.

And what they will do is they will look at how effective the gas tax is, is it truly able to meet our needs even if it's raised, even if it's stretched, even if it's turned inside out. It will also examine and evaluate expenditures of funds from the State Highway Fund that go other places; it will look at sources of funding for rail transportation projects and possible sources for that; and they will review all of the financing options for all modes of transportation including, but not limited to, motor vehicle user fees, fines, bonding and other debt financing instruments, and they should have all their work done by December 1, 2006.

But I think that's where a lot of the action is going to occur on any improvements in transportation funding and financing, and it's good to see, after at least 12 years in this job -- there may have been things before then -- that it's being given that level of attention. I think this is very positive.

Now, the things that we've discussed internally and publicly at commission meetings that are at least taking the shape of the commission's next set of state legislative proposals are: rail and of course funding the Rail Fund; addressing some issues remaining with bringing over Railroad Commission duties; making sure we have all the tools available to us in railroad planning; being able to spend any other money, such as the Enterprise Fund, grants from the governor's Enterprise Fund for rail relocation or rail matters.

Also at the top of our agenda are toll roads, of course. Whenever a toll road is sold in the state, we should seek the authority to issue revenue bonds for the purpose of acquiring existing toll roads and bridges. If a piece of infrastructure is being sold in the state, transportation infrastructure, it only makes sense that the state agency in charge of that has everything available to it in case it wants to enter the discussion.

We do need to discuss concession terms; we need to visit the cap and the length of concession agreements for the corridor. There's a 50-year cap for toll roads; we can go to 70; if there's a clause then we can just buy it from them after a certain number of years. We like the expanded use of comprehensive development agreements which the shorthand for that is turnkey project delivery for roads that the agency thinks are appropriate and other projects. And if concession fees from concessionaires, when appropriate, should be placed in the Texas Mobility Fund for their use when that decision is made, if that decision is made.

The commission has made a very, very strong statement last December that it is very interested in sobriety checkpoints and improving the safety on our system, and that will be on our state legislative priority list, regardless. I mean, the commission made that very clear in December.

And then one other thing that is fairly new, under federal law the Federal Highway Administration is authorized to delegate environmental oversight to TxDOT, and as we pursue this new federal program that we worked very hard to become a part of in SAFETEA-LU, it needs to be reflected in Texas law how we do that.

The commission's proposals did very well last session but there are some things that will require some more work if we want to continue to pursue them, so I will need some guidance on that, make sure we want to continue to do these -- I hope that we do.

One is professional services procurement. This was, again, speaking about Commissioner Nichols, he had tried his best to introduce price into the selection of engineering contracts -- which if I need to explain that for the benefit of the audience, I will.

MR. WILLIAMSON: By price you mean the proposed charges that an engineering firm would send to the department for their work prior to selecting them as a contractor?

MR. CHASE: Correct, and it's not low bid. It was mischaracterized as a low bid system for procuring engineering, and nothing is really farther from the truth than that. The way the current system works, if you need to hire an engineer to do a hydraulic survey of your property or whatever the case may be, you can call up three engineering firms, you determine they're all three qualified, and you can talk to them back and forth in any order that you want, look at their qualifications, what they're proposing and what they charge you, and you can weigh all three of those and decide which engineering firm you want to do the work on your business or your private property.

The state government, all governments have to --

MR. WILLIAMSON: You were talking about if you were a private sector person.

MR. CHASE: If you were a private sector person, you could compare prices and qualifications.

In government, I'll just say state government, you cannot compare prices. Once you've determined that three -- I'm just using three as an artificial number -- three firms are qualified to do a certain job, you look at the one you believe is most qualified, you enter into discussion with that firm, and once you look at their price and you discuss that price back and forth, if you don't feel that's the best price for the job, if you go to the next engineering firm, you can never go back and talk to the first engineering firm, once you walk through a door, you can't go back. Now, in your private business or in your home when you're hiring such services, you can do that.

I think almost every state operates that way, the federal government operates that way. The question is why and there's never been a very satisfactory answer to that.

MR. WILLIAMSON: So neither price nor value of the entire contract can be considered in negotiating with these engineering firms for the purpose of establishing the best value for the state.

MR. CHASE: Right. You can't line up all three and pick the best value. Once you've decided you didn't like the price of one, you have to go to the next one, and that door is shut and you can't go back.

MR. WILLIAMSON: And the opposition during the last session was the best value would inevitably drive down the cost to the consumer which would permit us to build more roads faster.

MR. CHASE: Yes, and there's never been any true evidence presented that that would drive down quality. I mean, people lose their licenses if the quality is not delivered. I think that's a pretty strong driver there.

MR. HOUGHTON: Now, that doesn't hold true, though, Coby, in the procurement if we procure a CDA.

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

MR. HOUGHTON: So a CDA which we talk about all the time and we have procured CDAs, the developer then negotiates with the providers within that CDA.

MR. CHASE: Yes, sir.

MR. HOUGHTON: And there will be engineers in those CDAs. Correct?

MR. CHASE: Yes, absolutely correct.

MR. WILLIAMSON: Robert, you were the lead on this. Do you have anything you wish to say?

MR. NICHOLS: The reason we got into the issue at the department was because TxDOT, over the next ten years, was going to contract out approximately $4 billion in engineering contracts and never get a second price. I think most legislators, most citizens are somewhat horrified that we are prohibited by law to get comparisons. The same thing falls true with counties, cities and schools on those types of construction.

The proposals that we had taken and requested the legislature consider -- there was a bill last session -- was to keep the existing system intact for government entities that want to continue using the existing system, but for those who wanted to follow an exception, they could have price proposals that showed innovation of what they were going to design and how much they were going to charge for it so that the government entity, TxDOT or a county or a city, could then look at the actual proposal of the design, how much that would cost, and how much the engineer was going to charge for it.

MR. WILLIAMSON: So you would recommend we pursue this again?

MR. NICHOLS: Absolutely.

MR. WILLIAMSON: Questions members?

MR. HOUGHTON: To get around those, Robert, though in the school districts, cities, counties, the others, they've gone to CMs, construction management kind of projects, and PMs, project managers, that like our CDA procurement, they in turn negotiate those fees and charges.

MR. NICHOLS: The legislature allowed us the opportunity, the department, a few years ago, on a limited basis what you're referring to, the CDAs, comprehensive development agreements, where we could get engineering and construction bid together, so then you could, for the first time, truly compare the proposal and the cost to construct it versus the proposal to design and so on.

MR. WILLIAMSON: Cost to the taxpayer to construct it.

MR. NICHOLS: Yes. And the one project that we were able to do those comparisons on was the major one in the Austin area, the 130, and the difference in the conceptual way it was going to be designed saved that project roughly $200- or $300 million.

MR. WILLIAMSON: Anybody else wish to comment on this discussion item?

MS. ANDRADE: Mr. Chairman, I just have a question of Coby.

Coby, the last time when this issue was brought up, one of the things that I heard was that they weren't given enough time, that they didn't know we were going to bring this, so I'm glad that we're discussing it now so that they know that we are probably going to look at this again.

The other thing that I'd like to make sure is that we hear from the small firms and what I would hear was that it was the small engineering firms that were going to get hurt by this process, so I just want to make sure that we get enough feedback from them too.

MR. CHASE: Absolutely.

MS. ANDRADE: Thank you.

MR. CHASE: And that's a very good point. I had forgotten about that last part, but that's right.

Advance right of way acquisition, I talked about that briefly. Sometimes when a property owner is aware that a transportation project will require some of his or her land, they prefer to unload it sooner rather than later. After all, there's no sense developing the land or paying taxes on it if the government will soon purchase it. In such cases where there's a willing seller, the department ought to be able to acquire the property is likely to need in advance of completion of the environmental work.

Local transportation planning authority, I already discussed that.

Sale of department property. Currently the proceeds from the sale of the department's surplus property are deposited into the General Revenue Fund. A bill that requires such proceeds be deposited back into the State Highway Fund passed the Senate but ran out of time in the House.

Utility reimbursements. Under certain conditions, utilities have the statutory right to be in the state right of way at no charge, but as utilities have to be relocated to accommodate a highway improvement, state law permits reimbursement to the utility for those who possess a compensable property interest -- in other words, they were there before the highway.

However, if the highway being improved is an interstate, interestingly, taxpayers must pick up the tab for moving the utilities whether they have a property interest or not, whether or not they have paid to be there or the state allowed them to be there. However, we could free up more federal money for construction if state law is altered to ensure that relocation of interstate highways are treated the same way as any other highway.

That concludes my discussion on the state legislative agenda portion. At any time in the next year you have something, we're always available.

MR. HOUGHTON: I'm getting feedback, Mr. Chairman, on these speakers. I don't know if they can get that corrected.

MR. WILLIAMSON: It's your dynamic personality.

(General laughter.)

MR. HOUGHTON: One of the things, Coby -- if you don't mind, I'm going to go back a little bit -- you talked about temp tags. Are we losing revenue or potentially losing revenue from unregistered vehicles that never get registered that continue to swap out these tags or for a variety of reasons, or do we have kind of an idea what we're losing as far as revenue?

MR. CHASE: The answer to the first part, are we losing revenue, yes, lost registration fees, late registration fees, things of that nature. Do we know how much? No, we don't. It is kind of slippery, and I think as part of our course of study we're going to look into that. And there are some systems that are very, very simple to use, like Arizona had a very simple system to use that is painless.

I'll be honest, I've approached this more as a safety issue, as a law enforcement issue more than anything else, but there is a component of lost motor vehicle registration fees in the state, and no, we don't have an estimate of what that is.

MR. HOUGHTON: Okay.

MR. WILLIAMSON: Well, $10, a million dollars? I mean, we don't want to, I don't think, invest a lot of resources on a $10 problem, we won't invest a lot of resources on a million dollar problem. So is it bigger?

MR. CHASE: Oh, it would be well over a million dollars, yes. At the off chance I'm disagreeing with my chairman, it is a safety issue in my eyes, it is a law enforcement issue.

MR. WILLIAMSON: So your recommendation to the commission is you need to pursue it because criminals, including potential terrorists, can hide behind the paper tag.

MR. CHASE: Absolutely. If I had a criminal mind -- and let's not discuss that here -- this would be the way to go. It is phenomenal how easy it is to do this.

MR. WILLIAMSON: Well, I think we'll probably pursue that then, but let's move on to the federal legislative agenda.

MR. CHASE: Okay. The federal legislative agenda, for over three years, TxDOT and its partners have fought hard for advances in funding flexibility and innovation in SAFETEA-LU, we've fought for flexibility in how we oversee and deliver many of our transportation programs, and at the end of the day, we were very, very successful.

We must now work with our federal partners throughout the rule-making process to ensure the stability of these gains so we don't go backwards and with our congressional partners throughout the second session to continue to move forward legislatively.

A procedural item I do need to bring to your attention. I would like to request that the commission approve a set of federal goals at its February meeting. This is much shorter than the state legislative agenda process, but Congress, you know, they never shut down, they go on forever, they're starting their next session, and what we will bring to you will tend to be broad in nature, not highly specific.

MR. WILLIAMSON: And you'll be providing that to staff ahead of time, you won't just be bringing it at the last minute.

MR. CHASE: Absolutely, within a week. And if anybody within the sound of my voice or the reach of my e-mail wants to discuss that with us, we will do that, but I don't think there is anything that is going to shock or surprise anybody.

But like I said, what we are doing is we are trying to protect and build on the gains in SAFETEA-LU. Like with design-build contracting, the feds had horribly onerous regulations involved with design-build contracting. Congress told them to rewrite those laws. Thanks to Congressman Burgess in North Texas, he put that into the legislation to streamline that effort and to let states use their own design-build award process.

The Federal Highway Administration will soon, if not already, start drafting rules and we want to be there, and we will be there when we do that. We've already talked to them. As a matter of fact, Mike Behrens was just up there this week, and that was on his list of things that he was talking about.

Private activity bonds. Sam Johnson, again from North Texas, was instrumental in getting this into the legislation to allow tax exempt status for bonds issued with private capital used for roadways and certain rail infrastructure -- I think intermodal facilities, if I remember correctly. You know, it's always been done for schools and airports and stadiums in some cases, and other places, but it's never been used for roads. This is going to be very important for Texas as we're building I-69 especially. I'm not exactly sure how it will fit in with the Trans-Texas Corridor 35 yet, but definitely I think it will be a big element of Trans-Texas Corridor 69.

Of course, there's expanded federal tolling authority. There's some pilot projects put in there and this is, in my professional opinion, the signs that Congress is understanding that the gas tax alone isn't doing it but states that are looking, like Texas, will have the ability to toll new facilities such as 69 or TTC-35. In the case of 69, there's a set number of projects that can be done, and we will be at the top of that list asking for one of those.

Transportation development credits, also known as toll credits, we just simply want to make sure on the federal level that that program is protected and that we can spend those transportation development credits in as many places as possible and they are as open to our local partners as possible.

And what a transportation development credit is and where the change occurred was at one point in years past, not too long ago -- and I hesitate to put a date on it because I can't remember, but it was in my lifetime -- the federal government wanted to encourage the states to build toll roads but they wanted them not to put a penny of federal money in it, and if you built a toll road and didn't put, literally, a penny of federal money in it, you could receive something at that time called a toll credit.

So if you built a $100 million toll road with no federal money, you got $100 million in toll credits, and it could be used as a local match to draw down other federal projects, largely in the state used for transit projects, but it could be used for road projects and other, as I say, important transportation projects.

MR. WILLIAMSON: What you mean is you could use that credit in place of the state gas tax to earn your way into a federal reimbursement.

MR. CHASE: Correct. You do not draw down more federal money but you don't have to put up your state or local money and you can use that and put it into other important transportation projects.

MR. WILLIAMSON: So let's take it down to something personal people can understand. Is it the Brazos Valley Transit Authority that services this area? If they wanted to build an intermodal station in Conroe and if it cost a million dollars and federal funds were available to the tune of $800,000, the state, if it had the $200,000 transportation development credit, could negotiate a deal with Brazos Valley to let them have access to that $200- where they could access the $800- to build the $1 million facility. Is that correct?

MR. CHASE: If there was $800,000 available on the federal level.

MR. WILLIAMSON: As long as local level spent $200,000.

MR. CHASE: They would still draw down $800,000.

MR. WILLIAMSON: But the City of Conroe or Brazos Valley wouldn't have to come up with the $200,000, we could use the transportation credit in its place.

MR. CHASE: Correct.

MR. WILLIAMSON: Well, I would think we'd want that to be a critical part of our federal agenda.

MR. CHASE: Right, and primarily on the federal side. What Congressman Burgess from North Texas did was make it a pro rata share, so if 50 percent of the roadway is federal and 50 percent of it is not federal, state, local, whatever the case may be, concessionaire, that 50 percent that is not federal can't be used as a toll credit -- sorry -- a transportation development credit.

When we were working on this on the federal level, when we changed the name, all of a sudden it all started breaking our way for some reason, so now they're transportation development credits. But yes, they are a very powerful and misunderstood tool, but very powerful.

We were designated as one of five states for an environmental streamlining project, so we can take on the federal environmental review process -- I'm overstating that a little bit -- take on the environmental review process at the state level. We're working with the FHWA on making sure that is realized fully, and like I said, in our state legislative agenda, according to our general counsel, we will have to do some matching up of state law to accomplish that. I can't do it off the top of my head, but they advise me that we will.

Rail relocation. One of the stories that was a little bit lost in SAFETEA-LU, we worked very closely with Harris County and other partners, but primarily Harris County, we had floated the concept on the federal level that if a community feels that it needs to relocate rail because it's causing congestion or moving poisonous chemicals throughout a city's center, or whatever the case may be, that they should have access to their Federal Highway funds to do that.

In a sense, like the Alameda Corridor in California -- and those of us who have been out there to see that understand that that was not just an engineering marvel but it was more of a financial/political trick is what it was -- and we tried to make that more regular course of business.

We were 80 percent successful -- and this was Senator Inhoff from Oklahoma and Governor Perry talking at great lengths about this program -- 80 percent successful in that Congress did create a program we found on page 974 of the 1,300 page bill that was primarily the TxDOT language that would allow highway money to be spent on rail relocation but it's subject to appropriations -- what that means is appropriators have to put money in it every year -- and then there's some hoops you've got to jump through that I'm not real fond of but they exist.

But a large part of our federal agenda will be getting money into that fund and then accessing it for Texas, because I know the state is working on a broader rail plan and no matter how well Prop 1 is funded, or the Rail Relocation Fund is funded, federal money will be a part of this at the end of the day. And there are projects that are ready to go around the state -- having grown up in Harris County, I can identify with the ones in Harris County -- that have a very compelling case for moving rail to outside city centers, condensing rail lines, and with our philosophy of leaving the rail bed where you could put a road in its place.

Kind of like our discussion yesterday, the question was posed to Commissioner Andrade at the House Transportation Committee about peeling up the rail line along the Katy Freeway, and part of the answer was well, that left us room to put in a road bed. It was a little bit ahead of its time, whether it knew it or not, and so we would like to replicate that in many places.

But that is a huge -- right now it's a boutique program, it is a huge program that we are going to try to grow, and of course, we will try to protect our gains in funding equity.

Some other evolving issues on the federal side -- and I won't go through every one of them -- is recent hurricanes and now wildfires have pointed out that we are called upon to get involved in these mass emergency type operations without a funding stream to do it, and Texans, we don't whine, at least our department doesn't go to the federal government and keep looking for a line item for every single thing that happens, but we would like more flexibility in the way we spend money.

I believe this is still a viable idea in the agency, but when you're looking at reversing lanes -- and tell me if it's not still an item under discussion -- it would have been easier than to have to station multiple DPS officers at each entrance ramp if something like a rail crossing arm just came down. We don't have the money to do that, but there are pots of money that it would make sense to spend, at least in my opinion. One of them is the Federal Enhancements Program where your gas tax dollars are used for hike-and-bike trails and renovations of historic sites and tourism activities that enhance the transportation experience. Those are good if you're flush with money, but that represents at least $350 million that can't be put into emergency responses or congestion relief, and we have always advocated that those should be eligible activities and states should decide if they want to spend their gas tax dollars on those type of activities.

MR. WILLIAMSON: But right now the federal government doesn't permit that. We either spend it on the bike trail or the museum or we don't get to spend it.

MR. CHASE: Right.

MR. WILLIAMSON: So our position is going to be don't take that authority away from us but enhance it by letting us spend it on hurricane relief and wildfire relief as well.

MR. CHASE: Staging areas, things of that nature. And unfortunately, due to wildfires most recently, we're getting more interested in those ideas. Florida understands hurricanes, Louisiana and Texas do, and Oklahoma is starting to understand wildfires. And so people are starting to understand there's not a lot of money there but maybe there's some places you could spend it better.

MS. ANDRADE: Coby, I have a question.

MR. CHASE: Yes, ma'am.

MS. ANDRADE: So what you're saying is we just want the flexibility, we don't want to be limited, we want the flexibility, but we're still committed to bike trails and that.

MR. CHASE: Yes, if the state decides. And I am an advocate, not just because I work for a state, of having these decisions made at the state level and with local partners.

Interestingly -- again I keep talking about how long I've been doing this job -- I've been in this type of work for 19 years and we've always seen demonstration projects, some people call them pork. And I don't know if this is going to go anywhere, but from a person with a political science degree -- pardon me -- a government degree from the University of Texas at Austin, it is interesting to see the discussion now with this whole Abramoff-type scandal and the kind of abuses of lobby, but it gets down to a very core issue is they do it because they can't control themselves.

And this just kind of tells you how boring I am, not even my father is this boring, I drove in from Austin yesterday and we have Sirius satellite radio and we have CSPAN radio on it, and I was listening to the Alito hearings which was interesting -- pardon me, the floor discussion -- but then they switched over to a Senate Government Affairs, or whatever the name of the committee is, chaired by Susan Collins of Maine where they talked about demonstration projects, and it was very interesting. And the junior senator from Oklahoma said, You know, you can require more reporting, you can make us count everything, every little trinket and coffee mug they give us, and so forth and so on, but at the end of the day, until we just stop giving away federal money whenever we want to, nothing is ever going to change. And you could hear the oxygen leaving the room at that point.

MR. WILLIAMSON: But the dilemma we face in the transportation world -- because I don't want us to spend a lot of resources and energy on this unless we focus it the way it needs to be focused -- the Abramoff earmark explosion is a different kind of earmark than the earmarks the congressional delegation put on the transportation reauthorization bill in this sense, they apportion and then they earmark transportation projects. We've never seen an earmark, I don't believe, that directed us to go to Vic Suhm and spend the money with his company. The earmark that occurs in the transportation world is I want a road built here, or I want a museum built there, or I want a hike-and-bike trail improved over yonder.

The problem is we're getting caught in the backwash of the other things that are called earmarks that are literally I want my buddy Michael Behrens to get this contract so here's his earmark which is a completely different thing.

MR. CHASE: Which would generally be cast as Behrens Pharmaceuticals, yes.

But yes, things tend to go to private industry, but the highway bill is kind of the gold standard of unplanned for projects.

MR. WILLIAMSON: The reason I bring that up is we all watch this stuff because we're affected by it, and I'll guarantee you, unless someone takes the time to visit with Rad Sallee about earmarks in the transportation bill versus the 14,000 earmarks they're talking about, then the public will have the impression that these earmarks in the transportation bill are like the earmarks that are apparently going to send the congressman to prison, and they're two different things.

MR. CHASE: Yes, they are two different creatures altogether. Where we have bristled in the past is that they go outside of the planning process and there's rarely ever enough money to finish.

MR. WILLIAMSON: But just to be clear, Rad, we don't ever get directed to spend money with a person or a company, although apparently the United States Congress does some of that.

MR. CHASE: So I've heard.

MR. WILLIAMSON: We just get directed to go build something we don't think necessarily needs to be built, like museums, not because we're against museums but in times of wildfire, we'd rather think we need to go spend the money on fighting the wildfire.

