COMMISSION MEMBERS:

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
Dee Hernandez, Chief Minute Clerk

PROCEEDINGS

MR. WILLIAMSON: Good morning.

AUDIENCE: Good morning.

MR. WILLIAMSON: It is 9:00 a.m., for the record, Mr. Monroe, the first time in five years this meeting has started on time.

I would like to call the May 2006 meeting of the Texas Transportation Commission to order. It is a pleasure to have each of you here this morning.

Please note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of Secretary of State at 1:38 p.m. on May 17, 2006.

Before we begin today's meeting, I would appreciate it if each of you would join with me in removing your pager, cell phone, Dewberry, Blackberry and everything else you have in your pocket or purse, and place the device on the silent or vibrate or power off mode so that our guests will not be interrupted while they deliver their testimony. And I thank you very much.

Before I turn to my fellow commissioners for their opening comments, I would like to call your attention to the upcoming Texas Transportation Forum which will be held here in Austin on June 8 and June 9. There are postcards with more information about the forum located in the foyer to your right. If you wish to sign up and participate, I think we have five or six slots left. We'd be very appreciative of your attendance and hope we'll be able to share some valuable information with you about the future of transportation in our state and in our nation.

It is our custom to open with comments from the commission and we traditionally start with the commissioner with the least amount of service, and that's Mr. Houghton from El Paso, and then we proceed to Hope Andrade and John Johnson, and I wrap it up.

So Ted, if you'll lead us off.

MR. HOUGHTON: Yes, good morning. Thank you, Mr. Chairman. Glad to see the folks from the Metroplex is it North Texas? I think Amarillo is supposed to be North Texas. But I'm glad to see you here, and thank you for last night, that was a lot of fun. The energy displayed in the room on the economic viability of the Metroplex, it's an integral part of this great state, and I welcome those of you here today and I look forward to the presentation, Michael Morris, so thanks a lot. Thank you.

MS. ANDRADE: Good morning. I also would like to welcome all of you to our May commission meeting, and we have some special guests with us this morning. I had the great opportunity to meet with a group of young men and women from the University of North Texas. They're all in a masters program, a masters in public administration, and they've been in Austin for a couple of days visiting with some of our state agencies. And I'd like Dr. Benavides, if you would, please stand with your group.

MR. WILLIAMSON: Welcome.

(Applause.)

MS. ANDRADE: I have to tell you, Mr. Chairman, that they're quite interested in transportation, and I think we've got great future leaders here in this room this morning.

MR. WILLIAMSON: Well, I wouldn't be surprised that they were interested in transportation as their chancellor was one of the leading advocates for regional transportation planning and execution in North Texas for many years, Lee Jackson, who is also a former member of the legislature. So it doesn't surprise me a bit.

MS. ANDRADE: So welcome.

MR. JOHNSON: Good morning. If my memory serves me correctly, I think Lee Jackson's father was a TxDOT man.

MR. WILLIAMSON: Absolutely. A TxDOT man to the core.

MR. JOHNSON: And Lee Jackson was indeed a great advocate of regional transportation and statewide transportation.

Mr. Houghton, with regard to your query about the Metroplex and North Texas, if the University of North Texas is properly situated and located according to its name, the Metroplex is indeed North Texas as is Amarillo, I hasten to add.
I want to apologize for not attending last night's function. I've been to Austin twice, Albuquerque and Washington, D.C., and I got back from Albuquerque at 2:00 a.m. on Tuesday night/Wednesday morning and it set my Wednesday schedule behind and I never got caught up, and so I apologize for not being there. I know everybody had a marvelous time, and as usual, the hospitality was quite excellent. So please accept my apology for not attending.

We have a very full agenda. It's great to see you here. You do a great job of planning and bringing a very complex region together to speak with one voice and I think that's very important. Thank you.

MR. WILLIAMSON: Thank you, members. And I associate myself with the remarks of my colleagues. We welcome all guests from across the state, and in particular, we extend a welcome to those from the Weatherford/Dallas/Fort Worth/Rockwall County area who will be speaking for that great part of the state and the northern part of the state.

Let me remind everyone that if you wish to address the commission today, we ask that you complete a speaker's card, and you can find that at the registration table in the lobby to your right. Now, don't confuse that with the enrollment card for the Transportation Forum that's the multicolored form although, please fill it out if you wish to attend.

If you're going to comment on an agenda item, that's something posted on our agenda, we need for you to fill out a yellow card, and if you're going to comment in the open comment period towards the end of our meeting, we need for you to complete one of the blue cards. In any event, unless you're a standing member of the legislature, we ask that you limit your remarks to about three minutes or if you're one of the presenters. Members of the legislature are welcome to lecture us as much as they wish. And try to limit your remarks to the topics that you indicate on the card. That will be helpful as well.

We structure our agendas well, let me begin by saying that until several years ago, it was the habit of the commission to entertain and hear delegations, such as Partners in Mobility, at almost every monthly meeting, and traditionally those delegations were put at the very first of the meeting. People were permitted to explain their agenda for their area and then move on.

One of the goals of Governor Perry with regard to this commission was to put in place a system where people didn't feel like they had to come to Austin, Texas and beg for limited funds, or display any special reason why their area of the state was more important than any other area of the state. And over the years the commission has tried to honor that goal of the governor to bring to the transportation world a well-understood system of how you finance a local, regional, or state road and how we can be partners in the local and regional process.

As a consequence, our meetings are more and more occupied with public discussions of policy matters which is the appropriate forum for a commission to dialogue with each other and consult with each other about our position on relative matters in compliance with the law, and it takes quite a bit of time to do that. So what we've tried to do when delegations come to the commission, we've tried to scatter out the discussion items so that the delegation can be through as soon as possible in the mornings and back on the airplane and on their way home, but we don't end up holding people who have to stay here to the last of the meeting too late.

So if you would indulge us, we're going to stick to a strict schedule. The Dallas/Fort Worth/Weatherford/McKinney crowd will be allowed to lay out everything they want to lay out at exactly ten o'clock. No matter what we're doing, we'll stop and we'll start the Partners in Mobility at that time, and we're going to take up a few matters of business that we think might make a difference to you first so that when you head back home which is where we'd all rather be you might have picked up some information about how we approach problem-solving in a way that will be valuable to you back in the region.

The first item on our agenda is the approval of the minutes of the April commission meeting. Members, what's your pleasure?

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. Mike?

MR. BEHRENS: Thank you, Chairman. We're going to go to agenda item number 2 which is a minute order that authorizes the issuance of bonds that relate to the Texas Mobility Fund.

MR. BASS: Good morning, commissioners. I'm James Bass, chief financial officer at TxDOT.

Through this minute order, the commission directs the department to execute any necessary documents and to issue $750 million of Texas Mobility Fund bonds. The commission also approves the documents in the exhibits which are associated with the bonds and authorizes the department representative to approve any necessary revisions to the documents in order for the issuance.

Staff would recommend your approval, and I'd be happy to answer any questions that you may have.

MR. WILLIAMSON: James, we're going to have several questions of you and of Amadeo with regard to this matter because the matter of mobility fund bonds is very important to Michael Morris and the entirety of the North Texas delegation. So if you'll bear with us just a moment.

Members, we won't call for a vote on this matter until we've all had an opportunity to express ourselves about the mobility fund, and with your indulgence, I'll lead the way.

Amadeo, where are you? Do you want to identify yourself for the record?

MR. SAENZ: Good morning, Mr. Chairman. Amadeo Saenz, assistant executive director for Engineering Operations.

MR. WILLIAMSON: Thank you.

Four years ago when we started the discussion about mobility fund bonds, I guess when we were still a three-person commission and Mr. Nichols was part of the brigade, the commission attempted to link the use of mobility fund bonds to certain behaviors in the districts, the TxDOT districts, or the COG regions. Without going into a great bit of detail, would you touch upon what the commission's general goals were in deciding how to distribute the mobility fund?

MR. SAENZ: Okay. Thank you.

MR. WILLIAMSON: Don't you love it when I don't give you any warning about these things?

MR. SAENZ: I like that.

(General laughter.)

MR. SAENZ: Several things were going on at the time back around 2001 when we were working on this thing. We were restructuring the UTP and making it much more simpler, going from 36 categories down to 12. And at the same time, because of the input we were getting, we were restructuring, and instead of the commission selecting projects for mobility, we moved towards that we would allocate an amount of money to the eight big metropolitan areas so that they knew and they could plan and prioritize. That was on the UTP process.

Normally for mobility projects, historically we've always allocated about two-thirds of the mobility dollars to the metropolitan areas, 5 percent to the urbanized areas, and the remainder was for statewide connectivity. When the mobility fund was in place, one of the requirements that we had was that we had to put together a strategic plan or an action plan of how the mobility fund would be spent.

So we took the historical data and we said, okay, two-thirds of the mobility fund should go to the metro areas and at the same time we had some work groups that were working to determine the allocation between the different areas. There was a work group that was made up of TxDOT people as well as MPO people and other state officials, and they came up with a formula of how money in the metropolitan mobility area, what we call Category 2, would be allocated. And they used about 15 or 16 criteria, they went through a whole bunch of iterations, and they finally came up with a recommendation on how they would distribute metropolitan money for the different areas of the state.

That came before you all in the latter part of 2001, early part of 2002, and you all signed off on it, and we've been working under that scenario. So in essence, we took the mobility fund, we used historical data, we got input from the locals and got them to give us a recommendation how to distribute it among themselves, and that is the scenario we're using now. It gives them the opportunity to not only know what their resources are which is the most important thing over the next 30 years, they know what their needs are, and then they can apply the resources to the prioritization of their needs.

MR. WILLIAMSON: And in the discussion and eventual minute orders that the commission passed on the distribution of the mobility fund, did we make it clear that mobility fund dollars could be distributed not just to road construction?

MR. SAENZ: Yes, sir. The strategic plan for the mobility fund allows the money to be spent for highways for also for public transportation projects. And again, it's the area that decides where their priorities are and in which direction they want to be able to utilize that money.

MR. WILLIAMSON: And in the process of developing those alternatives for the metropolitan areas, did we also begin a process, that we're soon to conclude, on indexing the impact of investments in a transit or construction or regional toll system in other words, a set of indexes that we could use and the regions could use to assess the value of the dollar on congestion, safety, air quality, so forth?

MR. SAENZ: Yes, sir. We're working on that now and we'll have a discussion on that I guess after James finishes on this one, so I'll be right back.

But one of the things that we did at the same time when we provided them the resources, we asked them to put together the Texas Metropolitan Mobility Plan which was kind of identify your needs for your region, and identify your needs across modes, not just concentrating on highways because you may have a public transportation project that will address some of the needs, and now since you have the flexibility of using money for public transportation, that may address some of those needs and have a positive impact on congestion.

At the time when they did the plan, what we asked them to look at is the Texas Congestion Index. As we've moved forward, we've identified that based on the five goals that we have, that we should have some indices that they can apply towards meeting those goals, where of course, congestion could be the congestion index or an offshoot of that, we would have a safety index, we would have an economic opportunity index, preservation of the asset index, as well as a

MR. WILLIAMSON: Air quality index.

MR. SAENZ: Air quality index, yes, sir.

MR. WILLIAMSON: And the ultimate goal, as stated by the commission, and I would hope as was reinforced by staff, was the governor was interested in a planning and distribution of funds process that as much as possible eliminated the politician with the loudest voice or the biggest stick, the interest group with the best paid representative, and instead put everybody on equal footing across the state competing for limited state funds based on the ability to either reduce congestion, or improve air quality, or improve safety, or attract economic opportunity to the state, or preserve the asset value of the state's transportation grid.

MR. SAENZ: That's correct, sir.

MR. WILLIAMSON: Has the staff maintained that focus?

MR. SAENZ: We're working on that and we have been working on developing these indexes and today we're ready to give you pretty much a final report for some final comments so that we can wrap it up in the next month.

MR. WILLIAMSON: And the reason that this discussion is appropriate with regard to the mobility fund bonds is because as we move forward with the distribution of those bonds over the next few years, the instinct around the state will be I need to have the loudest voice or the most cohesive argument, and what we want is we need to reduce congestion as much as possible or improve air quality we want it focused on our goals as opposed to other considerations.

MR. SAENZ: That's correct.

MR. WILLIAMSON: Ted, anything?

MR. HOUGHTON: One word I did not hear in the discussion was leverage of the mobility fund.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: I was hoping you would bring that up.

MR. SAENZ: In our strategic plan we did also identify that the mobility fund was additional money and we wanted the large metropolitan areas, really everyone that gets an allocation, to be able to go out there and leverage, and you can leverage in several ways. We've have some of the areas that have identified toll projects that will leverage, they'll use the mobility fund to build a toll project, and that in itself will create a future funding source, so they're leveraging that dollar to replace that money in the future.

The other thing that the commission did that was very important was that you all passed a minute order that said that any revenue that's brought in through one of these leverage mechanisms tolling, for example surplus money remains in the region for the region to decide on what project to use. Again, if you have your indices and you can identify, you prioritize based on those indices, you go back and you pick the next project

MR. HOUGHTON: Did we not also, Amadeo, talk about a time period that these communities need to identify projects to leverage under the mobility fund?

MR. SAENZ: We had a time period in the strategic plan; I don't recall it off the top of my head.

MR. HOUGHTON: Was it three years?

MR. SAENZ: I think it was three years.

MR. HOUGHTON: Because I do remember a letter from one person in the state of Texas back to the department that said when El Paso forfeits its mobility funds, we'd like to have it.

MR. WILLIAMSON: I remember that letter.

MR. HOUGHTON: Where is Michael Morris? He's probably solely responsible for spurring on El Paso to form their RMA.

MR. SAENZ: We've had several requests or several assumptions that there will be some mobility funds that will be forfeited, and once it's forfeited we'd be more than happy to spend it for you.

(General laughter.)

MR. WILLIAMSON: Hope, anything?

MS. ANDRADE: Yes. Amadeo, I know we talked about leveraging because that's what we went out in the communities to educate them on: it was one-time money and we wanted them to leverage it. But refresh my memory, did any community use it for public transportation?

MR. SAENZ: To date none have used it for public transportation. Most of them have identified toll projects. The Lubbock District has identified a different funding scheme where they are going out there and putting in another levy or tax, and then they're using that to come up with the leverage amount. But no one has identified a public transportation project.

MS. ANDRADE: Why do you think that was? Was it that perhaps we didn't advocate as much or that they could use it for that?

MR. SAENZ: I think part of it, Commissioner, was that they identified the easiest thing that they could to be able to leverage those dollars, and the needs were so great that there was additional capacity needed on the transportation system. The surplus money staying in the region also has the same flexibility that in the future they can use. The other thing is through the planning process, even though they're commingled, most of the time the planning process for public transportation items and highway items kind of part ways, so we concentrate a lot on our highways and it's going to take a little bit of time to see how you can commingle and bring back.
The indices will help you in the future because you'll be able to evaluate what a public transportation will provide you and you can compare to what an equivalent highway project will provide you, and then can help you make the decision.

MS. ANDRADE: I guess now what we have to remind communities is that this surplus money that they'll have from their toll projects can be used for public transportation.

MR. SAENZ: Yes, ma'am. Part of House Bill 2702 identified surplus money and how that revenue could be spent, and it can be spent for public transportation.

MS. ANDRADE: I'll make sure I make that part of my talks.

MR. WILLIAMSON: And not only their surplus from their toll collections, but actually any cash payments for any concessions that they choose to execute in their regions can also be invested in public transportation.

MR. SAENZ: Yes, sir.

MS. ANDRADE: We'll make sure that we do talk about that.

MR. HOUGHTON: Develop a fully integrated transportation system. Right?

MR. WILLIAMSON: That is correct, a fully integrated transportation system.

MS. ANDRADE: [Indiscernible].

MR. WILLIAMSON: John, anything?

MR. JOHNSON: My observations are more of a conclusion and I think that what this illustrates a process that is by coming to these answers through goal-oriented steps, we eliminate, for all practical purposes, the external factors and what people might have referred to as pixie dust selection process, and I think if you're running a private enterprise or a public enterprise, when you have goal-oriented results and you have substantiation, you've built your goals based on solid assumptions, that everybody wins, and I think this is a great step.

MR. WILLIAMSON: The indices which we'll take up in just a moment I think are kind of the final piece in the cash distribution system. Hope spoke directly to a concern of the governor, and that is all of us that have been in this world for a while understand that every mode of transportation is subsidized. Whether it's an extension of Highway 75 north of Dallas, whether it's Loop 9 on the south side of Dallas, whether it's the DART train extension into the Duncanville area, whether it's DFW Airport or Love or Weatherford International, all forms of transportation are subsidized in some way by the common pool.

The question that transportation planners across the country I say humbly haven't been able to address that we're addressing is what is the relative cost and benefit of each of those choices. With the adoption of the index, the regional transportation council, whether they want to extend the train or not, now has the ability to say $100 million invested here will reduce congestion by this much, and that same $100 million invested in this train extension will reduce congestion by that much, what is the most rational decision for the region on the expenditure of this $100 million.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: That's where we want staff to be sure and take this up, particularly with regard to the mobility fund which has much more flexibility than does our state gas tax which is limited in the constitution to maintenance of the highway system.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Thank you, Amadeo.

MR. SAENZ: Thank you.

MR. WILLIAMSON: Now, James, on the matter before us, what would happen if we didn't adopt?

MR. BASS: We would, within a short order of four to six weeks, not have funds available to make payments on a number of the active projects that are tapped into the mobility fund.

MR. WILLIAMSON: And how much have we now issued against the mobility fund and how much remains to be issued, about?

MR. BASS: Assuming this is approved, it would be $1.75 billion with another $2-1/2 billion to be issued. And one thing I'd like to point out, we've had some questions if the transportation needs in the state are so great, why has the department not issued all $4 billion of the mobility fund bonds that we've received approval to do so from the Bond Review Board. And the fact is that through tremendous efforts of the district personnel and working with the MPOs, there are $4 billion worth of projects that are active, be it right of way, design work, or construction, that is ongoing today that wouldn't be going today if not for the mobility fund. However, these are mobility projects that are going to last several years so we don't need the cash in hand today, so what we're doing is as those projects go through their life cycle and the cash is needed, we're issuing the bonds to make payments for somewhere from six to nine months.

So all of that $4 billion is already committed, the work is ongoing, we're merely just issuing the bonds as we need the cash.

MR. WILLIAMSON: Very good. One more question, Amadeo. Where are you? No doubt later on in the morning the matter of comprehensive development agreements is going to work its way into the meeting. I want to give you a for instance. And again, I do apologize for not warning you about this; hopefully you're displaying your remarkable dexterity and intelligence.

I can't use North Texas as an example because there's really not a North Texas RMA, so I want to use the Alamo RMA as an example.

If the Alamo RMA chose to parallel 1604 with six high-speed toll lanes, and if the MPO in Bexar County or that COG area agreed with that decision, and if the Alamo RMA elected to go out for proposals to the private sector to compare what it could construct the toll system for and operate it as compared to what the private sector could do it for, could the Alamo RMA also say to the private sector at that time I want your proposal to design, build, finance and operate this toll road, I want your proposal to pay cash for a concession fee, and we will use mobility fund funds, we'll use our portion of the mobility fund, if we like your proposal, to buy one quarter of your deal after we approve it?

MR. SAENZ: That's exactly what toll equity will allow them to do. An RMA has the same authority as TxDOT so they can do a CDA that goes all the way from design-build to design-build-maintain-operate-finance. So depending on the project and the toll viability of the project and how much equity can be brought in, as well as the bonding, two things can be done. If it's what I'd call a revenue-positive project, then the RMA, working with the MPO, can buy into that project, and the amount that they buy into the project will certainly result in different amounts of revenue-sharing that they could realize, that in essence, through that toll equity they're able to, in essence, secure a percentage of a future funding source without them having to go out there and spend all the money themselves.

MR. WILLIAMSON: So a multi-county RMA, if it so chose, could sell a concession for a new road that the MPO had already planned on taking gas tax money and building.

MR. SAENZ: Right.

MR. WILLIAMSON: Then the gas tax money that would have been spent on that new road could then be spent on other projects in the region.

MR. SAENZ: That's also possible, yes, sir.

MR. WILLIAMSON: The RMA which is a creature of the counties that belong to the RMA could take the concession fee, if it were revenue-positive, and use that money to finance the extension of its commuter rail system and could take its share of the mobility fund and buy a quarter of the private sector's deal and own it just like the private sector does, sharing in the revenue growth if the toll road proved to be a quadruple winner that no one ever thought would happen.

MR. SAENZ: That's exactly right. You're buying into and investing into an asset and the revenue from that asset part of the revenue from that asset would then belong to them to do other projects as they so chose.

MR. WILLIAMSON: Any other questions about this option, members? Hope?

MS. ANDRADE: I have a question. Let me make sure I understand. So can they use the concession fee to buy that piece from the private sector?

MR. SAENZ: They could do several things, Commissioner. They could go in there and you can tell the potential CDA developers that you want to limit your concession fee to a certain amount, or that you want to reinvest a portion of that concession fee into the project.

MS. ANDRADE: Into the project they're building.

MR. SAENZ: And recover that through a revenue-sharing mechanism.

So there's countless different scenarios that you can use without even having to put in toll equity. If the project is revenue-positive, then you can look at that project and say instead of getting all the money up front and that's all I get, I would like to be able to maximize the amount of money that you can give me up front, Mr. Developer, but I want to keep a percentage of the future revenues.

MS. ANDRADE: And that's all part of negotiations

MR. SAENZ: And the revenue stream can be a revenue stream that is taken off immediately upon each transaction so that you're not subordinate to the operation and maintenance.
Of course, with every scenario that you use, there's pluses and minuses that you would have to evaluate and every project needs to be looked at on its own merits to determine which would be the best option to use.

MS. ANDRADE: Another question, Amadeo. And that's part of the negotiations. Right?

MR. SAENZ: Yes.

MS. ANDRADE: I want to make sure I understand this too. On the concession fee, can they use that on a non-toll project?

MR. SAENZ: Yes, ma'am. There's a definition in 2702 for a transportation project and it does not have to be a toll project.

MS. ANDRADE: Thank you.

MR. SAENZ: One thing that you also want to look at is as you're doing revenue-sharing, you want to be able to take advantage of if the project is a great project and it basically realizes a lot more traffic much sooner than was originally projected, and so you can set up revenue bands. For example, if the traffic is within our projection, we'll keep 10 percent of the revenue, but if traffic increases by 50 percent more, then I would like to get a higher percentage of that next band, and then if the traffic increases above that, I would like to keep even a higher percentage of that. So you can start from, say, a 10 percent revenue-sharing band, increase it to a 25 percent revenue-sharing band, and then maybe even increase it to a 50-50 percent revenue-sharing band.

Again, you look at the project and you run scenarios to be able to find out which is the best scenario that would be applicable or best for each party.

MR. HOUGHTON: One of the things, Amadeo and I'll piggyback Commissioner Andrade's question is that the MPO is an integral partner in this decision-making and shares in those revenue sources.

MR. SAENZ: Yes, sir. And I think it all goes back to the planning discussion that we first started when Chairman Williamson asked about the planning. The money is going to the MPO, the MPO has identified the plan. Using the RMA as a tool, they work together and they should work hand in hand to identify what projects the RMA can implement, and then with the revenue, either the toll equity that came in from the MPO or through agreement, they can say from the surplus revenue or from concession revenue that you get, Mr. MPO, we would like you also to develop these other projects, whether they be toll projects or not toll projects, and then that all becomes part of the plan.

MR. HOUGHTON: I think it's very important that the regions understand the three-legged stool, that it's the MPO, the RMA if they have one in that region, and TxDOT.

MR. SAENZ: We all need to work together because if you have one entity that's off pushing and pulling by themselves, you don't get any of the benefits of being able to commingle all the funds and get all the projects done.

MR. HOUGHTON: Right.

MR. JOHNSON: Amadeo, I'm assuming that since everything is negotiable, that the concession fee could be zero, and in the chairman's terms, the working interest could be a lot higher. It's difficult to set a template the way these things are going to fall.

MR. SAENZ: That's why you almost have to look at every project and say you look at the project, you look at the traffic, evaluate the risk whether the traffic will be there or will not be there, and you can go from zero up-front payment in a maximum revenue-sharing to a 100 percent up-front payment and no revenue-sharing, but you've got your money up front or somewhere in between, and it's just a matter of deciding which is the best scenario for that particular project.

MR. HOUGHTON: You speak with some authority. Have you negotiated a CDA recently?

MR. SAENZ: We're working on some.

MR. WILLIAMSON: And then, of course, the other thing, John, that you would balance, or I would assume, regional leaders and MPOs would do is you would balance what you could buy with your full cash payment up front for your consumers versus what you're giving up for your consumers 15 years from now if you guess wrong and the revenue goes through the ceiling. I mean, watching the North Texas discussion on 121 play out, it's been, I think, illuminating that there's been almost no attention paid to if the concession fee is $200 million, which grade separations and overpasses and congestion-relievers get built that otherwise wouldn't have been built and what was the value of that. And it seems to me that that's almost as important a consideration as how much of the toll road you would own or the business enterprise you would own.

Because the problem that we're trying to address is we're $86 billion short. All of these things are designed to close the shortfall between now and 2030 when we believe our state's transportation system is going to collapse if we don't close the shortfall.

MR. JOHNSON: Well, I think your point is interesting because it shows the difference in the way we build things on the commission. I'm partial to future cash flow as opposed to up-front payment. Now, I recognize that there are a lot of variables here that we do not know the answers to, but philosophically and we talk about building value into the system to me future cash flow has more value than an up-front payment. Now, it depends on the size of the up-front payment and it depends on the amount of the future cash flow, but it's interesting that we've sort of come to the same conclusion through different roads, if you will.

MR. WILLIAMSON: Following different paths?

MR. JOHNSON: Yes.

MR. HOUGHTON: And I think one of the things that's driving it, Commissioner Johnson, one thing is the demographic growth in this state. We've seen Chicago on the Skyway take up-front cash, we've seen Indiana take cash and no revenue, we've seen Virginia do the same thing, but when you look at their demographics and their growth, it's somewhat flat-lined, and you look at Texas, we'll benefit in that demographic growth on these roads, and it's pretty profound numbers that we're seeing.

MR. JOHNSON: Well, the other interesting thing is the Chicago sale was an existing asset and the Indiana is a future asset, and so it just depends on the way you value what you have currently, the knowledge plus what you're anticipating in the future. And I think your point is an excellent one, we anticipate this state is going to continue to prosper and grow and that's another reason I think the cash flows are going to be higher.

MR. SAENZ: One of the things to look at is the immediate needs for the area that you cannot address, and that should be one of the factors that you take into account in determining do I need some immediate up-front dollars that will allow me to address these immediate needs. And these immediate needs could be projects that would, in essence, facilitate the movement of traffic onto this facility that would, in essence, get more traffic there easier and would allow you to get more traffic faster, and you also take the benefit of having revenue-sharing.

So really most projects, your best position would be probably to take some money up front to address immediate needs for the area. Which is kind of what the region in the Dallas-Fort Worth area has been doing with what they call their Near Time Near Neighbor policy is they want to free up some money to do some of those projects through Near Time Near Neighbor, but they could also use some of that concession fee for Near Time Near Neighbor, but at the same time they want to keep the opportunity to get some money over time through delaying a percentage of that concession fee over time so that can create a funding source.

MR. WILLIAMSON: Amadeo, Senator Shapiro has been very direct in her conversations with me about 121 and its impact, particularly on the Frisco-McKinney parts of the state, and I've tried at every opportunity we've visited to assure her that the department, either at the Austin level or, I hope, at the district level, has no dog in the argument over who runs that toll road or who owns it or who makes the money off of it, and we do have an abiding interest in making sure that the concession fee, if there is one, is distributed as close as possible to improve the lives of the people who use that road on some percentage basis.

Is it your view that the RTC and our employees in the different negotiations that are going on regarding 121 are taking into account that if a concession fee is paid, the reinvestment is the Near Neighbor Near Time frame that Michael has led the way on?

MR. SAENZ: The RTC has put in place and I'm sure Michael will cover it in the delegation presentation has put in place a mechanism of how they're going to share in the revenues, both from concession fees as well as any future revenues that any of the toll roads generate. Part of it is outlined in House Bill 2702 but the RTC has then taken that and has identified how they're going to address the sharing of that revenue so that they can address other transportation projects within the counties where the projects are that would directly affect the McKinneys and the Friscos and the cities within there, and then also how they are going to apply some of it to improve the transportation system of the region. That's through concession fees and surplus revenue.

By going through the development of toll projects through the CDA process, it is freeing up some money that was already available to the region and they're using some of those dollars for their Near Time Near Neighbor projects. So they're putting in place a mechanism to try to maximize or optimize the resources that they have to be able to develop those projects.

MR. HOUGHTON: Based on your experience, Amadeo, in negotiating a CDA, how much say and influence do you have on the toll rates?

MR. SAENZ: The toll rates, you can fix the toll rates, you can fix the toll rates very low, you can allow flexibility, you can set a beginning toll rate and then have a say-so in the escalation mechanisms. Whatever decision you make will have an impact into how much money is generated through that toll road and how much money will be available through revenue-sharing or an up-front concession, and such and so forth. So every project needs to be looked at individually.

The region, because we have been working with the RTC on the 121 project, has identified a business term where they've identified the toll rates and the toll escalation rates. These will go into the CDA process, into the CDA request for detailed proposals, and the proposers will propose based on that business term that has been agreed upon by the region.

But depending on how you vary it, your numbers will change dramatically.

MS. ANDRADE: One other question. Will different communities have different toll rates?

MR. SAENZ: They could. What the RTC has done and like I said, I'm sure Michael, if I say something that's not 100 percent total of what you've done, correct me it has identified a toll rate and a toll escalation rate for toll projects in the region. They've also worked up a mechanism for the tolling of managed lane projects, and they've got a policy on that end.

Did I cover it well, Michael? Okay.

And so they have identified and have put in place, and they did it through public involvement. They had a series of public meetings and through those public meetings was how they have come up with this tolling scheme that they want to apply for projects.

MS. ANDRADE: But different regions will most likely have different tolls.

MR. SAENZ: Different regions can set their own tolls rates, yes, ma'am.

MR. WILLIAMSON: Okay, thank you, Amadeo. James? Members, are there questions of James?

MR. JOHNSON: I have one question.

MR. WILLIAMSON: Please, go ahead.

MR. JOHNSON: James, on the response from the comptroller on the estimated contributions to the mobility fund, as the years go by, the estimate is that the contributions will increase, and yet I've noticed in the column on the depository interest that that remains pretty constant and then it gradually increases and then stays at one number, $4-1/2 million. Why does that number not increase?

MR. BASS: I think it's just the conservative nature of revenue estimates in the state as they've been historically, and this depository interest appears to ignore the interest that is earned on the proceeds while we're holding them and spending them out over time. So I think it's just another layer and level of conservatism that helps us achieve a strong credit rating for the bond program.

MR. JOHNSON: Thank you.

MS. ANDRADE: Chairman, I have one.

James, were we able to give other members of the team an opportunity on this time around?

MR. BASS: Yes, ma'am. This will be our third debt issuance out of our underwriter pool, and after this third issuance everyone in that pool will have had an opportunity to perform on a pricing day for the department.

MS. ANDRADE: Good. Thank you.

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

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.

MR. BASS: Thank you.

MR. WILLIAMSON: Amadeo, we've got 15 minutes before we welcome our North Texas friends to the podium. Your explanation of the indices will probably take longer than 15 minutes. What I want you to do is to touch on the four and I want you to focus on the tax ratio. That's the one that will have the most impact on assessing the value of a road. And that will probably get us right to the time we can take a short break and let the Partners in Mobility get ready to go.

MR. SAENZ: All right. Thank you, commissioners. Again, for the record, Amadeo Saenz, assistant executive director for Engineering Operations.

I will very quickly kind of just start my presentation and talk about that we have been developing some indexes to our five goals, and I will briefly go over the progress that we've made. We have put together a report through a work group and have come up with indices that we think will allow us to be able to and I guess we're trying to do two things I want to be able to have something that as people come to you to ask for money for projects that we can give you an evaluation of those projects with respect to our four goals. In addition, these indexes can also be used by the metropolitan areas, such as RTC, and assist them in the decision-making of which projects would probably give them more of a benefit in the five goals.

I will talk about the indices that deal with increasing the asset value of our asset, the asset value of our facility.

MR. WILLIAMSON: What are the five goals again?

MR. SAENZ: Our five goals are: reduce congestion, improve safety, provide for economic opportunity, improve air quality, increase the asset value of the facility.

And I think you wanted to talk about the asset value of the facility, and what we've done in this is we've been able to put together a program that will identify the amount of revenue that a particular project would generate based on the traffic that uses that project.

MR. WILLIAMSON: By that you mean tax revenue?

MR. SAENZ: Tax revenue, yes, sir.

And then, of course, we can then compare that to the amount of money that it takes to build a project and then maintain and rehabilitate that project through a 40-year design life. Then you compare the revenue collected to the cost to maintain that facility, and you can do a ratio, and basically what we call that is our tax ratio. A project will generate so much money from taxes but it will take so much money to construct and maintain; the ratio of those two is what we call the tax ratio.

MR. WILLIAMSON: Do you have any examples?

MR. SAENZ: I've got some examples. Can you turn that on for me, please?

We usually also call this thing tax gap analysis, and what we show here, the parameters that we take, we take the amount of traffic, the length of the project, trucks, and we go through and we calculate. I'm going to go to the results. For example, this project was Grand Parkway in Houston. When you look at a 40-year total on the traffic, a projected traffic that would be using that project, we would generate $162.5 million of revenue. And that revenue is revenue that comes in from the state gasoline tax, the federal gasoline tax reimbursements, as well as its share of the vehicle registration.

MR. WILLIAMSON: Okay, we've got enough time we can explain this slowly, so let's lower the deal and let's go back to the top of this piece of paper. So what does ADT mean?

MR. SAENZ: ADT is the average daily traffic. Of course, length is the length of the facility thatwe were looking at in this case.

MR. WILLIAMSON: Average daily traffic is the number of cars that are going to go across this strip of road?

MR. SAENZ: Number of cars that are going over that facility.

MR. WILLIAMSON: So that's the number of cars that are going to cross that facility.

MR. SAENZ: That is the number of cars that are using that facility on a daily basis.

And of course, length is the length of the project that you're looking at.

MR. WILLIAMSON: So that's the number of miles on that particular road that we're analyzing.

MR. SAENZ: That particular road.

MR. WILLIAMSON: Is that a logical terminus point? I mean, you didn't just go out and whack 15 miles where you wanted to, you went from a logical point to a logical point?

MR. SAENZ: No, sir. What we do is we're able to go out there and identify a project. In this area we are identifying a project in Houston on the Grand Parkway from Interstate 10 to 290, and it's a 15-mile section. If we were looking at the section from 290 to another place that was only five miles, then we would use that five-mile section. So we take the logical termini or the length of the project that we're trying to look at.