MR. CHASE: Yes, exactly. And what I was pointing out there is that will be a discussion that it might just last through the election cycle, it might be gone -- I'm a pessimist at heart but I'm willing to be pleasantly surprised by all that -- but there might be some real discussion there that I've never seen before.

MR. HOUGHTON: Well, from my perspective, Coby, what we're hearing is what the chairman just touched on, there's an earmark to Project A, the project is a $10 million project, they get an earmark for a million. Well, there's just no way.

MR. CHASE: Somebody has got to fill in the $9 million.

MR. HOUGHTON: Somebody has got to fill in the gap. And I had an aide to a congressman the other day say get us out of this business, help us get out of the business, because what's happening is they are pitting community against community.

MR. CHASE: Yes.

MR. HOUGHTON: I'll go get my consultant, you got that person an earmark, now I want my earmark, and you have this self-serving interest. Instead of a united front in transportation, we're breaking everything apart.

MR. WILLIAMSON: But you know, Ted, to a great extent we've started doing that, we just maybe haven't marketed it too good yet. When we went to the apportionment of the state's construction money, when we went from a project-based system to an apportionment-based system -- with the help of Alan Clark and a whole bunch of other MPOs -- and when we started targeting our strategic priority money on military, locally financed projects, pass-throughs, or known economic opportunity, we have, in effect, starting giving Congress a blueprint of how you can distribute that money fairly and let people make regional decisions about where to spend it. That might be something to bring up with them.

MR. CHASE: I think we'll use that as a model in explaining our side of that story. I mean, it's a long, fascinating story that's never uninteresting.

Just to go very quickly to the rest of what we see as developing issues in Congress, we have the Federal Aviation Reauthorization, the Water Resources Development Act, and public transportation. I'll leave those at that.

The last area I want to talk about is the strategic plan which kind of serves as a link --

MS. ANDRADE: Coby?

MR. CHASE: Yes, ma'am.

MS. ANDRADE: Before you go there, on public transportation you are saying that our federal legislative agenda you'd like to finalize it by February or you'd like to start working on it?

MR. CHASE: Well, I would like to have a set of goals or over-arching things to go pursue in Congress without being so specific that we can't ever change our mind.

MS. ANDRADE: Because our ongoing study group in public transportation won't have the initiatives that we need to start working on probably until the end of summer or early fall.

MR. CHASE: And I want to make sure we just leave it open that we can embrace those.

MS. ANDRADE: So we're okay on that time line?

MR. CHASE: Yes, absolutely. On the federal side, it's just played differently because it never ends. On the state side we go with a high degree of specificity with what we want, on the federal side it tends to be broader goals.

MS. ANDRADE: So we'll still be protected.

MR. CHASE: Yes, ma'am, absolutely.

The last thing I would like to talk about is the strategic plan. This week I sent each of your offices the most skeletal drafts of the agency's next strategic plan. What I sent you to look over is the public version and that is written to be readable and informative, as opposed to the state template version that will be offered to the Legislative Budget Board and the Governor's Office as TxDOT's recommended agency strategic plan. Also, this public version is, of course, by its name what we will present to the public.

I believe we are unique among state agencies in that we produce two strategic plans: one is official, bursting with data, while the unofficial one is small and easier to digest and makes sense to people who pick it up and read it. The official strategic plan counts and measures things that are required by the Legislative Budget Board, but we have found that that doesn't translate well to the average taxpayer. I don't mean that as a criticism, simply as a practical observation.

You are always welcome to explore the document in depth with our research section if you'd like, but it is our intention to produce it with as little internal fanfare as possible and present it to the commission for adoption. If my memory serves correctly, I think it's due to the Legislative Budget Board in August -- though I could be wrong there -- which means that it requires a July commission vote, but I'll double check those details for you.

In addition to being concise and readable, the public version will present the department's five carefully chosen goals: decrease congestion, increase safety, decrease air pollution, enhance economic opportunity, and increase asset value. These will be measured by a set of indices. The chairman has put us all on notice this is how we will operate and gauge our progress. And that can be a little startling, but heaven forbid we actually measure ourselves by did congestion get reduced or was the air quality better. Those are very hard goals to attain; sometimes we're not going to meet them, but we need to know why, not to be afraid of that but we need to explain it.

TxDOT's attainment of these goals will be discussed in terms of performance measures currently being formulated by a task force under the leadership of Amadeo Saenz. This task force will determine the best measures and how these will be calculated. The intent is for these measures or indices to be used both as criteria and for project selection as well as for reporting progress toward the five goals.

James Bass, our chief financial officer, and I have at length discussed efforts to have the strategic plan mirrored in the agency's legislative appropriations request, the next most important operating document that we have. He's here today and I'd like to invite him up here just for a second.

MR. WILLIAMSON: How about right now?

MR. CHASE: Yes, sir. James? Thank goodness you're here; I hadn't seen you. Here is James Bass walking up behind me.

MR. BASS: Good morning. I am James Bass, the chief financial officer at TxDOT.

As you just heard from Coby, the strategic plan will lay out the department's goals for the upcoming time period. The commission will then request, through the legislative appropriations request, or LAR, that the department's financial and human resources be allocated in a manner to meet those goals. Like the strategic plan, there is a prescribed format for the LAR that has a lot of the characteristics Coby described with the strategic plan.

MR. WILLIAMSON: Prescribed by the legislature.

MR. BASS: Yes, sir. Therefore, our plan for the LAR will follow that of the strategic plan. We'll deliver the official fact and data loaded version to the LBB but we will also produce a more streamlined, unofficial version that will be easier to digest and understand to those who aren't involved in the appropriations process on a daily basis.

MR. WILLIAMSON: And that version will be available to the public?

MR. BASS: Yes, sir.

One quick thing on that, the LAR historically is due at the end of August. We will have to the commission a final draft in the month of June to allow you sufficient time to go through that and look at the allocation of those financial resources and human resources to see if there's adjustments that you'd like to make before it's finally submitted.

MR. WILLIAMSON: And how about that during the first week of June? Give us the maximum amount of time.

MR. BASS: Yes, sir.

The effort has been ongoing in order to try to make our appropriations more easily understood for the past four years or so, and just a quick update on some of the progress that we've made to date.

In the appropriations bill and in the strategic plan and in the LAR, we list performance measures for the department. Back in 2003 we had 121 performance measures that, as an example, some of them measured the different varieties of pavement surface treatments that might have been applied to the state's system in a particular year. Probably something of great interest to our local maintenance engineer in the area to know what type of treatment was on which road, but from a statewide perspective in trying to see if we're performing our duties and meeting our goals, perhaps not as important as simply the number of lane miles that received a surface treatment or the condition assessment score of the state highway system or percentage of projects that were completed on time and on budget.

What has happened over the past four years is we've moved away from the 121 to now we only have 32 that focus on those broader, more significant -- in my opinion -- measures and they look at how the department measures our own performance and we've incorporated those into the appropriations process.

Another key thing, I think, that's happened over the past few years in the appropriations process is historically TxDOT had used the term construction to mean major work on the highway system, such that if there were a two-lane road that was 25 years old and we went in and pulled up the two-lane road and replaced it with a brand new two-lane road, that fell under the term of construction in our appropriations bill. Very confusing because as most people, non-TxDOTers, as we call them, think of construction as being adding capacity to the system, so our message and our numbers were not aligning very well.

2006 is the first year that in the appropriations process that major rehabilitation work, as I described, will now more appropriately be accounted for under the maintenance category. We think that makes a lot more sense and it will be more visible to people, they'll see the limited amount of resources that are truly going for construction are adding capacity to the system.

We, of course, have also had a few near misses on some opportunities and chances to try and operate the department more like a business, and one of the things I hope is to respond to any questions you have and get ideas or input on things you would like us to pursue in the upcoming LAR.

One of them we attempted last time was on the full-time equivalents. We had pushed to have a restriction and a limit on the amount that the department could pay in salaries, rather than a restriction on a strict number of employees the department could have. There were discussions during last session, however, we ended up with continuing to have a limitation on the number of employees.

MR. WILLIAMSON: I'm curious. Mayor Metcalf, are you still here? Do you happen to recollect in your city budget do you budget your salary dollars for your staff by the number of people you intend to hire, or do you decide on your goals and the number of people you're going to hire to meet your goals and then put a dollar budget in and say we're going to spend $10 million a year on salaries?

MAYOR METCALF: Well, the way we do it, we start with zero budgeting, and then we go from there, and then we look at the staff that we have right now and then we look at things that we want to do in the future and go from there on it, and we try to maintain enough revenues to cover all that.

MR. WILLIAMSON: So you don't say we're going to have no more than 100 employees and then worry about what the 100 are going to cost you, you start with zero and say this is the revenue we've got, these are the things we've got to do, and this is the amount of money we can allocate to salaries for the year.

MAYOR METCALF: That's correct, yes, sir.

MR. HOUGHTON: Try to meet a mission statement.

MAYOR METCALF: That's exactly right, yes, that's what we try to do, and it works out very well for us too.

MR. WILLIAMSON: Barb, are you still around, or Ed or Craig, any commissioners court? I'm just curious if the commissioners court does it the same way.

Well, the dilemma we find ourselves in and the matter that James is talking about, we think that's how state government ought to be run, but it's kind of backwards. The legislature says you may have 14,000 employees but you kind of can pay them whatever you have to pay them. We kind of wanted to turn around and just say well, if you want to limit us, just tell us how much money the taxpayers are willing to spend for salaries and let us figure out what's the competency level and what do we need to pay people in order to get our mission done. I was just curious if cities did it the same way.

MR. BASS: A similar approach we took last session was dealing with our capital budget, and the capital budget term refers to heavy roadway equipment, large automation equipment, or large rehabilitative maintenance to our buildings fall under a category of capital budget. As well in that category, we asked to be limited on a percentage basis of our overall budget rather than the current prescribed method of so many dollars within each category and even an effort to go so many dollars per project.

That was very difficult for us, as you can imagine, because I said the LAR is due in August, we're beginning those discussions with our districts and divisions and administration to try and see what their needs are going to be in 2008 and 2009. So we fully expect those priorities to change and adjust over time and we would like the ability to be able to react to the changes in our priorities and our environment on the capital budget as well.

Another item that we've seen some progress but not what I would call complete success is in the appropriations bill there are strategies or duties and responsibilities of the department: highway design, highway construction, right of way acquisition, routine maintenance, aviation services, public transit, the common characteristics that people think of in the department. We currently have 22 of those and at some point you start to lose some importance and people get mired down in the details.

We have pushed to simplify that to five broad strategies, the ones that you're all familiar with, I believe: Plan it, Build it, Maintain it, Manage it, and Use it. Again, we have 22 strategies, however a little bit of progress I can report is they are listed in five groups, and those five groups are the ones that I just listed, so we're moving in the right direction.

As I said, I really just wanted to come up, and like Coby, in the next few months I believe that I'll be before you numerous more times to discuss this matter on the appropriations request. I'd be happy to attempt to answer any questions you might have at this time or to accept any comments or directions you might have now or going into the future.

MR. WILLIAMSON: I think for sure the things you identified we want to keep working on, we don't want to give up. If you have additional recommendations to us, you'll share that with us, either through staff during the month or at formal meetings every month. Thank you very much, James.

MR. BASS: Thank you. I'll now turn it back over to Coby.

MR. CHASE: Thank you, James. That concludes my remarks. Are there any questions at this point or are there any directions?

MR. HOUGHTON: It's not a direction but a suggestion, the U.S. Chamber report, I don't think that gets enough play. Maybe I'm just too parochial, but I think the transportation committees of both House and Senate ought to have at least a copy of that, and our federal delegation ought to have a copy of that sent to them as to some of the ideas that are being championed on a national basis by the United States Chamber of Commerce.

MR. CHASE: Right, and if I may add to that, I also think the fact that we just lost $150-some-odd million and the whole nation shrugged their shoulders: Oh, well, what do you do.

Anything else?

MR. WILLIAMSON: Members?

(No response.)

MR. CHASE: Thank you so much.

MR. WILLIAMSON: Thank you.

It's the intention of the chair now to take a full 15-minute break to permit people to take care of their business, and when we come back, Mike, we will start with agenda item number 5. Thank you.

(Whereupon, a brief recess was taken.)

MR. WILLIAMSON: Thank you. We will pick back up, Mike, with agenda item 5, please.

MR. BEHRENS: Yes. Agenda item number 5, this is going to be our rules for Proposed Adoption, and our first one is agenda item 5(a)(1) which is amendments to our rules relating to pass-through tolls. James?

MR. BASS: Good morning. Again, I'm James Bass.

Agenda item 5(a)(1) proposes revisions to the rules for pass-through fares and tolls. Some of the significant changes are to make amendments in order to incorporate pass-through fares into the rules, also to make changes so that now TxDOT can either pay or receive a pass-through payment, and also to add design, development and financing as subjects that are allowable for a pass-through agreement. Previously the only things that were allowed were for construction, maintenance or operation.

These proposed amendments are in response to statutory changes enacted through House Bill 2702 from the 79th Session, and if you approve today, the proposed amendments would be published in the Texas Register in order to receive public comments. Staff recommends your approval.

MR. WILLIAMSON: Members, you've heard the staff's explanation of these proposed rules.

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. BASS: Thank you.

MR. WILLIAMSON: Thank you, James.

MR. BEHRENS: Okay, commissioners, we're going to skip over 5(a)(2) for right now, the time being, and go ahead and go to 5(a)(3) which is proposed rules relating to right of way and these relate to toll roads and utility relocations.

MR. CAMPBELL: Good morning. For the record, my name is John Campbell, director of the Right of Way Division.

MR. WILLIAMSON: Good morning, John. How are you?

MR. CAMPBELL: I'm doing quite well. Yourself?

I'd like to present for your consideration minute order item 5(a)(3) which provides for the proposed adoption of an amendment to 43 Texas Administrative Code, Section 21.23, concerning state participation for utility adjustments, relocations or removals made on toll-related projects. The amendment is necessary in accordance with the requirements of House Bill 2702 of the 79th Legislature Regular Session 2005.

The amendment will require the department and utilities to equally share the cost of utility adjustments, relocations or removals made prior to September 1 of 2007 for toll-related state highway projects and will establish the procedures concerning that reimbursement. To ensure that eligible costs are properly incurred and tracked, new 21.23 requires that a utility that is relocating facilities on a toll-related facility to enter into an agreement with the department prior to commencing the work.

The comment period will be open through March 13 of 2006. Staff recommends your approval of the proposed amendment.

MR. WILLIAMSON: Members, you've heard the staff's explanation of the item.

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. CAMPBELL: Thank you.

MR. WILLIAMSON: Thank you, John.

MR. BEHRENS: Okay, commissioners, we need to address a rule for Final Adoption before we go back to the VTR rule under Proposed Adoption. This will be agenda item 5(b)(1), a rule for Final Adoption concerning rules in our Vehicle Titles and Registration. Rebecca? A first-timer.

MS. DAVIO: Good morning. My name is Rebecca Davio and I'm the director of the Vehicle Titles and Registration Division.

MR. WILLIAMSON: And is this your first time to appear before us in your new capacity?

MS. DAVIO: Yes, sir, it is.

MR. WILLIAMSON: And have you been warned about this?

MS. DAVIO: Warned about what, sir?

MR. HOUGHTON: Did you draw the short straw on this one?

MS. DAVIO: Yes, sir.

MR. WILLIAMSON: Are you sure you want to do this?

MS. DAVIO: I'm sorry?

MR. WILLIAMSON: Are you sure you want to do this?

MS. DAVIO: This first item is going to be very straightforward.

MR. WILLIAMSON: No, the job. Are you sure you want the job?

(General laughter.)

MS. DAVIO: I'm having great fun. I'm drinking from a fire hose but I'm having great fun.

MR. WILLIAMSON: Okay, well, proceed.

MS. DAVIO: I'm sorry?

MR. WILLIAMSON: Go ahead.

MS. DAVIO: We are asking you to consider final adoption of rules that were brought to you back in October. This is item 5(b)(1), and this is just cleaning up our rules to make them match with legislation that was passed last session and do a variety of cleanup. It's lots and lots and lots of little things to make sure that our rules match the statute.

MR. WILLIAMSON: Well, what's the worst little thing that's in here?

MS. DAVIO: Well, the most interesting to me was that cotton vehicle plates -- which I didn't realize there were -- now also can be used to carry chili peppers.

(General laughter.)

R. WILLIAMSON: And that took a change in the law and a change in our regulations?

MS. DAVIO: Yes, sir, it did, a change in rules to allow that and a change in law.

MR. WILLIAMSON: Now, did we change the law on Purple Heart license plates?

MS. DAVIO: No, sir, we didn't. We have not yet but we are looking into that.

MR. WILLIAMSON: And are you aware, members, that if you're a Purple Heart recipient you qualify for a Purple Heart license plate unless the vehicle you drive weighs more than?

MS. DAVIO: One ton.

MR. WILLIAMSON: In which case I guess the wound you took in Iraq just doesn't matter because you can't get the Purple Heart plate.

MS. DAVIO: I believe that the fees vary as you go up in size on your vehicle, and the legislation currently doesn't permit us to put Purple Heart license plates on that size vehicle, but we are going to look into it. That may be another item for Coby's legislative agenda.

MR. WILLIAMSON: It probably would be. Well, okay, what else can you tell us about this?

MS. DAVIO: What else can I tell you about this?

MR. WILLIAMSON: Uh-huh.

MS. DAVIO: Well, let me get out my notebook; there are lots and lots of things. This covers all aspects of the Chapter 17 Vehicle Titles and Registration Code, it includes our certificates of title, the motor vehicle registration subchapter, the registration and titles system. We had to be able to --

MR. WILLIAMSON: You're not making this up, are you?

MS. DAVIO: I'm sorry?

MR. WILLIAMSON: You're not making this up, are you?

MS. DAVIO: No, sir, I'm not.

MR. WILLIAMSON: Members, you've heard the explanation.

MS. DAVIO: Staff recommends approval.

MR. JOHNSON: Can I ask a question?

MR. WILLIAMSON: Please do.

MS. DAVIO: Yes, sir?

MR. WILLIAMSON: You're leaving me hanging out here by myself. I'm trying to run this lady through the ringer.

(General laughter.)

MR. JOHNSON: Okay. I'm legitimate. The video that was here this morning talked about Montgomery County and the area, and this was a very large cotton-producing area.

MS. DAVIO: Yes, sir.

MR. JOHNSON: And some of the people here are a little concerned that they're now going to allow the producers of chili peppers or the transporters of chili peppers to use cotton transporter license plates. I mean, what should I tell them? I mean, I've been inundated by people around here.

MS. DAVIO: I think you should tell them that we're being consistent in allowing economic development opportunities.

MR. JOHNSON: Well, what other fruits and vegetables?

MR. WILLIAMSON: Is a chili a fruit or a vegetable? It's certainly not a fiber like cotton.

MS. DAVIO: It's a vegetable.

MR. HOUGHTON: It's a vegetable, and they don't produce chili peppers down here like we do in West Texas, so what are you doing allowing those kind of plates on that kind of vehicle?

MS. DAVIO: Legislation was passed. What can I say?

MR. JOHNSON: Do you know what other fruits and vegetables kind of gather under the cotton transporter disguise and go down our roads utilizing these tags? Broccoli?

MS. DAVIO: The Vehicle Titles and Registration Division doesn't handle enforcement.

MR. HOUGHTON: Have you ever seen a chili pepper grown in this part of the country?

MS. DAVIO: I cannot say that I have. I'm testifying officially, I can't say that I've seen a chili pepper grown in this part of the country, no.

(General laughter.)

MS. ANDRADE: Rebecca, welcome.

MS. DAVIO: Thank you very much, Commissioner Andrade.

MS. ANDRADE: Now you know how I feel up here. You've done a great job this morning, you're going to be fine.

MR. WILLIAMSON: Yes, you held up pretty good.

MS. DAVIO: Thank you.

MR. WILLIAMSON: Do I have a motion?

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Congratulations and welcome to the family.

MS. DAVIO: Thank you very much.

MR. BEHRENS: Stay where you are, Rebecca, because now we're going to go back to our proposed rules and go back to item 5(a)(2) which also is a Vehicle Titles and Registration rule and this concerns specialty license plates and also some things that we were asked to look at by legislation.

MS. DAVIO: That's correct, Mr. Behrens.

Last fiscal year, the registration fees contributed $825 million to enhancing and building our roads. Of that, approximately $2 million came from specialty and personalized license plates. That's roughly about 2 percent of the 19 million registered vehicles that we have in Texas. The legislature looked at that and saw that there might be some additional opportunities, so House Bill 2894 was passed last session, and it directed TxDOT to enter into a contract with a private vendor to market and sell specialty license plates.

Effective Teleservices, Inc. was selected through a competitive RFP process, and they are going to sell and market all non-qualifying specialty plates. Non-qualifying, just so that everybody is clear, means any plate that a member of the general public could buy, so military plates, for example, Purple Heart plates will not be affected by what we're talking about today.

And what we're bringing before you, the proposed rules are to adopt the new fees. Effective Teleservices has looked at the specialty marketing campaign and recommended a fee increase of $25 for all specialty plates. This will increase the majority of the special plates cost from $30 to $55. The "God Bless Texas" and "God Bless America" plates will go to $65.

In addition to this increase, also for your consideration today is a plate cost of $100 for a whole new category of plates, and these will be collector plates, if you will, that ETI will create and market, and these plates, if you want an example of what something like this might be, they would be very limited sales plates but think "National Champion Football" plates.

MR. HOUGHTON: That would be very limited.

(General laughter.)

MS. DAVIO: Said by a non-Longhorn.

MR. WILLIAMSON: I thought all of us that graduated from there, they were just going to give us those plates.

MS. DAVIO: I do not believe we have the authority to do that.