MR. WILLIAMSON: And that's the percentage of trucks, that's the percentage of cars, that's the average miles per gallon.

MR. SAENZ: Right.

MR. WILLIAMSON: And that's the number of lanes on this project.

MR. SAENZ: Yes, sir, that's the number of lanes on this project.

And of course, we assume the type of facility that we're going to be building, rigid pavement, we're going to build concrete pavement, reconstruction cycle will be 30 years, our routine maintenance costs that we've developed through historical data, as well as the vehicle miles traveled growth rate that we are applying to this project. We do have a shoulder adjustment that we've done through a lot of statistical analysis, and of course, we look at the design and analysis period.

MR. WILLIAMSON: So is the period 2005 to 2044.

MR. SAENZ: Yes, sir.

So as we look at the results of that, then we're able to calculate, based on that traffic over that section of highway, and based on the mileage rate and the gasoline tax that is collected, the amount of dollars that are collected through state gasoline tax, federal revenue and its share of registration fees

MR. WILLIAMSON: Okay, stop. So that's the amount of money that we can apportion to that number of cars and those number of miles over that time period, state gasoline tax paid, federal gasoline tax reimbursed, and motor vehicle registration fees collected based on the age of the vehicles.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: So we feel very comfortable in this particular index that we know within a reasonable certainty that over the 40-year life of this project in Harris County $162 million in tax revenue will be generated by the use of that facility.

MR. SAENZ: And that's very important. It's by the traffic that is using that facility.

MR. WILLIAMSON: Okay.

MR. SAENZ: Of course, the cost of the project will take into account the initial construction as well as the routine maintenance, preventive maintenance and rehab that needs to be done over the 40-year life period. If you noticed, above I talked about a reconstruction cycle of 30, so at year 30 you would have a reconstruction cycle, and you would also have through that time period some additional improvements based on traffic growth.

So in essence, that tells me what the life cycle cost of that project is, same project, same limits, and in this case I would have a life cycle cost of $1.01 billion.

MR. WILLIAMSON: So we're going to collect $162 million in taxes and we're going to pay out a billion in tax revenues from other sources for a shortfall of $853 million.

MR. SAENZ: That's correct.

MR. WILLIAMSON: And what does that 16 mean?

MR. SAENZ: The ratio is basically what we call the gap I'm sorry the ratio is the revenue collected divided by the cost, so the revenue is 16 percent of the amount of money needed to basically have this project constructed.

MR. WILLIAMSON: So this highway is being subsidized at a rate of 84 percent.

MR. SAENZ: Eighty-four percent, yes, sir.

MR. WILLIAMSON: And what's this?

MR. SAENZ: The final number there is basically a calculation that says what would be the equivalent gas tax that would have to be collected in order to make that project self-sustain, that it would pay for itself. So in essence, for that project to be able to collect $1.016 billion over this 40-year life period, we would have to charge a gasoline tax of $2.22.

MR. WILLIAMSON: And if Chairman Carona were to ask us to recalculate that gasoline tax of $2.22 to a toll that would be necessary to pay for that facility if we wanted to pay for it in tolls?

MR. SAENZ: Yes, sir, we can do that also.

MR. WILLIAMSON: So we're laying the ground work to ask ourselves how much are we subsidizing any road, what would it cost by way of toll, and then that can begin to become our comparison against other modes of transportation if the regional leadership wishes to compare those two.

MR. SAENZ: Yes, sir. And just on that question that you're asking, I've got another chart here where I'm doing the reverse: I'm taking toll rates that are being charged right now on the different toll systems across the state within the Harris County area and the North Texas Tollway Authority area is also what we're going to be doing where we can calculate what the equivalent gasoline cost per gallon is based on those toll rates.

MR. WILLIAMSON: Well, share that with us.

MR. SAENZ: The projects up here are actual toll projects that are in our existing system today. Of course, in Harris County the toll rates that they've had and in converting those toll rates, we used a little bit different calculation there, we used 22.3 miles per gallon, but at 22.3 miles per gallon, at the toll rates that they charge, they're charging the equivalent of $3.01 per gallon gas tax.

MR. WILLIAMSON: The equivalent gas tax rate.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Via the toll charge.

MR. SAENZ: Yes, sir, and that's for the electronic tolling, and of course it's higher for the cash toll lanes.

In the North Texas Tollway Authority area, based on their toll rates, they're at $2.35 and $2.82. And then, of course, our Central Texas Turnpike Authority project which is our 130 project, 45/Loop 1 project is going to charge equivalent $2.47 per gallon to $2.75 cents per gallon for our gasoline tax for our cash toll lanes.

MR. WILLIAMSON: Do you have other highway projects that you've analyzed?

MR. SAENZ: I've got several other projects that we've done some analysis on that I'll go back and we can look at. A couple of projects in Collin County in the city of Frisco.

MR. WILLIAMSON: The city of Frisco?

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Randomly picked?

MR. SAENZ: Random project.

(General laughter.)

MR. SAENZ: Well, I took them from another presentation that we already had, I didn't go back and recalculate.

This project here is a project in the city of Frisco from Steward's Creek Road to US 380. We've done the same gap analysis. There is your ADT of 17,100; length of project is just under seven miles; going through this thing, the same assumptions using concrete pavement, the same cost of maintenance. When we look at this project over the 40 years, the revenue for the project is $40.1 million, the total cost of the project is right at $80 million, so my gap ratio is right at 51 percent.

MR. WILLIAMSON: So that's roughly a three times better investment for the state than the one previously because the tax gap is close to .51.

MR. SAENZ: Yes, sir. And of course, the real gas tax would be 57 cents per gallon.

MR. WILLIAMSON: Okay, continue. You've got two minutes.

MR. SAENZ: I've got two minutes. I'm going to do two other projects, and I'll stay in the north Dallas area. I won't do a Frisco, I'll just do a project in Collin County which is FM 2551 from 544 to 2170. This project the traffic is 6,3600 vehicles, a little bit over six miles long. When you go through the same scenario, this project generates right over $14 million but the cost for this project is almost $108 million. So in essence, this project is not as good as the other project, definitely not as good as the other project because its gap ratio is only 13 percent.

The last project that I've got is a project in San Antonio I've got two more. I've got a San Antonio project on 151, the project is 10-1/2 miles long, had almost 30,000 vehicles a day. We look at the results, of course, this project here generates $74 million in revenue, and of course, it's got a cost of $159 million, it had a gap ratio of .47. So this project is somewhere in the middle, it's close, it's a project that the equivalent tax rate would be about 62 cents per gallon.

The final project I have is a project more in the rural area, it's here in Travis County on US 182 south of 290 to Bolm Road. Basically it's got 52,000 vehicles a day, 40-year amount of revenue that it generates is $98 million, but the cost is extremely high, it's got $565 million, almost $566 million in cost over the 40-year life, so its gap ratio is only 17 percent, and of course, the equivalent gasoline tax would be $2.02.

But these are the scenarios that you will be able to use to determine which projects would be a better investment in protecting the asset of the facility.

MR. WILLIAMSON: Now, we're going to return, members, to the other four, the congestion, the air quality, the safety, and the economic opportunity because we've developed indexes to measure all of those five things, and we'll have an opportunity to question Amadeo about that.

Before we let our North Texas folks take over, Amadeo, the question that leaves us hanging in the room always when we talk about this matter, first, have we, in all of our research on this matter, found one road that pays for itself?

MR. SAENZ: So far I haven't, but we're still looking.

MR. WILLIAMSON: A good business person has recently asked me the following question: If you're so certain of this analysis, then that means every road in the state costs more than it generates in taxes but you have money in the bank this is your friend from El Paso that asked this question, actually, Mr. Houghton you have all this cash in the bank and you keep building highways, how is it possible that no road ever pays for itself but you're always building and maintaining roads, how can it be possible?

So the question I ask you is: Who is paying that deficit and how?

MR. SAENZ: Other parts of the state. When I build a road that has a gap, I'm, in essence, taking money from other parts of the state or other roads within the region to be able to address this one. That's why we're always behind. We don't have enough to be able to address all our needs so we have our own version of Robin Hood, and I take money from a certain part of the state and I'll go address problems in another part of the state, and then next year I'll go and address problems in the Beaumont area but I take money from Pharr.

MR. WILLIAMSON: But you can't keep that shell game going forever. Eventually what happens?

MR. SAENZ: Eventually we get into gridlock and cannot build anything.

MR. WILLIAMSON: So the answer is the taxpayers who are paying for that deficit are the taxpayers who are stuck in traffic.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: And the taxpayers who have kids who are breathing dirty air and are in the doctor all the time with asthma, and the taxpayers who won't get hired by Toyota because Toyota couldn't expand one more time in Texas because the roads were shot so they went to Tennessee. Is that the answer?

MR. SAENZ: That's correct.

MR. WILLIAMSON: That's a real good note to stop on.

DALLAS-FORT WORTH PARTNERS IN MOBILITY

(Senator John Carona, Senator Kenneth Brimer, Representative Vicki Truitt, Representative Charlie Geren, Michael Morris, Linda Koop, Ross Perot, Jr., Mike Baggett, Commissioner Glen Whitley, Wendy Davis, Pete Rickershauser, Mayor Mike Moncrief)

MR. WILLIAMSON: We have North Texas people with us here, Mike, and we have members of the legislature, and I always wish to welcome members of the legislature first.

In the manner that I was taught when I was a member, Senator Carona, I believe you are the senior member in terms of authority in the room today, sir, so you may choose the order in which you, Representative Truitt, Senator Brimer, Representative Geren, and did I miss anybody besides Ms. Howard who is observing? What's your choice, Senator?

SENATOR CARONA: Mr. Chairman, please give me a hard question. My colleague here, Senator Brimer, were it not for his presence, it would have been a very easy answer. But really at this point, if you don't mind, we'll proceed and I assume that you'll be calling each of the legislators up for brief remarks. Is that your intent?

MR. WILLIAMSON: Really, we do defer to the senior member, seriously. So do you want to open?

SENATOR CARONA: If I could open, that would be appreciated.

MR. WILLIAMSON: Please do.

SENATOR CARONA: Let me thank you very much, Mr. Chairman and commissioners, for allowing us just a few minutes to visit with you today and for allowing us to continue the 12-year tradition of allowing leaders of North Texas and they are here in numbers today to come and address you on transportation issues.

Transportation infrastructure is vital to all of us and so vital, in fact, that our cooperation as we hope we demonstrate today transcends city and county lines. Leaders from throughout our region are here today to give you unique perspective on how we can best work with you, what we can do for you, and of course, how we can make it all work for North Texas. In a region that adds, these days, about a million new people every seven years, you'll always have some healthy debate, some disagreement, and of course, that's what keeps local politics interesting, but the one thing I can tell you today is that we are united in what we lay before you today, and I am personally committed to seeing it through.

Some of what you'll hear requires legislative action. Reducing diversion of transportation funds certainly is an example, and my colleagues and I are already meeting in this interim well prior to the next session to address those issues and to begin the painful but nonetheless necessary process of reducing and ultimately eliminating diversion so that you do, in fact, have significant additional dollars to do the job that's laid before you.

And I'd also like to mention and please be advised that we hold no one in this room who may have been a former legislator at the time that diversion process was first begun responsible.

(General laughter.)

SENATOR CARONA: But we do expect everybody in the room, at least those that are seated toward the front of the room, to help work with us in playing an important role to use these limited dollars very wisely.

I want you to know I appreciate the opportunity to be here this morning. I have great respect for the work that you do and the difficulty that you face trying to tackle our enormous transportation needs in this state with very limited dollars and with new and creative ideas for doing it, and I really commend you for taking this in this direction.

But I'm proud to stand here today, as I mentioned, with my neighbors and friends. We're working united to present to you what we believe is the best option for all of North Texas, again, working together on an issue that we think is vitally important to our economic future. Thank you for allowing me to be with you this morning.

MR. WILLIAMSON: Members, anything for the Senator?

MR. HOUGHTON: Just thank you for being here, Senator. Look forward to working with you.

SENATOR CARONA: Thank you very much, appreciate all of you.

SENATOR BRIMER: Mr. Chairman, I had preferred we go by hair maturity.

(General laughter.)

SENATOR BRIMER: In my previous professional career which I still remember to some degree, I learned a few key presentation and sales techniques: tell them what you're going to tell them, tell them and then tell them what you told them. And that's before ask for the order and then shut up and listen. And I'm assisting today the sharpest minds that North Texas can ask to represent them before this commission. As a matter of fact, the government and the private sector food chain is well oiled for North Texas today, and many strong points are going to be presented to you.

In preparation for this meeting, I had hand-delivered to each of you the main concerns that I have at this time, and instead of repeating myself three times, I ask that you look closely at that article because it capsules the main concerns we have in the future of the Metroplex.

Our presentation today, I want you to know, shows unity I'm going to repeat it shows unity. We are simply asking that you understand our dignitaries today and listen to the integrated comprehensive approach that has been developed for North Texas. That's asking for the order, and then we're going to shut up and listen. Thank you.

MR. WILLIAMSON: Thank you, Senator. Anything for Senator Brimer?

MR. HOUGHTON: It's great to have you here.

MR. WILLIAMSON: Thank you, Senator.

Ms. Truitt?

MS. TRUITT: Thank you. Good morning, Mr. Chairman, commissioners. And I would have preferred that we go in order of beauty just kidding, just kidding.

(General laughter.)

MS. TRUITT: And younger age.

I wish simply to thank you for your attention this morning. I want to tell you how proud I am to represent the people of the 98th Texas House District, many of whom are here this morning, as well as representatives from all across North Texas. And we all appreciate the very difficult challenges that you face on a daily basis in dealing with the needs of this state, and we appreciate your time and attention and thank you for your efforts and encourage you just to pay attention to what these folks are saying, as you have done in the past, and appreciate all your hard work. Thank you.

MR. WILLIAMSON: We thank you. Anything for the House member?

MS. ANDRADE: Thank you.

MR. WILLIAMSON: Mr. Geren?

MR. GEREN: Thank you, Mr. Chairman, commissioners.

I'd just like to echo what my colleagues have said. I was here for the first part of the meeting and I got your message very clearly: we need to work together. And I think that this partnership that will be making this presentation today shows you that the Dallas-Fort Worth area is working together, and these people have worked very hard and we hope that you'll look at their proposal for the Trans-Texas Corridor as it affects the Metroplex area. And thank you very much for your time today.

MR. WILLIAMSON: We thank you for being here. Anything for this House member?

(No response.)

MR. WILLIAMSON: Thank you, Mr. Geren, very much.

Historically I don't comment if it's not true, but when a House or Senate member speaks, I try to make a remark or two about their support of transportation generally, not necessarily agreeing with me. It's a rare occasion where four House and Senate members are in the room and all four of them can be accurately described as very strongly transportation. And Chairman Carona, Chairman Brimer, Mr. Geren, Ms. Truitt all have been strong supporters of transportation across the state, and we're very appreciative of that, very appreciative. How do you want to proceed, North Texas?

MR. MORRIS: Do you want to take a two-minute break or do you want to go right into it? Our speakers are ready, Mr. Chairman.

MR. WILLIAMSON: We're aware you have some travel concerns and we're willing to stay right here and start, or we can take a break.

MR. MORRIS: I think we will go right ahead.

MR. WILLIAMSON: We're ready. Ms. Koop?

MS. KOOP: Good morning, Mr. Chairman, and members of the commission, and Director Behrens. I'm Linda Koop, city council member from the City of Dallas and the chair of the city's Transportation and Environment Committee.

On behalf of the Dallas-Fort Worth Area Partners in Mobility, thank you for this opportunity to speak to you today. We're here to participate in a discussion with you on ways we can improve the surface transportation system in North Texas.

Our coalition includes mayors, city council members, county judges, commissioners, city managers, chamber presidents, business and civic leaders, and transportation professionals throughout North Texas. Our region takes great pride in the collaboration that is occurring among our transportation providers, all of which are focused on improving regional mobility in North Texas.

Representatives of each agency are also with us here today. I would like for our delegation to please stand and be recognized.

MR. WILLIAMSON: Wonderful.

MS. KOOP: We have lots of folks. Thank you to each member of our delegation for being part of the 12th annual presentation.

Through the combined efforts of our state leadership and this commission, we have new opportunities to address the transportation infrastructure and financing needs of our region, as well as those of the entire state. Our presentation today will focus on several of these initiatives and how we are making the most of these opportunities in a climate of rapid population growth and declining revenues.

First, we will discuss the population growth and economic climate for the Dallas-Fort Worth area, and we've wished to present ways that we can make use of public-private partnerships to leverage federal and state transportation dollars.

Second, we understand that a transportation funding crisis exists. The implication of no future capacity improvements is unacceptable, and today we will ask for your continued support for legislative strategies and commission policies to address the issue of funding.

Third, we will present the region's adopted policies related to comprehensive development agreements for toll projects and managed lanes. This is a very important issue to our region, considering the number of tolled and managed lanes we plan to add in the coming years. We will share with you and ask for your endorsement of an integrated comprehensive approach for toll facilities in North Texas.

Fourth, we will discuss the current activities taking place within our region in order to implement new passenger rail lines in North Texas.

Fifth, we wish to discuss the Trans-Texas Corridor and how the Dallas-Fort Worth area's regional vision for this much needed transportation project can be more fully integrated into the vision of the transportation commission.

I want to reiterate that the entire region supports this vision. The concern is where and when the segments will be constructed. Transportation is constructed in our region with significant attention to sustainable future, and we must make land use and transportation decisions simultaneously.

We recognize and support the commission's five goals for improving the transportation system. Our region has been working to decrease congestion, increase safety, decrease air pollution, and enhance economic opportunity for quite some time now. We are looking at ways to increase the asset value of the transportation system in North Texas and we will present some of our strategies today.

And now let me turn the podium over to Ross Perot, Jr.

MR. WILLIAMSON: Thank you very much. You did a good job.

MR. PEROT: Linda, thank you very much. Commissioners, how are you?

MR. WILLIAMSON: Good to see you.

MR. PEROT: It's certainly an honor to address you today and talk about North Texas, one of our favorite subjects, and clearly addressing the transportation commission's goals will be critical as the DFW area continues to be one of the fastest growing regions in the nation, if not the world. Last year our region added over 92,000 jobs; we had almost 49,000 new homes built in North Texas; we're averaging 40,000 new homes a year, we've averaged that for the past five years; we grew by 168,000 people. This marks the tenth consecutive year we've added over 100,000 people into the North Texas region. That's the equivalent of adding one million new residents every seven years.

If we're going to continue to see this kind of sustained growth, we need to continue to use the innovative financing techniques that we have, build a balanced transportation system, enhance the region's passenger rail system, and manage freight traffic more efficiently, improve safety, and grow in a more sustainable and environmentally friendly way which has become critical to the region.

Then the next slide, this is the gross domestic product of the state and the eight largest metropolitan regions of the state, and this makes up over 80 percent of our state's economy. It's critical we preserve mobility and access for people and goods within and between these metropolitan areas to maintain our economic strength. And Dallas-Fort Worth still leads on that chart, it's important we point that out. A little pride.

According to the U.S. Conference of Mayors, the Dallas-Fort Worth area currently ranks as the 28th largest economy in the world, and we're the fifth largest economy in the United States. The Dallas-Fort Worth area was the number one ranked metropolitan area by Site Selection Magazine for new and expanded corporate facilities in 2004. In 2005 we were number two, with 309 projects and investments of $3.5 billion.

It's critical that we have never played a more central role in the global economy than we do today. For the third year in a row, Texas is the largest exporting state in the nation, and the DFW area accounts for a fifth of that total. According to the Greater Dallas Chamber of Commerce, Dallas-Fort Worth did more than $10 billion worth of business with China in 2004. And all this means is jobs for Texas, it means jobs for North Texas. Between now and 2030 it's projected we'll add another three-quarters of a million new jobs into our community.

Clearly the economic health of North Texas is very important, and we must continue to improve transportation because it's a key element to that growth. As the commission's strategic plan recognizes, a reliable cost-effective transportation system is critical to business for timely freight delivery and access of customers and employees.

The DFW industrial market experienced a dynamic opening in the first quarter of 2006. We had demand of 4.1 million square feet. That's off of a base of 624 million square feet of space in North Texas, the fourth largest distribution center in the United States. We really are becoming the trading hub for North America, and it's an area that will continue to grow as long as we have transportation that allows this distribution to grow. And the warehouse and distribution sector really did lead the way with 80 percent of the demand.

We must improve the economic lifelines throughout the state, especially in our metropolitan regions, because on-time business systems are based on transportation reliability. Highway congestion affects all the motorists but freight shippers are particularly vulnerable. Nationwide delays due to highway bottlenecks cost the private sector nearly $8 billion every year. As international trade continues to increase, the delays cost will only rise unless innovative strategies are implemented to improve our state's transportation system.

The last two sessions of the Texas Legislature have produced meaningful transportation bills and our region would like to thank you for your leadership in that process. Texas is now at the forefront of using innovative financing tools to address transportation needs. Funding flexibility through the Texas Mobility Fund, toll equity, pass-through tolls, as well as increased private funding through comprehensive development agreements, the Trans-Texas Corridor, and goods and movement partnerships will be instrumental to enhancing the transportation system throughout this state.

North Texas is taking full advantage of all the new tools that you've offered to leverage scarce resources and build public-private partnerships. Combined with our passenger rail initiative, we estimate over $18 billion in near term initiatives are currently being developed. Private sector leaders recognize the need for an improved transportation system, and you see increased investment in highway facilities. It is a win-win for businesses and for commuters alike, congestion can be reduced, facilities can be built more quickly, and businesses can benefit by the ability to access potential customers traveling along these corridors, and once again, we can continue to improve and protect our environment.

Thank you very much for the time. I'd like to now turn it over to Mike Baggett. Mike?

MR. WILLIAMSON: Thank you.

MR. BAGGETT: Good morning.

MR. WILLIAMSON: Good morning, Mike.

MR. BAGGETT: Very nice to be here. I'm not sure I can follow that act but I'm going to try.

A major challenge we face and I'm sure you know this is the huge discrepancy between funding needs and funding availability. As documented in the Texas Metropolitan Mobility Plan, we face a $55 billion shortfall over the next 25 years. The shortfall largely comes from lack of rehabilitation funding and the need for $24 billion in mobility improvements. Clearly something needs to be done to address this gap if we are to meet our goals and meet our goals of our region.

As an area where considerable attention must be focused in the continued diversion of transportation revenues to non-transportation issues, we believe various transportation-related taxes or fees currently being deposited in the General Revenue Fund should go into the State Highway Fund or the Texas Mobility Fund, and we also believe that revenue going into the State Highway Fund should be spent for transportation purposes only. We ask that you stay focused with us to work with our legislators and eliminate these diversions.

We greatly appreciate the recent progress that's been made on a formula to distribute Category 2 funds among the state's metropolitan areas. As we move forward, please monitor the relative levels of need between rural, urban and metropolitan areas of the state and make sure that the right amount of funding is going to the metropolitan areas which serve as the economic engine of the state, as you heard from Mr. Perot.

Our region supports the new rules on transportation development credits. This is a valuable tool to leverage scarce resources, particularly in a region that is taking full advantage of toll roads. We appreciate your recognition that transportation development credits should be used in the region that earned the credits through tolling. The majority of regions generating toll credits are non-attainment areas. We ask that you consider a portion of these credits be a match for air quality projects.

The decisions being made by North Texas elected officials and commuters to pay tolls on many roads are very difficult, regarding a greater investment in our transportation system at a time when we're challenged by record high fuel prices.

We understand that you've developed criteria for distribution of Category 12, Commission Strategic Priority funds, that include promoting economic development, advancing system connectivity, improving access to and from military institutions, and utilizing pass-through tolls. Throughout North Texas we have needs related to these criteria. As you consider future allocations of Category 12 funds, we hope that you will pay particular attention to those regions taking full advantage of innovative finance initiatives techniques.

Let me turn the presentation over to Commissioner Glen Whitley to discuss the Trans-Texas Corridor. Thank you.

MR. WILLIAMSON: Thank you, Mike.

MR. WHITLEY: Thank you, Mike. Good morning, commissioners.

Another important part of the innovative finance is partnership with the private sector. One of the largest public-private partnerships currently envisioned in the nation is the Trans-Texas Corridor which represents a long term multimodal transportation solution for the entire state. North Texas fully supports the concept of the Trans-Texas Corridor, and I can't make that point I need to make it again, we fully support the concept of the Trans-Texas Corridor.

Our major interstate highway and railroad routes are at or near capacity, slowing the movement of people and goods throughout our state. We continue to ask that you strongly consider the needs of North Texas as you refine the alignment options. Our plan addresses current needs with highway and rail traffic moving through our region on a system to distribute such traffic throughout various routes, but it also addresses long term needs to move traffic to the outer portions of the region. The staging of transportation improvements is critical to creating sustainable communities in both the metropolitan core and in the rural fringe.

Before you is a map with signatures from leaders throughout our region requesting your support for this alignment. This vision makes alignment recommendations on a mode-by-mode basis to expedite auto, truck and rail freight improvements in our region. Our plan addresses how to phase the implementation of TTC-35 to address sustainable growth while focusing on urban connectors in the near term.

Another feature of our region's vision is for east-west truck and rail routes which is missing from TxDOT's draft alignment. This is important for moving freight trains and hazardous wastes out of our central cities. By proposing a route that moves closer to the Dallas-Fort Worth area, we estimate that the cost of the Trans-Texas Corridor will be reduced by almost $2 billion.

Let me now turn the presentation over to Fort Worth council member and Regional Transportation Council chair Wendy Davis to discuss regional policies on toll roads and managed lanes within our region.

MS. DAVIS: Thank you, Glen, and good morning to all of you. Thank you for giving us the opportunity to present to you today.

MR. WILLIAMSON: Good morning to you.

MS. DAVIS: On behalf of the entire Regional Transportation Council, we appreciate the opportunity to address you, and following our presentation, we will present to you a check for $5 billion representing the use of new finance tools discussed here today and investments by the North Texas Tollway Authority as the first installment from our next toll projects.

With House Bills 3588 and 2702 still relatively new as we come to speak to you today, we are pleased to present our region's progress in using these tools as North Texas continues to grow. North Texans have decades of history of driving on toll roads and support the expanded mobility choices that these facilities offer. Seven new toll roads have been identified in our region and we are working at the local, state and federal levels to get these projects delivered.

These toll roads include the Southwest Parkway in Fort Worth and Johnson County, State Highway 161 in Grand Prairie, the President George Bush Extension in Rowlett and Garland, Trinity Parkway in Dallas, State Highway 121 in Denton County, State Highway 121 in Collin County, and the Lewisville Lake Toll Bridge.

We have been working on tolling projects since we first forecasted the financial crisis in 1993. We are also preparing plans for three additional toll facilities on State Highway 170 in Tarrant and Denton counties, State Highway 360 in Tarrant County, and Loop 9 in Dallas County.

In April, the Regional Transportation Council responded to your request to provide input on the business terms by which private firms can develop proposals for financing the construction and operation of toll roads in North Texas. The effort was initiated as a result of considerable deliberation on the State Highway 121 corridor in Denton and Collin counties but it serves as a starting point for CDA proposals on toll roads throughout the region.

As part of our process, the Regional Transportation Council has adopted a policy for excess toll revenue to be allocated to county-specific accounts. The amount of funding returned to each county will be based on the residential location of each region's toll system's users. The Regional Transportation Council expects to work cooperatively with TxDOT and local governments in each corridor on a process to select the projects to be funded from the excess revenue accounts.

In addition, we request that TxDOT begin on the memorandum of understanding between the commission and the Regional Transportation Council on establishing these county credit union type accounts so that we can all meet state law requirements of retaining these funds in each TxDOT district.

The region is also working to implement managed toll lane corridors throughout North Texas. These projects include the Interstate 35/Interstate 820/State Highway 183 corridor in northeast Tarrant County, Interstate 30 in Fort Worth, Arlington and Grand Prairie, the State Highway 114/121 funnel in Grapevine, and the Interstate 635/Loop 12 corridor in north Dallas County.

In May, the Regional Transportation Council also adopted business terms for managed lanes CDAs. We recognize that these critical projects are costly and will not be able to proceed without the extra funding provided by managed lane revenue. Should, at some point in time, excess revenue be produced on these facilities, the Regional Transportation Council also has a policy on excess toll revenue-sharing on managed lanes. The policy would distribute revenue back to the county in which the managed lane facility is located and would be used for air quality and sustainable development programs to leverage federal transportation funds.
The Regional Transportation Council has developed an integrated comprehensive approach for North Texas. This model looks at projects that are toll feasible and determines the appropriate implementation agency to build and manage the project, as well as the appropriate source of funding, level of state transportation funds needed, and process for distributing excess revenue. We are ready to move forward with you on a memorandum of understanding to implement these policies.

In addition to addressing toll road and managed lane implementation in North Texas, we are also staying focused on the implementation of our regional passenger rail system. Activities are underway with a committee of local elected officials and state legislators to address funding strategies. The recommendations of a two-year technical and policy study called for nine new passenger rail corridors in six counties, with a half cent additional sales tax being a likely funding mechanism.

Leaders in the Dallas-Fort Worth area remain dedicated to working with state legislators to find a way to make the vision for seamless regional rail a reality. While that process is ongoing, progress is being made by our three transportation authorities on bringing new rail opportunities to North Texas with access to Dallas-Fort Worth International Airport being a priority.

Dallas Area Rapid Transit is currently finalizing plans for the Northwest Irving Light Rail Line which is expected to be completed by 2012. The Fort Worth Transportation Authority is conducting an alternative analysis for the Cotton Belt Corridor from south of downtown Fort Worth to DFW Airport. Also, the Denton County Transportation Authority is working on the environmental impact statement for its north-south rail service in the IH-35 corridor which is anticipated to connect to other rail service in Carrollton. This work is very important and will complement the additional passenger rail plan for the region.

Let me now turn the podium over to Pete Rickershauser to continue our presentation. Pete?

MR. RICKERSHAUSER: Thank you, Council Member Davis. Good morning, commissioners and Director Behrens. I am Pete Rickershauser, vice president of network development for BNSF Corporation.

I know telling this group about the need for transportation infrastructure is like preaching to the choir, but let me share some quick facts to put my remarks into perspective. The United States Department of Transportation projects a 67 percent growth in total freight traffic between 2000 and 2020. The American Association of State Highway and Transportation Officials, AASHTO, reports that the cost of adding highway capacity to meet this demand are prohibitively high, so railroads will have to assume a greater share of the freight transportation burden.

Freight railroads currently carry 42 percent of the nation's inner-city freight, including goods consumers use every day, everything from electronics, orange juice and furniture, to automobiles, lumber and coal. Freight railroads are critical to international trade, facilitating movement of both imports and exports, as well as helping U.S. businesses compete in global markets.

While our country and our region will certainly need more highway infrastructure, we will also need a strong and robust rail freight component as part of a balanced transportation plan. Beyond near term roadway projects, there are clearly additional transportation issues to be addressed in order to provide the capacity needed for the future.

The Trans-Texas Corridor concept represents a long term multimodal transportation solution for people and goods movements for the entire state. Our region recognizes that there is still a great deal of discussion and debate about the particular alignment and no one solution is going to make everyone happy, but these problems are not going to solve themselves and you are to be commended for your visionary thinking about long term transportation solutions that include multimodal elements for goods movements.

BNSF urges you to strongly consider the rail infrastructure needs of North Texas as you refine options. Several plans have been advanced which call for different alignments and differing transportation solutions. It is certainly not for me or BNSF Railway to tell you transportation professionals which plan works best, but I can offer that any of the solutions on the table will be extremely expensive. It is difficult for us at BNSF to see how any of these visions are going to come together using traditional funding mechanisms. I believe success is going to involve leveraging, to the fullest extent possible, private capital and private resources in conjunction with public funding, balancing visionary transportation policy with the real world need for these private sector partners and investors to earn a fair return on their capital.

Addressing rail needs is a central part of the North Texas vision, and there is no more pressing need than to find a solution for the train congestion and resulting motor vehicle congestion that is the result of antiquated track design and engineering at Fort Worth's Tower 55. We must find a solution to the Tower 55 rail crossing, not just to move rail freight more efficiently and provide for future freight growth but to improve public safety, security and air quality issues related to this major rail bottleneck.

All indications point to increased levels of rail traffic through the Tower 55 intersection. At present, approximately 120 trains intersect daily and that number most certainly will increase. Wyoming coal trains, in route to Texas electric generating stations, and intermodal trains coming into Texas from the west, north, east and south, all meet at and must move safely through a one-time small volume rail intersection now engulfed by urban growth at Tower 55.

According to the well documented AASHTO forecast from 2002, freight transportation demand is expected to more than double by 2025. Further, Global Insights forecasts trans-Pacific trade to triple by 2025, bringing the annual equivalent of 84 million TEUs, or 20-foot containers, into West Coast ports that today are handling about 14 million containers of that size annually.

Another way to look at the AASHTO report is that domestic freight ton mileage will grow at a little more than 2 percent compounded annually from 2005 through 2020. This means the nation's truck network will handle 4.2 trillion more tons in 2020. For the rail industry, this translates to 1.8 trillion more tons in 2020. These are staggering numbers.

The coal story is just as staggering. According to the Energy Information Administration, western coal volumes are forecast to grow at 2.2 percent compounded annually through 2025. This projection amounts to 900 million tons of western coal production annually by 2025. As a comparison, this is a doubling of last year's western coal production of about 450 million tons, of which 415 million tons come from the Powder River Basin located in Montana and Wyoming.

Texas power plants are some of the largest consumers of Powder River Basin coal. As the population grows, so does electrical demand and the amount of coal passing through Tower 55. TXU announced last month that it will add eleven coal-fired generating stations which will more than double TXU's coal-fired power. Eight of the eleven new plants will use Powder River Basin coal. This will require a huge influx of coal brought into Texas from Wyoming, much of which will, of necessity, move through Tower 55.

In the longer term, we need to look at a bypass route to move through freight out of the metropolitan core and build enough additional capacity to handle the anticipated growth. The North Texas Council of Governments' plan for the Dallas-Fort Worth area is visionary in its scope and scale, however our statewide and national demand for freight transportation, as well as the desire for more regional passenger rail, cannot wait for the decades that these visionary realignments would take to engineer, permit and build. Action needs to be taken now.

The North Texas COG is preparing a concession agreement for more immediate and near term solutions for Tower 55. This effort is critical to enhance rail freight efficiency and will be another important step in a number of other regional transportation and economic initiatives. Commissioners, thank you for your time today, and Mayor Mike Moncrief will conclude our presentation. Mayor Moncrief?

MAYOR MONCRIEF: Mr. Chairman, commissioners, good morning.

I'd like to, first of all, open my remarks this morning and see if I can wake you up a little bit. Go Mavs! I thought that would be appropriate.

(General laughter and applause.)