MR. WILLIAMSON: Wait a second now. I'm listening to you and you're giving us a lot of information, but I want to go back to the beginning. Did you say that the fee for new plates are going to go up by $25, or did I hear you say, for example, if Alan has a specialty plate right now and he doesn't want to change it, he just wants his same specialty plate, his fee is going to go up 25 bucks?

MS. DAVIO: Yes, sir, that's correct.

MR. WILLIAMSON: Why would his fee go up 25 bucks?

MS. DAVIO: Because a new marketing campaign will be developed so that there will be a lot of new holders of speciality license plates, so his cause, the cause that he's supporting would get more, whether that's his university --

MR. WILLIAMSON: Well, where does that $25 go?

MS. DAVIO: The money is going to be split. The vendor obviously gets paid for their services, and then the state will also get some additional revenue because more plates are being sold.

MR. HOUGHTON: On my specialty plate, if I have an increase of $25, where does that $25 go?

MS. DAVIO: The first year that you get that plate and pay your additional $25, that money goes to the vendor, the selected vendor, Effective Teleservices, Inc. The second year through the fifth year -- and this is a five-year contract for this service -- the second through the fifth year of that, 30 percent of that $25, approximately $7.50, will come back to the state in general revenue.

MR. WILLIAMSON: General revenue?

MS. DAVIO: Yes, sir. That was in the legislation.

MR. JOHNSON: What about the 70 percent of the $25? If 30 percent goes into GR, the 70 percent, where does it go?

S. DAVIO: That will go to the vendor for their services.

MR. WILLIAMSON: So you mean the highway transportation fund is paying for the cost of administering motor vehicle license plates and we're going to start selling specialty license plates and we're going to raise the fees on the consumer, and 100 percent of that in the first year is going to the vendor, and 70 percent in the second year is going to the vendor, and the other 30 percent is not even coming back to the highway fund?

MS. DAVIO: That's correct. The vendor is projecting an increase in sales, and I should tell you also that this is the first effort of this kind in the country to market specialty license plates, and the vendor is projecting that there will be an increase in sales, that there's a lot more people that just simply don't understand that specialty license plates are available or they don't know how to get them or that kind of thing.

MR. HOUGHTON: Let me ask a question, and I'm not familiar with this. What's the number one specialty plate?

MS. DAVIO: That's the "State of the Arts" plate.

MR. HOUGHTON: And when I get a "State of the Arts" plate, I buy one, where does that revenue go?

MS. DAVIO: A portion of the revenue goes to the sponsoring agency, and that will continue to go to the sponsoring agency.

MR. HOUGHTON: My question is have we talked to the people at "State of the Arts" or that sponsoring agency on how they feel about this $25 increase which may somewhat limit their renewals back to the "State of the Arts" and corresponding other specialty plates?

MS. DAVIO: We have not talked to them yet, we do definitely plan on notifying them. If you choose to approve these proposed rules today, we do plan on having that conversation. The benefit that would come to the sponsoring organizations is the increase in plate sales.

MR. HOUGHTON: That's an anticipated increase.

MS. DAVIO: Yes, sir, that's correct.

MR. WILLIAMSON: Well, I've been flipping through the rules, and I guess it occurs to me -- I need to word this correctly for the record -- this may or may not be a good program but this really isn't our program, apparently the legislature passed this and told us to do it.

MS. DAVIO: Yes, sir, that's correct.

MR. WILLIAMSON: So you were kind of under the burden of adopting rules, going out for contract, making the best decision you could about who responded.

MS. DAVIO: Yes, sir.

MR. WILLIAMSON: I don't necessarily hear you saying this is a good idea, we need to go do this, you're just laying out for me my options.

MS. DAVIO: Yes, sir, that's correct.

MR. WILLIAMSON: Well, let me just tell you, I don't mean this personally, Steve, I'm not interested in voting on something that increases somebody's fees 25 bucks for what they're already getting in order to capitalize somebody else's business. I'm not interested in doing that at all. Maybe I'm by myself.

MR. HOUGHTON: Well, I think we need to talk to our partners that are going to be affected by this negatively and potentially positively on the top ten specialty plates and bring them into the room and say, What do you think about this?

MR. WILLIAMSON: We're asking consumers, I think, across the state to do enough in our road program, and even for that 2 percent of the guys and gals who are buying those specialty plates. I mean, we're saying market forces need to drive decisions, but poor old Alan here is fixing to pay 25 bucks more for his UT plate and he didn't get anything out of it at all, he just got to pay 25 more bucks.

MR. JOHNSON: Mr. Chairman, UT for Alan is located in Knoxville, Tennessee.

(General laughter.)

MS. DAVIO: The colors are still right, though, aren't they.

MR. WILLIAMSON: You know what you say if you graduated from UT Austin, don't you, John?

MR. JOHNSON: No.

MR. WILLIAMSON: I understand that, he just wants to associate himself with the great university.
 

R. JOHNSON: And a lot of people do.

(General laughter.)

MR. WILLIAMSON: But what about this $25, are you not bothered by this?

MR. JOHNSON: No. I concur with everything that you've said. My question, Rebecca, how many presenters were there for the RFP, how many participants?

MS. DAVIO: There were two companies that competed.

MR. JOHNSON: Two?

MS. DAVIO: Yes, sir.

MR. JOHNSON: And what has Effective Teleservices said that puts them at the top of the heap in terms of what will they do in the marketing aspect where they will deserve the money that they're going to get paid? And we have high expectations, like the "State of the Arts" group or the others who have specialty tags that will be affected by this that it's going to benefit them from a revenue standpoint. What are they going to do, are they going on TV or are they going to use direct mail?

MS. DAVIO: They're proposing to use a variety of media and to really go out. One of the things, they had a higher revenue projection so more revenue would come to the state because they were going to market and sell all existing specialty plates in addition to any new plates that they would develop and any new collector plates that they would develop.

MR. JOHNSON: Is their contract tied to performance?

MS. DAVIO: Yes, sir, there is a clause in the contract that they must meet 90 percent of their revenue projections. There's some other performance criteria as well, they have to have minimal drop time on their calls and such.

MR. JOHNSON: The university plates, did you mention them, are they affected by this program?

MS. DAVIO: Yes, sir, they are. They are part of the existing specialty plates.

MR. JOHNSON: "State of the Arts" sells more than Texas A&M?

MS. DAVIO: I believe that they do.

MR. WILLIAMSON: Does that surprise you?

MR. JOHNSON: It does. I thought Texas A&M was the largest.

MS. ANDRADE: Rebecca, let me ask you, let me start from the beginning and so we're using the "State of the Arts". If this private vendor sells more license plates for "State of the Arts", "State of the Arts" will get more revenue.

MS. DAVIO: That is correct, and that is the basis of the revenue projections that they will in fact get an estimated -- over the five-year term of the contract, the sponsoring agencies are supposed to get $38 million.

MS. ANDRADE: And the way they work now is that whatever we charge, the agency that manufactures the license plate would get paid and the "State of the Arts" would get paid, and that was all the revenue we were collecting before. Right? Currently?

MS. DAVIO: I'm sorry? I want to make sure I agree with the revenue split.

MS. ANDRADE: Currently how do we operate? My understanding was that the agency that manufactured the license plate got paid and the "State of the Arts" received the rest. Is that the way we're handling it right now?

MS. DAVIO: Yes, and Fund 6 also gets a portion of that.

MS. ANDRADE: Fund 6.

MS. DAVIO: Yes, ma'am. Currently the sponsoring agencies, I believe, get $8 from the current $30 fee.

MR. HOUGHTON: Have we run numbers on this? Let's just take "State of the Arts". Steve, how many "State of the Arts" license plates have been issued? Do you know, Steve?

MR. WILLIAMSON: You don't know off the top of your head, Steve?

MR. SIMMONS: For the record, my name is Steve Simmons, deputy executive director. I'm looking back to Mike Craig, I'm sure he's got those numbers.

I want to clarify the fee structure for Commissioner Andrade real quick. Out of the $30 currently, $22 of that goes to the sponsoring agency, $8 of that goes to the department.

MS. ANDRADE: And that's it.

MR. SIMMONS: And that's it. Well, and then a little bit of that goes to the county, 50 cents out of that goes to the county.

MS. ANDRADE: And now?

MR. SIMMONS: And if this was enacted, the $25 would go to the marketing firm.

MR. WILLIAMSON: The additional $25.

MR. JOHNSON: In year one.

MR. SIMMONS: The additional $25 would go to the marketing firm, $22 would still go to the sponsoring agency and $8 would still go to the department. The second year of the contract, 30 percent of that $25 would then go to general revenue and 70 percent of that $25 would still remain with the marketing firm.

MS. ANDRADE: So what's our benefit?

MR. SIMMONS: Increased sales. So if we're selling 100 University of Texas at Austin plates -- which I think we sell a few more than that -- and they now have a company that's going to market it, that marketing number may go up to 200, and so rather than just getting the $22 off the 100, they're getting $22 off the 200.

MS. ANDRADE: And what happens if it doesn't happen?

MR. SIMMONS: That's what the performance measures in there, to make sure they're pursuing it.

MR. WILLIAMSON: Is 90 percent of their projections higher than what we're selling now? Is the baseline higher?

MS. DAVIO: Yes, sir, it is.

MR. HOUGHTON: And what's their track record?

MS. DAVIO: This is the first of its kind effort in the country so we don't know.

MR. HOUGHTON: So we don't know it, there is no track record.

MS. DAVIO: No, sir.

MR. WILLIAMSON: They won the contract on a competitive proposal.

MR. JOHNSON: With one other firm.

MR. WILLIAMSON: Well, granted it was one other firm.

MR. HOUGHTON: I mean, do they have a history of performance?

MS. DAVIO: Effective Teleservices, Inc. provides telemarketing services, I believe, and their partnered with an advertising agency, Miroch Partners.

MR. HOUGHTON: They have no history of performance in this field.

MS. DAVIO: That's correct, sir.

MR. WILLIAMSON: But Ted, we need to be careful and not create on the record that any objection we have is related to that because they've already won the contract according to objective criteria.

MS. DAVIO: That is correct. They were deemed to be the proposal that was the most advantageous to the state.

MR. WILLIAMSON: The commission's formal query about this is related to the 25 bucks, whether our partners know it's coming and whether or not we're willing to accept that. And I can't poll, all we can do is vote.

Mike, how do you want me to make my proposal? Do you want me to make it in the form of a bring this minute order back to us and let's delay it, do you want a straight up or down vote, how do you want to do this?

MR. BEHRENS: I think I would recommend that we defer this minute order and some of the points that have been brought up, like I think was brought up have we talked to our partners and some of these people that may or may not be impacted, give us some time to do some of that, and then at the appropriate time we'd bring it back to the commission.

MR. WILLIAMSON: Let me cogitate with my commission members. What do you think about that, Ted?

MR. HOUGHTON: I'm fine with that.

MR. JOHNSON: This is a proposed adoption, I mean, this is not final.

MS. DAVIO: That's correct. We would go to the Texas Register as well and have a public comment period, and then we would bring them back.

MR. JOHNSON: I definitely think there are a lot of affected parties here that need to be informed, and whether that's the appropriate mechanism to do it, to pass the proposed adoption. Can we extend the comment deadline period? Would that be of any benefit?

MR. WILLIAMSON: I think what we're better off doing is deferring and let them notify everybody directly.

MS. DAVIO: Let them know it's coming before we do the proposed rules.

MR. WILLIAMSON: Right. That way when we ask her that question, she can say, Yes, every affected party, we sent them a letter and talked to them.

MR. JOHNSON: One other question.

MS. DAVIO: Yes, sir?

MR. JOHNSON: Do they have the authority to create new plates, Effective Teleservices?

MS. DAVIO: Yes, sir, they do, with TxDOT's approval.

MR. JOHNSON: There's no criteria or authority that would say you can't do that other than maybe a copyright infringement?

MS. DAVIO: TxDOT would have final approval on any plates that were proposed, and if they were going to propose a new collector's plate, for example, and it would be a "National Champion" plate, it might infringe.

MR. JOHNSON: I suspect that will be the first one they do and I suspect it will be a big seller.

MR. WILLIAMSON: It will become the number one seller in the nation. I think there's about 800,000 of us standing by to buy it.

MS. DAVIO: In that instance, ETI would have to work with the University of Texas, with the Big Twelve, anybody that had a say in that and get their approval on it.

MR. WILLIAMSON: Michael, I think that we would like to defer this matter.

MR. BEHRENS: All right.

MR. SIMMONS: Mr. Chairman, can I get clarification on exactly what your concerns are? I think, first off, you have concerns that $25 is being placed on all the existing plates that are in existence today. Is that what I understand?

MR. WILLIAMSON: Now, in this regard I speak only for myself and not the commission; the other commission members will have to give you their concerns. My concern is we are not business unfriendly here, we understand the power of the private sector to help us accomplish our goals. I'm not saying that.

I'm just saying that if I owned a personal plate -- which, for the record, I don't -- but if I owned one and if the government sent me an almost 100 percent increase in my plate charge and then explained to me that the increase was necessary to capitalize a marketing effort that would simply get the cost of my plate back to where it was going to be five years from now if no one ever did this -- do you see what I'm saying -- I would have to ask myself a question as a consumer: Well, why do I care about that; you're going to increase my fee so that you can sell Hope a plate and my fee is never going to go down and you're never going to put it back into the transportation system; why would I be for that?

And my suspicion is -- you said 2 percent of our plates are personalized plates?

MS. DAVIO: Yes, sir.

MR. WILLIAMSON: Out of how many?

MS. DAVIO: Nineteen million registered vehicles.

MR. WILLIAMSON: And is that 400,000 people?

MS. DAVIO: Approximately 380,000.

MR. WILLIAMSON: That's going to be a lot of mad Texans. That's almost the size of the Texas Toll Party.

MR. SIMMONS: Yes, sir. I'm just trying to clarify. The second thing is the increase that's being proposed has not been discussed with the sponsoring agencies that will be affected by it, and you would like for staff to make sure they're aware of it during the comment period which they will make the effort.

And I was trying to think, there's was a third item that I thought I heard.

MS. ANDRADE: I think one of the concerns I have also is that because this company doesn't have any proven record --

MR. WILLIAMSON: No, we can't talk about that.

MS. ANDRADE: Oh, we can't? Okay.

MR. WILLIAMSON: We've already gone through a process where they've been awarded the contract, it's not for the commission to judge that.

MS. ANDRADE: Okay. Then my concern would be the sponsoring agencies.

MR. SIMMONS: The sponsoring agencies that it's going to impact their sales and that they have no opportunity whether to opt in or opt out of the marketing. Is that a correct statement?

MR. WILLIAMSON: Say it again.

MR. SIMMONS: That they have no opportunity -- they are automatically mandated they're going to have to be part of this marketing effort and not have an opportunity to opt in or opt out.

MR. WILLIAMSON: That's a fair statement, yes. And we're not springing this on you, we didn't know this was going to happen. Don't mean any offense to you on your first trip.

MS. DAVIO: You're the commission, sir. So we're going to defer?

MR. WILLIAMSON: Correct.

MS. DAVIO: Okay. We will visit with the sponsoring agencies and get their feeling.

MR. WILLIAMSON: Very good.

MS. DAVIO: Thank you.

MR. WILLIAMSON: Thank you.

MR. BEHRENS: Okay. Now going back to our rules for Final Adoption, we'll go to agenda item 5(b)(2) which is recommendation to adopt some rules in our Right of Way, and John Campbell will come back up. And these rules relate to right of way concerning rail facilities.

MR. CAMPBELL: Yes, sir. Again, for the record, I'm John Campbell, director of the Right of Way Division.

I'd like to present for your consideration minute order item 5(b)(2) which provides for final adoption of new Section 21.801 and Section 21.802 concerning acquisition and disposal of real property for rail facilities.

Section 21.801 essentially adopts the same acquisition procedures that currently apply to highway facilities for rail facilities, and also clarifies the department's authority to use the services of a right of way acquisition provider, to use comprehensive development agreements, and to utilize pass-through fare agreements in the acquisition of property for rail facilities.

Section 21.802, again essentially adopts the same procedures for the disposal of real property for sale by sealed bid that currently apply to highways to rail facilities. It also directs the revenue from the sale of rail facility property to be credited to the State Highway Fund.

No comments were received; staff recommends your approval.

MR. WILLIAMSON: Members, you've heard the staff's recommendation and explanation.

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.

MR. CAMPBELL: Thank you.

MR. BEHRENS: Agenda item 5(b)(3), again rules for Final Adoption, this is concerning our rest areas and being able to link to community web sites at these rest areas.

MR. WILLIAMSON: Now, this is not your first trip, is it?

MR. SERNA: No, sir. This is my first trip earlier in the agenda, though.

Good afternoon, Mr. Chairman, commissioners. For the record, my name is Edward Serna. I'm the assistant executive director for Support Operations at TxDOT.

The minute order that you have before you is for final adoption of a rule that would outline how communities can link to web sites that we have available at our travel centers and rest areas where the motoring public can access the internet. Basically, the intent is to encourage tourism, travel and local economic opportunities for those communities.

We had no comments at all during the comment period and there's no controversy with the rules.

MR. WILLIAMSON: Okay, members, you've heard the explanation and recommendation of staff. What's your pleasure?

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. SERNA: Thank you, sir.

MR. WILLIAMSON: Thank you, Ed.

MR. BEHRENS: Agenda item 5(b)(4), rules for Final Adoption concerning oversize and overweight vehicles and loads. Carol?

MS. DAVIS: Good morning.

MR. WILLIAMSON: Good morning.

MS. DAVIS: I'm Carol Davis, director of TxDOT's Motor Carrier Division.

The minute order you have before you for item 5(b)(4) concerns final adoption of amendments to Chapter 28 concerning oversize and overweight permits. These amendments clarify motor carrier registration requirements for permit applicants, clarify escort vehicle requirements, implement the provisions of House Bill 2438 by eliminating certain taxing requirement information for permit applicants, and clarify requirements for some third party permitting programs.

The proposed rules were proposed in October and we did not receive any comments, and we are recommending final adoption.

MR. WILLIAMSON: Members, you've heard the staff explanation and recommendation. What's your pleasure?

MR. JOHNSON: I have one question, Carol.

MS. DAVIS: Yes, sir?

MR. JOHNSON: One of the parts of this rule is the Chambers County issue over oversize and overweight permit, and it deals with only the frontage road on the Grand Parkway in a particular area? That's my understanding. State Highway 99?

MS. DAVIS: It specifies FM 1405 and the frontage roads of State Highway 99, yes, and within the Cedar Crossing Business Park.

MR. JOHNSON: Thank you.

MR. WILLIAMSON: Other questions, members? What's your pleasure.

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: A motion and 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. DAVIS: Thank you.

MR. BEHRENS: Agenda item number 5(b)(5), this is rules for Final Adoption under Maintenance and these concern priority boarding at the Galveston/Port Bolivar and Port Aransas ferries. Steve?

MR. SIMMONS: Let me be the first to say good afternoon, Mr. Chairman, commissioners, Mr. Behrens. For the record, again my name is Steve Simmons and I'm the deputy executive director of the department.

These rules deal with our ferry operations in Galveston/Port Bolivar and Port Aransas, and I'd be remiss, if you know how our boats are named, they're traditionally named at Port Aransas after former executive directors and at Port Bolivar after former commission members. And in the audience today, at one time we had two, I know there's still one, but Mr. Bill Burnett is here, who has a ferry named after him at Port Aransas, and Arnold Oliver was here earlier.

MR. WILLIAMSON: What do we name after assistant executive directors?

MR. SIMMONS: I think they're the trash pickup vehicles on the side of the road.

(General laughter.)

MR. SIMMONS: This item is dealing with priority boarding for the Galveston/Port Bolivar and Port Aransas ferry systems.

Senate Bill 249 of the 78th Legislature amended Texas Transportation Code, Section 342.004 to allow the department to implement a priority boarding system for the two ferry operations. The department held public meetings on February 22 of 2005 at Galveston and on February 24 of 2005 at Port Bolivar to discuss the proposed construction at the ferry system that would provide for additional ferry landings and an additional ferry.

At the August 2005 commission meeting, proposed rules for the priority boarding system were presented and approved by the commission for public comment. The rules were published in the September 9, 2005 Texas Register as 43 Texas Administrative Code 49.48.

A public hearing on the proposed rules was held in Port Aransas on September 20. The Galveston and Port Bolivar hearing was originally scheduled for September 21 but was canceled due to the potential of Hurricane Rita. The hearing was rescheduled for October 13, 2005 but was again canceled at the request of Port Bolivar residents because they were still recovering from the damage caused by the hurricane. The meeting was finally held on November 29 at Crenshaw Elementary School in Crystal Beach, Texas.

The department received a variety of oral and written comments from a total of 81 commenters regarding these proposed rules. Sixty-two of these commenters were generally in support of the proposed rules, and 19 commenters generally expressed opposition.

Some of the opposition comments were: the fees were too high; there was a need for a simpler fee structure; the identification should be a hang-tag instead of a sticker; that only residents and businesses of Port Bolivar should be eligible for the priority boarding; that if we follow through with 50 percent of the vessel being used for priority boarding that that would still not alleviate the problem; that elderly and people with medical disabilities or handicaps should receive additional consideration; that there should be weekend or monthly passes that could be purchased; some suggestions on how to improve the priority boarding lanes; and a request for public transportation or shuttle buses.

Based on the public hearing and written comments, the following changes in the proposed rules are recommended. First, we added public transportation with more than six passengers will be added to the special conditions priority boarding list. The fees for motorcycles, cars, pickup trucks and vans will be reduced from $400 to $250 for the first vehicle of a household; all second vehicles of a household, the fee would be $150. For a bus, motor home, or single unit truck with up to three axles, we lowered the fee from $600 to $500, and for multi-unit trucks or other vehicles with more than three axles, the fee was raised from $800 to $1,000. Because of the generally lower fees, the number of applicants required to start construction was raised from 400 to 500 per ferry operation

And at this time I'll answer any questions.

MR. BEHRENS: Steve, we've had four people sign up to speak on this issue, and why don't we allow them to present whatever they want to present and then we'll consider questions. Is that okay?

The first card I have is from Michael Kovacs, city manager from Port Aransas. Welcome, Michael.

MR. KOVACS: Yes, sir. Thank you for hearing us today.

I just want to thank the commission for their work on revising Chapter 29, considering the changes in state law that took place. And also I'd just like to say a special thank you to Howard Gillespie, who is the ferry manager there at Port Aransas and an ex-Navy guy and has really run the ferry efficiently and effectively and has really been able to help the volume down there and how it's working and it's a big part of the success, and also the support he gets from the district engineer, Craig Clark, in the Corpus Christi area that really makes a big difference. And we've seen big improvements with those two, that's a good team.

Just to let you know some of the local work that Port Aransas has taken on in dealing with our ferry issues, we've had a lot of talk about different concepts in the last 12 months at the local level about things that we can do to improve the ferry system and the wait and reduce the wait time and improve tourism to the island and the movement of employees to businesses and so forth.

We've talked about a $85 million new ferry location and talked about innovative financing and how we can work to see if we can achieve something like that. We've talked about RMAs which are now an option thanks to a lot of the work that you've done. We've even brought over Hatch Mock McDonald for a little while and they talked about a $165 million tunnel.

And coming back to reality, the improvements that we're going to see at the Port Aransas Ferry are going to be small improvements and they're going to be a lot of things that we need to do locally and we realize that we need to partner with TxDOT and do a lot of things locally.

One of the things that works is this priority boarding system, and we think it will make a big difference. The city council of the City of Port Aransas has identified the priority boarding system, getting it up and running, and any other ferry improvements we can make as one of our top ten goals for the 2005-2006 time line, and that's why I'm here today.

Of course, we provide a lot of tourism in Port Aransas, we deliver a lot of state tax revenues and hotel/motel revenues which help everyone in the state, and we're an economic driver and a contributor to all the different funds that the state has.

This might primarily benefit our high users but also our businesses and commercial sectors as we're able to get employees on and off the island. The cost of living is very high and we need the transportation resources to be able to get people back and forth to work in a reasonable amount of time. And Sam Poteet is here from the chamber and he'll talk a little bit more about the business angle.

The primary benefit to the general public, even those that don't have the sticker or the hang-tag or whatever it may be, is that the way the transportation grid works in the city of Port Aransas is the ferry on the Port Aransas side stacks up and the stacking lane overflows into the general street system of the city. And essentially we're like a circle in the center of our town area, and although improvements have been made to that through Highway 361 and Cutoff Road, there's still a system that those cars will begin backing up through the system, and when it starts to get through several different lights, the transportation system in the summer begins to shut down on the weekends.

Therefore, what we're doing, essentially creating those stacking lanes with this new proposal, will give us the stacking capability to get those cars off the street system, and that's a really good benefit to everybody who uses the traffic grid. That way we don't have to avoid a third of our city during the summertime.

And as this proposal is put through, we hope this gets going as soon as quick as we can. I think we're looking at spring 2007 to get this online. If we're able to do that, not only will it alleviate the system, the users of these stickers will actually pay for the improvements to the ferry landing system and therefore increase the viability of the traffic grid. So the users of the system are not only getting back and forth off the island quickly, but they're also paying for the improvements that will help the entire city street system.

If we don't do this, right now we've got a thoroughfare study we're paying about $20,000 for which is not that much money but it's about $4 per capita, and we're looking at quadrupling our traffic study costs to see what else we can do, and we'll probably have to develop some significant high-end traffic models to see what else, if we can't do this priority system, what other things we can do to rearrange traffic within the city. And then when it comes to implementation funds, the city just is very limited in its local capacity to add different things with the amount of land space that we have and the right of way that we have and the amount of funds that we have. So this priority system is a really good way of handling our biggest traffic problem which is the ferry system and its backup through the city.

And just to close, I'd like to say that the City of Port Aransas is a willing partner and we're actually ready to step in at any point here. As soon as we get the green light, we're ready to go, we're ready to be a pilot program, if that's what's needed to get this going.

Thank you so much.

MR. JOHNSON: Any questions of Mr. Kovacs?

(No response.)

MR. JOHNSON: I have one. You mentioned the words high cost of living in Port Aransas. Can't the mayor do anything about that?

(General laughter.)

MR. KOVACS: Well, she's here to talk to you about that. She's ready to answer any questions.

MR. JOHNSON: Thank you.

Next person, Darlene Leal from Crystal Beach. Are you here, Darlene?

MS. LEAL: I've come all the way from Crystal Beach. We had a ferry down this morning, they had some problem with the mechanism.

We're not like Port Aransas at all -- we are and we aren't. We have a big crush of traffic but we're a very rural area. We have one store that closes at eight o'clock, we don't have a medical clinic except Monday through Thursday, 8:00 to 5:00. The fee is a big concern. We have one way in and one way out. I don't know in Port Aransas how far they have to go around, but for us to go around it's about 100 miles.

I do appreciate that the fee was lowered from $400 -- which just seemed out of the reach of everybody -- to $250. This was just kind of sprung on us -- and we do appreciate the other changes -- but no one has heard about the fee, even the $250 fee. It came out in Saturday's paper and on Sunday then here's the Oh, we're looking at a bridge thing.

Okay, we have been through a hurricane. You're talking about people who come to a meeting. In February at that meeting there were 312 people, there were 200 people who started signing a petition before the evacuation, and at the meeting in November we had 250 people. That's an awful lot of people. Most of them are retired, they were not like this audience wearing suits, they were just regular people who cannot afford $250 or $400.

If this passes, in Port Bolivar the big concern is -- and I read some of your commission minutes, I guess when Port Aransas was here in the summer -- there are 2.2 million people who travel that highway, it's just astronomical. We have a population of 3,853, probably 2,000 of them drive. I know my daughter is one of them who doesn't drive yet.

There has to be some way. That is our only way in and out of that peninsula without going 100 miles around, and I know it's not in your administrative rules. We don't know what else to say, I guess, except to come and beg. We don't have a city manager. The county commissioner wrote us a resolution a few months ago; we asked for the whole county to be included. Galveston County is 278,000; the city of Galveston is 60,000. The commissioners wrote us a resolution; they didn't even ask for the city of Galveston, they didn't even ask for the county. That ferry holds 70 cars and 50 percent capacity is 35 cars, you're talking about approving something that's going to bottleneck. We're just not there yet.

The ferries don't run on time, there is a maintenance issue. Right now there are two landings on each side, we're trying to expand it to three landings, but there's a landing down on each side right now. We have Mardi Gras coming up, we have Spring Break coming up. Since I've lived there in seven years I've heard people say you're not going to dredge again during Spring Break, and oh, yes, it happens. I guess just because of the time of year it silts up.

I don't know what to say. If you untie the issues and let them go forward, it's a different system, it's hundreds of miles away. For us, people have not seen that. I don't think that you're going to get 500 applications at our location that will give you $250.

So what happens to us little people in this crush of traffic? Hopefully in a few years there will be a bridge and it will connect with the highway which was shut down from High Island to Port Arthur in Hurricane Alicia which was 20-25 years ago. So what do we do as residents there when they can't afford it, when there's more than 25 percent retired?

I drive a car, I have air conditioning, I have a cell phone. I can't buy a pass at $250 which I can afford and have some other people from Houston who have beach houses, Dallas and Austin, other people have beach houses, some of us who can afford it, some of us coming with the beach houses and a few trucks, I can't go in front of all those people who have no other route. We just can't do it. There has to be more discussion. We're asking you to postpone it. If you want to let the ferry system go ahead, we have no problem with that.

There just has to be some way for those people to be able to get through, whether it's a construction period. The basis of the petition -- and we sent all of this and Mr. Graff was really nice at the meeting here -- we ask in your rules add us to mitigating and extenuating circumstances. I mean, there has to be some way that you can help us with our transportation needs.

And it's not just a new thing because on a typical 4th of July weekend -- and it was on your web site -- there were 43,000 cars who come through there, so if you divide that by days, that's 13,000, it makes the waits two and three hours long, and that was in '93-94. Nancy Flores with the Beaumont Enterprise, we asked her and she wrote from just this last 4th of July there were 43,000-something, almost as many. It's been going on for a long time. There are people who just sit and wait, there's nowhere to get out, there's no porta-potty, there's no water, you can't go anywhere, there's no shuttle. We do appreciate if we could get a little shuttle going, maybe that would be better.

I just feel like our transportation needs have been overlooked and there's nothing else to do except to come and beg and plead and see if you can't help us in some other way that you haven't already done.

MR. JOHNSON: Thank you. Before we get any questions, I'd like Gary Trietsch to come up and sort of shine a little light on what's going on in the ferry system there at Bolivar in terms of present and what the anticipated improvements are. I know there are some.

MR. TRIETSCH: Yes. As Ms. Leal referred to, we have an approximately $30 million project to increase the landings from two on each side to three. Just what she mentioned, when one is down it creates a bottleneck, and lord help us if both go down at the same time. It's been my fear ever since I've been here. It hasn't happened, but that's the reason really to add the third landing.

This is a very expensive operation. Over the past ten years we've added a couple of ferries, newer ones. We've spent approximately, in the last ten years, $50 million on the ferry system in just capital expenditures.

When she said it doesn't run on time, I didn't know it had a schedule. We run back and forth as fast as we can because there is no schedule because when it's crowded --

MS. LEAL: There is a schedule.

MR. TRIETSCH: Yes, it's approximately. But most of the time -- and I'm not going to get into a discussion -- it's kind of like a freeway, the Katy Freeway -- no, that's a bad one to use -- I-45, maybe that's a bad one to use -- but most of the time the ferry system operates with virtually no wait. But if you're there during Spring Break, if you're there on the 4th of July, during the summer, midnight it may be all right. Actually that's not even true. Sunday night, midnight to 2:00 a.m. may be just as big a rush when people are coming home. It's a very difficult situation.

I guess my final comment, if you want to take a look at the Bolivar Ferry as a roadway, a two-lane roadway, we spend about $6,000 a lane mile on maintenance and operation of our highways in Houston, it's $2.3 million for the ferry system if you categorize it as a lane mile. So it's our most expensive roadway, movable roadway in the state to operate.

We have added personnel and it's a very difficult situation, and that's why we're looking at a bridge. Whether we can do it environmentally, politically or anything else, it's going to be a very expensive proposition, it will be several years out. It will have to be a toll bridge because of the cost, if it's built at all, and our initial studies that we did a few years ago showed that the annual operating cost of the ferries is approximately $12 million, and if it overruns that, I get to pick it up out of my maintenance budget -- like the diesel has gone up -- but you could buy a lot of bonds for $12 million a year, but that won't pay for itself.

It's something that we have worked on continually over the last few years and we will continue to work on it. And it's just a mad crush of people, and my final comment is we are concerned. The crowds have gotten rowdier, we now hire security at times, we are concerned. From an operations standpoint, I think it will work itself out, but at least in the first year, it's still going to be a long wait, and when you have people that we get this in operation and get to drive to the head of the line, it may even create additional safety problems or security problems.

If you don't understand, and I'm not sure what year, the City of Galveston banned drinking on the beaches in Galveston, so if you want to drink on the beach, you go to Bolivar.

MR. JOHNSON: Just out of curiosity, Gary, the third landing on each side, when is the anticipated finish or opening of those landings?

MR. TRIETSCH: Those should be complete, I think, right after the end of this year. We're getting pretty close; they may be complete during the summer.

MR. JOHNSON: Is it possible to put signage up? You know, on a lot of the freeways in our urban areas we have signs that are changeable that bring a message. Would it be possible to put signs up that are changeable that give information to people who are heading towards the crossing from either the mainland side or the Bolivar side and give them an estimate of how long the wait is so if they see the sign and it needs to be appropriately placed so they can maybe do something else if the wait happens to be -- if there's a boat out of commission or it's one of those times that there's a lot of people waiting to cross? Is there way we can have a message center of some sort that can communicate?

MR. TRIETSCH: Well, matter of fact, we already during Spring Break and from Memorial Day through Labor Day on the Transtar web site there's an icon you can click on that will tell you the waiting time. We also put it on the changeable message signs. We put it on I-10 trying to kind of convince -- if you're that far out, it's probably not that many people, but as was said, some people come from Austin and have homes -- it may be easier to stay on I-10 and come in the back way instead of waiting for the ferry. So we're already trying to get that information out.

Matter of fact, I think with out technology now you can even set it up to page you, if that's what you wanted to do, from our Transtar web site. We will probably eventually go to a 12-month a year with that information, but during those time periods that's when it's the worst and we try to divert people.

MR. JOHNSON: Thank you. Any questions of Gary?

(No response.)

MR. WILLIAMSON: Appreciate it.

Ms. Leal, any questions? I take great sympathy with the dilemma that you face, but help me with a little bit of understanding. Let's say nothing is done, then we would have the same process that we have currently in place and has been in place for, I assume, decades. So what is being proposed is a change and the change is that for a fee people could move to one side and have advance boarding privileges.

MS. LEAL: Correct, but the problem is if it's not a reasonable fee -- I mean, $400 is a lot, even $250. It's not like I can decide when I go back to take the tollway and just chunk down my $1.25, it's a one-time fee, it's $250 a year, and actually if it's not implemented until next year, that's about the time when the new ferry and the new landings will be here, and that will greatly help, I do appreciate that. But then you're also asking us, okay, we could pay $250 for this year and get it in place and then it will become an expressway for everybody else.

The problem is -- and I just think that it needs some more thinking out -- that if the other people vacation homeowners and everybody and possibly even small trucking companies and the few who can afford it, we would actually add to the wait time of the people who live there because we'll be going in the priority lane and then they're not. You know, we just can't do that, we need something that works for our whole community.

I mean, we pay taxes. There is a ferry schedule, it starts running every half an hour at 8:45, by midnight it's once an hour, so we're paying 100 percent of taxes, we're only getting about 60 percent service, we're already waiting in line for the thing, and then if it's weather, if it's fog, if it's all these other things, I mean, there just has to be some way.

We've read your administrative code I don't know how many times, your biographies, everything, we've spoken, begged, pleaded to everybody. You know, there just has to be some way for you to identify and let the people who live there, with that being their only access, in and out of there, and then if it's a toll bridge, well, we have no choice. We don't even have an alternate route. I guess that's just the mitigating and extenuating circumstances, there is no alternate route. That's like you saying you can only drive around your subdivision but the minute you leave you have to pay $250 or everybody else can come in and out freely but you cannot.

I mean, I know it's a very complex issue, we're all aware it's a complex issue. There's nothing else to do really, I guess, except to bring it to the board and see if there is some magic wand or something else you can do for us.

MR. JOHNSON: Well, my counsel would be, depending on what happens today, let's keep a dialogue going. I don't think all good ideas necessarily originate in one spot, and especially, I mean, you're affected a lot more than I am or probably anybody else in this room, and so the closeness of dealing with an issue, I think that if you come with good ideas, we certainly ought to be listeners, and if they work for the greater community, then I think we'll be eager to implement them.

MS. LEAL: Would you consider postponing it for a month then and have an additional meeting and see what else? I mean, I don't know what else to say.

MR. HOUGHTON: Let me ask you a question. Who is the proclamation from and to?

MS. LEAL: It's from the commissioners court, Judge Yarbrough.

MR. HOUGHTON: What's the basis? You don't have to read it all.

MS. LEAL: Just that they understand that we have a growing population and tourism and it's made ferry traffic congestion a much more serious issue on Bolivar Peninsula. They've passed a resolution giving support to priority boarding for the people who live on the Bolivar Peninsula.

When we originally asked, we asked for the -- I guess we made recommendations, we said Galveston County, but with the capacity of five ferries at 70 apiece and 35 being priority boarding, we did the numbers.

MR. HOUGHTON: So that's from Galveston County?

MS. LEAL: Right, from our Galveston County commissioners.

MR. HOUGHTON: And they support the priority boarding?

MS. LEAL: Yes, they do. As a matter of fact, Commissioner Doyle sent me an e-mail and he said he agreed that he thought $250 is still too much for most residents. I mean, we understand that if it's too low, everybody can buy one and we're in another bind, but when you're in an area where there are 2.2 million people going through and you're a little population of 3- or 4,000 people, what do you do. Does everybody else have the right to go before you and your needs just not be met? I don't know.

MR. JOHNSON: Well, those are all good questions.

MS. LEAL: Big questions with poor answers.

MR. JOHNSON: Well, they have answers that we're searching for.

MS. LEAL: Would it be legislation that would write that if it's not in our code?

MR. WILLIAMSON: Have all the witnesses spoken?

MR. JOHNSON: No, we still have two more.

MR. WILLIAMSON: Why don't you permit us to hear from everyone else and then let's retain --

MS. LEAL: Sure.

MS. ANDRADE: I have one question for her. You asked us to postpone this. What do you expect to happen between that time?

MS. LEAL: Well, I would just think that because the amount of the fee was not announced at any of the meetings, we knew the $400 which we said was too much and then there has been no other official communication. The last time you had a board meeting was December 15, that was the end of our comment period, and now it's just like here it is, final adoption, $250, and nobody -- I mean very few people -- we try to get the word out but very few people have even heard that, so it's just going to pass them by, here it is, and then oh, I can't afford it. We just don't think that's fair.

But we don't want to slow it down forever. We are really generally in support of it and we need it very desperately.

MR. JOHNSON: Well, you made an excellent point. There's some number that it gets to then everybody is going to sign up and we're right back in the same situation that we've been in.

MS. LEAL: Right. I would actually offer about $100 or $125 or $150 would be that magic number where it would work for a while. Hopefully by then in a year the new ferry will be here, the new landings are here, and there just needs to be improvements anyway, it's a two-lane road. You know, you're having three ferries come off. Not that we're not willing to pay, but to put it on the small amount of people who live there for construction, that's a difficult thing too. We'll never be able to pay you back for it.

MR. JOHNSON: Well, thank you.

MS. LEAL: Thank you.

MR. JOHNSON: The next person is Sam L. Poteet, Jr. who is with the Business Associates of Port Aransas.

MR. POTEET: Thank you, commission, for giving me the opportunity to speak with you today.

MR. JOHNSON: We have a letter that I believe you sent.

MR. POTEET: You have the letter and that pretty much sums it up. I just had a few words I would like to say, basically that our priority boarding pass situation, we're dependent for employees to service which Port Aransas is strictly a tourist destination, and our big problem is getting our people back and forth across the ferry during peak times, and this is what we're most concerned about from the business standpoint.

And I think that with the numbers of employees that we have and the numbers of gross dollars produced in the hospitality industry in Port Aransas and the occupancy tax that's paid to the state for promotion for tourism, we need to be able to get our people on and get them off so they can service these people and generate that kind of tax revenue.

And thank you. I think I only took about a minute.

MR. JOHNSON: Well, thank you.

The fourth speaker is Georgia Neblett, the mayor of Port Aransas.

MAYOR NEBLETT: Thank you, and I've been here before.

MR. JOHNSON: That still does not save you.

MAYOR NEBLETT: It does not save me.

MR. WILLIAMSON: But none of us are going to joust with you, I promise.

(General laughter.)

MAYOR NEBLETT: Okay.

We made the headlines today in the Caller-Times and for the newspaper they got it mostly right. They did start out by saying this would give you the right to cut in line, so I'm sure there will be a few phone calls about that. But when this legislation was passed in 2003, we've anxiously awaited administrative rules that would allow us to implement it.

I heard the accolades today for TxDOT in the Houston and Montgomery area. I'd like to tell you we're very proud of the people who help us in the Corpus Christi area. David Casteel actually started a ferry work-study group when he was in Corpus Christi that gave us the opportunity to look at some options of solving our transportation issue.

Craig Clark came onboard and we initiated him in a hurry, and we have Howard Gillespie, who is the director of ferry management, who has tweaked the system as best as it can be tweaked to get the very most out of it. We appreciate the fact that we're getting two new landings as well. But our stacking system and our availability is different than Bolivar. I've been on the Bolivar Ferry and understand it.

I would ask that you please not delay this. If 500 applications is what it takes to trigger the beginning, and if it's too high in Bolivar, that will become self-evident, we'd like to start right away, we'd like to be the pilot for this and move forward with it, and then certainly allow you, in your wisdom, to come back and tweak the administrative rules if that becomes necessary.

But I think we can learn a lot by moving ahead in Port Aransas. We're ready to go, and would ask you to please consider that. We're looking forward to it.

MR. JOHNSON: Thank you. Any questions for Mayor Neblett?

MS. ANDRADE: I have a question. So Mayor, your business community is willing to pay those fees for their employees?

MAYOR NEBLETT: Yes, they are, and it's not just the business community, we have second homeowners that I think will. The e-mails I received before our public hearings, many of those were from second homeowners and residents. We know that there is no easy answer nor is there any inexpensive answer, but not having our ferry back up three miles -- which is quick calculation like 900 cars, and I think you figure 2.2 people per car, that's a lot of people waiting in line -- and it also won't gridlock our city streets. We would put in more city streets if there was a place to put them, but we're an island and not very big and it absolutely is a gridlock on Sunday afternoon.

And the high cost of living, Commissioner, come on down, we'd love to have you, and then the more people we have, the lower we can get it, I hope.

MR. JOHNSON: I knew that you could do something about it.

MAYOR NEBLETT: That's right. I'll try.

MS. ANDRADE: It's been a pleasure to work with you, Mayor. You're a very progressive thinker. And I acknowledge that we've got two very different communities and what might work here might not work with you.

MAYOR NEBLETT: Thank you, Commissioner. We certainly appreciate your support and help.

MR. WILLIAMSON: Let's see if we can solve this problem. We have a House and Senate member from the Nueces County area who wishes us to move ahead; we have two reluctant senators and a House member from the Bolivar area who wishes us to ultimately solve the problem but they have some concerns that their constituency are fully advised; we have what appears to be a middle to low income neighborhood on one end of the spectrum, what appears to be a middle to perhaps higher income neighborhood on the other end.