MAYOR MONCRIEF: I'm Mike Moncrief, mayor of the city of Fort Worth, and we genuinely appreciate the opportunity to spend some time with you this morning, share some of our thoughts. We want to thank you, Mr. Chairman and members, to express our appreciation for the countless hours that you put into your jobs. I know that the challenges are great, we know that the financial chasms are equally as great, but you don't stop and we don't either, and I don't think any of us have any thoughts but to try and succeed in addressing the mobility needs of this great state.

And I also, at the same time, want to thank a great legislative delegation. As a former member of that body, I want to thank my former colleagues and those that I served with. We are very fortunate to have a strong delegation in this region and they understand the transportation needs, not just in one part of the region but the entire region. So we look forward to our continued strong partnership, and let me summarize for you some of our specific suggestions and requests. I'm batting cleanup this morning.

First of all, the entire transportation community must stand firm on the need to end diversion of transportation funds to other purposes. This limits our ability to improve mobility, safety and air quality, and it confuses our citizens who know that they're paying transportation-related taxes and fees but they're not seeing any benefits. Please continue to utilize transportation development credits in the region that they were created and allow those credits to be used as a match for vital air quality projects, as was previously mentioned.

In order to continue improving our region's transportation system and meet the commission's goals, several funding issues need to be addressed. We ask that you monitor the relative levels of need in the state and allocate the appropriate amount of funding to metropolitan areas which serve as the economic engines of this great state.

We realize that given our current financial situation, if a major transportation project is going to be built, it must be tolled. North Texas leaders have been extremely bold in the use of innovative finance techniques, and we hope that the commission will look into incentives, such as the programming of Category 12 discretionary funds, for regions making these difficult but necessary decisions.

These past few months have challenged leaders in the Fort Worth-Dallas area, however, we have been able to come together in support of a set of business terms for comprehensive development agreements and an integrated toll policy for our region. Difficult middle ground to find, but we, by working together, were able to find that ground per your direction.

We ask that you take the region's policies into consideration. We need to use the right tool for the right job, and the right agency for the right project. The region needs to make the ultimate decision as to what is in its best interest for the region, and we hope that you will continue to allow local officials to have input into that process. We feel that's critical and appropriate. We need to sign a memorandum of understanding to fully commit excess revenue to projects within our region.

As you heard today, North Texas does support the concept of the Trans-Texas Corridor. We have a specific plan that we feel meets the current and long term issues being addressed by the corridor, and we urge you to strongly consider and ultimately embrace our region's vision.

In addition, we hope that you will move forward quickly on addressing freight rail needs, both in central cities at major bottlenecks such as Tower 55 which I might remind you all we have talked about year after year after year; I know since I've been elected, the three years that I've served as mayor of Fort Worth, we've talked about it but also creating that bypass that will serve future needs.

Finally, local and state officials are seeking ways to bring a seamless regional rail system to North Texas. We appreciate you allowing mobility funds to be used on rail projects such as access to DFW International Airport, but we need your help to bring us together. Regional rail needs to be more than just a dream of the future, it needs to become a reality and not later but sooner. This is critical. If we want to move large numbers of people safely, quickly, economically, then we have to find alternatives to everyone getting in their cars or trucks the way we are now so accustomed to doing. We have to do that, we can't build lanes fast enough to deal with the kind of growth that we're looking at.

I want you to understand what we see every day in our region and that is more and more and more rooftops, more and more and more retail, our inland port at Alliance, the issues that we face trying to keep the infrastructure in place for the rapid growth that we're experiencing. We need your help to make regional rail a reality, to bring that to the place where we have found ourselves working together on the tolling issue, Mr. Chairman. We were able to do it there, we can do it here if we prioritize it.

So I want to again thank you for the opportunity to speak to you today. I'm proud to join my colleagues in this distinguished delegation from the DFW area. We're proud of our region, we're proud of what we've been able to accomplish, we look forward to continuing our partnership with you to accomplish even more.

I'd be glad to entertain any questions and certainly ask my fellow staff to assist as well.

MR. WILLIAMSON: Mr. Morris, were you going to add anything to this or just be standing by to answer questions?

MR. MORRIS: I'm here to answer any questions.

MAYOR MONCRIEF: He's standing by to help me in case you drill down, Mr. Chairman.

(General laughter.)

MR. WILLIAMSON: I'm assuming that we comfortably have 14 minutes to kind of do some give and take. Is that comfortable?

MR. MORRIS: Absolutely.

MR. WILLIAMSON: Mayor and good friend, Mike, if you don't mind, could I ask one of my staff people to step up here for a second?

MAYOR MONCRIEF: Absolutely.

MR. WILLIAMSON: Amadeo, I need for you to do me a favor. Pull those inserts out of the projects that we had analyzed, the Frisco, pick one.

In my earlier years, Mike, in this arena, I made the mistake of fighting too much, and so I've learned not to do that, but I've also learned that moments like this are the one time that you have the opportunity to impress upon all four of us what's important to you, and we have the opportunity to cut through the filters that all of us have to put in place between us and you to sort of explain ourselves, and we think sometimes with regard to mayors or Dallas County commissioners or Tarrant County commissioners or Collin County commissioners, we think there's so many filters out there between what we're focused on and what you hear about us that maybe the message gets a little distorted. So if you'll just indulge me.

Now, do I understand that project we've analyzed to require how much of a gasoline tax rate per gallon to pay for that project?

MR. SAENZ: $1.48.

MR. WILLIAMSON: $1.48. Show me another one, please.

MR. SAENZ: This is the Harris County one, the Grand Parkway.

MR. WILLIAMSON: Tax rate?

MR. SAENZ: $2.22.

MR. WILLIAMSON: And just one more, I just want to see one more. You know the question I'm leading to.

MR. SAENZ: This is the Travis County, this is the rural project on 183 south of 290, that's $2.02.

MR. WILLIAMSON: Now, recently for Senator Carona, we put together for his Transportation Finance Committee our view of what the financial requirements of the state were, and we spent a lot of staff time and a lot of third party contractor research time. Whether others believe it or not, Michael, we think we did the sort of the definitive study on what is the real gasoline tax rate required in our state effective September 1, 2008 to do all of the things that everyone in the state has identified we must do by 2030, including your $55 billion that was just put up on the paper a while ago, not fantasy land, but what everyone in the state agrees has to be done by 2030, including the allocations that have to be made to the DPS which are small in comparison to the big number, and including the allocations to the Permanent School Fund.

What is the tax rate per gallon of gasoline if we don't want to do any toll roads or borrow any money and solve our problem by 2030?

MR. SAENZ: $1.40.

MR. WILLIAMSON: So we have to raise the gasoline tax rate in this state a $1.20 to a $1.40 to accomplish all of these things.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: The reason I asked Amadeo to reinforce this is because when I was listening to the testimony which was wonderful, by the way; it was a great presentation I was struck by a couple of things. I heard Mike and I heard the mayor and perhaps Wendy, but I might have missed it, make some reference to be sure and monitor the allocations between the metropolitan areas and the urban areas and rural Texas.

You and I both know that ten years ago and you may still think so but at least ten years ago there was a lot of angst in the state because of the perception or perhaps the reality that too much money was being allocated to Waco and San Angelo at the expense of Houston and Dallas. Now, I believe we've addressed that angst in several ways over the last ten years. It was something that concerned the governor and he told us to do that. So I'm a little bit struck by there's a little bit of focus on that. Does North Texas still think that a lot of that is going on?

MR. MORRIS: No, let me clarify. The greatest thing the state ever did was four years ago when you formula allocated Category 2 or capacity funds to the eight metropolitan areas. The reason why that was so great is the metropolitan areas then could put in whatever equity they wished to to advance toll roads, knowing that at the end of the day that gas tax money wasn't going to be reallocated. So that's the greatest thing that's ever happened. If that didn't happen, the region couldn't hand you a check for $5 billion because if they tried to do that four years ago, the fear was we build those toll roads and then you take $2 billion in gas tax money over ten years and put it somewhere else.

The concern to think about is as urban regions now get the message and move ahead and I was out to the room, Commissioner, when you said El Paso is moving ahead, and we all live in one state and we hope they all move ahead as the metropolitan regions move ahead it is your policy to take capacity funds and put something like 58 percent into Category 2, 20 percent into Category 3, and 20 percent into the rural program. The concern over time isn't your formula allocation in Category 2, the concern is if urban regions continue to put more money into their program, will a commission come behind you and take the Category 2 funds and instead of putting 58 percent or whatever it is into the eight metropolitan areas, they lower that amount.

MR. WILLIAMSON: Okay, I see what you're saying.

MR. MORRIS: And that is not in legislation, that is a policy. So the concern we're doing is as we successfully build these blocks

MR. WILLIAMSON: It's perspective.

MR. MORRIS: It's perspective. I think for ten years in a row you haven't changed that number, the concern is as we continue to have success stories, we don't want to do it at the expense of a future commission. So that's the question that's being asked to you today.

MR. WILLIAMSON: I think as long as we can indoctrinate each other with regional needs and our perspective and continue that with succeeding commissioners, I don't view that as ever changing again. I guarantee you it won't change with this commission.

MR. MORRIS: That's correct.

MR. WILLIAMSON: This commission, we give our word and we keep our word, we never break it.

Then the next thing I have to ask about, the reason I had Amadeo talk about this gasoline tax business, Mike Baggett and Pete both made reference to well, actually I guess all presenters made reference to the Trans-Texas Corridor footprint. I have to ask two questions about that.

One, is the absence of a line straight through the middle indicative that the RTC may be rethinking what piece goes through the middle?

MR. MORRIS: No, Mr. Chairman. I think we were trying to be innovative, I think it was misunderstood, so we're going to try to be clear, and let me present the same position in a different light.

The Trans-Texas Corridor position of the region has always been this red line. That particular position, we think, is very much comparable to your blue line, of which we continue to say could you nudge your blue line to the red line. What our region was very proud of, and still is, is I don't think you're going to build that red line all in the same day, it is going to be built in stages over time. What our line through the middle is indicating, that we think is the most cost-effective thing to do, is to build a section, the red line that comes from I want to be very clear starting right there we think is a good first phase of that particular project.

And the reason why we think it's a good first phase, back to your tax element, ask Cintra-Zachry to calculate what that new performance measure is for the whole red line and ask them to present that from the red line that Commissioner Houghton just did. Our analysis indicates that it's far superior as a first investment to go from the bottom of the region south as the most cost-effective portion.

Your concern should be, well, wait a minute, how could we feed this possible facility in the middle. And the beauty of this particular plan that Senator Brimer talks about all the time is it feeds from the middle of the region right up to State Highway 360/161 corridor as part of that early first phase.

I think what's happened, Mr. Chairman, is when people see our first phase they assume that that was the whole plan and then they say it doesn't meet our purpose and need because we don't want to build a Trans-Texas Corridor that travels through the middle of the region, what's wrong with you folks? So we purposely, to try to be clear, are showing what the permanent plan is by suggesting to you to use your performance measures to actually phase it in a more cost-effective way.

Now, for our policy officials, in addition to the cost-effectiveness, that phasing is critical because of what you heard them say with regard to the sustainability of the region with land use and transportation decisions being made simultaneously. If you build portions of that particular corridor prematurely, the fear is you would get leap-frog development to occur at major interchanges, hurting the ability and creating more transportation shortages to chase those developments, increasing vehicle miles of travel, and hurting us on the air quality side.

So the reason why I think the whole region is so proud of this is we have a permanent plan that meets the purpose and need of your particular scope, we think we can phase it in a way that's extremely cost-effective, and we can tie land use and transportation decisions together by building it in phases that doesn't hurt us on either the other performance measures you have, economic development and the air quality of the region.

MR. WILLIAMSON: Okay, that helps me understand it a lot. And the reason I have to probe about this I now can tie back to my $1.40 a gallon business Amadeo did frequently I find in discussions about transportation decisions we lose sight of the fact, all of us, that there are two gorillas we have to deal with. The first gorilla is the $86 billion that we're short and Mr. Perot, you're a great businessman, Mr. Baggett, you run a great law firm, a transportation law firm, in fact we are $86 billion short, that's not funny money, that's not wish list, that is $86 billion short.

When Margaret Kelleher goes to bed tonight and wakes up the next morning thinking about Dallas County's roads, we will be $86 billion short. When I go to bed tonight thinking about trains which I do a lot I'm going to wake up tomorrow morning and we're still going to be $86 billion short. That will not go away if we don't do some things. Now, we can fix that problem by simply persuading the legislature to raise the gasoline tax to a $1.40 a gallon.

Mr. Brimer, can you share with me the possibility of that occurring in the state senate?

SENATOR BRIMER: Mr. Chairman, after we build the rapid rail, then we'll consider your concerns.

(General laughter.)

SENATOR BRIMER: I really think, and we've had some very lively discussions on the rail system that's being proposed by the North Texas leaders. We've had three exchanges with all the legislators; we have a meeting set up in the next two weeks; we're trying to have a consensus so that next session we can help all of our leaders. In my opinion it's going to take improvements in every category of revenue. We probably need to make adjustments to the portions that are taken out of Fund 6, obviously. We're going to have to look at definite gas tax increase from the 20 cents that we've had, what, for 12-15 years, and I think we've made tremendous strides.

I know my colleagues feel like, and it was mentioned in this presentation, some of the changes we've made in the last two sessions, with your leadership and this commission's leadership, we still have an opportunity to explore those funding revenue sources as they compile and as we put them to use, but I think it needs to be on all fronts.

MR. WILLIAMSON: The reason I posed the question, and the reason I feel comfortable posing it to you as a former colleague and good friend, I think I can play with you and risk minimal damage, but just my view that the legislature is not going raise the gasoline tax to $1.40 a gallon, I just don't think that's going to happen.

So the dilemma we face is we get to sit in our position and read every newspaper article around the state that's written about transportation, and we get calls from television, you know, Channel 4 news, Commissioner So-and-so from Dallas County said this about you, and Mayor So-and-so from Frisco has had this comment about the commission, how do you respond, we get to hear all of that all the time. And what we hear more often than not is an understandable outrage based on misinformation, as if we hear this a lot well, a ten cent a gallon increase in the gasoline tax will fix this problem. And we look at people who base their observations and decisions on that and we say, you're absolutely crazy, a ten cent a gallon increase in the gas tax will do nothing to address the state's problems. That's how bad it is.

And so I'll wrap it up here and yield to my buddies. My point, Michael, is when I have to deal with Senator Brimer personally or Senator Carona personally soon, and when I have to listen to and I should, I'm supposed to their concerns sharply put about the location of Trans-Texas Corridor 35, about the allocation of money between Tarrant and Dallas counties, about putting freight rail in front of a concrete road, when I listen to that and try to explain our vision of how we can solve this problem, what gets sometimes really sucked down the drainpipe is we can't breach that $86 billion unless we aggressively invite the private sector to be our partner.

If you aggressively invite the private sector to be your partner, you cannot tell them where to build the road. In other words, I could not go to Mr. Perot and say would you finance the entirety of the I-35W expansion, and oh, by the way, we want you to build it over at Azle and then bring it up to Decatur and then over to Roanoke because we want everyone in Roanoke and Azle to feel good about it. Mr. Perot would look at us and say you're nuts.

And that is the problem we face. We have an $86 billion gap, none of us believe that the tax rates are out there necessary to close the gap, we're either stuck with doing nothing or we ask the private sector to be our partners. If we're going to ask the private sector to be our partners, we cannot tell them how they're going to be our partners or they won't be our partners. They're going to come to us and say, well, if your goal is to decongest Interstate 35, if that's your goal, then we can do that by building a parallel road right here and we will get 16 percent or 14.9 percent of the congestion off Interstate 35, and we won't charge you anything, in fact, we'll pay all the taxpayers of the state a billion two to let us have that concession.

Now, it could be the case that they see this footprint and say this is a better deal, we like this even better. The point is we wouldn't might get involved in that, we would try to stay out of that and permit them to define what worked best for us, not just for a roadbed but for a utility line, a water line, a rail line, a commuter rail line, and a petroleum line.

So this is sort of our opportunity to cut through the fog that sometimes gets between us. NTTA is a good example. Let me say for the record we don't care who builds 121. Let me say one more time, not one person on this panel cares who builds 121, the only thing we care about is that the region and the state get the best possible deal to solve its share of the $86 billion gap, that's all we care about I think. Have I got that right?

MR. HOUGHTON: Yes.

MR. WILLIAMSON: I yield to you, Ted.

MR. MORRIS: Mr. Chairman, can I just make one comment on your conclusion? I think it's very important to understand, at least in Dallas-Fort Worth, that it isn't public sector people working in a vacuum, it is public sector and private sector people sitting down every single day, from Mr. Perot's shop to CDA firms to businesses that want to come to the region. Our region prides itself of having public-private partnerships. We don't think we're asking, in the case of the Trans-Texas Corridor, for the private sector to do something that is very foreign to them. We use a lot of private sector performance measures in trying to come up with the recommendations that we come up with.

And as we move forward in your discussions with Cintra-Zachry, it will be very interesting as they pursue it may be more cost-effective to build a central toll road than have two toll roads competing with each other.

MR. WILLIAMSON: And if I could make the point, Michael, it doesn't matter to us.

MR. MORRIS: It matters as long as there's a private sector person at the end of the day who's willing to build the particular vision.

MR. WILLIAMSON: Correct. Anyone who has ever had the idea that anyone on the commission or at the department level was opposed to the red line versus the blue line, it's just not true. What we are concerned about is we have to have a matrix in place that will attract the private sector to build the road in the first place because we do not have the money to decongest Interstate 35 on our own. It's real important for everybody to understand that, we do not have the money, as we see the cash flow stream, to decongest I-35, we have to decongest it a different way.

MR. MORRIS: And your particular elements are identical to what the Regional Transportation Council faces to make sure they have a State Highway 161 project that has preserved its right of way for a CDA or an NTTA to come in and build it as a cost-effective project. So what you do with interstate movements is identical to what we do with in-region movements to make sure we can maximize and capture both the public and private sector benefit of a particular project.

MR. HOUGHTON: Well, Mike, in one of my previous lives I sat on a water utility board in El Paso and the leap-frogging is a big issue in communities. If you extend lines up, all of a sudden people start building. And so I'm sensitive to that, and if that's what the region is looking for and it works, then I buy into that.

One of the things I want to clarify, being involved in CDA negotiation recently, we've got to get away from the term define excess revenue. There is no excess revenue, there's none, I mean, unless you're a tollway authority. They consider excess revenue beyond its debt service and maintenance. Excess revenue in the CDA process is negotiated revenue-sharing. And I think obviously you'll probably have a seat at that table when that does occur, but it is a revenue-sharing determined as a negotiated item between the region, RTC, TxDOT and the desired proposer in that process.

MR. MORRIS: Let me just quickly I don't want to take too much of your time we use two terms. Bonding capacity and these are typical terms in the traffic and revenue studies of people like yourself and NTTA bonding capacity is the ability of a particular investment to have a certain volume and a certain toll rate to produce a certain money to build that particular project.

The term excess revenue is used as coverage ratios are indicated due to insurance companies or others that you retain a revenue stream that's say 35 percent above what you actually have to pay that as that project is being built you can let some of that excess revenue go because the project is beginning to prove itself. And you are correct, excess revenue is typically a bonded project that over a 30- or 40-year time frame every year has a increment of capacity that's brought back.

MR. HOUGHTON: A CDA is different.

MR. MORRIS: Well, what you have in the case of a private sector person, and what the Regional Transportation Council has suggested to you Commissioner Johnson, back to your point is you can either let all that occur at some point in time which is no risk to the CDA person, and then you maximize your revenue stream without your investments when those excess revenues come due. Or in the case of a concession fee, a private sector company could say wait a minute, I've looked at your particular project, I think those excess revenues are going to occur over time, we will purchase those or give you a check up front as part of a concession fee that includes both the bonding capacity and usually a discounted excess revenue amount.

Now, the item we're struggling with in our particular region and I think, as Amadeo indicated to you, sometimes you want to build things sooner our cost of money is not at 5 percent or 4 percent that you may have in the oil industry, our cost of money is at 10 and 15 percent because of the cost of concrete and steel that you have witnessed every month on cost overages on projects because of those items. Now we're at a very unique situation where the cost of inflation on transportation is two times the cost of money, and the argument can be made, at least at this point in time, you're better to take a portion of your money up front to beat the cost of inflation by beating the 10 or 12 percent ratio that is above the cost of funds, so the RTC recommended to you to take 75 percent up front and take 25 percent over time.

MR. HOUGHTON: I think you're going to see very, very soon a negotiated CDA and you're going to see something that is completely different. I think you're going to be very surprised in this state, I really do, and I wish I could say more but I just think those days are coming.

MR. MORRIS: We're looking at least at three corridors either by a CDA or NTTA that we think will produce $3.5 billion up front as a concession fee, and that's the portion of the $5 billion today.

MR. WILLIAMSON: Did you make that proposal to them?

MR. JOHNSON: I'm not giving up my hole card yet.

(General laughter.)

MR. JOHNSON: Mike, my colleagues are very reluctant to accept checks but I'm not, so we'll accept your check.

You point out a very distinct difference between a concession fee or at least a consideration between a concession fee and the receipt of a generated positive cash flow in out years. I am not certain, in fact, I don't believe we have the ability to dedicate future income streams to bond but that is a mechanism that can be used if statutorily we do have it where we do dedicate positive income streams from projects and then bond, so in essence your concern about increased costs which they are legitimate concerns and something that we've certainly experienced dramatically in the last three or four years and to some extent in the six or seven, probably every year before then that would, in essence, to my way of thinking, enable us one, to leverage those funds and deal with the rising cost scenario, but also to maintain a future income stream which my sense as a business person has great value.

MR. HOUGHTON: I think, in fact, Commissioner Johnson, you can't leverage those future revenue streams.

MR. JOHNSON: Well, statutorily now you cannot.

MR. HOUGHTON: Maybe Mr. Bass can shed light if he's here.

The other points I have, Mike, there seems to be two issues here. One is the local Dallas-Fort Worth Metroplex which is meeting the five goals that we continue to repeat and repeat and repeat, the other is Texas being the trade corridor for this hemisphere and we think beyond. You've got to ask the question how does that freight get to Dallas-Fort Worth, and it begs that question of Trans-Texas Corridor 35, it begs the question of east-west connectors, and we have recently announced do you want to put something up on the screen or something we recently announced Trans-Texas Corridor 35 rail project that would have a double track all the way from the border, beyond Dallas.

Do you want to answer that question, Mr. Bass, about leveraging a revenue stream off toll projects? Can we leverage that?

MR. BASS: Good morning again.

MR. HOUGHTON: Revenue-sharing if we have a revenue share off a toll project with a concessionaire, can we future leverage that revenue stream?

MR. BASS: For the record, I'm James Bass, chief financial officer at TxDOT.

Under current statutory language, I would say the answer is no because those funds go into the State Highway Fund and the ability to leverage money off the State Highway Fund is currently limited at no more than $3 billion issuance ever. And so the revenues would go in there, we can pledge any and all revenues to the fund, but it's capped at $3 billion, so with that cap in effect, we would not be able to leverage it currently.

MR. WILLIAMSON: Coby, legislative agenda, add one.

MR. HOUGHTON: Well, I guess the issue we've got a local and we have a statewide connectivity, we've got a statewide trade issue. With what you showed up on the chart as far as container, the Port of Lazaro Cardenas down in southern Mexico will be the alternative to Long Beach and L.A., and it's coming right up the gut of Mexico on Kansas City Southern line that should connect to our Trans-Texas Corridor 35.

But I think what we have to do as regions, as communities is look beyond our borders and look at how we connect our state up and make Dallas-Fort Worth greater than what it is today and continue to making it a viable trade center.

MR. MORRIS: Mr. Houghton, two things I want to bring to your attention and support your point. First I'm going to cover it on the toll road side and then I want to cover it on the concession side of goods movement.

In our region we have four ways to build toll roads: we hire CDAs in box number one to construct projects; we have North Texas Tollway Authority constructing projects; we have managed lanes that could be constructed, these are tolled express lanes in the middle of corridors like LBJ; and then we have the Trans-Texas Corridor. And we very much try to identify the right pot of money for the right source. The problem in the Trans-Texas Corridor is the inner-city component of that.
 

We have a similar view on the goods movement side. On the goods movement side, we think a lot of our transportation needs are actually a function of inner-city movements, and Tower 55 clearly is that. So we're very excited about your recent success and what we wish to do is to provide the concession tool on the goods movement side in two different time frames. One is an immediate solution to Tower 55. As Mayor Moncrief indicated, the railroads and us are talking right now that $2-, $300 million we may be able to fix that particular problem with a private sector vendor where the goods movement industry is paying that vendor back like a toll road at that particular location over time. That would give us an immediate solution because we think within two years we're going to be stacking trains at that particular location.

In our testimony to the Senate and the House last week and next week, they're going to indicate that Burlington Northern and UP and the U.S. Department of Transportation thinks Tower 55 is the number one bottleneck in the United States. As we move ahead and solve the near term problem, we can work on the Trans-Texas Corridor elements of those reroutings, and as you heard from Burlington Northern, there's going to be lots of money needed and that's going to have to be built over time. And what we don't want to do is put all of our eggs in the 20-year basket, we want to be able to develop a two- or three-year plan that still needs to be maintained over time because you still have General Motors and other users of that corridor as we do the planning and the rerouting of those other particular routes.

That's a major focus going on right now and it mirrors this toll road vision on the goods movement side with both short term and long term, but on the goods movement side, we think a lot of those are actually funding sources and mechanisms that should be more statewide or actually more national because of where we are located.

Now, City of Dallas has a major initiative with the Port of Houston that's developing goods movement, warehousing and intermodalism in south Dallas County of which you'd have to review the shares of cost that some of those maybe should come from our region. In fact, the Regional Transportation Council approved last week two grade separations of that new intermodal hub in south Dallas County to provide roadway access to maximize the train switching at that particular location, so we took $6 million but Eddie Bernice Johnson's funds, probably $12 million to do those two grade separations. But it's a similar philosophy of both an inner-city component and a within-region component as part of the mix.

MR. HOUGHTON: Well, I look at Tower 55 and your initiative and our initiative on Trans-Texas Corridor 35 and marrying those things together on a communicative basis because they do have a profound effect on trade for this state.

MR. MORRIS: Yes, sir.

MS. ANDRADE: Good morning, Michael. Once again, thank you for everything that you do, not just for your area but for the state of Texas.

As you all know, I am from San Antonio so I do want to congratulate you for the Dallas Mavericks. I will tell you that you have a great coach, and so I'll leave it at that.

(General laughter.)

MR. MORRIS: We asked the coach to come with us today but he was busy with a game last night.

MS. ANDRADE: He'd bring a smile to my face. He was a great leader in San Antonio and he does great things.

MR. JOHNSON: You know, their great coach has an excellent last name.

MS. ANDRADE: Yes, I know. Well, we call him Avery so I forget about the Johnson, but thank you for reminding me.

(General laughter.)

MS. ANDRADE: And to Senator Brimer, I want to reassure him that we are listening, absolutely. I concur with what the chairman said. We're not set on whether it's the red or the blue, but I am curious to hear from our staff and our private sector partner on that.

I want to apologize for not attending last night's event. Sometimes there are things that grandmothers cannot be absent from, and I had to do one of those.

I want to congratulate your community for being so united, for coming together. When we see all of you coming together, it really makes us see that we're all working for what's better for your region and for the state.

Thank you for including public transit and rail in your plan. As the chairman said, he stays up thinking about rail and I dream about public transportation, so I was glad to see that.

You know, you mentioned a couple of things that I appreciate also and that's that you're supporting us on the issues that we need to work on to protect the money for our State Highway Fund, and I ask your continued support on that because that's something that we can only do all together.

So Michael, I continue to say that I'm looking forward to working with you, and you reminded us once again of the role that you all play in the state of Texas, and so thank you so much.

MR. JOHNSON: Michael and all the presenters, this clearly is not the first presentation I've heard from the Metroplex group, and I marvel at how each year they improve and they become more comprehensive. Probably the first one I heard dealt solely with concrete and now we're getting into the complete multimodal picture, and if our large metropolitan communities are going to survive, we have to take that approach because a lot of people have said and it's abundantly true that we just are not going to build concrete lanes to work our way out of some of the issues that we face.

And I mean, these are high grade issues, this state is prosperous and growing and there are reasons for it and it will continue and there are reasons for that. There are probably communities around this country that are facing just the opposite, they're trying to attract businesses and enterprises and education and institutions there so that they might one day face these problems.

I think Hope's point and Ted's point are excellent. Your innovation in this case and in terms of routing I think is excellent, and it's a sincere wish on everybody's part that we want to find the best solution for everybody involved, and I think your willingness to think in those terms that this is not just a one way dialogue is greatly appreciated not only by the commission but the agency.

I salute you for what you're doing. As I said earlier, an area as complex and as large as the Metroplex is and to come here year after year and speak with one voice is very impressive. And I appreciate it and I know not only does your region appreciate it but the state benefits from it.

MR. HOUGHTON: Mike, I have one more question. All the communities bought off on the idea that whoever builds this it's going to be for the best value, whatever the value is for the community and for the state?

MR. MORRIS: Yes, Commissioner. We're having conversations with your staff on the definition of best value. We've already scheduled public meetings in the region. They've asked us to come up with a recommendation from the Regional Transportation Council. We think we know what the variables are, we're going to go to the public and get the weights of those particular variables, we're going to go back to the RTC. They can't meet in June because it conflicts with your summit and a lot of them want to go to your summit, so this is your chance to advertise your summit again, Mr. Chairman.

MR. WILLIAMSON: Would you be speaking of the Texas Transportation Forum?

MR. MORRIS: Yes, which starts on a Thursday?

MR. WILLIAMSON: Thursday, June 8 and June 9.

MR. MORRIS: So the RTC has not scheduled their meeting on the 8th so they could attend your meeting.

But the point is yes, they've signed off on the competition; yes, they're encouraging everyone to compete; yes, we've worked a way for the private sector to compete and the public sector to compete; we are establishing what the best value criteria are; we're going to propose weights to you for that particular criteria; we've already established the business terms with regard to toll rates, maximum toll rates and growth rates; we're moving ahead with that particular competition. I think the competition has already benefitted the region. Your goals and our goals are common with regard to the financial crisis, and the competition is what's going to create the ability.

MR. HOUGHTON: Whether it's a public or a private company.

MR. MORRIS: That's correct.

MR. HOUGHTON: Good.

MR. JOHNSON: But let's emphasize it could be either.

MR. HOUGHTON: Yes.

MR. WILLIAMSON: Amadeo, put that Frisco thing back up again for me, please. We'll be done in two minutes.

Now, I want to be sure that we've represented to our guests our interpretation of this data. Our interpretation of this data is that this particular road has a tax gap ratio of 23 percent.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: That means the taxes that the citizens who use that road, wherever they come from, pay throughout the life of that road will recover exactly 23 percent of the cost of that road.

MR. SAENZ: That's correct.

MR. WILLIAMSON: And were we to put the design, construction, finance and operation and

maintenance of that road on a gasoline tax per gallon basis.

MR. SAENZ: It would go to $1.48.

MR. WILLIAMSON: It would be $1.48. Now, the reason that I chose that slide to finish up what we have to say to you and by way of thanking you for being here, is because I'm aware that there are some in North Texas it's not necessary to name names like it was five years ago just there are some who I think in a moment of passion or emotion perhaps mis-spoke.

The Texas transportation funding system, Senator Brimer, I think is being compared to the Robin Hood public education system that you've recently done so much to end. The Robin Hood public education system, for those of you who might be mistaken about this, consists of taking excess revenues over costs and transferring that excess revenue to areas that have less revenue than costs than other parts of the state.

It is the case, whether you live in Frisco or Fort Worth or Austin or Houston or Brownsville or El Paso, not one road in this state pays for itself. So when you go home to Plano or Weatherford or Fort Worth or Duncanville, please don't tell your neighbors that your gasoline tax money is being taken from you and sent to other parts of the state, instead tell your neighbors wasn't it wonderful that other citizens of this state surrendered their gasoline tax revenue to build our roads because that is precisely what happens.

It is no more complicated than that, not one road in this state pays for itself, and unless we find a way to bridge that gap, we're going to be in way more trouble in 2030 than we are right now. We'll look back on 2006 and think of it as the grand old days in the state of Texas if we don't do something to bridge that gap, and I think that my part of the state is doing its all to bridge that gap. You are lighting many candles, you should be commended for that.

What are you going to do with that check?

MR. MORRIS: Well, we want to take a picture and then you can get on with your agenda.

MR. WILLIAMSON: Are you really going to give that to me?

MR. MORRIS: Yes, sir.

R. WILLIAMSON: I'm like Johnson, I'll take the checks.
 

We thank each and every one of you. You know, when you're born, God gives you grace and time, and whether you accept grace or not it's up to you, and time you control, and when you've given us your time, that means you've given us the most valuable thing you control. So thank you very much for giving us your time, we appreciate it.

MS. ANDRADE: Mr. Chairman, may I make a comment? One of the persons I'd like to recognize that does a great job from your region is Donna Hallsted on our PTAC.

MR. WILLIAMSON: I saw Donna here.

MS. ANDRADE: Thank you for everything you do, Donna.

MR. WILLIAMSON: Thank you, Donna.

Let's take a picture of the check and then we'll take a break.

(Whereupon, a brief recess was taken.)

P R O C E E D I N G S (RESUMED)

MR. WILLIAMSON: We're going to return from our brief recess. To accommodate those who are from out of town, we're going to try to jump around a little bit through the morning, so we're not going to take the indices discussion back up right now at this time, Amadeo.

MR. BEHRENS: We're going to skip a couple of items and go to agenda item number 7, and this is an item where we have a recommendation to appoint two members to the Public Transportation Advisory Committee. And Eric Gleason, if you would take that, please.

MR. GLEASON: Good morning. This minute order authorizes the appointment of two members to the Public Transportation Advisory Committee, or PTAC, to serve the remaining terms of two vacated positions on the committee. The positions are for members who represent public transportation users and health and human services programs. The terms of these positions expire in September of 2008.

We are recommending that Dr. Robert Peters, representing public transportation users, and Claudia Langguth, representing health and human services programs, be appointed to fill these two vacated positions.

Dr. Peters lives in Tyler and brings an impressive diversity of experience. He currently manages Project Level Field, a charitable fund which provides adaptive technology for visually impaired persons in the counties of and surrounding the Tyler-Longview area, and post-secondary educational scholarship assistance to their family members.

Claudia Langguth brings over 25 years of experience in state and local government services, having served as deputy commissioner, regional administrator, and regional director for the Texas Department of Human Services. She is currently vice president for health and human services programs for Unisys. And Claudia is with us today, and Claudia, could you please stand up?

MR. WILLIAMSON: Hello, Claudia.

MR. GLEASON: We recommend your approval of this minute order.

MR. WILLIAMSON: Hope?

MS. ANDRADE: Yes. Eric, I want to mention that I believe we had quite a few candidates apply, very high caliber, and I hope that somehow we encourage them to reapply whenever we have avacancy. I was very impressed with the applications that were received.

And I met Claudia a few minutes ago and I thanked her for being willing to serve in this position,so thank you once again.