We generally try to set rules that apply to everybody so no one can accuse us of setting special rules for special groups of people. You wish us to move ahead, you wish us to delay; we're not going to be able to satisfy everybody, I don't think. But one thing we could do, if you want to consider this, we could give some instructions to our staff about a minute order that we will be prepared to approve a month from now that would permit you time to visit with your citizens, that would permit Craig time to talk to his constituents, that would permit you to begin your sign-ups.

I think if all four of us give you signals from the podium that we intend to do this, you can count that we will do it. Our legal staff tells us that if we don't adopt final rules by next February, we have to start the whole process over and that means that construction will be delayed a year. You don't want that for them. On the other hand, they don't want for you disruption in your community that prevents continuing to talk about a solution.

So what I'm going to suggest, Steve, is that we delay adoption, that we instruct you to secure from each county either a resolution or letter from the judge, whatever we can work out with Mr. Monroe and the legal staff that we feel comfortable with, that says this community is prepared to move forward with the system you've adopted for priority boarding. That would permit the Nueces County ferry system to go on and start getting their signatures and feel comfortable that we'll approve rules in February.

Is it Galveston County or Bell County?

MS. LEAL: Galveston County.

MR. WILLIAMSON: That would permit you a month to educate, and if you're not so inclined to move forward, then we'll not get a letter or resolution about it and we won't on your side, and we can move forward on your side. And I think that might be a way we can work through that.

MAYOR NEBLETT: For clarification, you want the resolution from the county, not from the city? The city limits are on both sides.

MR. WILLIAMSON: I think the legal staff is going to work out something that will make everybody feel good. We have certain ways we have to work, so they'll get right on it, we don't want any delay. We want this done one way or the other.

Let me first kind of get a sense from my commission members if that's comfortable.

MR. JOHNSON: Could I throw out a potential alternative, and I have no idea if it would work. Could we strike the Bolivar/Galveston reference in these rules and pass them today as they affect Port Aransas, and then have another one on the agenda for next month that has the same rules or whatever changes might be made for Galveston/Bolivar?

MR. WILLIAMSON: I think we'll have to ask Mr. Monroe to give us his legal advice. I was thinking the statute cited both and I don't think we can split our rules when the statute cites both.

MR. SIMMONS: Well, Richard is coming up, I don't want to speak for him, but I think that would cause a new process of the rules to have to be initiated for Port Bolivar.

MS. ANDRADE: Could I suggest that we pass subject to approval from the jurisdictions, whether it's the city on this side and the county on that side? Could we pass, Richard, subject to?

MR. MONROE: I had a premonition this would not be easy.

(General laughter.)

MR. MONROE: For the record, my name is Richard Monroe; I'm general counsel for the department.

Actually, what the statute says -- and I have a copy of it here -- the department may -- so you don't have to do anything -- may adopt rules to establish a system under which an owner of a motor vehicle may apply to the department for the issuance of a sticker for the vehicle that entitles the vehicle to have priority boarding Galveston/Port Bolivar Ferry, or a sticker for the vehicle that entitles the vehicle to have priority in boarding the Port Aransas Ferry operated by the department.

The obvious intent of the legislature was that we would do both. I think if you try to pass different standards for different ferries, for different people, that's not the way Texas law is supposed to work, and frankly, I think if it was challenged, the challenger would stand a very good chance of knocking it down. It smacks of -- as you, a former legislator, know -- local legislation favoring some people and not favoring others.

Perhaps we could defer and carry on conversations with the interested parties and come back to you in February with something.

MS. ANDRADE: Richard, I have a question. What if Port Aransas served as a pilot program and this other community could also learn from that, to defer some time to give them time to talk to their citizens and kind of get more educated?

MR. MONROE: You could pass the rules -- or rather, adopt the rules, and I think it would certainly be within the discretion of the chairman to advise the executive director to do a pilot program in the Port Aransas area, see how that works. I'm not sure how I would feel about that if I were in Port Aransas and I'm paying a fee and other people are not; it seems to me I'm not getting a very fair deal, but life isn't fair.

MR. HOUGHTON: Richard, I go back to my original, pass these subject to approval by their respective jurisdictions.

MR. JOHNSON: And what happens if one of the jurisdictions doesn't approve it?

MR. MONROE: Commissioner Houghton, I would strongly advise against that. You are giving local government control over a state agency, and I would strongly advise against that.

MR. HOUGHTON: I thought it was local control.

MS. ANDRADE: Mr. Chairman, could we acknowledge the mayor? She has a question.

MR. WILLIAMSON: Oh, sure. Thank you, Richard.

MAYOR NEBLETT: I wasn't going to take up any more of your time, but I heard it mentioned. I wanted to assure the commission that our state senator and our state representative strongly support the priority boarding legislation and implementing the administrative rules.

MR. WILLIAMSON: You are way strong down on your end, it's senators and House members on the other end, all of which are good transportation members and we tend to pay attention.

MAYOR NEBLETT: Well, I wanted you to know we have their support, we wouldn't be here without it.

MR. WILLIAMSON: Now let's visit a second. Can you stand up? That way you can be recorded.

I think what's going to happen, whether we do it today or a month from now, is we're going to adopt these rules, I think that's what's going to happen.

MS. LEAL: Oh, and I assure you we do want it. We've had hundreds of people come. We're trapped and we're ready.

MR. WILLIAMSON: Sometimes I dialogue with citizens and my words get cut up into little pieces and remanufactured and fed back to me. I hope that won't be the case here.

The problem that you face is that you and everyone that lives on Bolivar chooses to live there. Craig and Mike and Kyle come to the legislature, they argue -- I don't say they beg and plead but they argue for the rest of the legislature to understand your dilemma and help them out, and the argument always falls back to there are 3,000 of 22 million Texans who choose to live where they choose and they know what the problems are, and if we start cutting the pie for them, then we've got to cut the pie for people who choose to live 100 miles away and they have a dirt road and they want their road paved. And at some point a limited-resource culture has to make some decisions about where they put their resources. So my guess is it's not going to change much and the rules are going to be adopted.

The flip side is the purpose of a wise elected leader is to give hope while she searches for a solution, and I don't want you to go away from here without having received hope. So I'm going to stick with my suggestion that we defer the matter until February, telling Georgia that we are going to pass the rule, start getting people signed up, talk with your constituency.

And then I have hope for you, and here's the hope: the transportation system in this state has been in many ways totally redefined and the financing of it has been redefined, and it's now entirely possible to get support from your district engineer or your commission for investment in an asset based on an economic argument alone, forget the congestion, forget the air quality for a moment, just on a pure economic opportunity argument.

I think if I lived on Bolivar and had to put up with those people three times a year, I've got to think that has an economic impact on that island. Somebody ought to start making the argument you guys need to build this bridge now, not for us that live there, but because there's a lot of taxes to be collected from all these tourists that will come down here and enjoy Crystal Beach or whatever.

MS. LEAL: Oh, I understand, that's even if it can be engineered on that 33-mile, two-mile wide peninsula right now even just to widen the highway. I mean, I'm not sure that it can be done.

MR. WILLIAMSON: Well, I've talked with Gary many times and I think Gary has a lot of concerns about the island, and that's an important piece of the state's economic infrastructure, so I'm thinking somebody ought to organize and start pushing Gary -- Gary wanted to hear that -- and us to take a second look at the bridge issue from an economic opportunity standpoint.

MS. LEAL: And I do appreciate that, and I would just like to tell you we think an awful lot of Craig Eiland and Senator Janek and all the efforts that have been made, and we really are entirely in favor of it, I'm just saying it's just really a caution that if only some people can afford it there and then others cannot, and they would be tourists and then trucks -- like I said, it's just kind of a complex issue -- that you would have to go in front of and cut out and make the line worse for your neighbors. So I would think more the economic issue is probably the determining factor and the fact that not a whole lot of people have really seen it and had a chance to think about it.

MR. WILLIAMSON: Are we okay with that, members? Then Mike, we want to defer this until February.

MS. LEAL: Thank you very much.

MR. WILLIAMSON: Thank you. Let's get with OGC. I would probably rather deal with the city but I think that OGC is going to say we need it from the county because we have a structure that's set up with the county. I don't think that will be a problem. I want to get Zane cracking on starting the list. Let's don't delay the Port Aransas side. And bring it back in February for our approval.

MR. SIMMONS: I want to get a clarification because I thought I heard Richard say that we may not want to get approval.

MR. WILLIAMSON: No. I said resolution, not approval. I just want the county to tell me they're ready to move ahead with these rules.

MR. BEHRENS: Are you talking about Galveston County?

MR. WILLIAMSON: Either one of them. I don't want them to approve our rules, I want them to say we can live with what you've done.

MR. SIMMONS: Okay, thank you.

MS. ANDRADE: So are we saying Port Aransas, wait for another 30 days.

MR. WILLIAMSON: I'm saying they can go sign everybody up. I'm assuming you've got your county judge's support.

MAYOR NEBLETT: That's what I need to speak to, that you need a county resolution. Our county judge has chosen not to run again, he's packed up his office. I don't know who is going to be appointed. We don't know if he's going to go tomorrow or if he's going to go next Thursday, and we sort of have some really heated races at the commission level, at the county level. Certainly they supported this, but depending on South Texas politics.

We are the city on both sides of the ferry landing, we are the jurisdiction. The county really doesn't enter into this.

MS. ANDRADE: And Mr. Chairman, I've worked with that county judge and I concur with the mayor, and I think that's one of the reasons that we gave the authorization that you could form your own RMA.

MAYOR NEBLETT: That's correct.

MR. WILLIAMSON: How's this, Mayor? We have a very capable, and in fact, outstanding general counsel, we'll let him work with you and Steve and figure that out.

MAYOR NEBLETT: Thank you very much.

MR. WILLIAMSON: That's all we need to say. You all figure it out.

MR. SIMMONS: Yes, sir.

MR. WILLIAMSON: Michael?

MR. BEHRENS: Okay, agenda item number 5(c), this is also a rule for Final Adoption concerning our Motor Vehicle Division, and Brett will lay that out.

MR. BRAY: Members, Mr. Behrens, I'm Brett Bray, director of the Motor Vehicle Division.

This agenda item involves a number of things, including relocation of all of the division rules of practice and procedure from Chapter 16 to Chapter 33 of the Texas Administrative Code, in recognition of the elimination of the Motor Vehicle Board.

It's fitting today that we're having this discussion and you're considering adopting these rules here in Montgomery County because Gary's district, this particular area, has probably one-third of all the car dealers in the state, probably one-third of all the cars in the state, and I think it's a good place to have this discussion.

In addition to the wholesale relocation of our rules and there's a number of changes that were proposed, the six most significant are: limited authorization for manufacturers to sell at wholesale auctions without a dealer's license; repeal of the scooter rule; revision of temporary tag design; furnish procedures that public auctions must follow when transferring titles; establish a 20-day period as a reasonable amount of time for dealers to file registration papers; and cause dealers who sell vehicles that are going out of state but do not provide the buyer with a title to apply for title in the destination state within 20 days.

Public hearings were held. As you may remember, last September when you authorized publication, you decided that it might be a good idea to have several public hearings and that we vary them geographically. Five hearings were held during the month of November and part of December; they were in San Antonio, El Paso, Pharr, Arlington, and Houston. And at each of these hearings, only one rule proposal was addressed by attendees; this was the proposed temporary tag design modifications. None of the other proposals were addressed by anyone.

I could stop there. There were written comments, however, submitted by the Texas Automobile Dealers Association and by Auto Nation, Incorporated, a large corporate owner of dealerships throughout the country and they have a number of dealerships here in Texas. Almost all of the written comments were still about the proposed temporary tag design, and I'm about to address those.

There was one comment, though, from TADA concerning the proposal to allow manufacturers to sell vehicles without a general distinguishing number. It is noted that the rule does refer to vehicles and that there is no definition of vehicles in Chapter 2301 of the Occupations Code. They're correct about this, however, this rule is only connected to Chapter 2301. It is promulgated pursuant to Chapter 503 of the Transportation Code which, in fact, does have a definition of vehicle. Our review indicates that this definition is applicable to the intent of the rule proposal, and therefore, we do not recommend acceptance of the proposed language change suggested by TADA.

To refresh your memory, this is the state of existing temporary tags in Texas today. We talked about these in Brownwood in July and in Austin in September. This is what was published, you authorized publication of this in September as a proposed new format.

As to the hearing comments, I can go into a lot of detail, if you'd like, but to boil it down, there were two main groups that appeared: law enforcement and dealers. Dealer comments essentially spoke in opposition to the proposal. Their main objection is a perception of added cost and record-keeping burden. This perception appears to be based on a set of assumptions about the use of the tags. Some of those assumptions were false in that it was never intended for the use to be as restricted or as cumbersome as they presented in addressing the issue, and this had been conveyed to their associations early on in the process.

One of the issues is the proposed material to be used in the tag. Originally we proposed a Dow poly material that's sort of like a flexible plastic and it's pretty durable. Dealers object that it will add significantly to the cost, perhaps even two to three times as much per tag.

Law enforcement also expressed concerns about the material because of the durability factor. It would mean that if you had a fake tag, it could just be fake that much longer and harder to detect.

After studying the matter, we have dropped that proposal and are asking that you adopt our latest tag proposal which has material just like they are today, it's just the basic cardboard style.

Another suggested change from the published version is the wording of the boldface print. We had suggested unregistered vehicle, however, after consultation with members of the Vehicle Titles and Registration Division staff, we have had to recommend alternate language. Despite my view that once someone trades in a vehicle, there is no longer accurate registration on file with the state, the prevailing view is that the vehicle is still not technically unregistered.

Because of the way the law is worded, however, the vehicle is technically untitled because it is no longer titled correctly. Thus, we altered the language accordingly. Our thought is that in either case the new language serves as a reminder to consumers that the dealer owes them a tag and to law enforcement to have no faith in the legitimacy of the operator displaying the tag, or the vehicle displaying the tag.

Without a doubt, the most contentious issue involves the proposed control number. That's the little black number on the right-hand side midway in the tag, about a six or seven digit number. And most of that consternation involves the black tag, the one in the bottom left corner.

You'll recall that this is the tag that has no expiration date and is supposed to be used by dealers to demonstrate or transport vehicles. As I said, the dealers testified, based on false assumptions, that we meant for them to be much more detailed and labor-intensive in their logs than was in fact true. Our original concept was for the dealers to incorporate the control number into their existing management systems.

As an example, Mr. Alderson, who owns Alderson Cadillac, Lexus, BMW and Subaru in Lubbock, testified at the El Paso hearing that his dealership currently places a black tag in every vehicle when it comes off the truck. Conversely, Mr. Rich, who has Five Star Ford in the Arlington area, testified at the Arlington hearings that his dealership issues a tag at a time to salespersons and they are accountable for them.

In both cases the vehicles on the lot are kept in a database and there's a VIN number recorded and the dealer assigns a stock number. In the latter case they apparently keep another log of what salesman has what tag.

We remain unconvinced that requiring a control number to be kept is cumbersome or burdensome. There are probably many more methods that you can use besides those used by Mr. Alderson and Mr. Rich, and we don't really care what the method is, what we care about is that the dealer keeps up with the tags with some method, and that the control number is a uniform reference for us and other state agencies to monitor or investigate. An added benefit of the control number should be to make dealers take more care with the black tags so that they remain in dealership hands.

Some small used care dealerships also testified at these hearings around the state. Even they testified, most of them, to having computer systems and records, and our feeling is that if there are dealers out there that are so small and if their volume of sales is so low that they cannot afford or they don't need a computer system, then it would not be burdensome for them to keep a manual log of their black tags.

We have prepared substitute language to that published in the proposal and we're asking that you adopt it instead. It should make it plain that the dealers can operate like Mr. Alderson in Lubbock or like Mr. Rich in Arlington. It's basically language that says something to the effect of dealers must maintain a log in any reasonably commercial manner.

I can't represent to you that the addition of the control number will not add cost to the printing process, but we believe that the benefit to law enforcement, TxDOT and the public is worth it.

One of the purposes, I believe, for the dealer testimony about how they administer black tags in their dealerships around the state is to show that they are being responsibly handled. I think the testimony from 16 franchise dealers around the state, who all admitted, each and every one, that they had never had a tag incident at their dealership and have no experience with that is probably not representative of the dealer body in the state as a whole.

It seems no matter how hard I try, I can't get away from these tags and I apologize to you for personalizing this a little bit. My wife's ancestors helped settle Blanco and Llano counties and also the Walnut Creek Methodist Church there. That church enjoyed its 150th birthday; it was established in 1855 and it enjoyed its 150th birthday this last fall. The church is a little bitty building in the background, not much of a structure by TxDOT standards, but as I pulled into the parking lot, that Ford 500 in the foreground there was staring at me.

This dealership is a successful dealership in the area and that is what he was operating with. As you can see, the vehicle was being operated on a black tag, and if I wanted to be a conscientious citizen and turn this incident in for an investigation, a control number would have been helpful. The department could determine if the vehicle were actually on some sort of extended test drive -- this was, by the way, a Sunday, all day Sunday -- or that the tag were assigned to a specific salesperson who was misusing it, or just what the story might be. We don't know what the story might be.

And my point of this is simple, if this is happening with a new car from a franchise dealer in the middle of nowhere, you can imagine what the misuse by unscrupulous dealers and others where populations and opportunities are greater can be.

A couple of the commissioners are fairly familiar with Larry Bullard, our chief investigator. He fell seriously ill January 5 and on January 8 on a Sunday I was visiting him in a Houston medical center. My wife and I left the medical center -- this is Loop 610 on the west side of Houston. I'm not very good with a cell phone camera so you're not able to see it. That vehicle is a brand new Chevrolet from Landmark Chevrolet. By the way, Landmark Chevrolet which is just down the road here is the largest Chevrolet dealer in the state, frequently in the nation and in the free world. If anybody knows how to conduct a sale correctly, you would think that they would know how to do it.

The tag in the window -- we followed that vehicle all the way around to Interstate 10 -- this was January 8, the red buyer's tag in the window said February 20 of '06. I think you can count and tell that that's more than 20 days.

I don't doubt the testimony at the hearings by the dealers that testified that there's an incentive for franchise dealers whose vehicles are floor planned to register timely, but for some reason, this kind of behavior on the part of new car dealers still happens.

This is in our parking lot at the Riverside complex in Austin, Texas. There are so many problems with this tag that I don't really know where to begin, and so really the only thing I want to point out to you is that that's a blue tag. You might not be able to tell the colors too well here, but that's a blue tag, and the only time you can use a blue tag is when a dealer cannot get a title from a lienholder. It seems odd for a dealer's loaner vehicle that you can't get a title for.

The other group of commenters was law enforcement. Most of law enforcement personnel testified that they supported our effort. They're definite critics of the original system that I put up on the screen for you, and I have to be honest with you and tell you that while they see some redeeming value to our proposed changes, they are not enamored of them. I think this is a reflection of the different kind of job they do.

When an agency is conducting an investigation or an audit on a dealership, it's not an immediate pressure like exists in a traffic stop. Law enforcement needs instant access to information, and while they can get that on you and me and our vehicles, they're running blind when stopping a temporary tag. What they want is an E-tag system like the one I showed you in July at your Brownwood meeting, and perhaps someday the legislature will give the department the tools to have such a system, for now the tools aren't there.

Probably the single most vocal concern by law enforcement about our proposed tag design was the lack of the large expiration date on the buyer's tag. You might remember I mentioned in Brownwood that we went to that design in 1997 and reached the conclusion after eight years of experience that it's a failure because of the widespread counterfeiting and misuse. I've heard countless times estimates that over 30 percent of temp tags on the street are counterfeit.

Law enforcement says they want the large expiration date because it gives them probable cause to stop when the date is expired. I don't personally accept that explanation because if tags are phony a third of the time, then the information on them cannot be relied upon. Indeed, there's an officer that testified at the San Antonio hearing that criminals who are using temp tags to further their illegal conduct endeavor to keep the date current on the tag so as not to be stopped. That means the only people who officers will be getting probable cause to stop are you and me if our plates have not been given to us by the dealer yet.

Nevertheless, the sentiment of law enforcement is so widespread and uniform -- and I have to defer, I think they know their job better than I do -- that we elected to place the expiration date back on the tag against our better judgment. This is the prototype and the proposal that is before you today to adopt, and it incorporates all of the things that I have discussed with you about dates, control numbers, language, and the commercially reasonably standard of keeping a log.

You will notice that we left the year off because that shouldn't be on a vehicle more than 20 days. If you don't have a tag on a vehicle for more than 20 days, what do you need a year space for?

As the proposal is before you today, it gives dealers until May 1 to come into compliance with the new tag design.

And the last area I'd like to cover is that there were a few individuals who testified at the hearing that all of the interest groups need to work together to find a solution. As I told you before, the Motor Vehicle Division has attempted for ten years to have meaningful discussions, to no avail, and I firmly believe that it was the action of this commission to include temp tags on the 2005 legislative agenda and your willingness to consider tag design modifications today that causes some to now say they are willing to discuss the issue.

This is a picture of some of the tags that have been confiscated by the department or law enforcement in our closed files. Most of the tags represent an investigative file, and since most tags are produced in batches -- as you may know, legitimate tags and illegitimate tags are produced in bulk, it can be 100, 500 or 1,000; printers usually print them in batches -- there are 720 tags in this photograph -- and by the way, we were kind of disappointed because after we conducted -- by the way, this is the lobby of the 150 Riverside building -- if we had known that it was going to cover this that well, we had so many tags left over, we could have covered the entire face of the 150 Riverside building -- if each tag represents just 100 tags in a batch, that's 72,000 counterfeit tags -- and these are counterfeits -- running around on Texas streets.