MR. GLEASON: And just for the record, we do keep files on every applicant and so every time a vacancy does come up, we do revisit those files.

MS. ANDRADE: Thank you so much for the work you did on this.

MR. WILLIAMSON: Ted, anything? John?

(No response.)

MR. WILLIAMSON: I also want to both thank them for their willingness to serve. Claudia, thank you for being here today with us. Voluntary servitude is never an easy thing and we appreciate your willingness to be a part of refashioning how we look at transportation throughout this state.
Members, you've heard the staff explanation and recommendation on agenda item 7.

MS. ANDRADE: So moved.

MR. HOUGHTON: Second.

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

(a chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Welcome aboard, Claudia.

MR. BEHRENS: At this time we're going to continue and go to agenda item number 8 which is a discussion item. This item we're going to discuss the Transportation Enhancement Program and some of the things that we've been discussing in-house, and Amadeo is going to lead that presentation.

MR. SAENZ: Good morning, commissioners, Mr. Behrens. Again for the record, Amadeo Saenz, assistant executive director for Engineering Operations.

I'm going to talk a little bit about the Transportation Enhancement Program, I'm going to start by giving you some background.

The Transportation Enhancement Program, or TE for short, was first created as part of the Intermodal Surface Transportation Efficiency Act, or ISTEA, which was a federal bill that was put in place in 1991. It provided innovative opportunities to enhance and contribute to the transportation system. This is carried out in the development of non-traditional projects through the implementation of a specific list of transportation enhancement activities. The focus of these actions is to improve transportation experience in and through local communities.

As mentioned earlier, this is a federal program. The project eligibility is at the sole discretion of the Federal Highway Administration. Only after a project is determined to meet the federal eligibility requirements can the project be forwarded to the Texas Transportation Commission for consideration.

Another characteristic of the program includes the fact that it is a reimbursement program as opposed to a grant program. The program provides for 80 percent federal reimbursement with 20 percent local match. Therefore, if a project is selected, costs must be incurred by the local sponsors in accordance with the federal requirements, and then the sponsor may be reimbursed 80 percent, provided that the costs incurred meet the federal requirements.

Also, the federal legislation that defines a transportation enhancement project indicates that each individual project must have a relationship to surface transportation. In fact, the Federal Highway Administration recently sent us a letter stating to the Texas Department of Transportation that it does not plan to continue using transportation enhancement funds for projects that have only limited or incidental surface transportation relationships.

I'm going to give you a little bit of history. Under the initial ISTEA legislation, TxDOT held three program calls in 1993, 1994 and 1996. These three calls ultimately approved 253 projects at a total estimated cost of $181 million. Of those 253 projects, 207 have gone to letting, 30 projects have been withdrawn by the nominator, and 16 are still pending. This is from the ISTEA, the original Transportation Enhancement Program.

The Transportation Enhancement Program was renewed in the federal legislation as part of TEA-21 in 1998. For that program, TxDOT held two program calls based on TEA-21 legislation, the first one in 1999, the second one in 2001. These two calls ultimately approved 252 projects at a total cost of $285 million. Of those 252 projects, 135 projects have gone to letting, 14 have been withdrawn and 103 are still pending.

During the formulation of the latest federal transportation legislation, there were discussions at the federal level regarding the continuance of the Transportation Enhancement Program, however, in August of 2005, the long-awaited federal transportation bill legislation passed called SAFETEA-LU, and the Transportation Enhancement Program was included in that legislation.

Since 1992 more than $9 billion have been redirected from normally funds used for congestion relief and such and put into the Transportation Enhancement Program this is nationwide. Current legislation requires each state to set aside 10 percent of our STP funds and use them for transportation enhancements.

MR. WILLIAMSON: Ten percent.

MR. SAENZ: Ten percent of our STP funds. And I'll go over the numbers in a little bit.

TxDOT began preparations for this new program call, we had some regional workshops held by district staff to prepare them for working with the local nominators. Each district then in turn conducted workshops with the local communities to advertise the program and answer questions about how to nominate and submit projects. Also, we had two informational meetings that were provided with the state legislative staff in October of 2005 prior to the start of the actual program call.

Going back a little bit on the state side, our 79th Legislature had some riders dealing with enhancement projects. In the 2005 state legislative session, several riders were attached to the appropriations bill. These legislative riders directed several projects to be considered for submission as part of our Transportation Enhancement Program and participate financially if these projects were deemed to be eligible by Federal Highway Administration.

Those projects included a Tejano monument, the Battleship Texas, the Emancipation Juneteenth historical memorial, the Woodall Rogers Highway enhancement park, the Texas Museum of Music History, the Houston Fire Museum, and a courthouse preservation program.
The Design Division and the Government Business Enterprise Division staff met with sponsoring legislators and staff on the rider issues during the Transportation Enhancement Program call to update them on the process and also to answer questions that they may have concerning their specific nominations.

The courthouse preservation effort is somewhat different than the other rider projects because it does not involve a single effort or building, but several different courthouse locations around the state. For that, TxDOT met with the Historical Commission in September of 2005 to begin discussions of the courthouse preservation program. It was the hope of the Texas Historical Commission that the effort could be approved programmatically turn the money over and we'll go out there and do it however, in December of 2005, Federal Highway Administration responded in a letter that each courthouse project would have to be submitted individually for eligibility determinations.

So in January of 2006 we met with the legislative sponsors and staff to update them on the status of the courthouse preservation program. So for that program, just like all the other projects, each courthouse that is identified needs to go through a review by Federal Highway Administration for approval that it is eligible for the funding.

Federal Highway Administration and TxDOT met with the Texas Historical Commission in February to discuss the specific documentation that would be required for each project location in order to meet federal eligibility determination. In May of 2006, the Historical Commission called on various county judges to solicit assistance in preparation of those packages for federal determination.

TxDOT was asked to attend that meeting and answer questions from the counties about the Transportation Enhancement Program. Upon future receipt of these individual courthouse locations and documentation from the Historical Commission, we will then submit all that information to Federal Highways so that they can make the eligibility determination for those projects.

The actual Transportation Enhancement Program call under the new federal legislation SAFETEA-LU started in November of 2005 and closed April 28, 2006. The districts are currently performing technical reviews on all the projects nominated and we'll submit these projects by the end of June. The Design Division will coordinate division review such as environmental coordination, hydraulic design, et cetera, to be done sometime during July. The projects will be then submitted to Federal Highway Administration for eligibility determination beginning in August. These projects determined to be federally eligible for transportation enhancement funding would then be ready for commission action in the fall or sometime in 2007.

Our current transportation enhancement call through technical evaluations are still incomplete. It appears that the new call generated approximately 330 projects at a cost of about $690 million.

On another topic that warrants discussion, particularly in the context of the Transportation Enhancement Program, in the last six months we have had two federal rescissions. A rescission is defined in the rules of the National House of Representatives as a provision of law that repeals previously enacted budget authority in whole or in part.

MR. WILLIAMSON: So what does that mean in normal person's language?

MR. SAENZ: We get apportionments of money to develop projects.

MR. WILLIAMSON: All projects?
MR. SAENZ: All projects. We get an apportionment for different things.

MR. WILLIAMSON: So is that a normal person's way of saying the federal government grants us money? So the federal government grants us money.

MR. SAENZ: It grants us money.

MR. WILLIAMSON: And what's a rescission in normal person's language?

MR. SAENZ: A rescission is they take the money back.

MR. WILLIAMSON: They take the money back.

MR. SAENZ: Take the money back.

MR. WILLIAMSON: So they pass a 4-and-1/2-year bill called SAFETEA-LU and in that 4-and-1/2-year bill they say you've got approximately $4 billion to spend, and then a rescission says oops, now you've only got $3.9 billion to spend, and the next rescission is oops, now you've only got $3.8 billion to spend.

MR. SAENZ: And then, of course, they don't tell you from where you can give them the money back, they just ask you need to rescission X number of dollars back.

MR. WILLIAMSON: So they send it to us with 10 percent has to go to courthouses and 7 percent has to go to this and 2 percent to that, and finally get down to about 70 percent can go to construction to relieve congestion, but when they take it back, they say just give it back to us according to wherever you want to give it back.

MR. SAENZ: And you decide. There are some programs, like demonstration projects, that come with their own apportionment or their own dollars. We cannot do rescissions on those projects that were earmarked.

MR. WILLIAMSON: So for example, on a project that's been the subject of discussion before this body in the past, moving a roadbed out in West Texas around a community called Lajitas, we can't rescind that money.

MR. SAENZ: No, sir, because that came through an earmark.

MR. WILLIAMSON: All right. We can't rescind the money that was laid back for the overpass in Bryan-College Station area.

MR. SAENZ: Any project that was an earmarked project, we cannot rescind that.

MR. WILLIAMSON: But we can rescind courthouses.

MR. SAENZ: We can rescind enhancement money, we can rescind other mobility money, added capacity money that's available.

MR. WILLIAMSON: And out of curiosity, that process you were describing of how we do things here internally, how many FTEs would you guess are tied up on the enhancement program. I'm not going to ask you to terminate anyone, Amadeo, I'm just curious, how many bodies do we assign to that.

MR. SAENZ: I would probably say there's two or three bodies per district which is 75, and probably at the division level we probably have 10-12.

MR. WILLIAMSON: Are we capped by the legislature on the number of people we can hire?

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: So the legislature says you can only hire so many people and the federal government says here's your money to relieve congestion in Dallas, except 10 percent of it has to be used to improve courthouses in Dallas, and oh, by the way, you've got to hire enough people to manage this program if you're going to do it, and if you are going to do it, you've got to spend it on those things. So in effect, 80 people or so that could be working on relieving congestion, making the roads safer, providing economic opportunity, improving air quality, or preserving the asset value of our state are instead locked into building museums.

MR. SAENZ: Building museums, managing enhancement projects throughout the state, just 10 percent of the program.

MR. WILLIAMSON: How do you think people in north Austin who are fixing to have to pay toll roads feel about that?

MR. SAENZ: Well, I live in north Austin.

MR. WILLIAMSON: Well, how do you feel about having to pay a toll because there's not enough money to build a tax road?

MR. SAENZ: Well, my opinion is I'd like to have the flexibility to use all the money to put in added capacity.

MR. WILLIAMSON: Not that our opinion apparently accounts for much.

MR. SAENZ: I would love to have the flexibility to be able to add capacity or address other problems.

MR. WILLIAMSON: I'm just a fan of command and control government where senators in Minnesota think they know what's best for Texas.

MR. SAENZ: To continue, we received notification of the first rescission in December 2005. That was $159 million.

MR. WILLIAMSON: How much of our money, our federal gas tax that we pay into D.C. do we get back?

MR. SAENZ: We get back about 70 percent, 70 cents on the dollar.

MR. WILLIAMSON: So just so I understand this, Ted, we send a dollar, we get back 70 I don't complain about that, I understand why, I just observe but the 7 cents we get back, seven cents of that we've got to lay back to build picnic tables, and we have to hire the people to manage the picnic tables.

MR. HOUGHTON: Amadeo, but you talked about the federal government starting to pull the horns back in a little bit on this program, or did I misunderstand that on the front end?
MR. SAENZ: They have gone back and tightened the program with respect to eligibility of projects that can be built with the enhancement funds.

MR. WILLIAMSON: Would the renovation of a highway qualify as an enhancement project?

MR. SAENZ: No. I've tried that.

MR. HOUGHTON: What do you mean by tightening up? Give me an example.

MR. SAENZ: For example, back in 1991 under ISTEA, historical preservation was one of the allowed projects and there was not much tie. There was some language about that there had to be some tie to transportation, but it was very loosely administered or reviewed or accepted.

As we've gone through, those criteria that show the tie-in to the transportation system have been tightened up. So a lot of the projects that were approved in the first program call no longer qualify, especially like in the area of courthouses and historical preservations.

MR. HOUGHTON: Now, it could be safe to say, or I'm assuming that you tighten it up so tight that you kind of eliminate many, many programs or many, many opportunities for enhancement.
MR. SAENZ: Right, you tighten the program so much that you limit the amount of projects that can be built, so in essence, you could probably say that with time you can't build anything and the money is there and you can't do anything other than that type of project.

MR. HOUGHTON: Can we use this on hurricane evacuation routes?

MR. SAENZ: Not at this time, sir. We can only use it for enhancement.

MR. WILLIAMSON: Can we use it to enhance the value of, say, an old train?

MR. SAENZ: Yes, we can, and we've done some projects like that.

MR. WILLIAMSON: An old commuter train?

MR. SAENZ: Yes, we can.

MR. WILLIAMSON: How about the track the commuter train runs on?

MR. SAENZ: I believe we've done some projects that have put some money on rail projects.

MR. WILLIAMSON: I see an opportunity here.

How about if we enhance the entire Cotton Belt line in North Texas?

MR. SAENZ: I would say yes, but then we would just submit that to Federal Highway and let them make the final call.

MR. WILLIAMSON: Michael, here's an opportunity. It's an old track.

MR. JOHNSON: Amadeo, this might not be the most appropriate juncture to ask about this, but I noticed, I believe, in one of your early slides, maybe slide 3, what struck me was that some of those projects dating back to ISTEA and many to TEA-21 aren't even off the ground yet.

MR. SAENZ: Yes, sir.

MR. JOHNSON: Is there something in either the federal statute or in our agency policy rules that states there need to be time parameters when a project can be designed and it needs to be finished by a certain time?

MR. SAENZ: Yes, sir. That's one of the things that we learned between ISTEA and TEA-21 in that the ISTEA agreements with the local sponsors because most of these projects are submitted by cities, counties, local sponsors did not have any time frames on the development of the project. Because the enhancement program has continued from ISTEA to TEA-21 to SAFETEA-LU, those programs continue to be used, so the money doesn't lapse. If at the end of SAFETEA-LU the enhancement program would not survive under the next federal bill, we have a certain amount of time, and at that point all that money would lapse. But since the program has been renewed every federal bill, that money doesn't lapse.

What we do to make sure that it doesn't lapse is we're always taking money and using as a project is developed from say TEA-21, we would use the ISTEA apportionment so that we never would lose any money, and that's just good management of funds.

MR. JOHNSON: But what concerns me is the management of projects. We have 16 projects in ISTEA which finished in 1997.

MR. SAENZ: We are going to go back to the people to find out exactly where those projects are and really make a call that if those projects need to be canceled, they need to be canceled.

Under TEA-21, under those program calls we do have some requirements in our contracts that required the sponsor to first execute a contract within one year of when the project was selected, and then they had three years to be able to develop the project. So depending on which of the program calls we did, under TEA-21 those do have a time frame that we can hold them to. Again, we need to monitor where those are and if those projects are fixing to run out of time, we need to, in essence, take action, and that would, in essence, free up some money.

MR. JOHNSON: Would it not be wise that in future calls that some time parameters be in there?

MR. SAENZ: Yes, sir. And our current rules have the time parameters, so any project that's going to be developed under SAFETEA-LU, should any be, then we'll have those parameters or those requirements in our contracts to make sure that the projects do get started and get built and then get completed so that we can get them off the books.

MR. JOHNSON: Thank you.

MR. SAENZ: Just going back, as I mentioned in December of 2005 we were asked to rescind or turn back $159 million. This was Texas's portion. Of that amount we gave back $116 million taken from older transportation enhancement categories. The logic behind that is we wanted to keep the money available to us that had the most flexibility. Since the enhancement money has very little flexibility in its use, we used the oldest enhancement money that we had available and rescinded that money.

We received notification for a second rescission in March of 2006, totaling $91 million, and of that, $63 million were taken, again, from the old programs, those programs that were part of ISTEA and TEA-21 were taken, and in essence, we depleted all of the enhancement money apportionment that we had in those two categories.

What the rescission discussion illustrates is that the Federal Highway program is increasingly unreliable for the regular construction programs, as well as for special programs like enhancements. If we had increased flexibility that the money could be used on all projects and all types of projects, it wouldn't make any difference where you rescind money because you could cover them as they go; because they're all tied and pigeonholed, it makes it very hard.

One of the things that we've been trying to do is working with our federal legislation to try to get the law amended that would allow flexibility to be able to use some of the transportation enhancement funds for other projects like we were hit with a hurricane; we were hit with wildfires. So to take care of emergencies and hurricane preparedness is one of the areas that we're trying to get to.

MS. ANDRADE: We are going to use some of those monies?

MR. SAENZ: No, at this point we can't. We need to get legislation changed, federal legislation changed.

MR. WILLIAMSON: I think the purpose of the discussion item, I believe Ted and Mike are going to be before a House committee tomorrow and staff wants us to air between ourselves kind of where we are without making a decision, of course, Mr. Monroe on our approach to enhancements, what we want to communicate to the United States Congress, what we want to communicate to the House and Senate members who wonder why we're rescinding all of these wonderful courthouse projects.

I think the public discussion item was set up years ago to have an opportunity to talk with staff, talk with witnesses, talk with each other, and in that way give the staff a sense of where we want to head before it becomes a minute order item.

MR. HOUGHTON: So the difference, Amadeo, is $71 million that we take out of other transportation projects.

MR. SAENZ: We could have taken $179 million out of programs that had full flexibility.

MR. HOUGHTON: But your rescissions are 250-.

MR. SAENZ: Right. $71 million we took out of programs.

MR. HOUGHTON: The $50 million question or the billion dollar question is do we expect any more rescissions?

MR. SAENZ: My understanding is there is probably at least one or two more that are in the works.

MR. HOUGHTON: Do we know what gas tax receipts are doing these days with gas prices inching up?

MR. SAENZ: James?

MR. HOUGHTON: Where's Bass? He's hiding again.

MR. WILLIAMSON: He's hiding again.

MR. SAENZ: We'll ask him when he comes.

MR. WILLIAMSON: I'm surprised Carlos is out here in the room; he generally hides with Carlos.

MR. HOUGHTON: And commiserate. Bass is upstairs watching on TV. Well, we can move on.

MR. WILLIAMSON: No, that's Coby. Coby goes upstairs and watches us on TV. Oh, sorry Coby.

MR. BEHRENS: I think, Commissioner, James will tell you that we're not getting the gas tax revenue percentage increase that we always anticipate. We anticipate usually about a 3 percent a year growth; I think now it's probably 1 percent.

MR. WILLIAMSON: Based upon the comptroller's latest estimates and confirmed by our own staff, I think it's reasonable to project that federal gas tax receipts are down or the growth in the receipts are much less than what was projected when the bill was fully financed a year and a half ago, and I think it's very logical common sense would indicate we're going to have at least one more rescission and perhaps two.

MR. HOUGHTON: Very good.

MR. SAENZ: At the federal level they continue to earmark limited federal transportation funds for projects which are often in direct conflict with the priorities of the state and local authorities. This regularity of these rescissions makes it increasingly difficult to find candidates for reduced program funding that do not also hinder our primary goals of congestion reduction, enhanced safety, increased economic opportunity, improved air quality, and preservation of the state system assets.

Let me use hurricane evacuation and preparation as an example for immediate demand that can be placed on the highway system. We had a massive evacuation of more than 1.8 million vehicles and 2.5 million people from the Texas Gulf Coast this summer. That put a tremendous burden and a lot of expenses were made. It is vitally important to the state that we do everything in our power to ensure that the infrastructure is capable to be able to protect and allow us to be able to do something like this.

We can't use any enhancement money to do that kind of project, so what we have to do now is if we want to do some improvements, we've got to go take from mobility projects to address this. Having that flexibility to use those funds that have no flexibility will allow us to address some of these needs that come up.

And of course, you all, the commission and the department, believe that enhancement funds should be used for the most urgent needs in the state of Texas. Like I said, we've, in essence, been in communication with our federal legislators to amend the law that will allow us and give us this flexibility. We've visited with some of our counterparts in other states along the coast and at the state level, executive directors and chief engineers basically are in the same position and are in the same boat as we are, they would like to have that same flexibility.

When I asked a couple of my counterparts as to what they did with respect to rescissions, to the one everyone said we used enhancements, and the reason is because you want to keep the most flexible money available to you that you have.

Several of our members of Congress have expressed a willingness to support our effort to seek this federal legislative change and allow the states the flexibility to utilize enhancement funds for this purpose, and we want to continue to pursue that.

Going back a little bit to our SAFETEA-LU funding, as previously discussed, rescissions of unobligated federal funds do not jeopardize any of the authorized programs. I think that was one of the questions is we rescinded $179 million. In fact, Texas will receive $75 million a year under SAFETEA-LU for the enhancement program for about $450 million. Of that $450 million, of course, we still had $149 million committed from those previous program calls, some of those projects are idle, Commissioner Johnson, and probably will fall by the wayside.

Also, as part of the enhancement program, one area that we were able to use was on our Safety Rest Area Program and we have been updating and upgrading our safety rest areas allowing for adequate parking so that those truck drivers have a place to park and the motorists have a place to park, those truck drivers have a place to rest and they're not out there driving while they're sleepy or parking on the side of the road. So we were able to convince Federal Highway that the Safety Rest Area Program could qualify under the enhancement program, and we've been doing very good on that. To date we've got $72 million committed to the Safety Rest Area Program; that leaves us with about $230 million available for this program call, should we carry it forward, once all the projects have been evaluated and determined and then we bring them to you.

This concludes my presentation and I'll be happy to answer any questions.

MR. WILLIAMSON: Members, we have one witness that wishes to comment on this item. Would you like to listen to him first or would you like to ask questions of staff?

MR. HOUGHTON: The witness.

MR. WILLIAMSON: Glenn Gadbois. He no doubt is in favor of using this to enhance old rail lines.

MR. GADBOIS: I like that idea, although I also appreciate Michael saying you can't use all of it to do one particular line.

We have talked about this a little bit. My name is Glenn Gadbois. I'm with a project called Just Transportation Alliances; I'm the director of that and a few other transportation projects.

We have talked about enhancements several times. I don't think anybody will object to the framing of this department has had a tumultuous relationship since the beginning of this program, since the 1990s, on how to deal with enhancement funds, and in part that, Commissioner Johnson, is why you still have a lag of some projects coming out of ISTEA. It took three years to do the first round of letting.

MR. JOHNSON: Well, let me ask you a question. You said tumultuous relationship. Tumultuous relationship with who or whom?

MR. WILLIAMSON: With the concept.

MR. GADBOIS: With figuring out how to implement the concept and then converting processes. When we first started this, we were using the same contracting process for a few thousand dollar pedestrian trail that we were for building a multi-million dollar roadway, and so there were a number of things that we all had to learn, and that's part of kind of the lag time of this.

I guess I want to present a Plan B here. It sounds like there is definite interest in suggesting that we get maximum flexibility, that we look at having latitude to spend this differently. I want to propose a Plan B, and that is to use enhancement funds more strategically than what we have done in the past which is simply letting out for projects and having them come in willy-nilly and not necessarily any significant relationship to the overall state goals we're trying to achieve on everything else we're spending money on, or even on the local goals and what they're spending money on. It simply was a process that bubbled up: we want a trail here, we want a courthouse there.

And so I'm going to encourage you to think about doing this a little bit differently if you need a Plan B, and I'm going to try to drag Michael into this conversation at the same time. I first started thinking about this in talking with Michael Morris. He suggested that enhancement programs, with a little bit of flexibility from the state, could be used for their sustainable development program. What that would mean, though, is that you all had to allow for a block grant, if you will, of enhancement money to go to a region if they applied for that money, and then them to be able to distribute it out to encourage or incentivize their sustainable development kind of projects.

And to be clear, what that means is we, as a local entity, agree to invest in this sidewalk or in this roadway in this new development, thereby lowering the development costs and serving as an incentive to do the kind of development that we as a region say we want more of. Well, actually Michael can describe that if he wants.

But basically they're saying we want development that works better, it has less impact on our overall transportation system if you would just do it; we understand, as developers, there are some extra costs you'll have to do that kind of development; as a consequence, we want to invest some money in encouraging you to do it.

They already use some CMAQ, Congestion Mitigation money and they also already used some Surface Transportation Program money. Enhancement money would simply be another pot of money they could go to to encourage that kind of development.

That is an example of the kind of thing you could incentivize around this state by allowing for the program to not simply be a project-by-project call, but talking to the MPOs in the urban areas and saying is there some way we could do at least a significant portion of this in block grant.

You already have something of a precedent. Soon-to-be- Senator Nichols encouraged this department to think about investing a portion of the transportation enhancement money in the restoration of your rest stops. That is similar to what I'm talking about: take a portion of this and simply say we want to try to encourage this kind of activity or to do this overall kind of investment, and then you allocate it strategically to make sure that happens.

Building your rest stops and bringing those up, modernizing them is certainly one of those, so are things like the sustainable development program, so would be the locals' interest in looking at a little bit of investment to help them make a rail system transition work or a relocation work. Part of that may be not necessarily going in and doing the roadway, but something the TE can certainly do is look at a station rehab as part of that overall project, and that little piece simply makes that project more viable, but that's for them to decide and figure out. Right now the way you call for projects, it makes it hard for them to ever get to that kind of use for the Transportation Enhancement Program.

That's all I'm going to say. If there are any questions, otherwise, I'll just get out of your way.

MR. WILLIAMSON: You're never in our way. Any discussion with Glenn about this? That's a pretty good suggestion, actually.

MR. JOHNSON: Interesting approach.

MR. WILLIAMSON: Michael, have you got a comment about it?

MR. MORRIS: Michael Morris, Council of Governments staff, Fort Worth.

Just some observations, I think, along the same line to help you. I think the Dallas-Fort Worth region, because you require us to review an enhancement project because if you approve it, we guarantee in advance we'll put it in the TIP, we do not make eligible projects that are all eligible federally. We don't do courthouses in the region, so if we get a courthouse application, we tell the person yes, we know it's federally eligible but we won't put that project in the Transportation Improvement Program. So MPOs can be stronger allies, I think, by being not willing to do that.

I think your safety initiative on rest stops is a terrific example. So you can either continue to go into the enhancement program and instead of doing a call for projects, you fund a specific program, and we have long told you I think we have sent six letters to you since 1991 maybe you shouldn't administer all of the enhancement program in Austin, maybe you should delegate portions of it that are closer to the situation and building transit-oriented developments, pedestrian sidewalks to create increased density, is a way to support your transit initiative.

Now, if you want a really radical idea, one of the things we could do for you is okay, MPOs, tell us what you're funding with surface transportation funds or CMAQ funds that are enhancement-eligible. Let's go ahead and switch them out: if we're already doing a pedestrian/bicycle project and we're using STPMM funds which are flexible but you wish to encumber some of your enhancement funds, we'll go ahead and fund those projects with your enhancement money and we'll turn around and put those STPMM projects on mobility projects that you're trying to build.

So one of the concerns we've always had is this blind call for projects of which you're not implementing a particular vision or goal or program. If this enhancement program is really a tough nut because of these rescissions, there may be some very innovative MPOs could partner with the state to put them on already programmed eligible projects, therefore, the feds have them be eligible, and we'll commit our flexibility of our other funds to build other projects on the mobility side that you're not able to build.

MR. WILLIAMSON: Those are two good suggestions.

MR. MORRIS: If you don't like that, then Glenn's suggestion, continue your rest stop notion, go ahead and fund the programs that are in your goals, and either fund them yourselves out of Austin or delegate some of those responsibilities to the MPO to fund them around a particular initiative.

MR. WILLIAMSON: Wait. Hope, did you have a question?

MS. ANDRADE: I'm always interested when you mention public transportation, but will you use some of those enhancement monies to enhance our bus stops?

MR. MORRIS: Sure.

MS. ANDRADE: And I think one of the things that sometimes discourages riders is that we don't have user-friendly bus stops, and so I'm thinking they're rest stops.

MR. MORRIS: I clearly think pedestrian activities qualify for enhancements. I think there should be a policy no citizen in the state of Texas waits for a bus standing in the grass or mud.

MS. ANDRADE: Or rain.

MR. HOUGHTON: Or sun.

MR. MORRIS: And if you develop a particular program, then you could go ahead and say okay, the Texas Transportation Commission wants to implement 50 percent of the bus stops to meet this particular requirement by this point in time, and then you're not responding to a whole bunch of projects that are just all over.

Now, the other thing that always amazed me and you'd have to go back some time and I'm probably way off notes here, so I'll sit down. On the one hand you're critical that you're not funding transportation projects, and Chairman Johnson, back to your strategic plan which you asked me to sit on, you got a whole bunch of criticism by elected officials and county commissioners who argued how could you possibly have a financial crisis to convince us of when you're changing the glass in the courthouse with your money. You remember that whole disconnect. And I think, Mr. Chairman, that's what you brought up before.

So on the one hand you want to put it on transportation but you permit the State Historical Commission and who knows other state organizations to weigh in on these enhancement projects, and when they weigh in on these enhancement projects, you're watering down the transportation part because the Historical Commission will say we want you to spend it on this particular thing, and I don't know all the state commissions that are weighing in on your enhancement call.

MR. HOUGHTON: So as we get rescissions, Michael, then we just pass them down to the MPOs, you make the decision on what gets cut out.

MR. MORRIS: Well, I think there's a way that if you want to make a rescission that affects the enhancement program, maybe we wish to switch out projects that are already funded and then put those flexible funds in other projects.

MR. WILLIAMSON: That was cute. Michael wouldn't take your bait but that was cute.

MR. HOUGHTON: No, he didn't.

(General laughter.)

MR. MORRIS: No, I don't want you to take it out of some other particular program, but I understand the difficulty you've long had with the enhancement program. You don't want to alienate a whole part of the state who looks at the enhancement program as the best thing that ever happened in ISTEA or TEA-21 or SAFETEA-LU, and I think there's a way to craft an initiative that doesn't alienate that community.

MR. HOUGHTON: But you get back to the real world and the real world says we have $250 million of rescissions, it's got to come from somewhere, so we let local control determine where those rescissions come from.

MR. MORRIS: Well, we have a policy on our projects that if they're not built within four years, we're talking to the community about getting the money back. If you're sitting on enhancement projects in our region that are eight or ten or twelve years, that's a potential source for those conversations.

I think there's three or four programmatic things that can be done to assist you in that area that is very consistent on where you've started, and I think there's a way to do that without alienating the whole enhancement community so you don't have a line around this building.

MR. HOUGHTON: But some of these projects we're talking about, Mr. Chairman, are not in the urban areas, they're in Waxahachie, they're in Fredericksburg, they're in Brady, and they have nothing to do with a local MPO making those decisions.

MR. WILLIAMSON: Well, they certainly are not targeted on metropolitan Texas, that's for sure.

MR. HOUGHTON: That is true.

MR. WILLIAMSON: Okay, Michael. Thank you very much.

Amadeo, wrap up. What do you need from us?

MR. SAENZ: We will continue to push in the direction of trying to get the enhancement funds with more flexibility, and I guess just make sure we have the support from the commission. This would allow us to use them for enhancement projects if they're needed that way, if you choose, but also if we run into emergencies such as hurricanes, wildfires, then we would have the flexibility to use those dollars to address those needs, and then in the future we can do enhancement projects at a later time.

MR. WILLIAMSON: I think that staff ought to consider building a plan for our consideration that touches on the following: some sort of formal communication, something more than what we're doing now, Coby, to our two senators and our entire congressional delegation, to the governor, lieutenant governor and speaker, sort of identifying the problem and recommending that the entire state sort of take a united approach to this which is we really wish people in Minnesota would not tell us how to spend our scarce 70 percent of our federal gas tax dollars we get back.
I think the plan ought to include let's have a visit with Glenn about his ideas on sustainable development in communities, let's get a few more comments from Michael about how we might make this more of a grant program to the MPOs, letting them worry about distributing it.

Anything else in the plan, members, you want to see?

(No response.)

MR. WILLIAMSON: I think we just develop a good plan for our consideration at some point in the future. I want to be sure you're given enough for tomorrow and I want to be able to be sure you're armed with sort of where the commission is on this. I wouldn't want, Ted, for you to think that I don't believe that we're united in going in there and putting our finger in Jim Pitts' eye, but I think we have to be kind of direct about this in an era where we're asking people in Dallas and Austin and San Antonio and Fort Worth and Houston and El Paso to pay tolls because we don't have enough money to address congestion with tax money, it is becoming increasingly difficult to justify routing $270 million every four years towards non-congestion, safety, air quality, economic opportunity or asset value sources of expenditure.

I'm sure that their viewpoint is going to be okay, fine, but you're required to do that so why are you not doing it until the federal government doesn't require it, and I think Glenn and Michael maybe have given you some good answers, you know, there are other ways we can spend this money that make more sense from a congestion standpoint.

Anything else from us, Amadeo?

MR. SAENZ: And the other issue with this thing is the position that we've taken on the rescissions where, in essence, we're keeping the money with the most flexibility so that we can use it and it's the decision of the department.

MR. WILLIAMSON: Just check with all commissioners as each rescission comes down the pipe.

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: Michael, let's take up item 5, please.

MR. BEHRENS: Okay. Item 5 is going to be a report on the work of our hurricane work group that I appointed after the hurricane in September, and I appointed Carlos Lopez and Lonnie Gregorcyk to chair that committee, and they've been working also with the other task force, the governor's task force and the one that you appointed also, Chairman, to research some of the things from the outside, and they're going to give you a report on how all that's coming together. Carlos?

MR. LOPEZ: Thank you, Mike. Good afternoon, commissioners. My name is Carlos Lopez and I'm director of the Traffic Operations Division, and as Mike said, with me here today is Lonnie Gregorcyk, the district engineer from Yoakum that's going to help with this hurricane preparedness report.

Commissioners, last fall we got hit by a pretty big storm. We've been hit by big storms before. In fact, Brett in 1999 was actually a stronger storm than Rita was when it came onshore, but this one was real unique in that as it was approaching Texas, it became the most powerful storm ever recorded on record, and the potential cone of impact kept moving from west to east. So what it did is it caused evacuations to start from Corpus all the way to Port Arthur as that cone of impact was moving, and it severely tested all of our infrastructure and it also tested every bit of planning we'd been doing up to that point.

From the Monday to the Friday before Rita hit, millions of people in millions of vehicles and as Amadeo said, I think we had 1.8 million vehicles and 2.5 million people leave the Houston region alone left at that time. Now, people got out of harm's way, they got out of the way in time, but not without some consternation. So clearly there were some things that we could have done better and clearly there are things that we can do to improve.

After the storm, as Mike said, he asked all TxDOT employees to give us their ideas and suggestions on the things that we did well and on the things that we could have improved on. Shortly thereafter, Mike formed the internal Hurricane Task Force that was made up of representatives of the coastal districts, the inland districts, and various divisions and offices, and then he asked Lonnie and I to chair that group.

When all the ideas came in, we categorized them into four different areas: logistics, purchasing, operations, and communications. So what we did is we subdivided our group into four subgroups to further analyze those ideas and see what could be implemented. So when it was all said and done, about 48 of those ideas were deemed to be implementable, and in fact, most of them will be implemented by next week.

Now Lonnie is going to come up right now and talk about the logistics and purchasing areas, and then I'll close with the operations and the communications part of the improvements that we're going to make. So Lonnie?

MR. GREGORCYK: Thank you, Carlos. Good afternoon, Commissioners, Mr. Behrens. I am Lonnie Gregorcyk. I'm the district engineer in Yoakum, and I'm very pleased to have this opportunity to present to you all the work that many have been working on on the Hurricane Task Force group. The two areas that Carlos mentioned I'll be talking about are logistics and purchasing.

And I'd be remiss not to mention, too, that having an opportunity to work through several of these events, the department enjoys a very fine reputation responding to emergencies, whether it be a fire or an ice storm or a tornado or a flood or a hurricane. And there's we've spent many decades developing that reputation.

This last event heightened our awareness in hurricane evacuation planning or mass planning. And I think that was really clearly the big difference. We've gone in and cleaned roads up and gotten things cleared up for our emergency responders for long term, like I mentioned. But just the magnitude brought that awareness.

So in the logistics area there's basically you can kind of fold it into two primary large envelopes. And one of them or the first would be the movement positioning of personnel, equipment, supplies for both our evacuation, which is new to us having to move that many people in position and to support those evacuations and then formalize the reentry of the post-landfall event.

And then the internal communications that would be the other portion of the another envelope that we surely experienced some growing pains last summer.

We have developed plans at this point for pre-staging equipment, personnel, and supplies. And those plans were we had a trial run here recently, and we did find some things that we could fine tune. But, by and large, it went very well.

We expended our courtesy patrol operations in more of a formal operational aspect because in many of the rural areas of the state we don't traditionally run courtesy patrols day-in and day-out. So there's some training, some staffing, and then sharing of duties between districts.

We looked at our facilities to find out where can you house these personnel for overnight stays and to supply and having a plan in place so that those things can be moved quickly.

We developed guidelines for our crews being sent in so that they know what to take, what we need to have there, what needs we need to be able to sustain them.

And the fuel, which is, of course, one of the largest the most public items that we encountered that was kind of a new item we're working with industry, as our Governor has directed. And the industry has taken the lead and they're assuring that they're going to do everything in their power to keep stations full.

Come off of that though and we are we do have a plan that in case we do have some shortfalls that we will be able to take care of some things, especially directing traffic to ramps, where we'll have queuing links and then stations that we do have some security to get trucks in and out to keep fuel coming into those locations.

Again, the industry's taken the lead on that and hopefully that is out in the public. I know that's been a concern of ours, and it looks to really be going in the right direction.

Internal communications was very chaotic in those early morning hours putting this contraflow plan together. My experience was with the Houston District and the San Antonio District putting those personnel sharing employees and developing a plan.

And the probably the brightest point of our trial the other day was the communication. We put together emergency operation centers in each district. And we that way you have all the folks in that area to be able to answer those quick we're getting consistent, timely, accurate information to a very large audience.

We've also expanded our hard communication items, such as BlackBerries to critical staff. Satellite phones are installed to this point. And our Texas of course, we have our radio system to fall back on. I commend Zane Webb and the maintenance division for the work they've done in the logistics area and they've done the yeoman's work for us there.

In purchasing while I'm commending folks, Scott Burford and his folks not just for the work they've done on this task force, but for the innovative solutions that they developed last summer while we were trying to figure out how to purchase things that we hadn't done before. Things a lot of new things were coming at us, and they did a very good job of doing that in a timely manner.

There's always room to improve. And we have we've got our focus on, you know, our public and personnel how do we serve them during evacuation and also later for the re-entry.

We've identified existing contracts where we can utilize our private sector partners to help us to do things such as traffic control. We had a little experience with that last season. We'll expand that in the future events.

We've developed guidelines for purchasing, both rapid purchasing and stock items for things such as cots, blankets, MREs, and others. And we also found an item that probably came to light, especially in Beaumont how do you deal with our personnel issues mail, pay warrants those people that are without anything. So they're working on a plan for that.

I feel like the logistics and purchasing end, as well as the items that Carlos covered, we're in very good shape. We're moving forward. Hurricane season's starting next week and we should have we will be much more efficient and coordinated in this next event.

So at this I'd turn it over to Carlos for the operations and external communications.

MR. LOPEZ: Now everybody remembers the pictures of Houstonians trying to get out of town as Rita was approaching. There was gridlock and it took many hours, and sometimes even days for people to get to their final destination.

Prior to last summer there was not one plan for contraflow anywhere in the Houston evacuation plan. The plan that had been in place was for the people in the surge zones to leave and for everybody else just to ride out the storm.

But, you know, with Katrina so fresh on everybody's mind no one wanted to be that person on the roof getting rescued by the helicopter. So everyone left.

Well, now we have contraflow plans in place. In fact, we have plans for over 1,000 miles of Texas highways in place. With the help of TTI we've developed plans contraflow plans for U.S. 281 and U.S. 83 out of the Valley, IH-37 out of Corpus, IH-10 out of Houston, U.S. 290 out of Houston, IH-45 out of Houston, U.S. 59 out of Houston, and U.S. 69 out of Port Arthur and Beaumont.

We've also estimated the manpower needs to make all of this work. Now, in the very unlikely scenario that every highway would have to be contraflow at the same time it would take up to 2,200 people most of them TxDOTers and not law enforcement to man all of the ramps and all the driveways that we'd have to close off so that people wouldn't go in the wrong direction.

And there's always going to be the issue of keeping those folks supplied with food and water and to get new reinforcements in, which is a very big challenge.

Now, when we did the hurricane unison exercise earlier this month we simulated contraflow on all these roads, and in no case did it take more than four hours to get a road contraflowed. That was a simulation, but we think we've got it down now where when we get the go order we can make it happen real quick.

However, as we've tried to tell our friends over in Emergency Management, contraflow has a window it's got a window of opportunity. You can't do it too early you don't want to do it when your roads your outbound roads are still something like 50 percent capacity and use up all your personnel and stop resupply of those larger cities by starting it too early. You also don't want to start it too late because then you get those pictures of everybody trying to get out of town.

One other thing we're going to try to do on a few highways to kind of preempt the use of contraflow is what we're calling evacu-lanes. And that's on certain highways where our shoulders are wide enough that we can open those up to traffic outbound traffic just by flipping down signs and maybe get some capacity enhancements that way before going through the contraflow option.

We did that on I-37 in Corpus coming out this past year, and we never had to go to contraflow on I-37, even though we did have plans in place for contraflow there because we were able to add that 25 percent capacity right away.

We also have that plan in place for U.S. 69 coming out of Beaumont and we're hoping we can use that there instead of having to contraflow that road because that's a non-control access road and there are a lot of driveways a lot of roads that come in. And that's the one we've had the most concern about.

Now, under Houston's leadership we've also installed more cameras at some of the critical locations that we're going to be able to track the traffic conditions and help us manage flow better and also put appropriate messages on our dynamic message signs all across the state.

This whole exercise also has allowed us to enter to identify a number of bottleneck projects that we could do, a number of ITS type of installations to help hurricane evacuation up to $195 million worth which might be another good idea for enhancements to use the dollars there.

Another communications area Randall has done a very good job of trying to keep our communication plan focused. Tomorrow the Governor will shoot two PSAs a 15-second and 30-second PSA at the State Operations Center that will focus on preparedness. He'll mention to folks about being ready, to have food and water, some cash, take their medicines with them when they need to leave, to call 2-1-1 if they need more information, or go look on Texas Online for a common website.

We're also working with the Governor's Office to develop that common disaster website, which would be Texas Online that they'll have links to all the different agencies that have information. And that way Texans can go to one place to get the information they need.

We've also made improvements through our highway condition reporting system where we've put in a contraflow type of icon so when a road is contraflowed people going to that particular site, they will know the limits and more or less a duration that they might expect that condition.

We've developed some regionalized evacuation maps that can be easily handed out at places like HEBs or put in mail stuffers. They have common routes out of any given area and not necessarily focusing only on the contraflow routes. The main point of these maps is to show folks there are a lot of ways to get to point B, and it doesn't necessarily have to be the main highway. And on the back of those one pagers we'll have helpful tips on things to prepare for similar to what the Governor will talk about in the PSAs.

Also we're training TxDOT personnel on how to handle stressful phone calls. A lot of those came in as Rita was approaching. And I think when people hear a calm voice on the phone it makes them feel better and confident in the information that they're getting.

A lot of these short-term communication goals are going to dovetail real nicely into the mid-term and long-term goals that are being studied through the GBE study. And it's going to help us get better as the years go along. In fact, that study's going to highlight a lot of different type of preparedness type of issues that will help us improve as every hurricane season that passes.

In closing, I want to thank all the folks that were involved in helping look at these ideas and get these implementation plans in place. They've worked hard, long hours and spent just a lot of time making us get to this particular point.

Like Lonnie said, we're ready much more ready than we were last year. But it sure would be nice not to have to use any of these plans this season. I'll answer any questions.

MR. JOHNSON: Ted, do you have any questions or thoughts?

MR. HOUGHTON: No, just a comment. Carlos, congratulations to you and your group that it's a labor of love and, Lonnie, for the work that's been done. And like you said, I hope we don't have to use any of these measures.

MR. LOPEZ: Thank you, Commissioner.

MR. HOUGHTON: And my congratulations to you all.

MS. ANDRADE: Carlos, I echo what Commissioner Houghton said. Thank you for all the hard work. And we've got a good sounds like we've got a good plan. My question is on public education. How do we help a resident decide whether he or she should evacuate or not?

I think that what happened the last time is we all reacted from what we saw on T.V. with Louisiana. And so, you know, there's not everyone has to be evacuated. How do we educate do we have a checkoff list? Do we have

MR. LOPEZ: Yes, that's a good question, Commissioner. In fact, part of that disaster website is going to be broken up into different areas. And one of the suggestions that Randall just sent in is the first thing would be should I stay or should I go.

MS. ANDRADE: Right.

MR. LOPEZ: And it's going to have like about eight questions. You know, are you ready to be without electricity? Do you have a place to go? Do you have a vehicle? All that kind of stuff. And at the end it says, You know, if you answered no to most of these then you might be able to ride it out. But in the end it's going to be up to that individual person's decision because we really can't just tell anybody, don't go anywhere. But at least we take

MS. ANDRADE: They'll have some guidelines.

MR. LOPEZ: Right.

MS. ANDRADE: And then how do we educate the public that that's

MR. LOPEZ: That's going to also be available through the Governor's PSA.

MS. ANDRADE: Okay.

MR. LOPEZ: We're going to say call 2-1-1 or go to this website

MS. ANDRADE: Okay.

MR. LOPEZ: for more of that type of information. But the secret's going to be Commissioner, as you know with all PSAs we just need to get that played.

MR. GREGORCYK: Observations from the GBE study that they're working on now is we need it really right now before the to get folks to start thinking that way.

MS. ANDRADE: Well, and I think, you know, what's happening is that we're reacting. And I think we just need a calming source that says, Oh, okay, I don't have to evacuate yet, and let those that have to evacuate get out.

MR. GREGORCYK: And as the Governor's developed the RUCs that will help in having that unified decision versus one county versus another getting a little bit excited and

MS. ANDRADE: Right.

MR. GREGORCYK: some of those hopefully we learned a whole lot in that area as a state.

MS. ANDRADE: Right. Thank you very much.

MR. JOHNSON: A couple of observations. First of all, Lonnie, you mentioned about our experience in emergency management. And one of my assumptions, or at least my conclusions, has been over the years it sort of has been taken for granted. I think that this department has gotten so experienced and so good at what it does that it has gone unnoticed. And I think that's excellent that it does get unnoticed that we do what is required and then more and we meet the difficult circumstance and solve the issues at hand.

Clearly, the vivid pictures of the Katrina the Rita evacuation are still in our minds, and it's appropriate that we have these discussions. But we've had hurricanes before, and we've handled those crises very effectively. We just have not had one of the magnitude that disenfranchised dislocated so many people as Rita did.

And to learn from that circumstance and to improve, I think is an excellent opportunity. It doesn't go without saying that it's unfortunate that so many people encountered so much difficulty. But, as Hope says, external communications are vitally important in letting people know that they should evacuate and when they should evacuate is critical to what's going on.

And, plus, as we discussed yesterday, where there are circumstances that people will not have a choice in the routing. There might be if you go this way that when you encounter Interstate 10, or whatever the evacuation route, you will be required to then head west in the contraflow lane.

Also the decision making on when we do go contraflow is, as Carlos pointed out, extremely critical. It's you can't do it too soon because there's a lot of deployment that has to come into the region. But you don't want to do it too late where we repeat some of the things that happened during Rita.

I'm encouraged that business the business community especially the fuel suppliers have taken such an engaged role in your task force. And I'm also fascinated by the point that not only have we used members of your committee that are coastal, but those that are non-coastal, because this affects a huge portion of the state, and actually beyond the state, when a storm or a situation of this magnitude occurs.

One thing that I don't know whether we have considered or not but it's the impact on where people end up. The our Gulf Coast, particularly the greater Houston area, was impacted considerably by Katrina refugees.

Likewise, should there be another storm along the Texas Gulf Coast you mentioned U.S. 69 that cannot carry the number of people that an I-10 or a U.S. 290 can carry. Plus, the places where people can stop and be comforted and aided are fewer up U.S. 69.

And so, likewise in the Valley, where 281 and 83 I believe are utilized I think we had the same circumstance where you had a lot of people in the Rio Grande Valley area that might want to leave and but their destinations might be limited on the ability of those destinations to handle the influx.

And so I'm curious as to whether the consideration was given as to number of beds and places to eat and medical facilities and all the considerations that have to be considered that impact, you know, where people are going to finish their journey to seek refuge.

MR. GREGORCYK: We looked at the traffic end of it and now there is I think that GBE is looking at some of the special needs and some of those exactly what you are saying how many beds are available in San Antonio, how many are in Austin, and where did people actually go.

So some of that is being looked at. We didn't we have not looked at to date here, Commissioner, unless we you feel like we need to take that at least and capture what they've already done and see if we can't move forward.

But I think it was interesting from the poll that they did in the Houston area a large percentage of them went to Austin. And I was expecting San Antonio to be a higher percentage. And they were up there, but Austin was a prime destination.

MR. JOHNSON: It's a great destination anyway. You know, the other thing, when the movement of people who are affected you know, the elderly, the disabled people who just cannot fully take care of themselves. And, you know, certain areas along the coast there is a greater population of those type of people. And so that's going to be something of vital importance, especially on the destination side of it.

MR. GREGORCYK: And I do know there was a reference to that in the executive order to for an assignment in that area.

MR. LOPEZ: And that's something Jack Collin and them are taking a very close look at. They've done an inventory of all the hospitals and they've already had contracts on board with buses and people like that that can transport folks that may be in hospital beds to other places.

MR. JOHNSON: Well, I'm going to echo what Ted and Hope said. I think you all have done tremendous work on this, and hopefully that we won't any time soon have to engage this plan, but we'll be ready.

MR. LOPEZ: Thank you, Commissioners.

MR. JOHNSON: Mr. Chairman, do you have observations?

MR. WILLIAMSON: (No response.)

MR. JOHNSON: Thank you.

MR. LOPEZ: Thank you.

MR. JOHNSON: Well, I reluctantly turn this meeting back over to you.

MR. WILLIAMSON: Yes, sir.

MR. JOHNSON: Thank you, Carlos and Lonnie, for your work.

MR. ANDRADE: Mr. Chairman, I need to it's for the record it's one o'clock and I need to be excused. I have to be back in San Antonio by 3:00 to attend my grandson's kindergarten ceremony.

R. WILLIAMSON: Well, please go and enjoy that most important event.

MS. ANDRADE: Thank you so much.

MR. HOUGHTON: You haven't seen the new rocket sitting out in the parking lot, have you?

MR. WILLIAMSON: No, I haven't.

MR. BEHRENS: Okay. We'll continue. We're going to go to Item 9a. We'll get Coby to come up here and talk about our legislative agenda and recommendations on how we can use that to improve our operations.

MR. WILLIAMSON: And, Michael, if you want to start preparing your people we're putting this in for a particular reason and you'll be coming up pretty quick. (Pause.) Did that catch you off guard?

MR. CHASE: Yes. In a word, yes.

MR. BEHRENS: I warned you, Coby.

MR. CHASE: For the record, my name is Coby Chase, and yes, I am the director or TxDOT's Government and Business Enterprises Division. My appearance today is part of our continuing monthly discussion in preparation for your legislative agenda for the 80th session of the Texas Legislature. If anyone is wondering, it is set to convene Tuesday, January 9, 2007.

One short mention, going back to the enhancements discussion the Chairman had asked if there were any more rescissions on the horizon. There's one that is kind of an interesting one that I think kind of gets to our one of our central tenets in federal funding is that the federal financing system is kind of flimsy in some respects.

But in the Senate version of Transportation Appropriations there is a $50 million rescission that's applied to every single state. And Texas' share of that would be a little over $4 million. California has a slightly higher share, but it's spread out evenly. But it's all designed to build one road in Montana. So it's every state has to pony up money to build a road in Montana.

MR. WILLIAMSON: Is that the road to the sun or the road to the stars or

MR. CHASE: Something to that effect. I would hope it's something

MR. WILLIAMSON: The something-something Senator reelection road?

MR. CHASE: Exactly something kind of spectacular and touristy sounding. And it

MR. WILLIAMSON: So not only do we rebuild courthouses, but we also pay for roads in Montana.

MR. CHASE: So far.

MR. WILLIAMSON: While we ask our people to pay tolls.

MR. CHASE: Right. It could be stripped out by the end of the day, but right now that's in there. I just wanted to make that point.

The Commission State Legislative Program I'm going to begin today by recapping all proposed issues that I have discussed or mentioned to you since January. I am reiterating these to you today for the purposes of clarifying pardon me of clearly identifying these as issues which would be we have either initiated research or we'll research for possible inclusion in your report to the Legislature. I'll go through these briefly and quickly.

We are studying methods to capitalize the Rail Relocation and Improvement Fund. In addition, we'll be looking at several other rail-related initiatives, including the use of funds from the Texas Enterprise Fund on rail projects.

We also should make explicit TxDOT's authority to study and plan state and other entities rail projects. And we could seek authorization to use CDA concession fees and surplus revenue on rail relocation projects as well.

We'll be undertaking a wide-ranging review on updated laws governing Comprehensive Development Agreements. This will include use of CDAs for all types of projects, removal of the expenditure cap, and a look at the concessions terms of the CDA the ability to essentially buy out the concessionaire's interest in the project clarifying that a private participant in a CDA has the same authority to enforce the payment of tolls the same way that TxDOT can. And we must address the Sunset date of our authority to enter into CDAs.

We will examine numerous revisions to the laws governing toll roads. We should study the authority to issue revenue bonds for the purposes of acquiring existing toll roads and bridges and then also consider additional ways to enforce the decision against those who are convicted of a certain number of toll violations, such as blocking motor vehicle registration and driver's license renewals.

We will certainly recommend the authority to establish sobriety checkpoints. We will study pursuing limited delegation of environmental oversight to TxDOT as authorized under federal law that is, to match up with the SAFETEA-LU flexibility program that Senator Inhofe put in there and added Texas as one of the states to allow us to do some of the environmental oversight that currently the Federal Highway Administration performs.

We will recommend pursuing a quality-based best value approach to the procuring of professional services, specifically engineering services. We are studying a system of secured temporary tags required for all motor vehicles sold in Texas.

We will recommend seeking the authority to acquire property from a willing seller in advance of completion of the environmental process. We will recommend eliminating the taxpayer subsidy utility companies realize when we have to relocate their utilities along interstate highways.
We will research and recommend that the existing oversize, overweight permit fees that are statutorily directed to the general revenue fund be redirected to the Texas Mobility Fund. And that represents about $20 million per year.

We will study city ordinances that could allow for the relocation of billboards instead of ordinances that disallow this. Acquisition of billboards is much more costly to us than relocating them.

We will recommend seeking authority for local governments to lease their international bridges. We will examine revising the state law that allows cash distributors to retain 2 percent of the motor fuels tax collected. This 2 percent may exceed their cost of administrating their portion of the state's tax collection requirements.

We will once again recommend that the proceeds from the sale of surplus department property and rights of way be directed back to the State Highway Fund. Although this is certainly a contentious issue we will take a look at the possibility of the department being granted the right to enter property for the purpose of conducting appraisals.

We will once again recommend that counties be granted the authority to require developers to set aside property for future transportation corridors.

We will research whether it makes sense to authorize the department to set variable speed limits based on current conditions, such as inclement weather, traffic crashes, and work zones.
And then, finally, of course, we are studying the placement of utilities within our rights of way with an eye toward optimizing that placement and perhaps looking at requiring the leasing of TxDOT property for that purpose.

These are the issues that I have brought up thus far in my presentation before you this year. We have either initiated or will initiate further research on each of these.

In summary, I wish to be clear we are putting the public and other interests on notice that these are issues which may be finally adopted by you in your report to the Legislature on proposed changes in law which will improve the operations of the department.

What I understood to be added today I'm going to move into issues that have been proposed from within the department that I haven't really raised before. But what I understood may have been added today and I would like to seek clarification is the ability to move concession payments to the Texas Mobility Fund we are looking into that. That is one of the items we're into. And the other is to remove or raise the $3 billion cap on state highway fund debt.

MR. WILLIAMSON: I'm going to ask Ted to help clarify, but as I understood the dialogue between he and Michael or maybe it's he and mayor maybe it was Michael. At any rate the question was if you negotiated the CDA to build, for example, State Highway 121, and part of your negotiation as the COG or the RTC was that you would receive 20 percent of the gross revenue from toll collections.

Could you then pledge that revenue stream against up to secure a bond to go build some other asset, whether it's a toll-generating asset or a non-toll-generating asset. And we thought maybe the answer would be yes, and we were told the answer was no. That's when I leaned over and said, Coby, legislative agenda. So if that needs clarification, Ted, you're on.

MR. HOUGHTON: That's accurate. That's an accurate statement.

MR. CHASE: Okay. That is something we are not looking into right now.

MR. HOUGHTON: Whether that goes into the mobility fund or

MR. WILLIAMSON: See, I would think we wouldn't want it to go in the mobility fund because what we're trying to do is line up decisions and authority to act and revenue with the regions.

MR. HOUGHTON: In the regions. Right.

MR. WILLIAMSON: What we want to do is put the regions in the position of saying, Okay, let's negotiate for a piece of the action, and let's be able to pledge our piece of the action to go ahead and

MR. HOUGHTON: Bond against a revenue stream

MR. WILLIAMSON: Bond against revenue

MR. HOUGHTON: to build something else.

MR. WILLIAMSON: to get out ahead of that cost inflation problem that they spoke of earlier.

MR. HOUGHTON: Of course, if there was an RMA in place in that region they could do it themselves

MR. WILLIAMSON: Okay.

MR. HOUGHTON: without legislation.

MR. WILLIAMSON: Well, I'm going to ask a little bit about that in a moment. That was the reason why we put Coby immediately in front of the North Texas matter that we're fixing to take up.

MR. CHASE: Okay.

MR. WILLIAMSON: And what was the other one?

MR. CHASE: Remove or raise the $3 billion cap on state highway fund debt. Did I hear that correctly?

MR. WILLIAMSON: We do want to kick that idea around. Although, as you know, the commission's very reluctant to indebt the general to the state highway gas tax. We're very reluctant to do that.

MR. CHASE: Yes, sir.

MR. HOUGHTON: Unless we get an increase in the gas tax that's dedicated to the leveraging.
MR. CHASE: And a decrease in rescissions.

MR. WILLIAMSON: I have a couple more I want to add to it.

MR. CHASE: Okay.

MR. WILLIAMSON: I think I would rather listen to your list you're fixing to tell us you're thinking about adding.

MR. CHASE: Yes, sir. As I mentioned to you last month we received through the standard internal solicitation process numerous positive ideas for improving the department's business operations from the districts, divisions, and offices.

A very few of these I mentioned last month, but I wish to go ahead and bring several additional ones up with you which warrant at least further exploration on our part. In ensuing months I'm certain I'll be mentioning a few other issues.

The first of these is the requirement that motor vehicle dealer licenses be renewed annually. With literally thousands of licenses being renewed this creates a continuing backlog and has stretched department resources. We should study increasing the duration of these licenses to at least two years, and possibly longer depending on your wishes.

Depending on the during the final hours of House Bill 2702 last regular session an important provision regarding the department's involvement in the Medical Transportation Program was inadvertently omitted. The purpose of the amendment was to make it clear that the role of TxDOT in administering the Medical Transportation Program is limited to the actual delivery of a public transportation service for clients in eligible programs.

This still may need to be clarified and, as a minimum suggests, further research on the issue. And what is kind of the heart and soul of that is there were certain things that defined case management, client case review, coordination of benefits, and other parts of law, but it wasn't put into the Transportation Code. And I think that is the largest part of that that item there.

Then there is the issue of the department's ability to pay for exempt employees' comp time compensatory time. We are authorized to pay for non-exempt FLSA employees' unused comp time, but we are specifically prohibited from doing this for exempt employees.

And considering we're demanding more of our work force, not only with new programs and when disasters strike as well, it makes sense to maximize the incentives to work longer. So it is the ability to pay overtime in more situations than are currently allowed.

Since I last addressed you well, let me say one thing. Since I last addressed you and I have said this every time I've appeared and this being the fifth time this year that our door in the Government and Business Enterprises Division is always open to somebody who has an idea, comment, or suggestions and wants to sit down and talk.

And I had my first official visit last week by Ben Herr from the Texas Transit Association who said, I might be here just because I'm new, but I didn't think you were kidding when you said you'll sit down and talk. And we had Jefferson Grimes and I had a very lengthy and productive discussion with him and some of the things the Texas Transit Association are considering for next session. And we're passing some ideas back and forth, and I think you'll be hearing about those a little more in the future.

But it was refreshing to know, one, that somebody listens, and, two, they took us up on the offer. We've had one or two others contact us generally about placing utilities in the right of way, but I wouldn't consider those full-scale meetings on broad legislative items. So that was heartening.

Since I last addressed you the third called session of the 79th Legislature has drawn to a close and Governor Perry's property tax reduction and public school financing packages are a reality.

During this time period though the House Transportation Committee met to discuss their interim charge regarding placement of utilities in highway rights of way. Mr. Behrens provided testimony and the Committee heard from several utility companies.

The hearing provided an interesting discussion and I think a healthy one about the presence of utilities in the right of way and opened the door to the idea that it be viewed more on an asset management basis rather than the first come, first serve system it tends to be today.

And then by the time I am before you next month we will have been involved, as has been mentioned today, in at least two legislative hearings I wish to mention.

The first is tomorrow here in Austin. Commissioner Houghton and Mr. Behrens will be appearing before the House Appropriations General Government Subcommittee, which is part of the same interim charge they have every interim about monitoring the work of all the agencies under their jurisdiction. We will be discussing a wide range of subjects, including the transportation challenges and opportunities facing us.

And then on June 13 Chairman Williamson and Mr. Saenz will testify before the Senate Transportation and Homeland Security Committee in Fort Worth to discuss CDAs, TTC 35, and rail.

Those are my prepared remarks for today. Any questions, suggestions, or additions? I'd be more than happy to take them.

R. WILLIAMSON: I'm going to have a couple. Members? Would you care to go first, Ted? Anything? (No response.) John? (No response.) Coby, do you know and, if not, perhaps Richard or Bob, do you know, did the Legislature adopt any kind of standard for establishing the value of a home or a business with regard to the property tax cuts? Did somebody tell me that what you carry as insurance can now be used as a standard for evaluation? Don't know?

MR. CHASE: I don't know. We'll find out though.

MR. WILLIAMSON: I know it was talked about. I'm just not aware of whether or not it was adopted. I want to add to the research portion of GBE whether or not we could ask the Legislature to recognize insured value as of the date a highway construction project was approved as the barometer for value for purposes of purchasing or condemning land.

And the other thing I want us to research is whether or not the Legislature can establish a date matching up with our decision to build a highway construction project as the as of date we evaluate the land for the purpose of purchase and condemnation. I'm not sure about the constitutional issues, and we've got a great legal staff that will guide us in the right direction.

But it occurs to me as the state enters probably a ten-year era of adding capacity to the state system unlike it's ever had we're going to be almost daily confronted with the following scenario. A person owns land. We decide in the best interest of all the people of the state that a road has to be built. The person has the land valued at ag value and the house insured at $50,000 and now the road's coming so let's divide it into ten ten-acre parcels and let's insure all the structures for half a million dollars and let's attempt to make our land worth 3 million when it was only worth 100,000 when the decision to build the road was made.

Let's subdivide, let's get the county to cooperate in the subdivision rule, let's get the city to annex or whatever. It's not that I blame people for wanting to maximize the value of their property. I would probably do the same thing if it were permissible by law.

That's not the point. I want to research what we can suggest to the Legislature can be done, not only for the Texas Department of Transportation, but for NTTA, CTRMA, Alamo RMA, HCTRA, the City of Fort Worth, and whoever else to address what I think is fixing to become a pretty sizable cost issue.

MR. CHASE: Okay. Absolutely.

MR. WILLIAMSON: In addition, and to the nut of why you came up in front of the item on 121, I've listened carefully the last couple of months and I've read the newspapers and I've watch the television stories and I've agonized about this 121 business. And I got there were a couple of messages that came through real clearly to me.

One, that certain local and regional leaders either chose not to listen or were purposely confused about the role we play in the CDA process at the local and regional level. That came through real clear. That's I think probably a communications matter.

But what also came through very clearly was that there doesn't appear to be an easy, non-private alternative to the private sector CDA process if for whatever reason local and regional leaders want the power of competition to drive them towards a price, but perhaps don't want their road to be in the hands of only a private entity for a period of time.

Now, I wouldn't want anybody that's watching this broadcast or watches the tape later to be confused by my message. I myself believe in the power of competition. I believe in the power of the marketplace. And I do believe generally things owned and managed privately run more efficiently.

They don't always run more effectively, and they're not always the most comfortable for people. I recognize that. That's why cities and counties and states generally to this day operate 99.99 percent of the prisons in this state. People just generally aren't comfortable with the private sector for incarcerating their criminals.

And it may be the case that people generally are not as receptive to a local toll road being owned by the private sector as they are with the Trans-Texas Corridor. With that thought in mind, and, yet, knowing that we need the power of competition, I want us to research how we do two things how we position HCTRA and NTTA and Fort Bend County Toll Authority and the others, which I think we have two or three more set up to compete in the same manner as the private sector.

And I want us to research how the Texas Department of Transportation can create a division not in a district, but a division that can also compete for those projects. But it's got to be in a way that Kiewit and NTTA really believes that the competition is fair that they're adhering to the same actually it's got to be in a way that the RTC believes that the competition is fair and that everyone's pushing and pulling at the same competitive level and that the proposals are analyzed exactly side by side so that when the RTC makes a decision about Fluor, NTTA, TxDOT Toll Division, they've made the decision that's in the best interest of the state and the regional and local government, whatever that is.

Now, it may be we can't get to where I want to be, but I want the research section to at least begin to look at that. Because it was very clear to me watching all this what I frankly consider to be nonsense that there is a gap in there that we need to address about the public's comfort level on these proposals.

MR. JOHNSON: Mr. Chairman, I'm glad that you've brought that up. To my way of thinking competition is the keenest, the most inclusive it is. And if we excluded either the public entities or the private entities to the benefit of the other it occurs to me that we are not getting the most keen competition. And my sense is that the State and the users of the system and the local community are better served by getting the best value which is going to result from the most competition.

MR. WILLIAMSON: Ted, have you got any sense about that?

MR. HOUGHTON: I've been an ardent proponent of the competition, whether it's the public sector or the private sector, and it's transparent completely transparent at the time it is on the same Michael, on the same level playing field. Allan, you and I have discussed it whatever legislation needs to happen.

I will say here and I've said it privately to Allan and I've said it to others that the business models of NTTA and HCTRA are old. They're operating under a very old system. They need to update that system if they're so willing to do now.

MR. CHASE: Well, could we make the statement, Commissioner, that we're operating under an old system too in that same sense?

MR. HOUGHTON: Well, we are. Yes, but we have legislation that has turned this thing around 180 degrees, and just now at about 90. We're not even

MR. CHASE: Right.

MR. HOUGHTON: completely turned yet. So I do believe that, whether it be NTTA as a successor in north Texas or HCTRA in the Houston area, they need to have the tools to compete on a level playing field. That's enough for me to say.

MR. CHASE: Okay.

MR. WILLIAMSON: You know, and I just you know, I watched all this. And, Bill, you and Maribel did a great job of I think trying to balance everything out. But it occurred to me we just need to, as much as we can, eliminate the excuse some are hiding behind to confront the hard choices that have to be made if we're going to get out of this mess by 2030.

And one excuse you can hide behind is, you know, TxDOT wants to take our money and send it to San Antonio. And TxDOT's in the pocket of these private sector guys. I mean, we have to eliminate you know, you should never argue with fools and you should never debate misinformation. That's a waste of time. And we need to do what's necessary to eliminate that.

You know, people at the local and regional level who we're empowering to make decisions who are going to hide behind dishonesty we've got to eliminate that.

MR. HOUGHTON: With that, Mr. Chairman, though I believe that the change comes from within, not from without. So it's

MR. WILLIAMSON: Well, I know it's been distressing to you, and it's been distressing to me, and it's fixing to be very distressing to John down in the Houston area. You know, when we pick up a newspaper and read a board member being NTTA accusing us of things, and we don't even know who in the hell that guy is, it's very distressing. I want to eliminate that.

MR. HOUGHTON: Yes, and that

MR. WILLIAMSON: I just

MR. HOUGHTON: That change has to come from with inside those organizations if they're so willing to compete and change the business model. That's pretty obvious to me, but that's just my opinion.

MR. WILLIAMSON: And we're fixing to go through this in Houston because we're beginning to get the same push back from certain local and regional officials in the Harris County area. And I just don't want them to hide behind dishonesty. If they want to be for or against something they need to be for or against it based on reality, not based on monsters that don't exist. So I want to work on that.

MR. CHASE: Absolutely.

MR. WILLIAMSON: And I want to talk about it every meeting from now until the time and I don't want anybody to act surprised. I want them to know that we've decided to look into this. Was there anything else that we needed to add to Coby's list, gentlemen?

MR. JOHNSON: I missed some of his presentation earlier when we talked about the getting the ability to leverage positive cash flows from total projects either by extending the amount, which is our limitation right now $3 billion or getting the ability just to dedicate those streams to leverage.

MR. WILLIAMSON: I think what we instructed him was we want to develop legislation that would permit NTTA, HCTRA, or RTA any regional MPO organizational structure to leverage those payments in order to create debt create cash.

MR. HOUGHTON: Yes. It would take though James, you're going to have to help me on this. We decided on TTC 35 we could, in fact, leverage that revenue share. Is that correct? On that's the 35 project on the Trans-Texas Corridor we could leverage that. Is that an accurate statement? when we were talking about revenue sharing on Trans-Texas Corridor in our

MR. WILLIAMSON: One means yes; two means no. No.

MR. HOUGHTON: No, we cannot?