We've been involved in two different meetings with stakeholders on this issue in the past couple of months, and we're actually planning a third meeting to happen shortly. Sometimes, though, actions can contradict words or at least create a doubt, and there is no promise or guarantee that the department will be given the ability to administer the E-tag system any time soon. We respectfully ask that you consider adopting this proposal with the hope that a better system is in our near future.

Lastly, if you reach the conclusion that you don't want to do these things with the E-tags as proposed, we're prepared to make some of the modifications but not others, or to continue the existing tags, if that's your pleasure. We would ask that you consider approving all of the other rule proposals, no matter what the outcome of the tag proposal. Thank you.

MR. JOHNSON: Brett, appreciate the presentation, and we'll defer any questions. We have three speakers that have asked to give comment on these rules.

Bill Etzel? Bill, you're a dealer from Houston. Is that correct?

MR. ETZEL: Yes, I'm an independent dealer here in Houston and I am the owner.

'm in favor of the control number, I'm not against that, but I don't think that's enough.

One of the things that I want to say that is happening in Harris County -- and it's a unique situation, I think, for several reasons -- a lot of the dealerships are now taking the metal plates off the car before they wholesale it, so that's putting hundreds, if not thousands of cars out there on the road that the only way they can be driven is with some type of paper tag, so this paper tag problem is growing rapidly.

The reason the new car dealers -- most of them are new car dealers -- are taking the metal plates off the car before they wholesale it is because the problem they're having with the wholesaler or the dealer that buys the car. If the car is being driven, it's going through the toll roads and the toll is not being paid a lot of times, so revenue is being lost and it's creating a lot of problem with the registered owner in Austin getting this notice, going back to the dealer and complaining: Why is someone driving my car?

So that's the solution that the dealership has: they're pulling the metal plates off which is the only thing they can do to try to limit it. So now this paper tag problem in the last six months has grown tremendously because of that. So this control number is great but I don't think it's going to solve the problem.

The other thing about this control number that concerns me is how visible is it going to be. When someone goes through the toll road and they have a black tag and it has a control number on there, I really don't think that the camera is going to be able to get that control number, so you're going to still be losing all that revenue from those black tags. Because I have never had the state contact me about someone using my P number going through a toll road, and I know it's been done, so we're losing all that revenue.

The other thing, this control number they're going to put on the black tag, it will be visible when you get up and read it but if you see a car parked in your neighbor's driveway and it's got a black tag on it, you're not going to be able to read that control number. Just like when the guy is fleeing from the 7-Eleven, they're not going to be able to read that control number, all they're going to see is that P number. And so it's going to be the same thing, they're going to call the dealership up, they're going to call Standard Auto Sales up and they're going to say your black tag was on this car that was involved in a hit-and-run or whatever. And I'm going to say, Well, give me the control number. Well, we couldn't get that, we were too far away. So I don't see where that's going to solve a lot of problems.

I'm for the electronic E-tag. It will make the state money and I think it will be a big help to law enforcement to be able to track these people immediately. I don't a lot of people don't realize when they sell their car, whether they sell it in the Green Sheet -- I'm talking about an individual -- or whether they trade it in on a new car, that car is still in their name in Austin until someone takes that title and goes to the courthouse and transfers it, and sometimes that's as much as a year before it happens. That car is still in their name so everything that happens to that car is going to come back to them. If we had the E-tag, that wouldn't be the case.

I appreciate your time. Thank you very much.

MR. JOHNSON: Let me ask you a question or two and then I'll see if my colleagues have any.

I assume by your comments that you're a wholesaler. Would you style yourself in that category?

MR. ETZEL: Not really; I'm actually a retailer, I'm actually in the note business. I do some wholesaling, but primarily 80 percent of our sales would be -- I'm what you call buy-here, pay-here, tote the note.

MR. JOHNSON: Roughly, on an annual basis, how many vehicles cross through your system?

MR. ETZEL: I'm going to say probably our sales are 4- to 500 a year.

MR. JOHNSON: Great. Any questions of Mr. Etzel?

(No response.)

MR. JOHNSON: Thanks so much for being here.

Henry Brune? Welcome.

MR. BRUNE: Thank you. Thank you for the opportunity to come before and bring part of our concerns on the part of DPS and DPSOA, who I represent both.

The problem that we have with the current black dealer tags has been expressed and certainly it's hard to understand how rampant the problem is. When you buy a car, they put a red tag on it. Currently just a couple of weeks ago, I was driving on Interstate 10, coming toward Houston out of San Antonio, and there was a red tag on a car, and I looked at it and I said, Well, that thing is expired. Looked a little bit deeper, hanging in the back window was a black tag. Now, nobody is going to stop it. Why is it there? We don't know.

I work vehicle theft for the Department of Public Safety and have done that for the last 28-29 years, somewhere around there, and I don't work in a marked unit, so I don't have red lights, I don't have everything, in fact, this is pretty much the way I go to work. And so this is out there all the time.

They're selling these cars, not replacing the tag or not doing what they're supposed to. As a result of it, we are losing tax dollars in the state of Texas because they will sell this car a lot of times to the lower income people, collect taxes, collect the first month payment, and collect the fees for title transfer, and they hold that title. They don't transfer the title and keep a lien on it for themselves, they hold that title and carry the paper for them, hoping that two months down the road you don't make a payment, and guess what, I come back and get the car and I sell it to him. That's exactly what's happening.

Tony Aguirre in Cameron County did a survey on some of this and some other issues also involving the value that is put on the Form 31-U -- when you buy a car and you go to register it, you say I paid $1,500 for it or $1,900 for it, or whatever it was -- and he was contacting some of the people that were showing small amounts of payment and said, You know this isn't right, this is falsification of a governmental document, we're going to file on you. As a result of talking to these people, they increased their revenue by $3 million in one year in one county, Cameron County. Is that going on everywhere? You bet, everywhere in this state. We're just missing out on great revenue right there, and just about every crime in this state starts with a vehicle, just about every crime.

The P tag with the control number is very good, it will at least give us an opportunity to maybe run it down. I would like to see the P number with the control number a little bit bigger so it's visible from across the street, like the gentleman just before us did. It would help.

I realize that we have to take small steps a lot of times and this is a small step to correct some of the problems. The ultimate goal, our hope, is to get the E-tag in our system because it's just so much easier for us to know who is driving that car, who's supposed to be in it, or whatever is involved in that vehicle.

Are there any questions that I might field?

MR. JOHNSON: Any questions? Mr. Etzel mentioned the E-tag system, and my interpretation is that he thought that was a good step for Texas ultimately to make. Do you agree with that? Are you familiar with it?

MR. BRUNE: Yes, sir, I do, because the way I understand the E-tag system, when a person drives off the used car dealer lot or the new car dealer lot, he has an individualized plate number and it automatically comes back to him within 24 hours is the goal of TxDOT. But when he drives off and hits the street, number one, we ought to know who that driver or owner is, and number two is then you have a way with TxDOT to track who is not paying taxes also because that's the key in your system. Yes, sir, I do.

MR. JOHNSON: Great. Thank you, Mr. Brune.

MR. BRUNE: Thank you.

MR. WILLIAMSON: Gerald W. James?

MR. JAMES: Thank you for allowing me to speak. My name is Gerald James. I'm an automobile dealer in Houston, Texas. I always like to add I've been a dealer at the same location for 31 years -- when I was about five years old, I guess.

(General laughter.)

MR. JAMES: I'm also the compliance chairman for the Houston Independent Automobile Dealers Association. We started that position I guess about four years ago. Back in '87 I was president of that organization and I've always remained somewhat active. But I'm not here on behalf of HIADA, although I do feel that I share the views of the majority of our members.

You know, it was mentioned about this E-tag, and I'm not here to talk about that but I just want to say something. I gave a lot of thought to the electronic registration process. Electronic registration would mean that we would have a unique number for each tag; when you had cases where the vehicles didn't have a plate, the dealer could issue a unique number. If it went through the tollway, they would know who to contact, they wouldn't have to go call the dealership and find out who did they sell the car to and then contact that guy and find out who he sold the car to. The problems would have been solved.

But since we don't have E-tags, there were some groups that lobbied against it -- it wasn't me, obviously, but there were some people that lobbied against it, I don't know what reasons they had. We have a situation in Houston, Houston is a unique city in the sense I call it an international city. We're at the crossroads of Interstate 45 and Interstate 10, we also have a lot of salvage auctions located within the city of Houston or within the area -- I think I counted about 17 of them at one time. And I got that information, by the way, from the TxDOT Motor Vehicle Dealer database.

And I want to bring that up because in the state of Texas there are approximately 17,000 dealers in the state, not all of those are new car dealers, I think there's only about 3,500 or so, and I thought that was really a low number but I think that's pretty much correct. So what I'm trying to point out is you've got 17,000 dealers and then you subtract the new car dealers, you've got a lot of dealers still left out there.

Legitimate dealers aren't a part of the problem but we have to be part of the solution. I'm about as small as you can get. You asked Mr. Etzel about how many cars he sells. I sell less than a couple hundred cars a year but I have a small business, been there a long time, I fight to stay small, I'm comfortable with what I do. I like to say my checks won't bounce, they might quiver but they're not going to bounce. And I want to bring that up. You know, I said that to get a chuckle but I also said that to prove a point.

A small guy like me, I'm willing to pay whatever extra cost it's going to cost me to pay for extra cardboard tags. I do agree that we need to make changes but I feel like the control numbers aren't the only thing that we really need.

As a compliance officer -- I don't know if any of you saw the large number of pictures but I submitted about 61 pages of photographs that I personally took and I only submitted ones that I took because I wanted to be able to swear and testify to the accuracy of everything, and these were just photographs I took that were on salvage vehicles, salvage vehicles that probably shouldn't be on the road, salvage vehicles that are dangerous, and I'm not good with explaining things, but I'm sure we've all seen a car going down the road a little bit sideways -- we call that dog-tracking. Well, have you ever thought about what happens in a situation with a panic stop, you know, which way is that car going to go if they have to slam on the brakes, it's not going to go straight, it's probably going to go off into the ditch, or God forbid, it might go off into oncoming traffic.

So we need to think about how dangerous these salvage vehicles are. And what is allowing these salvage vehicles to be on the road? Well, it's a cardboard tag, because the salvage vehicle doesn't have plates, the plates are taken away from a salvage vehicle. When a vehicle becomes salvage, it's issued a salvage certificate, they take the title away and they take the plates away.

MR. JOHNSON: Does it have an inspection sticker?

MR. JAMES: Well, they're not supposed to until they're properly rebuilt, and that's another flaw -- that's a big flaw with the inspection process. The same guys that are putting these old cars back together, they drag them to their backyard and chain them to the tree, and a lot of guys who do this are the body shop personnel, not the owner of the body shop but maybe the guy that spreads the bondo. They drag them home and they're amateur car dealers, amateur rebuilders and they don't put the air bags back in and whatnot. And I don't think I need to go through the process, I think you folks understand the dangers.

But the point I'm trying to make is those cars couldn't even be on the road without a license plate and they can't get a license plate until they go through that inspection process, until the paperwork goes to the courthouse. And I think that's an auto theft issue, you turn in the paperwork and what you did to the car, where did you get those parts. I guess that's an auto theft issue, and then there's a safety issue.

But they don't even have to worry about that, they can put these cars on the street with a temporary cardboard tag, either a red or a black or a blue, and they can drive them around, and a law enforcement officer, unless he really has the time to dig into a lot of paperwork, it's really not worth it for him. If an officer pulled over a car in Spring Branch with a red cardboard tag, while he was investigating it, ten others would pass him by with red and black tags. There are that many down here.

And let me move back to these salvage auctions. I know you commissioners are from all areas of the state and cars get wrecked in all areas of the state, but those cars go to the insurance companies and then they come to the salvage auctions, and those salvage auctions are located in major metropolitan areas such as Houston, San Antonio, Dallas, maybe El Paso. And it's here in areas like Houston where we have all these salvage auctions, and if you drive just a few blocks from any salvage auction, you'll see the rebuilders and you'll see all these little facilities where they're rebuilding cars in the mini warehouse complexes and whatnot, and you'll see all of this. I'm not asking you to take a tour of Houston, but if you ever get a chance, drive by some of our salvage auctions and you'll see what's going on.

But getting to the point of these tags and the control numbers. Mr. Etzel brought up the point of not being able to see the control numbers. Hey, it would be great if every tag had a new number and you issue one tag per car, but these new car dealers that sell 500 cars a month, they say they can't afford it. I don't know what to say. They can't afford it. They give out key chains that cost more than what a temporary cardboard tag would cost. I don't know how to answer that, I don't understand their reasoning.

I've heard that you were leaning towards softening up the requirement on logging to make it to where a dealer could use any reasonable method to log so that it would be more affordable. I've heard dealers say that it's going to cost them $50,000 a year just to log these tags. There again, I don't understand that. You know, I have two employees, all I ask of them is that they give me an honest day's work for an honest day's pay, and we seem to get things done. I can't help but think some of these dealerships don't have enough employees to log things.

But what I can tell you is this, I do see tags from dealerships all over, I do see some tags from reputable dealerships -- the Gillman Group, I photographed some of theirs, and I feel like they're reputable people. I talked to Scott Dupons who told me that he was pretty sure, and I agree with him, that the tags that I saw that I photographed from his dealership were counterfeit, but he couldn't assure me that one of his 800 employees wasn't sneaking a few tags out the back door to give to his cousin that's rebuilding cars or to his sister that can't afford to buy the insurance for her car, or whatever reason. Nobody can assure you of that.

The control numbers, are they worth it? Well, yes, they're worth it by themselves but I think you need to go the extra step, and the extra step that I'm mentioning, I'd like to explain. They want to have these tags where you can use them over and over and over. Well, that's not going to work. In practical use -- if you want me to speak from the trenches, if you will -- if I send a car to the auction, I don't have time to drive it, maybe I pay somebody, a drive service, but I put my tag in there, I put one of my black tags in there, and when it gets to the auction, if the car is there, if they don't forget to pull that tag out and tear it up and throw it away, dispose of it, it's vulnerable, it's out there and it's easy game for anybody that wants to pick it up. So then Carol Kent is going to be knocking on my door wanting to know why was one of my tags found over in Fort Bend County, and I won't be able to answer that question.

So what I propose is make it to where a tag is more or less a one-use tag, make it to where I can either put my employee's name on the tag and that tag is only good for that one employee, that employee must be with the tag, if somebody else picks it up, they can't use it because they're not that person. Or give me the option of putting a VIN number on the tag. If I put a VIN number on the tag, if the tag gets stolen, if somebody steals it out of the car or whatever, they can't use it because it doesn't have the right VIN number.

But there again, the dealers say it's going to cost them too much money because they want to be able to log a tag to one car and then take it off that car and put it on another car. I don't understand that, maybe you folks do, and I guess that's your job is to figure it out what is best.

I'm just telling you, looking at it from our standpoint, you've got to do something about these tags, and I think you understand that. But if you just want to have the control numbers, if that's what you want to do, that's okay, I'm all for it, I'm going to log it, I'm going to do whatever you tell me to do. But if you really want to solve the problem, to protect the public from these dangerous vehicles, protect the public from these cars that aren't insured -- I don't know if any of you drive an SUV, but a $40,000 SUV can easily get totaled out by a $300 piece of salvage, and if that salvage car isn't on the road, you're better off and we're all better off.

So let me just finally close by saying that I think that logging is okay, I'm going to do it regardless and if you tell me, but I would really feel like I was accomplishing something and that we all will be accomplishing something if you would go ahead and make some revisions to the tag to require the VIN number to be on the tag or the person's name, and that would give us the option to use them in a practical manner.

I've taken a lot of time. Thank you very much.

MR. JOHNSON: Any questions of Mr. James?

(No response.)

MR. JOHNSON: I asked about the E-tag of the previous people offering comment. Do you think that should be the ultimate system?

MR. JAMES: Well, you know, I was for the E-tag. I've had conversations with people from trade organizations, with TADA -- I think Mr. Durham might be here somewhere -- but I never could get a clear answer whether or not they were going to support it during the next legislature. I've heard people say well, don't worry about this logging stuff, let's not worry about these tags right now, let's just go ahead and go for this E-tag stuff. But you know what, I don't have any assurance that TADA, TIADA, or anybody else is going to be in support of the E-tags, and we've got a problem that needs to be solved. Even if they are in support of the E-tags, we have to go to the legislature, it could take two or three more years to do anything, so we need to do something now.

And I think that although I am in support of the E-tags, I think we need to do something now, and I'm going to be in support of the E-tags during the next legislature and you'll be hearing about it.

MR. JOHNSON: Thank you.

MR. JAMES: Thank you.

MR. JOHNSON: Brett? Any questions? I'm going to turn it back over to the chair.

MR. BRAY: Any questions? I don't have anything really to add.

MR. HOUGHTON: Let me ask, Brett, we run around this revenue issue. Do you have any idea? I mean, what's the dart board on the loss of revenue? We've heard about the security issues.

MR. BRAY: When you inquired of that this morning with Coby, I kind of jumped up and down because we've been talking since July about -- since Brownwood about law enforcement, safety, and that's a very important issue, but the thing about these tags is nobody can believe how bad they are and how many issues there are, and I was so happy to hear somebody bring up the revenue issue because that's really how we started this. We started talking about this long before 2001 and people worrying about terrorist activities.

Just like Coby, I can't give you a figure, but I was kind of excited about getting to show you this particular slide because, as I pointed out to you, you're looking at at least 72,000 possible counterfeit tags running around, and we can replicate that at least four more times, and those are the ones that we get, that we have either confiscated or that law enforcement has sent in to us, and I can assure you that law enforcement doesn't send in to us hundreds and thousands of them.

MR. HOUGHTON: So at a minimum, the registration fee is being --

MR. WILLIAMSON: So this is kind of like the point of collection of registration.

MR. HOUGHTON: That's right, that's my point.

MR. BRAY: Well, there's an area here that I want to talk on and it's not registration, it's sales tax, and that's a really big number you're talking there. But if you're avoiding sales tax or if you're collecting it and not paying it somehow and you're putting people out on some kind of temporary tag, that's a lot of money. Now, it's probably not Fund 6 money, but it's money that the state should have gotten.

MR. WILLIAMSON: That's okay. If we could find the state a couple billion, they'd probably let us have a little bit of our transportation money back.

MR. BRAY: You'd think.

MR. WILLIAMSON: We might could make a deal about that.

MR. JOHNSON: I don't think it's dollar for dollar, though.

(General laughter.)

MR. WILLIAMSON: Okay, members, you've heard the staff's explanation and recommendation, you've heard the witnesses. What's your pleasure?

MR. JOHNSON: Could I offer one observation for the Monday morning quarterback?

MR. WILLIAMSON: Yes, sir.

MR. JOHNSON: Brett, I think primary exposure of this started in Brownwood in July, as you know, I attended one of the hearings in Houston, and my analysis is that this issue has sometimes become fairly contentious and on one side you have the dealer community or at least a large portion of the dealer community, the other side you have the law enforcement community. There are people on both sides that have actually gone to the other side which is certainly understandable. I don't think all issues have unanimity, generally.

My request, before we take up this issue here, is since this is one of our legislative agenda items that we hopefully will make progress on, that we get the stakeholders in a small room -- my belief is if we get too many people in a room, we'll never get anything accomplished -- but try to get representation of the components of both sides and let's try to solve something that we together can go to the legislature with that is good for all of Texas and it benefits law enforcement and it also is acceptable to the dealer community, all aspects. I mean, we have independent wholesalers, new car dealers who own multiple dealerships, I mean, it runs a pretty good gamut.

And that's a huge challenge but I think it's a place that we start to try to come up with a solution that way, and if we don't, we're right back where we are in this room right at this moment.

MR. BRAY: I got that message from you in September, and I spoke so fast earlier trying to get through so you have your afternoon that I may have glossed over it, but we've had one of those kinds of meetings, in as small a room as we could find, with stakeholders, and we brought in Jefferson and others to try to bring everybody together.

MR. JOHNSON: I know the Arizona and Montana systems we're looking at, and we ought to continue to do that, and if there are improvements that can be made or maybe paths that those systems went down that we shouldn't go down, then I think we ought to learn from what others have done.

MR. WILLIAMSON: Okay, members?

MR. JOHNSON: I would move approval.

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. JOHNSON: Thanks, Brett.

MR. WILLIAMSON: Thank you, Brett.

Mike, let's see if we can't get our guests on the road.

MR. BEHRENS: We're going to go to agenda item number 7, we're going to skip over 6 for right now, since we do have some people that have come from out of town and have been here a while.

Agenda item number 7 is our Toll Road Projects, agenda item number 6(a) is to talk about a proposed project in Smith County. Phil?

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

Commissioners, for many years the Tyler area has been working on an outer loop around the city of Tyler, Loop 49. The district currently has two projects under construction on the southern part of the city. I think the area has come to the conclusion, however, that to accelerate the development of this needed project, they're going to have to look at alternative ways of doing business.

One of those significant opportunities that I think they've looked at is the opportunity to toll Loop 49. The metropolitan planning organization has included Loop 49 as a proposed toll road in their metropolitan transportation plan. Consequently, the minute order I bring before you today would allow for the commission to designate this facility, Loop 49, from I-20 all the way south and southeast back all the way back to State Highway 110 as a controlled access facility and designate it as a toll road.

Staff would recommend approval of this minute order, and I'd be happy to address any questions you might have.

MR. WILLIAMSON: Jeff, do you or any of your group want to speak at this moment?

MR. AUSTIN: I would exercise [inaudible, speaking from audience].

MR. WILLIAMSON: Yes, sir, you'd like -- well, we'll go ahead and act on this one.

MR. AUSTIN: We're in favor, by the way.

(General laughter.)

MR. WILLIAMSON: Well, then we will reserve our comments for you on item 7(b).

Member, you've heard the staff's explanation and recommendation.

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. Congratulations, Mary. You worked hard.