MR. BASS: (No audible response.)

MR. HOUGHTON: Okay.

MR. BASS: (No audible response.)

MR. HOUGHTON: RMA can do it though.

MR. BASS: (No audible response.)

MR. HOUGHTON: Oh, okay.

MR. WILLIAMSON: The other instruction we gave Coby, John, was to be cautious about raising that $3 billion because of our conservative nature of indebting the gas tax revenue stream. We're not ready to go there yet I don't think.

MR. JOHNSON: No, I agree.

MR. WILLIAMSON: Anything else, gentlemen? Well, Mike, let's go ahead and just get to 15a.

MR. BEHRENS: We will do that. 15a is or item 15 is concerning Comprehensive Development Agreements. The first one, 15a, deals with putting a stipend in place for 121 work. Phil?

MR. RUSSELL: Thanks, Mike. And good afternoon, Commissioners and Roger. There's always or has already been quite a bit of discussion on 121 and a bit more to come with Amadeo on the next minute order. Thinking about Amadeo coming up next let me lower this just a little bit to get it ready for him.

R. SAENZ: I knew that was coming.

MR. RUSSELL: Okay.

MR. WILLIAMSON: But what's interesting is Carlos is in the back saying, Hey, Phil had to lower the microphone after I was here.

MR. RUSSELL: I thought about that, too, Chairman. And the reality is Coby was between me and Carlos, and so I'm sure Coby had to raise it a little bit after Carlos came up. That's my story and I'm sticking with it.

As Mr. Behrens pointed out, the minute order before you does relate to a stipend. Again, a lot of discussion so far. But just to refresh everyone's memory we have short-listed four teams four proposals on the 121 project.

We are preparing to launch the request for proposal that's the second step this summer. And I think it's about mid-July when that goes out.

Now, there are two things that relate to a stipend that are critical. Number one, obviously by the Transportation Code, we are required to pay a stipend and we are required to put that amount in the RFP document and, again, the sense of urgency of getting this thing through.

Again, a little bit of a background. We always talk somewhat about this stipend itself. The purpose of it is not to reimburse the proposers for their work effort in putting together a proposal, but rather to defray some of their costs. It also gives us the ability to essentially purchase their proposal any of their intellectual rights and to utilize them on any other proposals.

By law we can that amount and what we're suggesting here is a stipend amount of $750,000 to each unsuccessful proposer. And by law that's a not to exceed amount. And, in fact, we have to be able to show that we're purchasing value for that $750,000.

So the minute order before you would be to authorize or to approve a stipend amount of $750,000 for those unsuccessful proposers on the 121 project.

MR. JOHNSON: Up to.

MR. RUSSELL: Yes, sir up to. Up to per each.

MR. WILLIAMSON: When you said you have four proposers does that include NTTA?

MR. RUSSELL: No, sir.

MR. WILLIAMSON: So they have elected by resolution to propose on 121, have they not?

MR. RUSSELL: I think by law they can't propose as a CDA. But what we're actually doing is we're going to be comparing them as a public sector alternative public section option, and we're going to be comparing them against the CDA proposers.

MR. WILLIAMSON: Will they have to do roughly the same things as the private sector in order to get to a point where we can make the comparison?

MR. RUSSELL: I don't know. I don't know if I could answer that question, Chairman. Clearly, they'll have to do quite a bit of work to get to this point if they're going to match. And, again, I think that's what the boss is going to talk about that we're really looking for a level playing field so that it's apples to apples as far as selection criteria.

MR. WILLIAMSON: So are they going to qualify for the stipend?

MR. RUSSELL: Clearly, it wasn't anticipated in this proposal or in this minute order.

MR. WILLIAMSON: But if we're going to treat them like we're going to treat Kiewit wouldn't we want to do that?

MR. RUSSELL: I think it's always an option.

MR. WILLIAMSON: I can see Amadeo clearly wants to.

MR. RUSSELL: He's itching.

MR. WILLIAMSON: I can tell by that look in his eyes. Well, I mean, am I wrong about that?

MR. JOHNSON: No, that's applicable. I just don't know if we have the ability the authority to do that legislatively.

MR. RUSSELL: Bob Jackson could probably answer that. I think, Commissioners, it's probably more of a policy issue than anything. But I'm sure Bob could answer

MR. WILLIAMSON: Oh, Bob's left. He's left Richard carrying the load.

MR. RUSSELL: I'm sure we could figure out a way to reimburse or to pay NTTA a $750,000

MR. WILLIAMSON: Well, what if it's less than that 450-? What if you decide it's 625-?

MR. RUSSELL: Well, again

MR. WILLIAMSON: Whatever it is.

MR. RUSSELL: at least on the CDA side we can only pay up to $750,000

MALE VOICE: There's Bob.

MR. RUSSELL: if we receive that value in return some sort of intellectual property that we in turn can then utilize on the successful proposal.

MR. WILLIAMSON: Richard, you don't always wish to comment on things we talk about up here. Do you or Bob wish to comment on this dialogue?

MALE VOICE: No. [indiscernible].

MR. WILLIAMSON: I'm sorry, Richard. I didn't know you were here. I saw Bob earlier.

MALE VOICE: Bob's here also.

MR. WILLIAMSON: Or both of you. I like two lawyers' advice instead of one.

MALE VOICE: [indiscernible].

MR. JACKSON: Bob Jackson, Deputy General Counsel.

MALE VOICE: I don't think he heard the question. Nice to have you here, Bob.

MR. WILLIAMSON: I just posed the question to Phil. If we were going to if this dais approved a stipend to the four three of the four or I guess all four of the proposers on 121, and if we're going to permit one NTTA in some manner to offer a competing or an alternative idea, should we not also include them in this payment of stipend?

MR. JACKSON: We'd need to research if there's a statutory way to do that. It's required for a private developer. We have to to the extent that there's a benefit to the State. To pay the NTTA yes, I think that's okay as long as we are getting a work product with a value to it.

MR. WILLIAMSON: Okay. That's reasonable.

MR. JACKSON: Yes, I think we could do that, but that's a new idea we'd want to check on.
MR. WILLIAMSON: Okay. Thank you very much.

MR. JOHNSON: Phil, what is the likelihood that we will judge that we receive the same monetary value benefit from each of the runners-up? Or is there I mean, are there levels of benefit that we could ascertain or perhaps ascertain?

MR. RUSSELL: If I understand the question correctly, Commissioner Johnson, there is always a little redundancy. And that's something that we have to kind of sort out. And it is difficult. It's not like you can say that's a great idea, that one looks to me like $221,000 worth of idea. So it's always a bit of an opinion on how we put those together.

MR. JOHNSON: It's subjective.

MR. RUSSELL: But we can take

MR. WILLIAMSON: But one person's not making that decision. Right? You've got a lot of people

MR. RUSSELL: No. Absolutely not

MR. WILLIAMSON: looking at it.

MR. RUSSELL: Chairman. We look at it as a group and try to assess the value of those ideas and those opinions.

MR. WILLIAMSON: And that group is all professionals. It doesn't include any of the appointees of the commission.

MR. RUSSELL: Correct. Correct. It absolutely is a staff level assessment analysis. And then we in turn will come back with a recommendation I think typically to Mr. Behrens.

MR. WILLIAMSON: Any questions, members? (No response.) I don't think we wish to amend the wording of the minute order, Amadeo. But you've heard the dialogue about NTTA. And, truly, if we're fixing to engage I'm a Texan fixin' if we're soon to be about the business of permitting NTTA to compete on exactly the same playing field as the private sector for 121 and other projects then we've got to start adjusting our minds and treating them exactly like we treat the others. So we need to

MALE VOICE: That's a good idea.

MR. WILLIAMSON: After Bob's research we need to think about how we deal with that. Members, what's your pleasure?

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

MR. BEHRENS: Agenda item 15b is also involving Denton and Collin Counties and State Highway 121. And, Amadeo, if you can go ahead and lay that out.

MR. SAENZ: Yes, sir. Thank you. This podium's kind of low. Hold on. I think Carlos

MR. WILLIAMSON: Brutal, huh?

MR. SAENZ: or Phil might have even been James. Item 15b is has to do with the Comprehensive Development Agreement for the Denton and Collin County on 121.

We are requesting to defer this item for a couple of reasons. And but I would and I would like to have a discussion to explain this to why we're asking to defer. Of course, we have been working with the RTC

MR. WILLIAMSON: You're requesting to defer because you've been listening to the podium.

MR. SAENZ: Well, what yes, I've been listening to the podium. We're requesting to defer for a couple of reasons. We have been working with RTC about the development of the 121 project and the development of the project as a CDA project.

And, of course, if you all recall, NTTA had submitted a competing proposal to the RTC that they wanted to be able to develop the portion of 121 in Collin County. And, of course, that went before RTC. RTC elected to say that, you know, we would like to see competition.

And so we have been working with RTC once they said that to put in place a mechanism that would allow a level playing field in the evaluation of the proposal and so that we could have basically a good comparison between both kind of a little bit of discussion.

Of course, we've had some discussions on how we were going to be working with NTTAs and the HCTRAs and RMAs in the development of projects within the area when it deals with CDAs. We talked about that.

And, of course, one of the we had a couple of options that we had identified on how we would do that. And one of them was that we would work with and that the region would identify what the business terms they wanted to put in place for a comprehensive development agreement.

And we worked with RTC. And in the month of April they adopted their business terms. They adopted their toll rates, toll escalation rates, and a few other things.

The other thing that they want to be working on was the evaluation criteria, because it's very important that CDAs all be evaluated based on criteria and so they all know what it is. And that evaluation criteria is then placed on or in the request for detailed proposals.

We've been working with RTC staff in coming up with evaluation criteria. And, of course, to compound on 121, since we had the NTTA proposal that was going to be a comparatory proposal because they could not compete on a one-to-one, both because of the State, but more than likely a federal requirement does not allow a public sector to compete directly with private sector. So that's one of the research items that we're going to have to continue and do.

And we have put in place a mechanism to be able to evaluate the process. And so we've been working with RTA on the business terms, evaluation criteria, and the evaluation process.

We have a letter that's going to the RTC to finalize and get their final recommendations on the evaluation process. And during this time RTC I mean, the NTTA board basically selected that they wanted to continue to submit a proposal for 121 as a comparative proposal. But they also wanted to leave themselves open the opportunity to submit a proposal for the entire project both Denton and Collin, and not just Collin County.

We feel that, you know, we want competition, and we'd like them to have the opportunity to do that. And that's really the reason that we are deferring the minute order. Because the minute order that we had put in place with respect to it had to do with a process only for the Collin County portion. And so the limits on the agenda really are limited to the Collin County portion of 121, so we could not handle the changes that we want to incorporate. So we will be bringing this minute order back.

But to kind of brief everybody because NTTA had taken action that said that they were wanted to submit a comparatory proposal for both and give themselves the option to submit for both Collin and Denton. We basically want to work with RTC to finalize the process with respect to how these facilities how this type of procurement is going to be evaluated.

As I mentioned, they have adopted their business terms. Those terms are going to be in the CDA in the request for detailed proposal. They are also at this point we have been in communication have been discussing the evaluation criteria.

And evaluation criteria is looking at criteria really with Michael, we're looking at criteria that deals with the primary criteria being price the cost of the project taking into account the business terms that RTC adopted.

The second part of the criteria will be the evaluation of the time to construct the project so that we can have that.

The third part of the criteria will be a technical evaluation of the proposal because the proposal will be required to put in place a project management plan, a quality plan, a public involvement plan, a customer service plan. And all those plans will be evaluated. And that will be evaluated as the third element of the evaluation.

We have a letter going to Michael and the RTC so that they can finalize, then make those recommendations back. We can add them back to the RFDP as we go through without losing any time. And then all the proposers, including NTTA, will then submit a proposal based on the same criteria. So the playing field has been leveled.

And then, of course, they will be evaluated based on the same criteria. And the process that we've identified for evaluation is something like this. The CDA proposers will be evaluated by TxDOT.

And we go through using the criteria that we agreed upon previously. We will evaluate all the CDA proposals and come up with what we call the best value CDA proposal. At that time we will then take that best value CDA proposal and compare it to the NTTA proposal using the same evaluation criteria that we identified.

Concurrently, we will let RTC do the evaluation of the best value CDA proposer and the NTTA proposer so they can come up with their own evaluation number. Yes, sir?

MR. WILLIAMSON: So all the proposals come in. Are you saying that TxDOT is analyzing them all at the same time RTC is analyzing them?

MR. SAENZ: TxDOT is analyzing all proposers come in to TxDOT.

MR. WILLIAMSON: Okay.

MR. SAENZ: TxDOT begins and analyzes all CDA proposals.

MR. WILLIAMSON: The four privates.

MR. SAENZ: From the four we will select number one, number two, and number three. We will then take number one and then pass that information on to RTC, along with the NTTA proposal. They will then evaluate on the criteria that we previously agreed upon, and was included in the RFDP, that the two proposals. They will compare NTTA's proposal to the best CDA proposal.

MR. WILLIAMSON: Stop. So why isn't somebody from the RTC with us at the first analyzing those proposals?

MR. SAENZ: We had discussed that with RTC staff and they felt that there was some of the members of the RTC that did not feel comfortable with having staff here. They wanted to be able to do their own evaluation. And that's why it's very critical that the criteria evaluation criteria be put in place before and we have assurance.

Now, at the same time that Michael will be Michael and his staff and RTC will be evaluating the comparing of the two proposals we will be doing the same thing. And if we're using the same criteria and we're evaluating the same proposals we should come up pretty much with the same answer.

MR. HOUGHTON: Separately?

MR. SAENZ: Separately.

MR. WILLIAMSON: But maybe you I mean, I thought I just asked that question and you said no.

MR. MORRIS: Let me

Mr. Chairman, and speak to your question. How it contradicts just is a little slight twist.

We think TxDOT should be in charge of the CDA procurement process of CDAs. You have opened up that process for people to participate with you. We the RTC has taken you up on that. So it's still a selection process by TxDOT under your responsibilities under state law, but you have opened up that process.

And there will be RTC staff members I don't think they should be elected officials and staff members of local governments that you're going to let come to the meetings so everyone sees that that process is fair. We're taking you up on that.

MR. WILLIAMSON: Okay. All right. So that's what I meant.

MR. MORRIS: The distinction no. The distinction is it is TxDOT employees that are making the selection process. You have opened it up for others to watch and witness that process. You're not delegating your duties under state law to some other institution to do that.

MR. WILLIAMSON: Okay. When you

MR. MORRIS: So it's a refinement of it, but I think it's an important refinement because you're responsible for the selection of the CDAs. We are taking you up on watching you to observe that.

MR. WILLIAMSON: So will you feel comfortable if you see something that in your view is either not fair or not objective in reaching the best decision that you'll say something?

MR. MORRIS: That's correct.

MR. WILLIAMSON: Okay.

MR. MORRIS: I don't know if it's me personally, but there will be our staff and staff of local governments that will do that.

MR. WILLIAMSON: Well, I just I don't want

MR. MORRIS: And there's a distinction later on I want to make when we get to an NTTA proposal. But at that particular point you've opened up the process. If you read the words that the RTC said I didn't bring them with me maybe Bill has them yes, we will witness and observe your process that you're participating in.

MR. WILLIAMSON: We just don't want the RTC or anyone in North Texas to say at the end of this, you know, you had a predetermined decision.

MR. SAENZ: Okay. Don't leave, Michael, because I think okay. With respect to the evaluation of the CDA proposals not NTTA we're going to compare NTTA later. Under CDA proposals we will do the evaluation we can have RTC members there as observers. We've said that all along. And based on that TxDOT will determine the best value CDA proposal.

At that point then we take the best value CDA proposal and the NTTA proposal and we will evaluate that independently ourselves compare them. But at the same time NTTA I'm sorry RTC wants to do their own independent evaluation using the same criteria between the two proposals between the NTTA and the best CDA.

They will then make a recommendation back to TxDOT to the commission with their recommendation that you can use and compare to the recommendation that you got from TxDOT staff for the TxDOT Commission to make the final decision.

MR. WILLIAMSON: Okay. I understand that. Questions, John or Ted?

MR. JOHNSON: My only question concerns is there any place in the process whereby a public entity, such as NTTA, might be forced legally to disgorge what they would determine to be proprietary information which might put them at a competitive disadvantage?

MR. SAENZ: I don't believe, sir, that their proposal will be a sealed proposal just like the other CDA proposals. But the important part was to put together the I guess the requirements of the proposal so that they all submit a proposal that are based on the same business term and business requirements. They will all be treated equally and all be kept separately.

At that point we evaluate them, we come up with the best one, compare it to the NTTA independently. The RTC will do their independent evaluation also and then the recommendation. So nothing will be out in public.

MR. JOHNSON: Thanks.

MR. HOUGHTON: I'm a little confused by the fact that we're going to separately go evaluate the same proposals instead of being in the same room at the end of the day looking each other in the eye. I think you lose something, Michael, in that kind of negotiation.

MR. MORRIS: I think in the discussion over last week, Commissioner, it started off the following. TxDOT is leading an evaluation process; you guys can witness it. They pick the best CDA process. They now open up an NTTA proposal.

In fact, by the way, the RTC's position is any public sector entity could come forward. I think it's similar to where you were headed before. So the RTC isn't in a position that's just NTTA; it could be any public sector entity. And then the best public sector there will be competition to pick the best public sector entity, and the best public sector entity will go up against the best private sector entity.

Back to your point, Commissioner, if it's a TxDOT selection process that we are witnessing that we are observing, that if you then go into an evaluation of TxDOT proposals against NTTA proposals, of which we are simply observing, I think there is going to be a lot of commotion within the region that the public sector proposal from the region will not get a fair shake in the evaluation because TxDOT is doing evaluation that others are witnessing.

And I think it's going to create a four-month turmoil when they say, See, we told you it wasn't going to be a fair evaluation.

MR. JOHNSON: I agree. I think

MR. MORRIS: How could TxDOT do the evaluation and it be fair? So staff this staff proposed a check-and-balance system like the following.

We don't want to get we'll observe your CDA process, but we don't want to get in the middle of that particular selection process, especially if there isn't a public sector competitor. Right? You guys have the due diligence to be able to do that. We'll observe it, we pick the best CDA, we move forward.

We only get involved if there's a public sector bidder in a particular example. In this particular case TxDOT first does their own due diligence of the NTTA or the public sector proposal to make sure it meets the requirements of the competition. There are certain things that have to be done TxDOT determines it. If NTTA or the public sector proposal meets those requirements then we get it.

The criteria is identical. The weights are identical. Our staff then goes in and evaluates that particular proposal and makes a recommendation based on, you know, the education and learning of how we're interpreting these proposals to score them makes a recommendation to TxDOT. That recommendation will be made by the Regional Transportation Council.

If, for whatever reason, we the Regional Transportation Council ignores the weights or doesn't put the appropriate focus on the predetermined weights then I would expect the commission would reject that recommendation because it wasn't the weights that were associated with it.
Our staff is suggesting that the final recommendation that comes before you is from your staff, not from our particular staff, in that we're asking that you consider whatever the RTC's position is.

But the reason, Commissioner, I'm suggesting that, it gives what I think will be interpreted in the region as a fair evaluation by an independent group the Regional Transportation Council making a suggestion to you.

Now, it should be a somewhat mathematical process because the weights have been pre-established, the method of which you're scoring this is pre-established. If the staff comes up with a completely different answer then we would want to know that we interpreted the math incorrectly. But I think if you just have a TxDOT selection process that others witness I think you're going to get into this tizzy about it not being a fair evaluation.

MR. WILLIAMSON: Yes, that's where I see the value of it is that, Ted just simply saying I'm not going to give you any excuse to hide behind. Don't see monsters where monsters don't exist.

MR. JOHNSON: I think also it brings some confirmation into the process, which I support.

MR. WILLIAMSON: Plus we're simultaneously sending a signal to HCTRA you know, this is kind of where we're headed on how we do these things so that Robert Eckels can start thinking about how he wants to deal with this. Go ahead.

MR. SAENZ: A couple of things that need to happen this month before we come back in June is, one, we need to verify that NTTA is going to submit a proposal for both Denton and Collin County. That's number one.

We need to get final concurrence with from RTC on the valuation criteria waiting, as well as the process that we outlined before. That way all those will be in place all that information will go in the request for final request for detailed proposals so all the proposers know what the rules are and what the evaluation criteria that will be used to evaluate their proposals is.

This way this is the only way we can ensure that we have a fair process and everybody knows how they're going to be graded.

MR. WILLIAMSON: My one concern before I ask Allan if he wants to say anything publicly is are we absolutely certain the private sector proposers who have invested a lot of money so far to get to this point aren't going to read into this one more delay one more dragging our feet? How do we know about that?

MR. SAENZ: Well, we have a schedule that we have put in place. And, of course, we do already have a draft RFDP out there. And it had a process where we were asking them to submit proposals for Collin County, Denton County, and Collin/Denton County as a whole.

Because of the change we now are going to simplify the process. But we do have time during the time from going from the draft RFDP to the final RFDP where we're having our industry review meetings. In fact, we have industry review meetings starting tomorrow where we have a chance to be able to address the issues that they bring up, as well as any other issues that come up.

So within this time frame the whole key is that when we go out with the final RFDP in July all the questions have been answered so that that final RFDP is the one that they will use to prepare their final proposals. So because we do have this time window we don't lose any time and will not delay the project.

MR. WILLIAMSON: And none of those private sector people are going to be calling us and raising cain about it.

MR. SAENZ: I hope not.

MR. WILLIAMSON: Of course, they can't call us because they're in a bidding process

MR. SAENZ: That's right.

WILLIAMSON: -- we think real soon.

MR. SAENZ: They can call me.

MR. WILLIAMSON: Well, they won't call you because they're afraid of you.

MR. MORRIS: Mr. Chairman, just for the record, because I alluded to it earlier and Ken went out to the car to get it, Section 8 of the position approved by the Regional Transportation on April 13 was, TxDOT has requested that local governments participate in and monitor the Comprehensive Development Agreement procurement process. RTC requests that local governments assign representatives to this procurement process.

And 13 says, competitive proposals from the private and public sector will be evaluated against the same objective evaluation criteria to be determined by the Regional Transportation Council which is where we've already established the we concur with the ones Amadeo has said to you.
We've already scheduled public meetings. We will go to public meetings on the weights of those criteria and have them in place for the same schedule that's already been adopted to get these this issue resolved as quickly as possible.

MR. WILLIAMSON: Allan, do you want to come up and chew on us a little bit?

MALE VOICE: I'm not really sure Allan is going to respond to that particular

MR. MORRIS: Let me raise the podium for

MR. RUTTER: I'll stoop. We've responded in some direct written communication about the latest level of correspondence that we've been trading. I'm not really sure I have a whole lot more to add to that.

We, too, will I guess we've got an assignment today you guys want to know what it is we're going to do.

The Board at its last action on 121 on May 10 and we've got one of our Board members, Kay Walls, here from Johnson County. They took action to decline to participate under our MOU in delivering services to CDAs. They didn't affirmatively decide to authorize a proposal on 121.

I've talked to my Board members. So I know I understand what it is they expect. And we're hoping to be able to this actually this delay in this action gives us the time to at our next Board meeting in June, which is before your Board meeting in June, to take action on that based on this request that we've just received from you, which is tell us what you're going to do.

And we'll tell you where we're going. And as we've been invited by many of the members of this commission to go ahead and bring it on we will.

MR. WILLIAMSON: Okay.

MR. RUTTER: And look forward to it.

MR. WILLIAMSON: Anything for Allan? (No response.) All right. Thank you. So you don't object to us delaying this.

MR. RUTTER: Well, I

MR. WILLIAMSON: You view it as a positive.

MR. RUTTER: One, I'd have to agree with Amadeo. I don't think you're really delaying the ultimate disposition of this. And so the primary element that does the best job of communicating to your private sector proposers is the issuance of a draft RFDP. You hit that deadline. That's why you wanted us to decide by May 10 what are we going to do about offering services under our MOU.

MR. WILLIAMSON: Uh-huh.

MR. RUTTER: We appreciate being given that additional couple of weeks to make that decision. But the fact is you've got something on the street they see that action. That should be sufficient. And to the extent that you can clarify and, frankly, we'd like to see it clarified, too the evaluation criteria by which that decision will be made. That's good for everybody who's looking at it. It gives us a target of what we get to go hit.

MR. WILLIAMSON: So we wouldn't expect to hear you or one of your Board members criticizing our decision to delay this.

MR. RUTTER: No, I think that works to everybody's benefit.

MR. WILLIAMSON: Sir?

MR. RUTTER: That works to everybody's benefit.

MR. WILLIAMSON: Anything else, guys? (No response.) Thank you, Allan. Appreciate it. Anything else, Amadeo?

MR. SAENZ: I just a quick note that Allan didn't mention. We do have an alternate process where the where we are developing projects in the region. And if NTTA does not want to submit a competing or a comparative proposal we have an MOU in place that allows them to provide services.

And services could be all the toll collections services some of the operational services. And we have a whole menu where we sit down very early in the procurement process and identify what services they want to supply. And then that information is then made available to all the CDA proposers. So we have two mechanisms in place that would allow NTTA to participate in this CDA procurement process.

We will come back to you next month with a minute order that basically signs off on the process the evaluation criteria and move forward on 121. Be happy to answer any other questions.

MR. WILLIAMSON: Any other questions, Members? (No response.) Okay. That matter is erased. And, now, Michael, I would like to go back to the indices and finish that please.

MR. BEHRENS: Okay. That would be going back to agenda item number 3. I'll try to talk slow, Amadeo, because I know you've got to get your other papers. But where we started this morning talking about our project evaluation indices, we can continue on with that discussion.

MR. SAENZ: Thank you, Mr. Behrens. Again, for the record, Amadeo Saenz.

Earlier this morning we started talking about the indices, and we concentrated on the indices of the protecting the asset value of I've got all my notes let me get my notes lined up again.

MR. WILLIAMSON: I bet you had a handful of notes for today.
MR. SAENZ: I had plenty of notes for today. Probably even lost some now.

(Pause.)

MR. WILLIAMSON: Self-fulfilling prophesy.

MR. SAENZ: I've got too many notes. Everything is here.

MR. WILLIAMSON: He's fixing to go extend. Stand back.

MR. SAENZ: Earlier today we talked about the indices about the increasing or protecting the asset value of the assets. And we talked about the gap and we talked about that.

There are four other indices that we have been developing. We have an indices that talks about reduced congestion how do we measure reduced congestion. We have an indices on how do we improve safety, an indices on economic opportunity, and, of course, an indices on improving air quality.

I will start before I get into those I will start on one of the other things that we were asked to look at is to determine whether a project was a short-term, a mid-term, or a long-term solution and whether the project was defined as a local project, a regional project, or a statewide project.

MR. WILLIAMSON: I noticed in the staff report you gave us we're attempting to define or not define quantify what is local or what is regional or what is state. And it occurs to me that maybe we've never given you direction from up here.

We understand we're talking about the state highway system

MR. SAENZ: Yes.

MR. WILLIAMSON: or the national highway system. I think what the commissioners are talking about, Amadeo, is reaching a conclusion about from Point A to Point B is this primarily used by local drivers or is it primarily used by local and regional drivers or is it primarily used by local, regional, and/or state drivers.

MR. SAENZ: Yes.

MR. WILLIAMSON: Simply for the purpose of trying to grasp the difference between for example, Ted I-35 between Ben White Boulevard and 290 versus I-35 between San Antonio and Hillsboro it includes that piece.

MR. SAENZ: Right.

MR. WILLIAMSON: Obviously that would be a statewide road the latter. The former may well be a local or regional.

MR. SAENZ: A local or regional. But it also has some statewide kind of activity that you have other people that use it and there's

MR. WILLIAMSON: Because before

MR. SAENZ: so there's

MR. WILLIAMSON: Before this trip's done we're going to be in the business of making value decisions about do we invest our money here to address or national or a state problem or do we invest our money here to address a local problem.

If the if we use the indices right we're going to find ourselves in the following situation. A part of the national highway system that's really a local road that has much better congestion, safety, economic opportunity, air quality, and asset value measurements it's going to cost $800 million as opposed to this statewide road that's going to cost $800 million as less.

MR. SAENZ: Yes.

MR. WILLIAMSON: And we don't want in the situation where all we're doing is financing urban growth over a small footprint at the expense of

MR. HOUGHTON: I hate to say it, but we've probably already started some of that with our pass-through

MR. WILLIAMSON: Well, some of it we probably have. This is a balancing act we're going through trying to figure this out.

MR. SAENZ: And that was one of the things that the group determined is that there were some roads that really are designated statewide roads. But depending on where you're at they act or they perform differently, like I-35 here in Austin.

MR. WILLIAMSON: Right.

MR. SAENZ: I-35 here in Austin is the portion within the major part of Austin is a local road and a lot of it is local. There is some through traffic and there is some statewide traffic. So there is a blend of that. And that's how the group defined it is you almost have to look at each one of them.

As we look at the other projects we can define about who the users are the primary users are to be able to determine whether the road is local or regional or statewide.

With respect to the short-term, mid-term, and long-term solution, what the group kind of came up with is we do a comparison and then look at you go out there and you perform the solution that you do. And then based on how fast your roadway will become congested again, if it's less than five years then it was a short-term solution. If it's somewhere between five years and 12 years then it is a mid-term solution. And then, of course, if the congestion level does not reach the level that it is today until more than 12 years then it would be a long-term solution. So, in essence, that's how you would differentiate the solutions.

With respect to the looking at the indices for reduced congestion, what the group came out is we worked closely with at one time we were looking at level of service. And then working closely with TTI and work that they had been doing with the metropolitan areas we came up with using the some kind of a congestion index.

And TTI has a measure that they use called for emissions and congestion index that they have developed. And using that we're able to determine what the congestion index for a particular project prior to construction or as is condition. And then once you develop the project and you're at the capacity you're able to determine what the congestion index you're able to measure the amount of delay that you have on your project today versus the amount of delay that you'll have after it's built.

The difference will be your congestion index. For example, an index of 1.15 indicates that and then, of course, after the project is built has a 1 then you would have a 15 percent index. And that would qualify the project to fall under a moderate improvement to the congestion index.

The scale that the committee has worked up is for low is anything less than 15 percent would be considered low. Anything between 15 and 25 percent reduction in the congestion index will be considered moderate. And anything greater than 25 percent reduction in delay or congestion ill be considered high.

So every project we would run a congestion index. And then based on that we would give it a we would put it on the scale whether it's low, medium, or high.

For safety we in essence use a we would for safety what we have come up with is to use accident rates in looking at a project. So that we would take the average of the accident rate per hundred million miles for the last three years or the most recent three years of accident data that we have, and then we would compare that accident rate data to some standards that have been developed for projects of similar type.

And, depending on the accident rate of this project compared to the standards of similar type across the state, if the accident rate was higher by one standard deviation your engineers would have to come up with numbers then you would that project would have a possible improvement to safety.

If the standard deviation was higher than if the accident rate for this project is higher than two times the standard deviation for similar type roads then it has potential and, of course, anything above two standard deviations it would be a significant safety benefit.

So and the reason that we use possible, potential, and significant has to do with potential litigation that you would start ranking what safety. So that's why we went to that type of scenario instead of but if you notice it's three levels. You have a possible level, you have a potential for safety benefit, and then, of course, you have a significant safety benefit.

Our projects that we do under the hazardous elimination program all would fall under the significant safety benefit.
Economic opportunity was one of is with the indices that probably gave us the most challenge. The group looked at also we looked at delays and delay savings of when by adding capacity to a road you add you decrease the delay savings by being able to access the area much quicker. You allow for more growth into the area and economic opportunity.

We are still looking at that because there's two other areas that are very important for economic opportunity, especially when you look at areas that you're going on new location is, one, as you build a road out there the property values will increase. This increase of property values basically will give you a measure of economic opportunity.

And, of course, you also have the possibility that when you're building these facilities out there into an area where you get the potential of bringing something like a Toyota or another big outfit that can bring in and generate a lot of traffic you do increase a lot of economic opportunity to that.

So we're we concentrated on delay savings, but we are going back and adding these two other areas dealing with increase in property value, as well as kind of what I would call as a spot business opportunity where if this road were not built you would not get a Toyota to locate into this area or the road is built because Toyota came.

MR. WILLIAMSON: You have to be careful in developing that criteria to not lay the predicate for coming either to the MPO or to us and saying, Build this road and a thousand homes will be built, and, therefore, the property values will go up because the only reason the homes will be built is because we built the road.

MR. SAENZ: Uh-huh.

MR. WILLIAMSON: And if that were the criteria everybody in the state could be coming in here saying build a road so we can build more houses.

MR. SAENZ: Yes, we've had a lot of people that come to us and say, build it and they will come.

MR. WILLIAMSON: And we've got to avoid that at all.

MR. SAENZ: Right. So this

MR. HOUGHTON: So that flies in the face what Michael was talking about on the TTC 35 is leapfrog development.

MR. SAENZ: Uh-huh.

MR. HOUGHTON: You build something out there and maybe get crosswise with the communities, cities, municipalities I mean, counties as to their planned growth and staging in those sort of things.

MR. WILLIAMSON: But that I differentiate that, Amadeo, from Fort Bliss, for example, where the federal government says we might move this brigade here, but in order to do that we need the following five things.

MR. SAENZ: Uh-huh.

MR. WILLIAMSON: Well, that's not just houses, that's $250 million a year of economic impact if we make the investment decision. That's a very logical thing to then say, And, therefore, the property values will do this, and so on the economic opportunity index the value is whatever. See the distinction I'm trying to make?

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: I don't want to exactly what Ted said I don't want us to approve indices that have the unintended consequence of building roads all over the state just because somebody is going to build some houses. I want to focus the economic opportunity index on military, Toyota, Dell

MR. SAENZ: Okay. That's something that we can add then. Maybe use the same criteria that we have

MR. WILLIAMSON: Yes, houses would be a normal growth pattern.

MR. BEHRENS: You're talking about the Fort Bliss that's sort of a

MR. WILLIAMSON: It's abnormal growth. That's economic opportunity as opposed to economic growth.

MR. HOUGHTON: MPOs ought to be the first line of defense in that, too, because they're tied in with the municipalities as to planned development and what gets approved at the planning commission I'd say.

MR. SAENZ: Through the MPO process, of course, they do look at the all of the data that looks at growth and traffic growth and patterns and demographics. So they're already planning their roads out to the area, and that's part of their process where they've identified.

Economic opportunity but, you know, on a Toyota type if Toyota's coming they've identified potential locations. This is they won't come unless they have the proper infrastructure. Or the or, as you say, Mr. Chairman, the military bases we're bringing more people we're bringing this, this, and the other. And it adds to a lot more that requires additional infrastructure.

MR. HOUGHTON: The sporting goods south of Austin

MR. SAENZ: Yes.

MR. HOUGHTON: something like that?

MR. SAENZ: In the area of the air quality air quality also, we basically have been working through TTI and environmental staff and looking at the speeds of vehicles or travel time. And based on that travel time it will have a measure of improvement to the air quality and being able to measure the amount of NOx and the amount of particulate.

So as each project can be evaluated, and, based on the difference in the travel time and speed and delay, you can then quantify a savings in the amount of NOx and stuff. So, in essence so you get so many grams so many benefit of so many grams.

Now, in the non-attainment areas we're still going to have to run and both for this and for the congestion index we will run you can run this index per project, but they still will have to run and determine the overall congestion index and the overall air quality index. So

MR. WILLIAMSON: And I was struck by the staff discussion of and staff seemed to almost be hedging its bet by warning us it's one thing to have pollution related to congestion. But then if you free that congestion up

MR. SAENZ: You're going to have

MR. WILLIAMSON: you have the horseshoe-shaped curve where you have more pollution because people go faster. Well, if that's the case then there's never an air quality reason to do anything.

MR. SAENZ: Right. There is a balance in the speed versus and I forget exactly how they work, but you have a balance and you have a point where you want to keep speed at a certain point so that you can get benefits of both NOx and the particulate matter.

And if you cross that if you go too fast you in essence get on one side and you start losing ground. So you somehow need to work and design the project so that you get that speed and you try to keep that speed. And at that point you will get a benefit.

MR. WILLIAMSON: Well, let me ask you a weird theoretical question. Air quality is measured by the federal government for purposes of compliance or non-compliance or attainment or non-attainment based upon observable levels of pollutants at fixed locations.

MR. SAENZ: Yes.

MR. WILLIAMSON: So if you really wanted to gain the system you'd say, Well, the prevailing wind in Dallas/Fort Worth is southeast to northwest. So why don't we build a super fast road around the west side of Dallas/Fort Worth, which would have the desired effect of taking away from those sensors certain level of contamination which is occurring because of congestion on the east side of the city. Correct?

MR. SAENZ: That's correct.

MR. WILLIAMSON: So you could almost alter the route of the Trans-Texas Corridor to the west side of the Metroplex for the purposes of avoiding federal monitors.

MR. HOUGHTON: Until the EPA moves the monitors.

MR. JOHNSON: It gets the emissions the particulate matter out of the air set more quickly the closer you are to the prevailing direction.

MR. WILLIAMSON: Well, I can just see those who are against roads for all reasons always look for things to hang their hat on. And I can see an unnamed group who's against roads for all reasons saying, Oh, well, the only reason you're doing this is not to relieve congestion but to avoid the monitors for this non-attainment business.

MR. SAENZ: What we have provided you the report. And what we'd like to get is some comments on the report itself. We've gotten some direction today.

I am also running the report by some volunteer metropolitan planning organizations because I want to see how we can work on the implementation of this at their level, as well as our districts at their level so that we can get to the point that we can finalize this.

MR. WILLIAMSON: Well, it's a shame that we can't talk about all these discussion items in front of our captive audiences because it's so important for them to comment on this stuff, but we just can't.

But I'll tell you this, Amadeo, we need to figure out a way to involve the MPOs in this discussion because as we proceed down the carefully thought-out path of distributing decision-making responsibility act with resources act we are hearing increasingly privately, not publicly increasingly some concern about, you know, do you want to carry local and regional planning this far. What happens, for pick on the RTC but what happens when the MPO in Area X gets mad at one of their cities and just cuts them off? You guys have got to be able to intervene

MR. SAENZ: Yes.

MR. WILLIAMSON: on some basis. Well, it should be obvious to all that we're trying to develop indices that, not only will we use, but that we will suggest to our regional planners they use as reinforcement for the decisions they make as they enjoy more and more

MR. SAENZ: Right.

MR. WILLIAMSON: responsibility.

MR. SAENZ: I think I mentioned it this morning, but our plan and goal is to be able to use these indices as we come to you on any project selection for commission strategic priority, and also at the same time require the MPOs and the districts, as they put together their UTP updates and their TIPS and STIPS to use this to verify that they are getting some benefits in all of these indices and so that we can have some quantification that we can show people this is what we're doing with respect to safety on the statewide level, this is what we're doing with respect to congestion. And in the Dallas area we wanted to look at it like that.

MR. WILLIAMSON: Well, I would suggest let's be careful. I don't know that we want to convey to Allan Clark that we're going to require this. I think we want to convey to Michael Morris that we hope they will begin to use this and at least report on the results

MR. SAENZ: Right.

MR. WILLIAMSON: as they make their decisions. You know, I can remember when I first entered the Legislature there was a huge move to distribute local controlled school districts through House Bill 72, 1984 special session. And that was done.

And then from the moment that that local control was distributed to school districts for the first time since Gilmer Akins [phonetic] the Legislature steadily took that local control back away from the school districts.

We don't want to be in the same we don't want to get caught in the same trap. We either believe in regional planning or we don't. If we believe in it we set criteria, we set goals, we set standards, we referee arguments. But we don't want to ease back in the position of saying we require this of you turn out to be a different type of command and control central government.

MR. SAENZ: And, yes, sir. I think what I meant is we will set goals just like we can set a we want you to reach a congestion an improvement in your congestion index of so much. It is your plan to do that over time. But at least we know that they're doing that. And we that will give us a chance to make sure that they are selecting good projects and they are making good decisions.
MR. HOUGHTON: Amadeo, we can apply obviously apply this to pass-through

MR. SAENZ: Yes, sir.

MR. HOUGHTON: selection.

MR. SAENZ: We

MR. HOUGHTON: You start going down the chart from a statewide to a regional I mean to a local. You can ask for that municipality or private sector to put in additional funds

MR. SAENZ: Yes. In fact, that's the criteria that we're already using. If the project is of statewide significance they will we will basically allow them full credit of eligible funds. But if the project is regional or local we will step that down to, say, 80 percent and 60 percent or 75 percent and 50 percent, depending on the project and what benefits it is applying.

MR. WILLIAMSON: I know John had some concern early on when we were developing our strategic plan that preserving the asset value also have a component of service. Is that a good way of describing it, John? In other words, we're not just focused on the value of the road. We're focused on our level of service to our taxpayer. And we probably need to develop some criteria

MR. SAENZ: Okay.

MR. WILLIAMSON: with regard to the asset value that doesn't just focus on the tax gap and the required gasoline tax rate per gallon in order to evaluate that particular project. We probably need to figure out a service component that we and the MPOs would feel comfortable about not probably. We need to because one of the commissioners feels strongly about it.

MR. SAENZ: We will get back to that. I wanted to take the opportunity Wayne Dennis from TPP has kind of been heading this group, and we have people from environmental, from TPP, from design. We've some the indices are also done for transit, and we're working the one that's falling a little bit behind is aviation, but we've got something that we're going to be able to work with also on that.

And the whole key is to come up with these so that we can at some point in the future be able to compare the benefits of a rail project or public transportation project and compare it to with benefits of building a road. And you can see then that will give them the tool to be able to decide.

But Wayne Dennis has been leading this group and has been they've been doing some good work. We brought in TTI to help us. Our next goal was to go out to the districts and get them to shoot holes in it MPOs get them to shoot holes in it to see if so we can make it as a tool that they will want to be able to take advantage and use so that it is a benefit to everybody.

MR. WILLIAMSON: Okay. I'm comfortable with where we are. Ted? (No response.)

MR. SAENZ: Thanks.

MR. WILLIAMSON: Let's keep moving. You decide.

MR. BEHRENS: We're going to go to agenda item number 17. And this is a recommendation to the commission to approve a Memorandum of Understanding that has been made between TxDOT and the Parks and Wildlife Department.

We went before the Parks and Wildlife Commission when they approved this MOU. And it's a MOU that will help us in mitigation, particularly when we get involved in these larger projects such as Trans-Texas Corridor.

It will help us to get mitigation, not from a postage stamp approach, but from a larger approach where we're actually establishing ecosystems. And I'm sure Dianna is going to elaborate a little bit more. And we also have guests from Parks and Wildlife that we'll ask them to come up and comment on whatever they wish to. So, Dianna, why don't you

MS. NOBLE: Good afternoon, Commissioners. Please excuse me. I don't know if I have a really bad head cold or allergies, so I had to bring some water with me just in case I start coughing.

Agenda item 17 is a minute order regarding a Memorandum of Understanding between TxDOT and Texas Parks and Wildlife. I've prepared a brief PowerPoint presentation to give you some background on this effort.

Planners have identified 188 billion in needed projects to achieve an acceptable level of meeting the state's transportation needs. The Federal Clean Water Act and the Endangered Species Act provides for the compensation for the taking of wetlands and endangered species as a result of impacts caused by projects.

Mitigation can be achieved on-site or off-site. Off-site mitigation includes the use of mitigation banks. Mitigation banks are often used when the mitigation cannot be accomplished near the project site or when it would not be beneficial to the resource to do the mitigation on-site.

When on-site mitigation is not possible, TxDOT uses mitigation banks, including those owned by TxDOT. Benefits of mitigation banks include streamlined permitting, sustainable protection of the specific resource.

TxDOT has previously taken the lead to negotiate with federal and state regulatory agencies to create these mitigation banks in partnership with the Texas Parks and Wildlife. And at this point I do want to recognize Jack Bauer. We've been working with Jack Bauer for ten years, and, unfortunately, for TxDOT he's retiring at the end of the month. And he has been extremely instrumental in helping us develop, not only these three banks, but the specific memorandum of agreement that we've been working on.

The three banks are the Anderson Tract, which is in Smith County, the Blue Elbow Bank, which is in Orange County, and the Coastal Bottomlands Bank, which is in Brazoria County.

The Anderson Tract has been used for mitigation for the Tyler district, the Paris district, Lufkin, and Atlanta District. The Blue Elbow Swamp has been used for mitigation by the Beaumont district. And the Coastal Bottomlands Mitigation Bank has been used by the Houston and the Yoakum district.

MR. WILLIAMSON: May I ask you a question, Dianna?

MS. NOBLE: Yes.

(Pause.)

MR. JOHNSON: I'll ask a question while he thinks. This is the Stringfellow Tract. Is that not correct?

MS. NOBLE: That is correct, Commissioner.

MR. WILLIAMSON: I'm trying to think how to frame the question. Who decides to consume the credit as opposed to mitigate on-site? Do we decide that?

MS. NOBLE: It's the Corps of Engineers. We make a they normally insist on doing on-site mitigation and that was what Mr. Behrens was referring to.

What's happened is a creation of all of these postage-stamped-type mitigations that, at least in my opinion and I think that Parks and Wildlife will agree are not sustainable because they're these individual postage stamps.

And the mitigation banking offers opportunities to do an ecosystem kind of an approach where you have larger scale mitigation that is created with like this specific tract has 3,500 acres. And a lot of our mitigation is less than an acre.

And when you've got that postage stamp approach the likelihood of us having to take it when we expand because the mitigation the on-site mitigation is generally considered that you're doing it adjacent to the project. So whenever we're doing a new expansion then we end up having to take that specific mitigation that we had done maybe ten years previous to that.

But it's the Corps of Engineers that decides. The hierarchy is normally on-site and in-kind, and then with the last one being off-site, out-of-kind mitigation.

MR. WILLIAMSON: So do we frequently ask for bank credits and they turn us down?

MS. NOBLE: We've had that happen a couple of times.

MR. WILLIAMSON: I mean, I think my question is created by the fact that I see 1,522 available bank credits and only 264 used out of the Houston district. And a bell goes off in my head. Why have we not consumed them all?

MS. NOBLE: That's because of the watershed that the Corps of Engineers and EPA defines. The smaller the watershed the less projects that can be done in that specific area.

Recently and by recently I mean last month federal highway not federal highway EPA proposed an ecosystem approach which is promoting more of this kind of concept more of the mitigation banking to move away from the postage stamp approach. And I think that's a huge advancement in the way mitigation historically has been done.

MR. WILLIAMSON: Okay. Thank you. (Pause.) Going backwards.

MS. NOBLE: Oops going the wrong way. Here we go.

MR. WILLIAMSON: There you go.

MS. NOBLE: On November 23, 2005, TxDOT signed this Memorandum of Agreement with Texas Parks and Wildlife regarding mitigation banking other than the TxDOT-owned mitigation bank. And this is the one that I mentioned where Jack Bauer was extremely instrumental in helping us develop this.

The MOU applies to all transportation projects. And, in essence, Texas Parks and Wildlife assumes the responsibility for doing the mitigation for TxDOT.

Under the MOU Parks and Wildlife will make the credits available to TxDOT at a competitive rate. And the MOU under the MOU Texas Parks and Wildlife will negotiate all the related approvals with the regulatory agencies. And that's different than what was done on the three banks that I mentioned earlier where TxDOT took the lead in negotiating with the Corps of Engineers.

TxDOT will first use the mitigation credits from those three banks that I mentioned previously whenever possible. But as it will definitely not cover all of the transportation projects in the state. So we will this MOU with Texas Parks and Wildlife will facilitate that mitigation.

But, in sum, the memorandum allows TxDOT to focus on its primary job of planning and constructing a transportation system and will depend on Texas Parks and Wildlife for its expertise in preserving and protecting natural resources.

As Mr. Behrens mentioned, with us today we have two Texas Parks and Wildlife representatives. One is Scott Boruff, who is the Deputy Executive Director for Texas Parks and Wildlife, and the other is Jack Bauer, who I had mentioned earlier as the director of the Land Conservation Program for Texas Parks and Wildlife. And I would if it pleases the commission, I would like to invite Scott to come up and make some remarks.

MR. WILLIAMSON: Sure. Howdy, Scott.

MR. BORUFF: Thank you, gentlemen. For the record, my name is Scott Boruff, Deputy Executive Director of Texas Parks and Wildlife.

We've been having our commission meeting for the last two days. And Commissioner Fitzsimons, our chairman, and Executive Director Cook asked me to send their best wishes. Mr. Cook had wished to attend today, but obviously he's got a lot of commissioners to take care of this afternoon.

I'm going to keep my remarks brief unless you have questions. We are very excited and proud about the relationship we have developed with TxDOT over the years. This is only one of many examples that I think we kind of demonstrated a relationship that's been beneficial to the people of Texas.

We do think this MOU will be helpful for everybody. As Dianna said, there has been some concerns about the model in the past that allows us to kind of pick and choose small pieces of parcels to do mitigation that really may not over the long haul sustain themselves.

So we're hopeful that in the future as we develop these larger banks it will mean something to the people of Texas in terms of significant mitigation efforts that will be able to allow us, for example in some cases, to create state parks that are available to people in Texas, to create wildlife management areas that allow us to demonstrate to the private landowners of Texas some good conservation habits, if you will.

So I'm here on behalf of the commission to recommend and support your support of this particular effort. Be glad to answer any questions.

MR. WILLIAMSON: We appreciate you being here. I have nothing but high praise for your agency.

MR. BORUFF: Thank you.

MR. WILLIAMSON: And I particularly like the cooperative manner in which we're working together. I think that the people of Texas appreciate it when state government tries to figure out ways to solve problems as opposed to creating problems.

I'm kind of curious, do you have any recommendation to us about how we could what we can do to help the consumption of these mitigation banks faster?

MR. BORUFF: Well, I'm not sure I have any real recommendations. I would like to share with you the fact that this TERS group T-E-R-S I'm not even sure what that stands for. Jack, what does that stand for?

MR. BAUER: Texas Environmental Resource Stewards.

MR. BORUFF: Texas Environmental Resource Stewards, which is a pretty broad group of folks, which includes several of our state agencies, the federal agencies that are involved and I noticed your question to Dianna about why some of the credits aren't used. Because in the past I do believe the Corps of Engineers has had this culture or approach, if you will, to kind of do these, you know, on-site mitigation efforts.

We believe that at least in Texas and really nationwide but in Texas this TERS group has become kind of a vehicle to kind of get everybody on the same page. So I guess my one recommendation would be to continue to support the TERS group, continue to use it as a vehicle to make some of these decisions, and do just what you suggested, commissioner, which is to bring together multiple agencies and organizations that are interested in this and continue to push it forward.

My perception is that there is a changing of the approach within the Corps not that they're real quick to change all the time, but I do think they have recognized that this is an important way to allow us to get our business done on both sides of the fence here and do the best thing for the people of Texas.

So I think we're moving the right direction and I would just ask your support to continue to go that way.

MR. WILLIAMSON: John?

MR. JOHNSON: I'm going to echo and salute your remarks about the cooperation between our agencies. I was at the dedication of the Stringfellow Tract. Governor Bush was there and David Laney, who was the chair of the commission at the time. And that was an excellent partnership between Parks and Wildlife and a private entity, Dow Chemical, if I recall.

And I think the entire state and certainly the Gulf Coast area is benefitting from it. And it's an example of what we can accomplish when we join hands and work together. So may we continue to build upon that bond.

MR. BORUFF: Yes, sir. We intend to do so, and we appreciate your support. I do think in the end run this is also going to be a very cost effective way for us to do it. Not only will it put some good conservation on the ground and allow you good folks to do your job in creating a transportation system for the future, but I think it's going to be very cost effective compared to the model that was out there.

MR. WILLIAMSON: Ted?

MR. HOUGHTON: Not to be parochial, but do we have any sites in far West Texas? Not yet?

MR. BORUFF: Not yet. A Sarco [phonetic] site. Got some great state parks out there.

MR. HOUGHTON: Yes, we certainly do. And I understand you've got a few high-maintenance commissioners, especially that guy from El Paso on your Board.

MR. BORUFF: Mr. Brown actually has been a good addition to our commission. We're glad to have him.

MR. HOUGHTON: Great guy.

MR. BORUFF: Yes, he is.

MR. WILLIAMSON: Thank you, Scott. We appreciate you being here.

MR. BORUFF: I'm pleased to be here.

MR. WILLIAMSON: Appreciate the partnership.

MR. BORUFF: Thank you, sir.

MS. NOBLE: I did want to mention one other thing that I failed to earlier. There was a national tour that was headed by federal highway, along with EPA and U.S. Fish and Wildlife, and they went to various states to see how they were doing mitigation.

And the efforts the joint efforts between Texas Parks and Wildlife and TxDOT were recognized in that we're the only state that allows public use on these mitigation sites.

And, of course, we didn't realize that until they brought it to our attention that they thought that that was an extreme benefit to the public because generally all of these other mitigation banks in the other states are closed have no public access.

And I think that that's a credit to Parks and Wildlife that they believe that the resources of Texas need to be shared with the citizens of Texas. And I think and I want to emphasize this I think that losing Jack is going to be a tremendous loss to the state. And I'm personally going to miss his guidance and assistance on these, and I do wish him well.

MR. WILLIAMSON: And we all do.

MS. NOBLE: And I do recommend approval of the minute order.

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

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries.

MS. NOBLE: Thank you so much.

MR. WILLIAMSON: Thank you. Nice to see you.

MR. BEHRENS: Scott and Jack, thanks for coming. Jack, good luck to you on whatever you pursue. Like Dianna said, you've worked with us very well through the years. We appreciate that. And tell Bob Cook I'm still looking for a refund on my hunting license from two years ago.

MR. JOHNSON: Plus interest.

MR. BEHRENS: We'll go on to item number 6, aviation. This will be our airport improvement projects for this month. Dave?

MR. FULTON: Thank you, Mike. 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 13 airport improvements projects. The total estimated cost of all the requests as shown in the Exhibit A is approximately $3.6 million 2.4 federal, approximately $750,000 in state funding, and approximately $500,000 in local funding.

A public hearing was held on April 20 of this year. No comments were received. We would recommend approval of this minute order.

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

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. BEHRENS: Now go to agenda item number 9 this will be 9b. We covered 9a a while ago with Coby. And I'll ask James to come up and give us the status of the putting together the LAR, our Legislative Appropriations Request.

MR. BASS: Good afternoon. Again, for the record, I'm James Bass, Chief Financial Officer at TxDOT.

This is another in our ongoing discussions of preparation for the department's Legislative Appropriations Request. And in the next couple of weeks we should be delivering to your offices draft copies of that appropriations request.

And we're hopeful that on or around the time that we deliver those to your offices we'll actually have a set of instructions from the Legislative Budget Board.

MR. WILLIAMSON: Very good.

MR. BASS: The topic I'd like to talk about today oftentimes there's a number of discussions about uses of the State Highway Fund with other agencies. I want to bring to your attention some items even within TxDOT's budget where over time those programs may have been funded in part or in whole with General Revenue, and over time that has now moved to being funded by the State Highway Fund.

And I think I have offended some of my peers when I've had this discussion in the past. I am not suggesting in any way, shape, or form that these activities are not worthy. That is not a decision for me to make. It's something I want to bring to your decision and utilization of the State Highway Fund so the commission, if they so choose, has an opportunity to comment on before the Legislature makes that ultimate decision.

The first program I want to talk about is the Auto Theft Prevention Authority within TxDOT. This program has historically been funded by one dollar per auto insurance policy issued in the State of Texas. This one dollar had then been deposited to the General Revenue Fund and was then utilized to fund the administration of the Auto Theft Prevention Program. That one dollar continues to be assessed and continues to be deposited to the General Revenue Fund.

However, beginning in 2004 the funding of this program came out of the State Highway Fund. And so in 2006 and 2007 the State Highway Fund is spending roughly $25.5 million for the administration of this program, and the General Revenue Fund of the State is receiving about $30 million from the one-dollar fee assessed to the various auto insurance policies throughout the state.

In a similar fashion we have oversize, overweight permits that are issued to trucking companies, and they list a number of counties that they wish to operate in for the year. Based upon the number of counties they have listed on there the price varies, and the money paid is then distributed to the counties listed on that permit.

Again, historically that portion of the fee that had paid had been sent to General Revenue, and then twice a year it would be distributed out to the counties depending upon how they were listed on the permit.

Beginning in a few years ago it was altered, but in 2006 and '7, again, there's about $9.5 million coming out of the State Highway Fund being distributed to the counties while the collection of this fee continues to be deposited to the General Revenue Fund.

Another item is our commercial carrier operations that was transferred over from the Railroad Commission several years ago. When it was transferred over back in 1996 it brought with it about a $2.5 million appropriation for the biennium from the General Revenue Fund.

Again, in 2004 the GR was completely eliminated and was replaced with an appropriation out of the State Highway Fund. And this group who operates out of our Motor Carrier Division actually collects and generates about $10 million per year in revenues to the General Revenue Fund.

Another item is Public Transportation. Historically that program had received just over $17.5 million biennium from the General Revenue Fund to help support the program and its implementation. However, in 2004 you can see there's a constant theme here 2004 the General Revenue that was appropriated to TxDOT for Public Transportation was eliminated and was replaced with appropriations out of the State Highway Fund.

One last one that's a little different it was not funded by General Revenue but it's a perhaps somewhat an odd item. It's one of our riders in our appropriation bill that directs Travel Information Division to send a million dollars per year to the Texas Historical Commission and just over 1.3 million per biennium to the Commission on the Arts. And those funds are to be used to showcase the arts, culture, and historical diversity in Texas to promote tourism.

All of these together equate to about $55 billion for a two-year period for the biennium. So that's a large amount of money dealing with an $86 billion funding shortfall. It's not a large amount of money, but it's another example I think of an opportunity through the Legislative Appropriation Request.

The commission can express their concerns, if you have any, or support for the funding of these various programs by utilizing

MR. WILLIAMSON: What was the grand

MR. BASS: State Highway

MR. WILLIAMSON: total, James? What was the

MR. BASS: 55 million

MR. WILLIAMSON: 55 million.

MR. BASS: for a two-year period.

MR. WILLIAMSON: I would say just request them all be funded out of General Revenue.

MR. BASS: Okay. That was will fall into a separate part, assuming the instructions don't change too dramatically to call an exceptional items request in the Appropriations Request. And we should have plenty of opportunities to have a discussion on those matters.

MR. WILLIAMSON: Well, I mean of course, we're saying having this discussion without John I think he would concur. But why don't we just request that all of it all 300, 4-, 500, 600 million a year.

MR. BASS: We will do as you direct.

MR. WILLIAMSON: What's the worst that can happen?

MR. HOUGHTON: Take a shot.

MR. BASS: Those are the items I had again, just to give you an opportunity to begin thinking about those items as in the next couple of weeks your office should be receiving a full draft copy.

MR. HOUGHTON: It's a real thin book, isn't it?

MR. BASS: No, it's quite thick normally, again, depending upon the applications. Normally it takes about 300 pages to describe 2 percent of our requests, which is the Capital Budget. And then the rest of it is covered in only about 50 or 60 pages.

MR. WILLIAMSON: And we're, again, going to ask this year that the Capital Budget system be changed?

MR. BASS: Yes rather than a hard line to be based upon a percentage of our overall budget similar to the I know earlier, speaking with Amadeo about it, the FTE cap again, in the Appropriations Request we will request that it not be limited to a hard number full-time equivalence, but rather that our expenditures for salaries be capped at a percentage of our

overall budget.

MR. WILLIAMSON: What else do you have to report to us, James?

MR. BASS: That is all for today unless you have any specific questions.

MR. WILLIAMSON: I don't think I have anything specific this month. I do think that I'm serious about going ahead and asking for General Revenue. I don't think that hurts anything. I thinkhere's a

MR. BASS: We can certainly do that.

MR. HOUGHTON: We need to find some allies to go with it.

MR. WILLIAMSON: I think there's a certain interest this year maybe in not only stopping the transfers but perhaps even helping roll back some of them. So

MR. BASS: Okay.

MR. WILLIAMSON: give that a try.

MR. BASS: Thank you.

MR. WILLIAMSON: Thank you, James.

MR. BEHRENS: I'd like to change the agenda a little bit, and let's go to agenda item number 13, our pass-through tolls. And we do have some people to comment on 13b(2). So let's just go ahead and take care of all of 13, Amadeo.

MR. SAENZ: Thank you. Good afternoon. Again, for the record, Amadeo Saenz. Item 13 those the pass-through toll agreements. Item number 13a is authority to negotiate with a pass-through toll agreement with Galveston County.

This is an addendum. We had you have previously approved an approval to negotiate with Galveston County for on FM 646. As the District and ourselves and Galveston County were looking at the project it was determined that it would be a much better project if the project limits were extended to connect from 517 north to 45. I think we have an attachment.

We had already previously approved a pass-through toll project from FM 1764 to 517, but when we look at the project it makes much more sense, and the county is willing to take over and do that portion and connect it up to 45. This would provide a much better corridor. And we request approval to work with continue to work with Galveston County to negotiate a pass-through toll on this amended limits.

MR. WILLIAMSON: Why don't you go ahead and lay out b(1) and b(2).

MR. SAENZ: Yes, sir. 13b(1) is a pass-through toll project. The minute order before you authorizes the department to execute a pass-through toll agreement with Comal County for improvements on State Highway 46 from Loop 337 in New Braunfels west to U.S. 281 in Bulverde and also a pass-through toll agreement for U.S. 281 to construct a four-lane divided highway from the Guadalupe River to the Blanco County line for the purchase of right of way.

This project basically on 46 Comal County will provide $16 million in financing. This is the first of the pass-through toll agreements where it's just a financing. They will provide $16 million in financing through to complement that the department already has as we develop this project.

Then once the project on 46 is complete we would then reimburse Comal County at a 10 cents per vehicle mile rate until we repay them their $16 million for this project. Comal County is taking all of the risk and all the interest costs in the amount of that loan.

MR. WILLIAMSON: Are these primarily local, regional, or state roads?

MR. SAENZ: 46 is a regional road, and it's got tremendous amount of traffic. We've been working on it. We have a majority of the funding. We were still short, and Comal County stepped up to the plate to help us fund the project. And, of course, 281 is also it's really a regional road, but it's more of a statewide road.

The 281 project is also they're willing to provide $16 million. And really the way that they picture this thing here is that if they write $16 million, we build 46, pay them back, and then, instead of taking the money, they would then reinvest it in our project on 281 so that we could do that. And then we pay them one more time. So, in essence, it's a $32 million pass-through toll agreement on two projects $16 million apiece.

MR. HOUGHTON: What's the total project cost?

MR. SAENZ: The project on 46, if I remember correctly, had a cost of about $38 million. We were still short and could not complete the funding for this project and were still short $16 million and then we'll reimburse them $16 million.

But we will continue and we will develop and build the project. They're just providing partial part of the financing.

MR. HOUGHTON: We're using their debt their capacity

MR. SAENZ: Yes, sir.

MR. HOUGHTON: to finance that.

MR. SAENZ: We're using their debt capacity to be able to finish the financing.

Project number 13b(2) is in Hays County. It also is authorizes the department enter into a pass-through toll agreement with Hays County for improvements on three highways.

FM 110, which is a loop around San Marcos on the east side of 35. That project is a local road that will provide some connectivity and connection to Highway 123 and provide a new access from 123 onto 35. This is a first the first phase of that loop. Later on we will probably come back and do another request for the remainder of that loop.

The second project in San Marcos is the construction of Ranch to Market Road 12 from the San Marcos city limit all the way to Ranch to Market 32. The uniqueness about this project is a few months ago you approved a pass-through toll agreement with the City of San Marcos for Wonder World Drive or the extension of Wonder World Drive, which, in essence, will connect to this job, and this job continues and carries this one.

Ranch to Market Road 12 is a regional road. It basically brings in to major arterial from the west back into the east into the San Marcos area.

The third project is a project on FM 1626 from Bliss Spillar Road just inside the Travis County line and down to 2770. And what's unique on this same project is that we had worked with Hays County and also the City of Kyle about a year-and-a-half ago where they have they have already extended 1626 and connected it to 35.

So what when this project is complete we will have a connection from 35 over there in the Kyle area and then the project will then continue north and provide an alternate route into the Austin area from that part of Hays County into Travis County and into Austin. So, really, 1626 is a regional corridor, but it does have some tremendous benefits on 35.

And according to what we have negotiated the three projects we have come up with an agreed amount of $133,170,000 for the construction design, construction, and development of these projects. We would repay back at a toll rate of 14 cents per vehicle mile traveled with a minimum amount paid per year of 6,658,500 and a maximum of $13,317,000 per year maximum. This would allow a pay back of somewhere between 11 and 12 years.

Just for comparison to find out the two projects that were local/regional the county had agreed to fund 75 percent of the construction. They had also agreed to provide funding for some of the right of ways.

So when you're looking at the project cost, in 2006 dollars the project cost for these all three projects is $151 million, and the pass-through toll amount in 2006 dollars is $109 million, where they're providing $32 million towards these projects or 21 percent. Staff recommends approval of all three minute orders.

MR. WILLIAMSON: We have two witnesses, and we want to go ahead and listen to these witnesses. They're both on item 13b(2). And do you wish it to be Commissioner Conley first and then Judge Powers? And you're too young to be a county commissioner.

MR. CONLEY: I can be persuasive at times.

MR. WILLIAMSON: Golly.

MR. CONLEY: I just want to thank you gentlemen for the opportunity, Mr. Chairman and Commissioners, for this opportunity in Hays County. Our voters overwhelmingly support these projects. They voted on these projects in 2001. It has taken the county this time and the state to get to this point today.

And this is a historic moment for Hays and for our region. I want to thank Mr. Behrens, Mr. Saenz, and Mr. Daigh, and all the TxDOT staff who we've come to know fairly well over the last few years. And just appreciate the opportunity. This is going to make a tremendous difference in Hays County and our region and we appreciate your support.

MR. WILLIAMSON: Well, that's nice of you. Ted, anything for this young man?

MR. HOUGHTON: What did the voters vote on?

MR. CONLEY: They voted on 1626

MR. HOUGHTON: Funding?

MR. CONLEY: Ranch Road 12 yes, sir.

MR. HOUGHTON: Okay.

MR. CONLEY: Yes, sir. And I believe that passed in our county by about a 78 percent ratio. And, obviously, with all the changes and the way we fund state transportation it's taken us some time to come up with a good solution. But I believe we're there today. With your support we can move forward into the future.

MR. HOUGHTON: Thanks.

MR. WILLIAMSON: Thank you. We appreciate it.

MR. CONLEY: Thank you, gentlemen.

MR. WILLIAMSON: Judge?

JUDGE POWERS: Thank you, Mr. Chairman and Commissioners. I just want to echo what Commissioner Conley said. We appreciate so much your work and effort and the staff and Mr. Amadeo and Bob Daigh, who have been real helpful to us in Hays County.

We continue to be a fast-growing county with a lot of issues and needs. And we're just excited about this process and thank you so much for your help.

MR. WILLIAMSON: What we all want to know I just know this because I've seen notes written down here on the paper is how much did you pay the Statesman to do that article for you?

JUDGE POWERS: Well, I didn't pay them actually, but

MR. WILLIAMSON: Well, wait a minute. How much did your opponent pay the Statesman to do that article for you?

JUDGE POWERS: I don't know. I'd have to check with him or her. But, anyway

MR. WILLIAMSON: You know

JUDGE POWERS: so much for the Statesman.

MR. WILLIAMSON: having served an elective office I was and my roommate also we were reading the paper this morning. My roommate's flipping through it and he's reading and he says, Man, I bet he wished that wasn't there. He didn't have to tell me which article it was. I looked and I said, Oh.

JUDGE POWERS: Yes. Unfortunately, that was not a good article in some respects. But, you know, what can I say?

MR. WILLIAMSON: You'll be a great county judge or a great commissioner, either one.

JUDGE POWERS: Whatever. Anyway, I appreciate your time.

MR. WILLIAMSON: Any questions for the judge? (No response.) Thank you, sir. Amadeo, out of curiosity I know we haven't adopted the indices yet did you happen to run a tax cap on these roads?

MR. SAENZ: Yes, sir, I sure did.

MR. WILLIAMSON: Just so our transportation partners can know the dilemma we face.

MR. SAENZ: The indices for let me go back to my chart here. One of them had a ratio of .22, which is the Ranch Road 12. The 1726 had an indices of .16 or 16 percent. And then the loop had a low indices because it's only the first phase, so that one just had an indices of .08.
Both of all of these projects did not rank very, very high. The 1626 is the biggest is the one that's at and, of course, what we did, like I mentioned, I took into account that they were local and regional, and we did discount the construction cost, as well as all of the right of way cost on the loop and also on the project on Ranch Road 12.

MR. WILLIAMSON: So I guess as we mature these indices for purposes of the asset value we'll eventually develop a range that says, you know, if something in between zero and 20 has really got to have some high air quality or economic opportunity index or safety or congestion

MR. SAENZ: When we look at

MR. WILLIAMSON: or something.

MR. SAENZ: When we look at when I look at the rest of the indices we did run all of them, of course. We looked at with respect to the congestion they show congestion reductions are low, which is less than the 15 percent. And that 15 percent is air quality was also they also show low in that area. And partly because we don't have that an air quality problem in that part of the county.

And in the as far as safety they were in the middle section in the potential, which, on safety, we have possible, potential, and then quite a bit. So we did have a high safety index. I drove those projects this weekend just to go look at them to make sure and 1626 especially is winding and needs that expansion. There's a lot of traffic even on weekends.

MR. WILLIAMSON: Okay. Members, we have before us three matters. Items 13a, which is giving the department

MR. SAENZ: 13a

MR. WILLIAMSON: You've already done that.