MR. RUSSELL: Thanks, commission. The next minute order, item 7(b), is really a companion minute order to item 7(a). As you will recall, the Northeast Texas Regional Mobility Authority in October submitted an application for financial assistance in the development of the Loop 49 project as a toll road. As is required, it is a two-step process for approval. I brought to you the preliminary minute order in November which you approved. This minute order before you, item 7(b), would be the final approval of that financial assistance.

Financial assistance would be in the form of a loan, it's for $12.25 million, and they would be able to utilize this financial assistance to develop the project that would include legal, financial, and engineering issues.

And Chairman, I'd be happy to address any questions you might have. I think Jeff probably has some comments as well.

MR. WILLIAMSON: Members, we have witnesses. We'll hear from the witnesses first, in keeping with our preference.

Jeff, do we want you or do we want the county judge? Jeff Austin, a friend of transportation.

MR. AUSTIN: For the record, Jeff Austin, I'm chairman of the Northeast Texas Regional Mobility Authority.

And Mr. Chairman, commissioners, staff, this is a great day for East Texas. We're delighted to be here, and I think I go back a couple of years when we were in discussions of forming an RMA, I kind of equate you guys and ladies to Blue Angels, kind of the Missing Man formation -- former Commissioner Nichols was here this morning -- and I want to say with a lot of help from each of you, from Robert Nichols, giving us encouragement in the form of here's what can be done, build regional consensus, set your priorities, and then come back and see what you can do, and we listened. That's why we're here today, having applied for the grant. Thank you for your designation of a toll road. This is going to really kick us off.

Loop 49 and the sections that we're looking at for designating as a toll road really I liken to building a house. This is the foundation, now we're going to go to the framing and the roof. As we begin to go into Gregg County, as we look at our East Texas hourglass, we have some other pass-through financing projects such as Highway 42, Richie Road expansion in Gregg County, but the ultimate connectivity of this to Interstate 69 is absolutely critical, not only for providing local needs but regional needs as well, as it ties into the TTC I-69.

We have a couple of other things that we're really excited about but I don't want to go any further before I introduce a couple of the folks that are with us. We have Judge Becky Dempsey, Judge Bill Stoudt, from Gregg County and Smith County, Judge McWhorter, who is not a member but a future potential member of the RMA, from Harrison County. Also Joey Seeber, the mayor of Tyler, and several others from here, but I'd like for the RMA board members to stand up. We have all but one that is here: Tad Bell from Smith County, Gary Halbrooks, Ken Cunningham, Linda Thomas who is our vice-chair, and David Spurrier from Longview. And we're really excited with the work that they're doing.

MR. WILLIAMSON: Thank you for serving, appreciate it.

MR. AUSTIN: A couple of exciting things that are happening as we begin to look forward with this loan -- I did ask my fellow banker up here if there's a personal guarantee that we had to sign --

MR. RUSSELL: And my answer was yes.

(General laughter.)

MR. AUSTIN: We have partnered with the University of Texas at Tyler and they have agreed to designate two teams of MBA students to help us work on a public outreach plan for this semester. One is going to focus on Smith County and one is going to focus on Gregg County, and we hope through some of the things that they can identify will help us better reach out to the public to explain what we're doing and why we're doing it and the need for that.

Coming up at our next meeting in February, we anticipate approving selecting a GEC. We've gone through the oral presentations. More importantly, we're going to be looking at bringing on a financial advisor, and we have something else unique that we're working on -- I see Stein is back here in the back; I really appreciate the help that he has given us from Central Texas RMA and Bryan Cassidy at Locke Ladell -- we are going to partner with a position. They have a job that's posted for an assistant executive director and we're going to look at hiring a project director that would be that person as well to help partner, bring the expertise to us, and really collaborate and continue looking at the best practices that are existing.

So we're really trying to do some different things, and I just can't say enough about the local and regional support that we have fostered and garnered and been the recipient of.

And taking that one step further, Judge Stoudt had invited me this last week to speak to a group of county judges and economic development folks up in Gilmer, and in the discussion there was broad consensus on Interstate 69 TTC that we want to do our part, under the direction of the commission, to help further this along. If that meant us taking a session, for example, Nacogdoches north up to Texarkana, to help the commission, help the state move this along, not to take it away from anything, then you take it back over, we would make ourselves available to help work on this through either additional counties joining the RMA or through some other local agreement.

MR. WILLIAMSON: That's a tremendous offer. We appreciate that very much.

MR. AUSTIN: The last thing, we just wanted to say thank you for the support that you have given us so far, and we are really excited now we're off and running.

MR. WILLIAMSON: Members?

MS. ANDRADE: Jeff, I just want to thank you for your leadership. I still remember meeting you two years ago in San Antonio, and look how fast you've moved, we're here already. So congratulations, you've got a great group. Sorry you've had to wait so long, but it's just been great seeing your progress.

MR. AUSTIN: Thank you.

MR. HOUGHTON: Well, I echo that, Jeff, and to the leadership, the RMA board and judges, congratulations to you. This is another shining beacon in the state of Texas.

MR. AUSTIN: Well, we appreciate it, and actually we have some people here that say yes, we like tolls.

(General laughter.)

MR. JOHNSON: I'm going to say virtually the same thing, but we also salute your patience of waiting around as long as you have, and we appreciate that a great deal. And it's great to see Mary Owen back there and Duke, and she does a great job for you and for the state.

MR. AUSTIN: Absolutely.

MR. JOHNSON: It's terrific working with each one of the two county judges and everybody in the RMA. I think you have made a giant step, and as Hope referred to, a great deal of progress in a short period of time. It's good to see.

MR. AUSTIN: Thank you.

MR. JOHNSON: Stand by if you would, Jeff, because I want to talk to you in a second.

MR. AUSTIN: Sure.

MR. WILLIAMSON: We also have, members, County Judge Wayne McWhorter. For some reason, Judge Becky didn't want to talk to us.

MR. JOHNSON: She's shy.

MR. WILLIAMSON: Maybe I made her wait too long.

(General laughter.)

JUDGE McWHORTER: I'm County Judge Wayne McWhorter. I am from Harrison County; my county is not a part of this RMA, but we are part of the same region and we work together and support each other, and there are ways that we see that joining the RMA may be helpful to further the development of transportation through Northeast Texas.

While I have the chance, though, I like to heckle and tease a little bit, and I know you do too. My wife always kicks me when I don't introduce her when I'm at meetings and things, and Jeff Austin didn't introduce his own sister here this morning, and this pretty lady is Jeff's sister Lee Matson.

MR. WILLIAMSON: Well, we're glad you're here. Did you just come along for the ride?

MS. MATSON: I did [inaudible, speaking from audience] toll road.

JUDGE MCWHORTER: Well, again, as I said, my county is adjacent to Gregg County. By the way, I'm a member of the board of the Interstate 69 Alliance as well, so I'm active in that project and very interested in that project. I'm just here today in support of Smith and Gregg counties and their regional mobility authority, and then as you know, I think, the hourglass shape of the highway that would be constructed by this RMA, it's designed with the intention of providing connectivity to Interstate 69, and it would do that in Harrison County, my county. I think this is a good thing, we in Harrison County think it's a good thing.

I certainly applaud Smith and Gregg counties for their progressive approach to solving transportation problems and their preparation for growth that they're already having and that they are going to continue to have and that they deserve. And I applaud you for the vision that you've had in facilitating the use of the tools that make this kind of thing possible, and the state legislature in their authorization as well.

Thank you very much.

MR. WILLIAMSON: Anything, members?

(No response.)

MR. WILLIAMSON: Thank you, Judge. We appreciate you being here.

Jeff, if you don't mind. Commission members mentioned in passing, and we'd like to reemphasize too, when we organize the agenda we have no way of knowing which item might take longer than the next. I do organize it in a way to permit people to understand the challenges we all face, but sometimes things run longer than they should. I want to apologize for it, but I tell you, I appreciate your patience and endurance. I hope that watching this has helped you in some small way prepare for the task ahead because these are difficult things to do.

A lot of people don't want to raise their taxes, and a lot of people don't want to raise their tolls, and a lot of people want free cheese, something for nothing, and you know, the free cheese wagon kind of all ran out about 20 years ago and we've been kind of pedaling and consuming our transportation assets thinking about what to do, and it's now the time that we've got to do something, it's just that time. And your leadership and the leadership of your board and the community is proof that difficult things can be done to improve our common lot and the lot of our children, and that's what we have to do.

So I thank you for your patience and your indulgence today, and I think I'm going to be congratulating here in a second.

Okay, Phil, do you want to close?

MR. RUSSELL: I would simply say, Chairman, that staff would recommend approval of this minute order.

MR. WILLIAMSON: Members, you've heard the staff's initial explanation, you've heard witness testimony and you've heard the staff's recommendation.

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Congratulations to all of you. We're partners, we'll be right here.

(Applause.)

MR. AUSTIN: I would like to officially say thank you. Also Randy Childress and Darrell Williams from the city of Longview, city councilman and city manager, as we begin looking at moving into Smith and Gregg counties and working regionally. This is exciting for East Texas. We took a chance, Judge Dempsey, Judge Stoudt took a chance to form a regional mobility authority outside of one of the big cities, and we hope to be a model and show that it can work.

MR. WILLIAMSON: And we would never, I think, tell you want to do, but we've all thought in the back of our heads there's like a eight, or ten or twelve county area up there that if you think about it long term, ought to be an RMA, and we hope that's what will evolve over time is everybody will come to that same conclusion.

MR. AUSTIN: We will be back; stay tuned, we will be back.

MR. WILLIAMSON: You drive safe going home. We appreciate you staying so long.

MR. AUSTIN: Thank you.

MR. BEHRENS: Okay, Phil, go ahead with 7(c).

MR. RUSSELL: Thanks, Mike.

Agenda item 7(c) is our standard quarterly construction update for the Central Texas Turnpike project. Again, this is prepared by our general engineering consultant, PBS&J. The prognosis, as reported by the GEC, is still good, continues to be good. Construction elements are on track to be completed, as required under the official statement, in September and December of '07, and in fact, there are several segments that are well ahead of that schedule.

From the financial standpoint, the project again continues to be delivered well under the budget. Right now it's -- when I say right now, I should have said this report covers the period between September through November, and the project is currently at $428 million under budget.

MR. WILLIAMSON: $428 million under budget.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: My, my, my.

MR. RUSSELL: Not many of those projects around, sir.

MR. WILLIAMSON: Well, if we'll turnkey contracts on more of our contract, I guarantee you they'll be under budget. Competition works, even in the engineering world.

Let me ask you something, Phillip. I read in the newspaper that some of these private guys that we're negotiating with to build roads are actually buying assets, actually going out and buying existing toll roads.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: Shouldn't we be giving some thought to what the value of 1, 2, 3 and 4 of State Highway 130 is going to be before it even opens?

MR. RUSSELL: You know, I don't know, Chairman. I think people have different points of view. Some people say you may enhance your opportunities, your business opportunities if you put it up, essentially for sale before it opens, others would say no, once you have traffic that are actually folks that are driving on it, then you have a better, dependable, concrete report, more or less, that you could use as you market this to the private sector. So I think everybody will have their own viewpoint of what the best and most proper use of that is.

Of course, Chairman, I should point out although that is under an existing bond indenture, 45, Loop 1, and 130, and so we're always cognizant and careful of that legal document.

MR. WILLIAMSON: What will be the impact of the work the Central Texas guys are doing? Will their projects, in effect, feed more traffic volume, more customers into our system?

MR. RUSSELL: Is that the 183-A project?

MR. WILLIAMSON: Correct.

MR. RUSSELL: Oh, I would think so. The project itself stands on its own. If you look back in that original indenture, it was predicated on the fact that it doesn't require 183 as part of the indenture, but I think it was calculated it would be on line, I believe, 2011, 2010 or 2011, and at that point it would start feeding some traffic into the system.

MR. WILLIAMSON: Are they moving along expeditiously as far as you know?

MR. RUSSELL: Well, I think so. You know, Stein is in the audience, but any time I get a chance to look through it, I think they're making good progress.

MR. HOUGHTON: I'd like to ask him about that.

MR. WILLIAMSON: Stein, would you mind?

MR. HOUGHTON: Tell us about 183-A.

MR. HEILIGENSTEIN: Yes, sir. Commission, thank you for creating a sister agency; we've been happy to work with them and help them in their progress.

183-A is on track, on schedule, opening still projected March of '07. That was, after 130, the second CDA project that really got up and running in the state, I guess other than SH-45 Southeast. We are 90 percent completion on design work, 40 percent completion on construction work.

And what I have to really say is we're entering the stage where we've been all along cooperating with the TTA and TxDOT on every phase of this, and we're currently doing that on toll integration, and that's gone extremely well. We really want to give kudos to Phil and his staff for everything that they've done to partner with us, and I think that's been incredibly important for our success to have that type and that level of cooperation.

The same thing is happening on 290 East which the minute order was signed in August of '05. The level of cooperation there is very, very important.

I might also add that we see our role as a true partner in every sense, meaning once we get to the point where we do have surplus revenues available -- we've heard the discussions, I've heard the discussions here, and in visiting with you and others, it's important that we reinvest our dollars that we make that are eventually surplus dollars into the system that is both your system and our system.

So I think that we look forward to spending surplus dollars on nontolled projects that create connectors to tolled projects, so I think we're onboard as a full partner all the way around.

MR. HOUGHTON: So from that standpoint, when you talk about the reinvestment, are we looking at a formal type of arrangement, Mike, or just one of these thoughts?

MR. HEILIGENSTEIN: No, I think it's more than a thought. I think it's something that as we develop our development agreement, say on 290 East, particularly since that one is fully in your system and on the state system, we need to be cognizant of what some of your goals are.

MR. HOUGHTON: That right of way is worth something. Right?

MR. HEILIGENSTEIN: Absolutely. And the MPO's goals. We work very closely with the MPO. We think that by taking some of the roads off of your balance sheet helps everybody and it makes our system stronger, but also it creates some room for other projects for TxDOT.

MR. WILLIAMSON: That's an interesting viewpoint. How would we get that viewpoint being discussed say in -- I'm not sure we have a problem with it in the Harris County area.

MR. JOHNSON: No.

MR. WILLIAMSON: But how would we take that viewpoint to North Texas where we're having some rough spots right now?

MR. HEILIGENSTEIN: Is this where I sit down?

MR. WILLIAMSON: Well, I'm asking your opinion about some things.

MR. HEILIGENSTEIN: Well, I think it's something to think about. I think in our case it's really percolated from the local level. I mean, working with the locals, working with the MPOs, knowing that the system is stronger when you create interconnectivity throughout the system, potentially, again like I said, nontolled roads. To me it makes common sense.

I guess in our situation, in our area we have so much congestion that we're happy to have almost anything underway and under construction. But I think we see it, as Phil and our group has been a total partnership, we see it as we're stronger if we're together. As opposed to separating it out and fighting over who's going to get what, I think we're better off as a team.

MR. WILLIAMSON: I think we certainly have that viewpoint but sometimes, despite our best efforts, we don't do a good job of communicating that to our partners, or our potential partners, I guess.

MR. HOUGHTON: Well, I applaud CTRMA for their forward thinking and the partnership that's being created in the region, and hopefully in the future, as the chairman has talked about, those multi, multicounty -- as you and I have talked about -- those RMAs.

MR. HEILIGENSTEIN: We named one of the counties after your chairman.

MR. JOHNSON: Pretty savvy.

MR. HOUGHTON: That was reaching.

(General laughter.)

MR. WILLIAMSON: Thank you very much.

MR. HOUGHTON: Thanks, Mike.

MR. WILLIAMSON: We appreciate that very much.

MR. RUSSELL: I guess that doesn't mean that our fifth commission member will be Commissioner Travis, does it?

MR. JOHNSON: Never can tell.

MR. WILLIAMSON: Okay, members, you heard staff's explanation and recommendation of the item.

MR. JOHNSON: I have one question, Phil.

MR. RUSSELL: Yes, sir?

MR. JOHNSON: Phil, the $420-, has that number remained fairly constant as time squeezes there?

MR. RUSSELL: Yes, sir, it really has. I'm just looking at it, it's kind of vacillated between $383- in February of '05, $431-, $437-, $428-, so there's been a little bit up and down, but stayed fairly consistent, yes, sir.

MR. JOHNSON: Great. Move acceptance.

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. Thanks, Phil.

MR. RUSSELL: Thanks, commissioners.

MR. BEHRENS: We'll skip over number 8 for the time being and go to agenda item number 9(a), and this will be giving me the authority to negotiate with Hays County on a pass-through toll agreement. Amadeo?

MR. SAENZ: Good afternoon, commissioners. For the record, Amadeo Saenz, assistant executive director for Engineering Operations.

On specialty plates, Jim said he's willing to pay $50 provided we have all four national championship years on that plate.

(General laughter.)

MR. SAENZ: Item number 9(a), the minute order before you authorizes the department to negotiate a pass-through toll agreement with Hays County for the improvement of several roads. You may recall that back in October, in Corpus Christi, I believe, we went through the preliminary approval for the Hays County application for pass-through tolling. In working with Hays County through the last couple of months, they have identified and they took to heart the issues with the local, regional and state facilities, and they've decided to modify their application, so we received a modified application that removes some roads but added some additional roads that were more of a regional and statewide nature, so we're bringing back their application for the preliminary approval to add these new roads.

The roads now in the application, as submitted in December: include a loop around San Marcos on FM 110; includes Ranch to Market Road 12 from the San Marcos city limits back to the west to Ranch to Market 32; new road State Highway 21 which starts from 1966 and goes all the way to the Travis-Hays county line; and then also, of course, the original road that was submitted was FM 1626, they've added to 1626 to make a connection with a road that was being built by the City of Kyle that was done under a prior project. All of these are regional roads. The only one that probably has more of local in nature is the loop around San Marcos.

Staff has reviewed their application and recommends that we move forward. We have reviewed it and it does meet the requirements that were required by our Section 5.54 of our Administrative Code. We would recommend that we be allowed to continue to negotiate with Hays County, and then, of course, after we have reached negotiations, bring it back to the commission for final approval.

MR. WILLIAMSON: Members, we have two witnesses. Judge first or commissioner first?

MR. SAENZ: They may have left.

MR. WILLIAMSON: Judge Powers, are you here?

(No response.)

MR. WILLIAMSON: Commissioner Connolly?

VOICE FROM AUDIENCE: They had to go.

MR. WILLIAMSON: Do you want to speak in your capacity as a former commissioner?

VOICE FROM AUDIENCE: I'm in favor.

MR. WILLIAMSON: My concern, principally, Amadeo, was that we don't give the wrong signal to people who we know are preparing some of the larger, more urbanized pass-through toll applications, and that being we're not in the business of encouraging people to do pass-through tolls on roads that have other ways of being expanded or improved. We're not doing that here, are we?

MR. SAENZ: No, we're not. So we will meet with them and continue to evaluate the projects further and then come back to you, provided that you approve this minute order.

MR. WILLIAMSON: I mean, if the process doesn't have some rigor to it and isn't associated with some clear goals, I can see people saying: Well, this is going to be a toll road if we don't hurry up, so let's go change our plan here and make this a pass-through deal. We don't want to be encouraging people to do that.

MR. SAENZ: Right. That was one of the first checks we made, and all of these facilities don't lend themselves to toll facilities.

MR. WILLIAMSON: We can't expand our system if we don't make the hard choices and identify the roads that are toll roads.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Members, you've heard the staff's recommendation and explanation. Do you have questions on this matter, need to talk to Amadeo? What's your pleasure?

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. SAENZ: Thank you, commissioners.

Item 9(b) is also a pass-through toll agreement proposal that was received. This proposal came in from the private sector; it is a pass-through toll proposal from a private entity to design and construct the inner loop from US 54 to Loop 375 in El Paso County in the city of El Paso under a pass-through toll proposal. This proposal was submitted by J.D. Abrams, Limited Partnership.

And under our process, of course, we can receive proposals from the private sector. We are required for proposals submitted through the private sector to go out with a request for competing proposals, so what this minute order does is asking you all to give us the permission to move forward with asking for competing proposals. We will then evaluate those proposals and come back to you with a final determination.

We have also reviewed this application and find that it meets the requirements of Section 5.54, and we would recommend approval of this minute order.

MR. WILLIAMSON: Amadeo, do I understand this is the first combination pass-through toll and unsolicited comprehensive development agreement?

MR. SAENZ: No, sir. This is the second pass-through toll proposal that was submitted from the private sector. We have one that you approved for us to move forward in Laredo back in October, I believe, and this is the second one that was submitted as a pass-through. It is submitted as a pass-through toll proposal but it is for the complete design and construction of the facility, yes, sir.

MR. WILLIAMSON: What was the one in Laredo? Refresh my memory again.

MR. SAENZ: The one in Laredo was San Isidro Ranch, and it involved the construction of an overpass or an interchange.

MR. WILLIAMSON: Yes, but that was just a small facility, this is the first big one.

MR. SAENZ: Yes, just one location. This facility is a major facility. It's been identified in the El Paso MPO's long-range plan. There is some partial funding from the El Paso MPO, they don't have enough to complete the project. The private funding that's needed to complete the project is important and it can be done through pass-through tolling.

MR. WILLIAMSON: And this will be not only in support of reducing congestion, this will be in support of military base expansion?

MR. SAENZ: The inner loop goes right through the military base, it goes right through the airport; it will reduce congestion, improve air quality, afford for economic opportunity, and really meet all of our goals that we've identified.

MR. WILLIAMSON: And I take it, by bringing it before the commission for approval to seek competition, staff is in effect saying we think this project should be built.

MR. SAENZ: Yes. We have reviewed the project itself, as we normally do if it comes from a public entity, the project stands on its own merit, and we would recommend we move forward. Because it came from the private sector, we have to go out for competing proposals, so our proposal is to go out for a 45-day solicitation to ask for competing proposals, and then we will evaluate those as they come in, and then, of course, negotiate with the one that gives us the best value.

MR. WILLIAMSON: Members, you've heard staff's explanation of the minute order. Do you have questions?

MR. JOHNSON: I have a question.

MR. WILLIAMSON: Please.

MR. JOHNSON: Amadeo, do we have authority to act on projects that are in other time zones?

MR. SAENZ: Only if we start early.

MR. HOUGHTON: Early or later?

MR. SAENZ: We better start early, we'll make sure we finish early. We'll just have to move El Paso's time zone.

(General laughter.)

MR. WILLIAMSON: Questions, members?

(No response.)

MR. WILLIAMSON: Well, Ted, do you want the honor of firsting or seconding?

MR. HOUGHTON: I will first say thank you to the private sector for doing what we've been asking the private sector to do: look at all these projects across the state. And again, I think this is something that we'll see a lot more of because, Amadeo, of our CDA conference that we had last week.

With that said, I so move.

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. Congratulations, Ted; congratulations, Governor Perry; and congratulations, El Paso District. Go get after it.

MR. BEHRENS: Okay. We'll now go back to agenda item number 6, and this is minute orders under Transportation Planning, there will be five of them, and Jim Randall will present them. Jim?

MR. RANDALL: If you tell the story, might as well tell the whole story, sir.

Jim Randall, director of the Transportation Planning and Programming Division.

MR. WILLIAMSON: We might be the only public university in Texas that can tell that whole story.

MR. RANDALL: Might be.

Item 6(a). In accordance with Section 201.602 of the Texas Transportation Code, the Texas Transportation Commission conducted a public hearing on November 17, 2005 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 process 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 December 19, 2005, but none were received.

Exhibit A contains a summary of the UTP categories and their development criteria. The project selection process that is proposed in this minute order is consistent with the department's goals to reduce congestion, enhance safety, expand economic opportunity, improve air quality, and increase the value of the state's transportation assets.

This minute order authorizes the project selection process for developing the 2007 Statewide Preservation Program and the Statewide Mobility Program under the UTP. We recommend approval of this minute order.

MR. WILLIAMSON: Members, you've heard the staff recommendation and explanation.

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 6(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 that determine the amount of federal aid that the state of Texas receives. The section does not include deductions 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 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 the proposed distribution of the transportation funds through the 2007 UTP.

Staff recommends approval of this minute order.

MR. WILLIAMSON: Members, you've heard the staff explanation and recommendation on item 6(b).

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RANDALL: Okay, sir. Item 6(c). The Code of Federal Regulations, Section 420.109(a) requires the department to make all metropolitan planning funds authorized by Title 23, USC, Section 104(f) available to the metropolitan planning organizations by formula. The formula was developed by the department in consultation with the MPOs.

In accordance with federal regulations, the department considers such factors as population, status of planning, attainment of air quality standards, and metropolitan area transportation needs in developing the formula.

Approval of this minute order indicates your concurrence with the Federal Metropolitan Planning funds distribution formula. Once the Federal Highway Administration approves the formula, the executive director or the director's designee would allocate the planning funds to the MPOs. The MPOs will be reimbursed for eligible expenditures made under this program up to their allotted amount. The distribution of the MPO planning funds for Fiscal Year 2006 is shown in Exhibit A.

In addition, the minute order grants your approval to the Transportation Planning and Programming Division to distribute future allocations of planning funds to the MPOs based on the approved formula. These funds will be made available to the MPOs for a period of two years from the year in which they were allocated. After that time, any unexpended balance will be redistributed to the MPOs based on population or need.

Staff recommends approval of this minute order.

MR. WILLIAMSON: Members, we have with us our good friend, Alan Clark. Alan, you have a comment on this item?

MR. CLARK: Thank you, Mr. Chairman. My name is Alan Clark and I'm the director of transportation planning for the Houston-Galveston Area Council. We serve as the metropolitan planning organization for an eight-county region centered around Houston. Today I'm here representing the Association of Texas Metropolitan Planning Organizations, the MPOs from across the state, to express our deep appreciation for the support that we've had from Mr. Randall and his staff in the development of this funding formula.

I would say that I believe this formula will support the partnership between local governments and the Texas Department of Transportation that we've seen so successfully grow and develop under your leadership. I'm particularly encouraged that we're recognizing the need to strengthen the partnership of local governments in the smallest urban areas of the state, and this formula provides a greater level of support for them so they'll be able to ably fulfill their obligations.

So I just wanted to express the thanks of TMPO, our state association, and our great appreciation for Jim, Jack Foster, John Bendela -- I can't remember all the staff -- that sit there with their computers and crank numbers endlessly to help our group come to its final agreement. Thank you very much.

And I'd be happy to respond to any questions.

MR. WILLIAMSON: Well, I'm kind of curious, we're all reading reports about HCTRA thinking about disposing of its assets. Do you have a viewpoint about that?

MR. CLARK: Well, since I think Harris County has just started on their study, we're going to have to see what they determine they think is in the best interest of Harris County. I think you'll get a different opinion from each commissioner and judge on that, so I wisely defer your question to them.

MR. HOUGHTON: What a political answer. That's great.

(General laughter.)

MR. WILLIAMSON: I thought you might want to take the opportunity to have a public forum about it, but I guess not.

MR. CLARK: Well, since none of them are here this morning, it's probably the only time I could speak to that, but I'll defer that discussion.

Certainly toll roads are a great asset to our region and you all will be hearing from more of our local governments about more toll proposals. I know you've already received a briefing on several projects, particularly from Brazoria County. It's a tool we just can't live without, and whether there's some other ownership of some element of the toll road system, that won't, I think, reflect a change in our direction in the future in terms of use of that tool.

MR. WILLIAMSON: Members, questions of Alan?

MR. HOUGHTON: Thank you for your support, Alan, very much.

MR. CLARK: Thank you all very much.

MR. WILLIAMSON: Yes, we do appreciate you. I don't know what we would do if we didn't have Michael in the Central Texas and then Michael up north and you in the southeast to kind of keep the urban part of the state anchored down and moving in the right direction. You're a tremendous partner.

MR. CLARK: Thank you. You have made our jobs much easier.

MR. WILLIAMSON: Did you have a recommendation to us?

MR. RANDALL: Yes, sir, approve the minute order. May I mention that Karen Dunlap of PTN was also part of the committee that worked on the formula.

MR. WILLIAMSON: Is she here?

MR. RANDALL: No, sir, she's not.

MR. WILLIAMSON: Members, you've heard the staff's explanation and recommendation, you heard the witness's testimony.

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: Okay, sir. Item 6(d). This minute order certifies eligible counties and establishes local match adjustments for the Fiscal Year 2006 Economically Disadvantaged County Program.

House Bill 1107, 79th Legislature 2005, amended Transportation Code, Section 222.053 to require the commission to annually certify a county as economically disadvantaged as soon as possible after the comptroller reports on the economic indicators specified by law. The amendment also included provisions to expedite the processing of applications.

The comptroller has provided the necessary data to determine the eligible counties for the 2006 program. The counties' efforts and ability to provide a local match has been considered in determining the adjustment for each county using the criteria in 43 TAC, Section 15.55(b)(2).

Staff recommends the list of counties shown in Exhibit A for certification under the Fiscal Year 2006 Economically Disadvantaged County Program and establishment of the local match adjustments.

MR. WILLIAMSON: Members, you've heard staff's explanation and recommendation.

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RANDALL: Okay, sir. Item 6(e). This minute order authorizes CONSTRUCT authority for two projects associated with the Red River Army Depot in Bowie County at a cost totaling $13 million to be funded in Category 12, Strategic Priority, of the 2006 Statewide Mobility Program.

The first project includes the construction of one-way frontage roads on I-30 from State Spur 86 to FM 560, a distance of approximately 2.7 miles in and around the city of Hooks, including the construction of an interchange at the intersection of I-30 and West Hooks County Road, also known as West 22nd Street.

The second project includes the upgrade of West Hooks County Road from I-30 to US 82, a distance of approximately .4 mile and will serve as a connection from the interchange of I-30 to US 82 at the Red River Army Depot entrance. This connection will be designated on the state highway system as Spur 594.

Governor Perry has made a commitment to build new roads and other infrastructure in an effort to support military operations throughout the state. The department supports this effort and has determined that the projects listed in attached Exhibit A are needed in order to safely accommodate the anticipated traffic increase that will occur at the Red River Army Depot as a result of continued military operations. These projects will improve mobility on the state highway system by creating additional access to the post by military and civilian personnel.

We recommend approval of this minute order.

MR. WILLIAMSON: Members, you've heard staff's explanation and recommendation.

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: And do I understand you to say, Jim, that this was part of the base realignment military preservation?

MR. RANDALL: Yes, sir.

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.)

R. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. RANDALL: Thank you.

MR. WILLIAMSON: Thank you.

MR. BEHRENS: Agenda item number 8 is under Finance and this will be asking you to accept our Quarterly Investment Report.

MR. BASS: Good afternoon. Again for the record, I'm James Bass.

Item 8 presents the Quarterly Investment Report for the first quarter of Fiscal Year 2006 which ended on November 30 of 2005. The investments covered in the report are associated with the 2002 project of the Central Texas Turnpike System and the lease with an option to purchase of the Houston District headquarters facility. Details of these investments have been provided to you in the quarterly report.

Staff recommends your acceptance of the report, and I will be happy to attempt to answer any questions you may have.

MR. WILLIAMSON: Attempt. Well, do we have any questions we want to attempt? John, you're a banker, you know about these things.

MR. JOHNSON: I don't have any attempted questions to attempt.

MR. WILLIAMSON: Okay, members, you've heard the explanation and recommendation of staff.

MR. JOHNSON: Move acceptance.

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. Thank you.

MR. BASS: Thank you.

MR. BEHRENS: Agenda item number 10 is under Right of Way, and this is in Denton County and we're asking you to authorize the negotiations for options for right of way for I-35E. John?

MR. CAMPBELL: Thank you. Good afternoon. Again for the record, I'm John Campbell, director of the Right of Way Division.

I'd like to present for your consideration agenda item number 10 to authorize the use of option contracts for potential future purchase of right of way along the proposed route for the expansion and widening of I-35E in Denton County.

This minute order will provide the authority for the Dallas District engineer to negotiate the execution of option contracts and to expend funds for option fees and related expenses. Timely execution of option contracts effectively allows us to purchase the development rights during the interim period prior to the scheduled right of way acquisition, provides a strategic opportunity to realize lower acquisition costs, less complicated negotiations, and thereby a more efficient acquisition process.

Staff recommends your approval of the minute order.

MR. WILLIAMSON: This doesn't involve the Maharishi, does it?

MR. CAMPBELL: Not to my knowledge. I don't believe he's involved.

MR. WILLIAMSON: Well, does anyone have any questions about John's presentation or recommendation?

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. Thank you, John.

MR. CAMPBELL: Thank you.

MR. BEHRENS: Agenda item number 11(a), we have our contracts for the month of January, both Maintenance and also Highway and Building contracts. Thomas?

MR. BOHUSLAV: Good afternoon, commissioners. My name is Thomas Bohuslav, I'm the director of the Construction Division.

Item 11(a)(1) is for the consideration of award or rejection of Highway Maintenance contracts let on January 10 and 11, 2006, whose engineers' estimated cost is $300,000 or more. We had eleven projects, an average of 3.3 bidders per project. Staff recommends award of all the projects listed.

Any questions?

MR. JOHNSON: I notice that in our sort of reclassification that was mentioned earlier, especially of things that we classified as construction but we're going to move over into maintenance, a lot of the rehab, et cetera. So these numbers will be going up considerably in terms of gross dollars. Is that close to being accurate, and if it is, when does that happen, when is the effective date?

MR. BOHUSLAV: These are routine maintenance contracts and we have not moved what we would have considered construction before now in our maintenance category into this area. These are administered by our Maintenance Division primarily, so we bring them to you by the division. We have not planned on moving those into this award process since they're handled by the Maintenance Division.

MR. JOHNSON: So as far as the meetings are concerned, those numbers are not going to be mixed in with what we style as Maintenance here.

MR. BOHUSLAV: Right. It hasn't been our plan to do that, mainly because these contracts are overseen by Maintenance operations in the field and the other ones are handled by our Construction.

MR. JOHNSON: Might we consider when we're presenting the construction contracts, when we get into that system, that we break it into sub-classifications?

MR. BOHUSLAV: There may be some difficulty because some of those projects have blended funds, some may have a maintenance category fund or some may have a mobility fund or whatever other categories there might be, bridge funding, so that aspect, it might be difficult to break them out that way.

MR. JOHNSON: Thank you.

MR. WILLIAMSON: Any other questions, members?

MR. JOHNSON: Move approval.

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. BOHUSLAV: Item 11(a)(2) is for consideration of the award or rejection of Highway and Building Construction contracts let on January 10 and 11, 2006. We had 81 projects, we had an average of 4.2 bidders per project. We have two projects we recommend for rejection.

The first one is in El Paso, the El Paso District, Jeff Davis County, Project Number 3018. It's actually 95-96 percent over the estimate and we only had one bidder on this project. This is a Parks and Wildlife roadway, had some ADA work and some roadway widening, and working with the Parks and Wildlife Department, they'd like to go back and try to re-let the job and redesign it and take out some of the work to reduce the cost.

The second project recommended for rejection is in the Houston District in Waller County, this is Project Number 3038. We had five bidders on it and it was 53.8 percent over. The cost of this project causes the safety index to be below 1 and would not have qualified for the Safety Bond category. So the district wants to go back and take off part of the work and combine -- there's two sites on this project, one of the sites is in Harris County -- with another project and it should meet the safety index for that portion of the work, and they'd redesign it and re-let it at that time.

Staff recommends award with the two exceptions noted.

MR. JOHNSON: Thomas, in that Waller County project, actually it's two separate locations?

MR. BOHUSLAV: Yes, sir.

MR. JOHNSON: And you are recommending that if we reject it that we go back and separate it into two distinct projects and rebid each of them separately?

MR. BOHUSLAV: Actually, the Waller County portion -- and if Gary is still here or Delvin, they might correct me -- the Waller County portion, I believe they were deciding not to do that project, it didn't look like it would meet the index, but the Harris County part that they did want to go back and do that one.

Am I accurate?

MR. TRIETSCH: (From audience.) Correct.

MR. JOHNSON: What did we anticipate the timing of that to be?

MR. TRIETSCH: (From audience.) Probably four or five months.

MR. JOHNSON: Thank you.

MR. WILLIAMSON: Okay, members, any more questions of staff?

MR. JOHNSON: Move approval.

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. Thank you, Thomas.

MR. BEHRENS: Agenda item 11(b) is our Contract Claims and we have four claims.

MR. WILLIAMSON: I thought you weren't doing this anymore.

MR. SAENZ: I've got to finish cleaning up the ones that I've heard. I've got this month and next month.

Good afternoon, commission. For the record, Amadeo Saenz again. I'm chairman also of the Contract Claims Committee.

The minute order before you approves a claim settlement for a contract by A-Agape Contracting, Inc., Project RMC 611084001, et cetera, in Crockett and Irion Counties in the San Angelo District.

MR. WILLIAMSON: What county?

MR. JOHNSON: Crockett and Irion.

MR. SAENZ: I call it Iron.

MR. WILLIAMSON: Irion. I tell you, if you're from Irion County, it makes you mad, kind of like those people that say San Antone.

MR. SAENZ: I apologize for that.

MR. WILLIAMSON: If you're from Irion County, you want it Irion.

MR. SAENZ: I apologize for that. Irion.

The Contract Claims Committee met with the contractor and the district on December 8. We made a recommendation and offer to the contractor, the contractor has accepted. The committee feels this to be a fair and equitable and reasonable resolution to this claim and recommends your approval.

MR. WILLIAMSON: Members, you heard the explanation, and I note the money is knocked out of it these days.

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. SAENZ: Item 11(b)(2) is also a contractor claim. The minute order before you approves a claim settlement for a contract by C.D.S. Enterprises, Inc. for Project STP 2003(387), et cetera. This is in Montgomery County in the Houston District.

We also met with this contractor and the district on December 8, reviewed everything that was presented, made a recommendation for settlement to the contractor and the contractor has also accepted this offer. The committee considers this to be a fair and reasonable settlement of the claim and recommends your approval.

MR. WILLIAMSON: Members, you've heard the explanation and recommendation by the staff.

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. SAENZ: Item 11(b)(3) is also a claim for a maintenance contract with Taylor Mowing Services for Project RMC 610758001 in Rusk County in the Tyler District.

Again we met with this contractor on December 8, the Contract Claims Committee made him a settlement based on what we heard, the contractor has accepted. We see that this is fair and reasonable and we recommend your approval of this minute order.

MR. WILLIAMSON: Based on what you heard. Heard from who?

MR. SAENZ: Heard from the contractor, Taylor Mowing Services.

MR. WILLIAMSON: They said yes, they'll take it.

MR. SAENZ: Yes, that's what they wound up doing.

MR. HOUGHTON: So moved.

MS. ANDRADE: Second.

MR. SAENZ: All these four were small contracts.

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. SAENZ: I'm seeing if we can get out of here before dark.

MR. WILLIAMSON: Hey, we're so close to the record now, we might as well just hang tough.

MR. SAENZ: I can slow down.

MR. WILLIAMSON: No, don't do that.

(General laughter.)

MR. SAENZ: Item 11(b)(4), again this is also a maintenance contract, also with Taylor Mowing Services for Project RMC 610761001, in Wood County, also of the Tyler District.

On December 8, TxDOT's Contract Claims Committee considered the claim and made a recommendation for settlement to the contractor, the contractor has accepted, again through a phone call. The committee considers this to be a fair and reasonable settlement -- of course we paid him what he asked for -- and recommends approval of this minute order.

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. SAENZ: Thank you.

MR. WILLIAMSON: Thank you.

MR. BEHRENS: Commissioners, item number 12, our Routine Minute Orders. They've all been duly posted, they're all listed there for you to look at. I don't think any of them impact any of the commission. If you'd like any of them discussed, we'd be glad to do that; otherwise, we recommend approval of the Routine Minute Orders.

MR. WILLIAMSON: Members, do you have any questions about item 12(a)?

MR. JOHNSON: Move approval.

MS. ANDRADE: Second.

MR. WILLIAMSON: I have a motion and a second. Actually, it's 12(a), 12(b), all of item 12, is it not?

MR. BEHRENS: Correct.

MR. WILLIAMSON: All the Routine Minute Orders. Was that your motion?

MR. JOHNSON: Yes, sir.

MR. WILLIAMSON: Was that your second?

MS. ANDRADE: Yes.

MR. WILLIAMSON: I have a motion and a second on item 12. All those in favor will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

MR. BEHRENS: That concludes our regular business.

MR. WILLIAMSON: Before I ask for a general comment witness, do we have any reason that you know of, Mr. Monroe, to be in executive session?

MR. MONROE: No, sir.

MR. WILLIAMSON: Okay. Then we have Alice McGuffie. And Ms. McGuffie, as you walk to the podium, I want to tell you how much we appreciate your patience and your indulgence as we worked through the meeting. Normally our meetings do not last this long, but they did today, and we understand it's taken out a valuable part of your life and we appreciate your patience.

MS. McGUFFIE: Thank you. My name is Alice Sorsbee McGuffie, and I live in Waller County. And it sounds like this may be a history-making session in terms of length. It's been interesting for me to be here and sit and listen to the proceedings.

I do have a statement that I want to make to you, to all the commissioners.

I do not understand how TxDOT can relinquish its task of right-of-way acquisitions for building public roads to multinational financial conglomerations whose primary interests and talents are in making and moving money. These conglomerations rival governments in their size and influence and some have argued they are the quasigovernments of our future.

Where is the protection for the small Texas landowner who, through no fault of his own, happens to stand in the way of these devouring giants, bulldozing their way through our precious countryside? What chance will any Texan have in getting fair justice when what is left of our government is nothing more than a proxy puppet for these financial institutions?

Thomas Jefferson said, Governments are instituted among men, deriving their just powers from the consent of the governed. But when and where did the people of Texas consent to be governed by money-making corporations?

Ms. Taraborelli, the project manager for the Montgomery County Transportation Program, told the Conroe Courier, Texas will be watching to see how the FM 1488 toll road project is handled. Ms. Taraborelli, employed by the private firm, Pate Engineers, went on to say MCPT is not bound by TxDOT's philosophy. While she may be implying that a private business may be more efficient in its operations than a governmental agency, she also seems to be suggesting that a private business may have more leeway to operate in a more aggressive way in handling environmental issues and land acquisitions. Do you sanction the public intimidation tactics used by Ms. Taraborelli toward landowners in Montgomery County?

I am very uncomfortable with the idea of a private company taking on so much of the power of the government without the same accountability to the public. It appears that this aggressive approach toward building Montgomery County's new Shiloh Toll Road, at the expense of the environment and landowners, may foretell how TxDOT and its private mercenaries will handle the massive Trans-Texas Corridor.

Decades from now, historians will record our age as one of the most politically corrupt periods in American history, rivaling the gilded age of the 19th Century. Enron, Abramoff, and the Trans-Texas Corridor, big money, big manipulations, big mistakes.

Thank you.

MR. WILLIAMSON: We appreciate you reading your comments into the record. We note that we might agree with some and we might disagree with others, but we appreciate you taking your position.

Are there other matters before the commission?

(No response.)

MR. WILLIAMSON: The most privileged motion is in order. You want to stay a while?

MS. ANDRADE: What the heck, we've lasted this long.

(General laughter.)

MR. HOUGHTON: Move to adjourn.

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: Mr. Monroe, let us note for the record that this meeting was concluded at 2:57 p.m.

(Whereupon, at 2:57 p.m., the meeting was concluded.)

C E R T I F I C A T E

MEETING OF: Texas Transportation Commission
LOCATION: Conroe, Texas
DATE: January 26, 2006

I do hereby certify that the foregoing pages, numbers 1 through 254, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Sue J. Brindley before the Texas Department of Transportation.

__________01/31/2006
(Transcriber) (Date)
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