MR. SAENZ: Right.

MR. WILLIAMSON: 13a is extending authority to negotiate an agreement with Galveston County.

MR. JOHNSON: You want to handle these one at a time?

MR. WILLIAMSON: Yes, sir.

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: We have a motion and second. All those in favor signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries. And then we have 13b(1), which is Comal County.

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: We have a motion and second. All those in favor signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries. 13b(2) is Hays County we just heard.

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: We have a motion and a second. All those in favor signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you. And thank you for your patience today. We appreciate it. Bob, tell us a little bit ad hoc about the chlorine problem. They just probably want to know about this.

MR. DAIGH: For the record, my name is Robert Daigh, Austin district engineer.

This morning, unfortunately, on the westbound 290, just east of 183 for those of you that are local, just west of Springdale Road a chlorine container truck had a leak. The truck was pulled over to the side of the road. Traffic was stopped on U.S. 290 on both directions. At this point in time I have information that the we are anticipating having the road open within two hours. So that is good news. We're trying to have it open before rush hour. And the most important thing is that I don't believe anyone has been injured. So we are very fortunate.

And I think our combined operation center formed its function went very well today by allowing signals to be readjusted throughout the Austin area to try to alleviate the traffic jam that was occurring east and west of this area due to 290 being shut down. So I think the systems were working well.

MR. WILLIAMSON: Thank you very much for that update. Appreciate it.

MR. JOHNSON: Bob, for those of us anticipating going to their home that way

MR. DAIGH: Yes, sir.

MR. JOHNSON: on 290 towards the Gulf Coast how would we check to see just what how well the traffic is moving?

MR. DAIGH: The department has an excellent website which lists traffic conditions. And we will be sure that this commission and Mr. Behrens are notified when the situation has been cleared.
MR. HOUGHTON: Some are not computer literate so they may have other needs.

MR. WILLIAMSON: This North Texas commissioner is recommending that you put your compass on south and head 35 and take 10 across.

MR. DAIGH: We will be happy to keep the dais appraised of the condition.

MR. JOHNSON: Thank you.

MR. DAIGH: You bet. Thank you.

MR. BEHRENS: Okay. Now, we go back to number 10. This is concerning FTEs. We're looking at our FTE numbers that's in the General Appropriations Act. And we have recommendations that it will pass. Put before you that we would like to move forward on. Ed?

MR. SERNA: Afternoon, Mr. Chairman, Commissioners. For the record, my name is Edward Serna. I'm the Assistant Executive Director for Support Operations of the department.

This agenda item is a minute order that would provide approval for the department to request an exemption from a 2 percent reduction in FTEs required in the current Appropriations Act.

The Appropriations Act for fiscal years 2006 and '7 allocated to TxDOT about 14,831 FTEs. However, Article IX of that same Act had a provision that required agencies with more than 300 FTEs to reduce their FTE count by 2 percent.

For TxDOT that would amount to about a 296 FTE reduction. An elimination of that many FTEs in the department would have a very bad impact on our ability to execute our mission and to carry out the plans and the programs that this commission and the Legislature have tasked us with.

While the average number of FTEs over the past six years has remained consistent the workload has continued to increase. As a result of for example, as a result of the Texas Mobility Fund and other enhanced and innovative funding mechanisms our contract letting has increased significantly. Therefore, the workload in our districts and several of our headquarters' divisions has increased.

In addition, the workload in several districts and divisions has also increased because of the economy and the population doing well in Texas, as well as TxDOT's expanding role.

Examples of these workload increases are for example, I've talked about the highway construction letting. That's gone up 54 percent since 2001. The average increase in the number of motor carrier permits issued has increased 8 percent over the past several years. We've had a 10 percent increase in the number of motor carriers that we're registering.

We've had an 80 percent increase in the number of highway-related environmental projects that we've cleared. We have the ferry operations at both Port Aransas and Galveston that are requiring additional staff due to an increased number of ferries, as well as priority boarding.

And you may recall at the commission meeting in Conroe where our division director for Motor Vehicles Division talked about the need for additional staff and the backlog there. In Motor Vehicles Division we have a backlog of approximately 5,000 enforcement complaints that need to be addressed against motor vehicle dealers, manufacturers, and lease facilities.

Based on our current and future workload projections the department could use an estimated 2- to 300 additional FTEs in both the districts and the divisions. So a reduction of FTEs by any amount would have an adverse impact on our ability to successfully execute our mission and to carry out our workload.

Based on that staff recommends approval of the commission's of this minute order by the commission.

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

MR. JOHNSON: I think this is critical. I would

MR. SERNA: Yes.

MR. JOHNSON: certainly move.

MR. HOUGHTON: Second.
MR. WILLIAMSON: This is a very conservative and very Republican commission. And I think we're in unanimous agreement this is the very minimum we need to do. All in favor of the motion signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you.

MR. SERNA: Thank you.

MR. WILLIAMSON: Good to see you again, Ed.

MR. BEHRENS: Agenda item number 11, which is another discussion item. And this will be where Amadeo will give you a status on where we are on some of the rail projects that we have been talking about and others have been talking about. Amadeo?

MR. SAENZ: Good afternoon, commissioners. I'm on this is going to be a kind of a team approach. I'm going to give you a quick status on a couple of projects that deal with rail development.

One is an update. I was invited to a meeting in Nuevo Leon, Mexico, to meet with the people from the State of Nuevo Leon. And they provided us an update of projects that they are working on with respect to a new connection at the international bridge at Colombia, which is just north of Laredo.

And in their meetings and workings with the Webb County Rail District, where they're trying to get a new international crossing into Mexico that would provide a more direct route into the State of Nuevo Leon and into Monterrey.

One of the the reason for the invitation is they had seen the proposal that we had received based on the 35 TTC and there was a lot of interest from the State of Nuevo Leon with respect with trying to see how they could connect to the 35 TTC project.

So I gave them a status report on 35 TTC where we were at and provided them contacts. And they already in fact, they already had meetings scheduled with the Cintra-Zachry team and see how they could work together.

But what that does, it adds another element into the 35 TTC project in that now you have a potential of a corridor that connects into Mexico into one of the and eventually down to the coast of Mexico. So it extends the rail corridor of 35 TTC into Mexico outside of metropolitan outside of the urbanized area of Laredo.

That was one project. The other project that has kind of surfaced in the last few days is Cap Metro as part of their all-systems-go rail programs of course, they had their election back in November of 2004 and approved part of the program, which was basically a commuter rail system from Leander back into back to Cedar Park into Austin, and one of the in going through the Mueller Redevelopment old Mueller Redevelopment area.

And one of the projects that they're looking at now is how do you make a connection from the downtown area over to Mueller. And one of the options that they have been looking at is to develop some kind of a streetcar system that would start here in the downtown area, come up Congress, go around the Capitol grounds, go through the University of Texas, and then continue north and then connect to Mueller.

And it's a project that they said is in their very early stages.

And they're still doing some very preliminary feasibility studies. From what the information that was provided to us they're working with the city, with the county, with the University and asked us to see if anything we could do with respect to getting keeping this project going.

We're going to continue to communicate with them and see how we can help also discuss potential funding options that could be available as the project becomes more of a reality. I think I've got a little map here of the project here in Austin.

MR. WILLIAMSON: I guess the theory on this project, as far as its statewide implementation, is if you can figure out a way to have a public transportation system that in since people living downtown as opposed to out in the suburbs and you're taking you're removing congestion from the entering and exiting highways in the suburbs into the downtown area.

MR. SAENZ: Yes, sir. You know, the Mueller old Mueller Airport is being redeveloped. And there will be possibility that people could come into that area and then come into downtown.

Or the vice versa, just as you say. You've got people that move into the downtown area and then use the commuter system to be able to go through, as well as the University. Being able to go through the University provides a tremendous avenue where the people that work and go to school at the University have a commuter system or a transportation system available to them that they can use.

Like I said, the project is in the very early stages. They're talking about running it through the University. What you see here in right here is the area where they're going through the University. The blue dots here is the area where they're going through the University.

MR. HOUGHTON: Yes.

MR. SAENZ: What they were talking about is you start somewhere down here on Congress and you go up. They're still looking at the routes are not set at this time. They're still

MR. HOUGHTON: What kind of rail is it? Is it a trolley-type system?

MR. SAENZ: It's a trolley-type streetcar system.

MR. HOUGHTON: Like in Houston?

MR. SAENZ: Yes, sir. But something that is much more lightweight so that they're talking about that the pavement structure that they need it's much less than what you need for a normal light rail system.

As they mentioned it's early on and they're looking to see who the potential players could be that could help in the development of this project.

MR. HOUGHTON: And they're asking us to do what?

MR. SAENZ: At this point they're just they just brought it to our attention to see if there's anything that we could help with.

MR. HOUGHTON: It's a great system for the University of Texas to finance.

MR. SAENZ: They are working with the University and trying to see what they can do.

MR. WILLIAMSON: I think in Chairman Krusee's view the mobility fund was decidedly set up for things other than building highways. And he sees us developing the indices, and he begins to ask, Is it not the case that we are creating the ability to ask ourselves the following question will a dollar invested in this, coupled with three other dollars from other sources, produce less congestion in downtown Austin than our same dollar invested on 35 in a certain

MR. HOUGHTON: Is that an MPO issue?

MR. WILLIAMSON: Well, obviously, everything we do

MR. HOUGHTON: Right.

MR. WILLIAMSON: we coordinate with the MPO. I think the Chair's I think he's on the right track.

MR. HOUGHTON: Yes, I hear what you're saying.

MR. WILLIAMSON: At least bringing it to us and saying, you know, we say we're interested in doing stuff. Let's begin to take a look at it. I mean, I anticipate DART will bringing us similar proposals in the very near future or the MPO will be bringing DART proposals in the near future.

MR. SAENZ: Right. If you look at the map of course, the red line is their current line. That's going to be the commuter lane that comes in from Cedar Park and Leander. And it's going to come in it's going to have a connection to that Mueller old Mueller Airport relocation. And it comes in and ties into the downtown area.

This other commuter rail system the light rail system would then pick up from there, and you can go up and down the downtown to the University and eventually get back to Mueller.

MR. HOUGHTON: Are they going to run it through Memorial Stadium or what?

MR. SAENZ: No, sir. We're going to go around Memorial Stadium.

MR. WILLIAMSON: But you know what? If they ran it through Memorial Stadium it would be the only thing that could successfully run through Memorial Stadium because Texas A&M certainly hasn't had much success doing that lately.

MR. JOHNSON: Mr. Behrens asked me to ask, when you're referring to the University which university are you referring to?

MR. SAENZ: The University of Texas.

MR. JOHNSON: Okay.

MR. SAENZ: Here in Austin. The other part of our rail discussion item is basically an item dealing with the abandoned rail abandoned projects that we are currently working on kind of to bring you up to date and see if there's any guidance that you would want to give us. And I've asked Jim Randall to make that presentation.

MR. HOUGHTON: I've got one

MR. SAENZ: I figured you've heard enough of me.

MR. HOUGHTON: Since Jim is here I've got one issue on rail. And it was brought to our attention during the Dallas/Fort Worth on the Tower 55 and the patchwork of 200 million and, you know, a container fee and that flies in the face of a statewide plan, and that flies in the face of TTC 35 rail project where the railroads may say, Okay, we fixed our problem. We don't need to do anything else. I don't see that as a solution to the long-term needs of the State of Texas.

MR. SAENZ: One thing that could happen, and it needs to be looked at, is that but you could identify and build that intersection project as a financial feasibility project for part of the bigger rail project. So in a sense you're building it, you allow the early relief of congestion, but you keep charging on that, and that becomes a funding source for the bigger 35 TTC project. You need to look at the finances to see kind of how that would work.

MR. HOUGHTON: We need to look at the bigger picture instead of just the Dallas/Fort Worth picture because it has a profound effect on the entire system.

MR. SAENZ: As we look through the big 35 TTC project and we look at the benefits of moving the intersecting those rail lines before they get into the Metroplex we will then have to evaluate how much still has to go in through the Metroplex to provide and deliveries within

MR. HOUGHTON: Right.

MR. SAENZ: and then see how much congestion you're actually remains there at that intersection. And then maybe it's a different type of solution. So I'm going to ask Jim Randall to take care of the rail abandonment stuff.

MR. RANDALL: Good afternoon, Commissioners. Jim Randall, Transportation Planning and Program Division. In your briefing book there should be a couple of white papers that we'll cover. And there's a third abandonment that's come up that just recently that Roger has a map of it, and I'll briefly just talk about it at the end of the presentation.

Like Amadeo said, there's several developing rail issues around the state that involve the department. We're seeking to provide you with some information on the projects, as well as guidance. And from that we plan on taking it back to the staff and gathering kind of facts or analyzing kind of issues that we can bring back to you in a formal presentation like a minute order or something like that.

Since we're doing puns I guess what I'm asking is to the commissioners, are we on the right track on these projects.

First I'd like to begin with the Waxahachie industrial lead. This lead is a 4.57-mile rail line that begins just east of the U.S. 77 railroad overpass on the south side of the city. And it travels in a generally southern direction through predominantly rural areas to the north side of Nena. And have you all found that map? Okay.

The rail line closely parallels the east side of the U.S. 77 right of way, which also parallels I-35 to south of the city. The line is currently owned by the Union Pacific Railroad Company. No trains have operated over the facility in almost four years and no potential shippers along the line have expressed an interest in restoring the rail service at this time. The line previously served the agricultural community.

On November 17, 2005, the Union Pacific Railroad filed an application with the Surface Transportation Board to abandon and discontinue service along the subject line on January 11. And on January 11, 2006, the City of Waxahachie filed a request for the issuance of a Notice of Interim Trail Use in accordance with the National Trail System Act. And, of course, this keeps the corridor intact by preventing the loss of property by reversionary easements.

When we became aware of the potential abandonment how we became aware of it was following the city's application for trail use. The city is interested in acquiring an existing depot from its third-party owner and renovating it, and intends to construct a visitors' center at that location. In addition, the city is interested in constructing a recreational trail on portions of the right of way.

The city indicates that they would support the department's acquisition of this facility provided they were able to proceed with their plans for the depot and the possible establishment of a trail.
A limited inspection by my division staff discovered that portions of the track have been removed from this line in several locations. The remaining track is in various states of disrepair.

There are also two bridges on the line, one crossing a creek on the south side of the city and the other crossing a large lake south of the town. The condition of these bridges are not known at this time.

The Dallas District and TPP believe the department should acquire this corridor for potential future transportation uses. This may include expansion of U.S. 77, the construction of new roadways, and possible implementation of future passenger rail services into Waxahachie as the area south of town is developed.

We believe that TxDOT can permit the city to establish a trail in the corridor with the understanding that all portions of the corridor may be needed in the future for other transportation purposes. TxDOT and the city representatives agreed to work together to preserve the corridor.

TxDOT is now in the process of having the entire facility evaluated to determine fair market value assessment of the facility. The Union Pacific has provided evaluation of $210,000 for the remaining infrastructure and property that is owned in fee simple title.

My staff has coordinated with the Dallas District and the city, and we've begun implementing the procedures prescribed in the Texas Administrative Code in order to acquire and preserve this corridor for future transportation purposes.

A public hearing is scheduled to be held on June 6 in the city to gather local input on the proposed acquisition of the line. If favorable comments are received we plan to bring this back to the commission as early as next month to seek your approval to negotiate and acquire the facility.

So I guess my question to the commission is we're at the point where we need some direction. Do you want us to continue to follow through with this procedure for acquiring the line?

MR. HOUGHTON: I'm for it.

MR. JOHNSON: A question or two.

MR. RANDALL: Yes, sir.

MR. JOHNSON: How wide is the corridor?

MR. RANDALL: It's up to 100 feet wide in some places.

MR. JOHNSON: What about in its narrowest place?

MR. RANDALL: It would be 50 feet.

MR. JOHNSON: Is that from a safety standpoint enough width to encompass this trail that the city is would like to do, plus if the rail line or rail usage were ever preserved or some other

MR. RANDALL: We would have to look at it a lot closer, Mr. Johnson. But I believe that that the 100-foot right of way would be enough to encompass at least a commuter rail line there, as well as

MR. JOHNSON: What about a 50 foot?

MR. RANDALL: Fifty foot? I think that would be

MR. JOHNSON: I'm thinking from a safety aspect.

MR. RANDALL: From safety? I think 50 foot would be rather narrow.

MR. JOHNSON: What happens to the reversionary interest if there are some of the parcels of the corridor that are affected by a reversionary clause?

MR. RANDALL: Well, right now it's held intact because of the trail use condition. And we filed a public use condition for it, so at the time that the corridor is held intact. Now, if we decide to not go with the trail or use it for rail purposes in the future then the reversionary clauses would go into effect.

MR. JOHNSON: So the reversionary use language is not strictly a rail issue.

MR. RANDALL: Well, the rail the Trails Act we filed a rail a trail rail banking that that's what holds the corridor intact. And it keeps the reversionary easement clause from being executed. So as long as we have that designation then the corridor's intact.

MR. WILLIAMSON: Don't you remember how much cain former member and soon-to-be Senator Nichols raised about that?

MR. JOHNSON: What I recall him raising an issue is if was from parcels that were acquired through eminent dominant by the rails.

MR. WILLIAMSON: It then came under this Act.

MR. JOHNSON: Well, the issue that was run into on I-10 by purchase of the rail corridor there on the west side of Houston was there were one or two tracks that had reversionary interest and we ended up having to buy them twice. And I think we're also looking at the rail line that parallels State Highway 3 and found out there were so many reversionary interests on it that they really couldn't give us good title the railroad could not to where we were satisfied we'd have the flexibility of uses that we wanted to consider. So we didn't pursue it any more.

MR. RANDALL: Well, we would thoroughly explore that before we brought a minute order back to the commission to seek approval to acquire.

MR. HOUGHTON: This is just to the next step we're talking about.

MR. RANDALL: Yes, sir.

MR. HOUGHTON: In other words, the next step, Commissioner Johnson.

MR. RANDALL: In other words, I want to make sure that you all are all right for us pursuing the acquisition of it and going with further investigation of the corridor

MR. HOUGHTON: Further investigation.

MR. RANDALL: Yes, sir, because I'm about to spend some money to do that.

MR. JOHNSON: One other question the Chair asked me, are there any billboards in this corridor?

MR. RANDALL: We're not aware of any billboards in

MR. WILLIAMSON: But do you know that a little known fact you can use enhancement money to remove billboards? Now, I want to know if you can use enhancement money to erect billboards because I know how much you like them. You like billboards about as much as I like 85-mile-an-hour speed limit.

MR. JOHNSON: We're getting ready to vote on that. Well, I would concur with Mr. Houghton. I think this is worthwhile to pursue.

MR. WILLIAMSON: We can't make decisions. We've just got to tell we've got to just express to staff that we're individually interested in this.

MR. RANDALL: Yes, sir.

MR. WILLIAMSON: I think I heard Mr. Johnson say that he was individually interested in being aggressive.

MR. RANDALL: Okay, sir.

MR. WILLIAMSON: I can just as a general rule, Jim, if you ask me I'm going to say that the most difficult part of our job anymore is putting together right of ways and easements. And so you can almost always rely on me to be interested in pursuing anything that preserves a corridor, no matter how wide or how narrow.

MR. RANDALL: Okay, sir.

MR. WILLIAMSON: I just it's just the most expensive thing to deal with more and more. And I think the only concern I have is that we don't want to find ourselves in a position of financially supporting a trail that once done can never be converted back to a commuter rail or a highway

MR. RANDALL: Okay, sir.

MR. WILLIAMSON: or a bicycle path or something that would work us towards one of our five goals. Because I'll tell you, if we're going to send Ted Houghton in to see Jim Pitts tomorrow and talk about enhancements, and if we're going to send me in to see Senator Carona in two weeks to talk about CDAs, and if we're really going to focus on our five goals, you know, we've got to discipline ourselves to do that as well.

And we would just want to be sure that whatever group we're working with isn't misled. If we're going to be a partner we're going to be a partner because some day we're going to want to address one of our five goals with our investment of the taxpayers' money.

MR. RANDALL: Okay, sir.

MR. WILLIAMSON: Does that give you enough guidance

MR. RANDALL: Yes, sir. We'll go ahead and go into get a right entry and start doing a thorough investigation of the real estate as well as the other aspects of it.

Okay. The second issue I'd like to bring to your attention is the operation of the Northeast Texas Rural Transportation District Rail Line. I believe there is another white paper in your briefing book with a map. The map is rather busy, but it will give you a general idea of NETEX.

NETEX is a 66-mile has 66 miles of operating rail line from Winfield, which is just west of Mount Pleasant, through Sulphur Springs and Commerce to west of Greenville. There's an additional 23 miles of right of way from west of Greenville to Wiley that does not have tracks or ties.

The 31-mile segment of the rail line west of Greenville to west of Sulphur Springs was the subject of an abandonment application and was purchased in December 1995. The department funded the purchase of this portion of the line with a $2 million appropriation from the 74th Texas

Legislature and has a vested interest in the real property and assets of this segment.

In September 2000 NETEX purchased an additional 35 miles of rail line from west of Sulphur Springs to Winfield with a federal grant in the amount of $1.5 million. This segment of rail line had also been the subject of an abandonment application.

Finally, the 77th Texas Legislature provided 300,000 through TxDOT for the purchase of an additional 23 miles of right of way from west of Greenville to Wiley. The final right of way purchase does not include tracks, since the tracks were salvaged in the early 1990s. In total, the State has $2.3 million security interest in the line.

NETEX has been relatively successful in their efforts to preserve this railroad corridor and continues to provide freight rail services. Operates as across a rail line or lease to the Blacklands Railroad, which has increased its customer base from 2 to 18 active shippers since 1999 and increased cars handled across the line from 250 to 2,000 annually in the same time period. These 2,000 rail cars per year equate to approximately 700,000 truckloads of freight that are diverted from the local highway system to rail.

Ongoing maintenance and repairs has been the biggest challenge for NETEX. The rail line is mostly constructed of 100-pound rail and what that means is that the steel weighs 112 pounds per running yard or every three feet. And it also lets you know that the main line standards is about 136 pound. That's what UP (Union Pacific) would have on their mainline system.

The majority of the ties appear to be installed in the 1940s. And the average life of a tie is about 50 years old.

There are 70 railroad bridges on the line which were constructed between 1925 and 1950. The railroad suffered from deferred maintenance for years prior to the abandonment applications and has only had limited emergency maintenance and repairs since the acquisition in the 1990s.

Train speeds are limited to ten miles an hour and the railroad is in need of significant tie replacement, along with some of the bridge repairs and drainage improvements. If these issues are not addressed railroad operations will degrade and the railroad may cease to operate.

Representatives from NETEX has indicated that existing and new businesses would utilize the rail if improvements were made. This would increase operations on the rail line to provide economic stimulus to the area.

In addition, the potential exists that for establishing future commuter rail services for east of Mount Pleasant into the Dallas area.

Staff is concerned that the present operations on the line will not continue to support continued service without an influx of funds for track improvements. Now, I'd like to discuss three options in which improvements could be made.

Option one NETEX may apply for a loan to rehabilitate the line and improve operating speeds and service over the line. Such a loan would require that a lien would be placed on the line.

In the event service levels do not support loan payments an application for abandonment will be filed and the lending entity would share in the financial interest TxDOT has in the rail line. If we were to later acquire the line the department would be required to pay off the balance of the loan. As you can see, option one really does not require any action on our part at this time.

Option two this would include TxDOT assessing the value of the line the cost of rehabilitating the line to a higher operating speed. If the value of the line less our current investment is in excess of the cost of rehabilitating the line to a higher operating speed TxDOT could purchase the line from NETEX.

An agreement could be developed that would require NETEX to invest in higher purchase price and to needed rail improvements. TxDOT would oversee the expenditure of the funds for the line's rehabilitation. This option would not only preserve operations but has the potential to spur new business on the line and generate economic opportunity in the region.

NETEX would be required to lease the line back from TxDOT and sublet it to an operator. It would be NETEX's responsibility to maintain the rail line in its refurbished condition.

And, of course, a third option this option is similar to option two. We, again, would assess the value of the line and the costs to prioritize rehabilitation. Regardless of the cost of the rehabilitation TxDOT would acquire the line for fair market value less our current financial interest and have the proceed from the sale directed to line rehabilitation.

Ownership of the line and transportation corridor would be secured in the event of abandonment or default.

And what I'd like to do is maybe get your thoughts on those three options and we'd know better

how to proceed on this issue.
MR. WILLIAMSON: I want to ask a couple of questions, Jim.

MR. RANDALL: Yes, sir.

MR. WILLIAMSON: The lime green item three in the legend 2002 right of way acquisition looking at the map

MR. RANDALL: Yes. Somehow I got away without the map it looks like. Yes, sir.

MR. WILLIAMSON: That lime green right of way who owns that right of way?

MR. RANDALL: Just a second. Here it is.

MR. WILLIAMSON: Green pea green.

MR. RANDALL: Yes, sir. From Wiley east almost to Greenville?

MR. WILLIAMSON: Well, I can't see. My map would be west of Greenville.

MR. RANDALL: West of Greenville to Wiley?

MR. WILLIAMSON: Right.

MR. RANDALL: That is owned by NETEX. That was part of the $300,000 grant that was

MR. WILLIAMSON: Do we have a security interest in that?

MR. RANDALL: No, sir.

MR. WILLIAMSON: Does it cross the lake?

MR. RANDALL: I don't I'd have to double-check on that. I don't know if there's a bridge there or not, sir. The dark green portion from the from just west of Sulphur Springs over to just west of Greenville, that was the acquisition that was made in 1995 with the $2 million from the through the Legislature. The purple is the acquisition done with an FTA grant in 2000.

MR. WILLIAMSON: My next question is what is the rail line that goes from Mount Pleasant south and eventually into Tyler? Do you know?

MR. RANDALL: I believe that's the Union Pacific, but I Wayne, if you can hear me can you bring me the railroad map? He's in the back.

MR. WILLIAMSON: Well, I don't think it's going to make any difference in my decision. I was just kind of curious because

MR. RANDALL: I believe that's Union Pacific if I'm not mistaken.

MR. WILLIAMSON: We have a long visit with some people that former commissioner soon-to-be Senator Nichols sent to us yesterday.

MR. RANDALL: It's UP.

MR. WILLIAMSON: So is it an active line, Wayne?

WAYNE: Yes, sir.

MR. WILLIAMSON: What's the line coming east out of Dallas? Is that BNSF or Kansas City Southern? (Pause.) Not east out of Greenville, but east out of Dallas.

MR. HOUGHTON: There's several lines going down, one north and one south.

MR. WILLIAMSON: Well, I see one coming east out of Dallas headed towards Longview.

MR. HOUGHTON: And then there's one up north of that way up on top.

MR. WILLIAMSON: Boy, you know lose Mario Medina to Laredo and there's nobody knows about railroads anymore.

MR. RANDALL: I believe that's UP too, sir.

MR. WILLIAMSON: Okay. And then east out of Greenville.

MR. RANDALL: East out of Greenville?

MR. WILLIAMSON: Not the one we're talking about, but the other line.

MR. HOUGHTON: Follows the road.

MR. WILLIAMSON: Is that Kansas City Southern?

VOICE: That's Kansas City Southern.

MR. WILLIAMSON: Ted, what questions would you have or what direction might you want to offer?

MR. HOUGHTON: Well, the I was looking at the fair market value of the line and purchasing the rights of way.

MR. RANDALL: Okay, sir.

MR. WILLIAMSON: John, your thoughts?

MR. JOHNSON: On the three options, Jim, it's difficult for me to come up with a preference without sort of knowing ball-parkish what sort of numbers we're talking about. So

MR. RANDALL: Okay, sir. Well, what you're telling me is that I could go ahead and have an valuation done of the line so I can figure out

MR. JOHNSON: I think that's a good first step, yes.

MR. RANDALL: Okay.

MR. WILLIAMSON: Well, I'm like this about like I was with the Southern Orient. I'm interested in acquiring all rights of ways that we can acquire. I'm interested in acquiring all security interests we can acquire in easements and right of ways. I think this particular line you know, it wouldn't bother me if you started talking about buying a railroad.

MR. RANDALL: Okay, sir.

MR. WILLIAMSON: So you've got Ted sort of aggressive and John reservedly aggressive, and I'm ready to go buy. So that ought to give you some guidance.

MR. RANDALL: Appreciate it. The final one is something that just came across our desks is the Tyler Industrial Lead abandonment. And you probably already answered my question on this, but this is just for to show you that the from Troup to Whitehouse that segment, again, is another industrial lead that's up for abandonment.

And it sounds like from the direction I'm getting we ought to go ahead and explore what it take to acquire it. We're at the position right now is that we brought it to the attention of the Tyler District. And the Tyler District will do an evaluation as far as maybe its usefulness as not only a rail corridor but maybe a future transportation corridor. So we have not gotten that back from the district yet, but I just thought I'd bring it to your attention that this one's out there on the I believe it was announced May 11 or something like that.

MR. WILLIAMSON: You object to going first step, John?

MR. JOHNSON: Absolutely not. I philosophically I think it's a tragedy when corridors corridors are so difficult to develop that when we start abandoning it's it has to be a final your final answer and there is no other conclusion to reach. Because I think these things need to be preserved as best we can.

MR. RANDALL: Okay, sir.

MR. JOHNSON: Now, there's an economic limit.

MR. RANDALL: Right. So we'll go ahead and explore that too

MR. WILLIAMSON: Go for it.

MR. RANDALL: and come back with it. Okay, sir. Well, that's all I have. Appreciate your time.

MR. WILLIAMSON: When are you all going to hire a replacement for Mario?

MR. RANDALL: We will be interviewing the first two weeks in June and hopefully have somebody on board July 1.

MR. BEHRENS: Okay. We'll move on into agenda item number 12 will be our rules for this month. Agenda item 12a is rules for proposed adoption concerning international bridges. And, Jim, you're up again.

MR. RANDALL: Okay, sir. Jim Randall again with Transportation Planning and Programming Division. Item 12a this minute order proposes the adoption amendments to Section 15.70 through 15.76 to be codified under Title 43 Texas Administrative Code Part 1, relating to international bridges.

The proposed amendments are necessary to implement the provisions of House Bill 1653, 78th Legislature, Regular Session, 2003, clarify certain terms and definitions, update statutory references, clarify existing information, modify requirements for public involvement, and allow for comparison for competing applications.

Section 15.70 is amended to permit an entity that is authorized to construct a new international bridge to enter into the approval process with the Texas Department of Transportation I mean, the Texas Transportation Commission and the United States simultaneously.

Section 15.70 and 15.71 updates statutory references, adds definitions regarding competing bridge applicant and the district office, and removes references to the 1994 Texas-Mexico Bridge Study.

The amendment to Section 15.72 includes additional language to assist potential applicants with information gathering related to the application process by directing them to the local department district office and to the Transportation Planning and Programming Division.

Section 15.73 establishes the process for addressing competing applications and clarifies the requirements related to environmental documentation and for public involvement.

Amendment Sections 15.74 and 15.75 remove a reference to an organization position no longer used by the department, revises references to current state agency titles, and adds a subsection to clarify the commission will consider information pertaining to competing bridges.

And Section 15.76 all reference to the 1994 study are being removed and language is being added to reflect Transportation Code 201.612 requirements for local entities to withdraw applications that are not approved by the commission from consideration from the United States.

The minute order presented for your consideration authorizes the publication of the proposed amendments in the Texas Register for the purpose of receiving public comments. Staff recommends approval of this minute order.

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

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you, Jim.

MR. RANDALL: Thank you.

MR. BEHRENS: Agenda item 12b(1) is rule for final adoption. This concerns our Transportation Development Credit Program. James?

MR. BASS: Good afternoon. Again, for the record, I'm James Bass.

The minute order before you would adopt rules for the award of transportation development credits. Some brief highlights 75 percent of the credits earned by local agencies or by TxDOT in the area of an RMA will be available only to that area for a period of three program calls.

Twenty-five percent of the locally earned credits and all non-locally earned credits can be awarded at the discretion of the commission or through one of the program calls.

If a project seeking to use credits is in the area of an MPO the commission will consider the expressed opinion of the MPO.

The proposed rules were published in the Texas Register and a public hearing was held in order to receive public comments. Comments were received and are addressed in the Exhibit A.

One comment that we did add some language in response to was that the comment that an air quality project should be considered an eligible project. We agreed with this and with certain limitation.

If the proposer is able to show that the project is in an non-attainment area, that the project will solve specific congestion problems other than by adding lanes for single occupant vehicles, and that the project will reduce mobile source emissions then it would be considered an eligible project.

Staff recommends your approval of the rules.

MR. WILLIAMSON: I have a couple of I have one question and a significant suggestion I think. But I'll yield to you, Ted. Anything?

MR. HOUGHTON: No.

MR. WILLIAMSON: John?

MR. JOHNSON: James, the balance currently of transportation development credits do these rules apply retroactively to that balance, and do we have if so, do we have a calculation on the MPO or the district qualifiers and how many

MR. BASS: Yes.

MR. JOHNSON: credits there are in their account?

MR. BASS: The current balance is in the neighborhood of $110 million. And we know that we know of the total originally, which is something higher than that probably in the neighborhood of 130 the entities that created that.

To date the awards of the commission we have not taken from one particular subaccount, if you will. So more than likely what we'll have to do is take the remaining balance and, on a pro rata basis, assign it to the different entities and then carry that forward.

MR. JOHNSON: But we do know

MR. BASS: Yes, sir.

MR. JOHNSON: where from whence they come.

MR. BASS: Yes. That's it.

MR. WILLIAMSON: And, James, just to address one of the comments made by the Partners in Mobility today and to clarify for the record what we're doing. Does the minute order suggest or in any way clearly set out that we will apportion the transportation development credits by metropolitan area?

MR. BASS: If an area let's use the example of NTTA one of their roads earns transportation credit development credits. Seventy-five percent of those credits earned on that project would be available only for the North Central Texas Region for a period of three program calls.

If during those three program calls they did not submit a project that was eligible and receive credits it would then be opened up on a statewide basis. But, in effect, they have three swings at the bat for 75 percent of the credits earned.

MR. WILLIAMSON: Does Michael want to comment on that or do you have anything to say about it, Michael?

MR. MORRIS: Michael Morris, Counsel, Government staff. I think that's a very fair proposition. I think we were looking at making sure we could use it for air quality projects as well. But three program calls, and one's asleep at the wheels, that's more than enough time to get your act together.

We have situations where we have 80 percent federal funds for an air quality project that's in the state of limitation plan. Sometimes hard to get the 20 percent match similar to your issue on credits for the border communities. If you could flex them to permit us to use them for air quality credits we'll certainly do that. And if we don't get our act together we very much would support your moving your credits to somewhere else in the state.

MR. WILLIAMSON: Thank you. John, does that I know you've been concerned about this from day one. Are you comfortable with

MR. JOHNSON: Yes. My question other question, James, is the what is your anticipated spacing between the calls? Annually or

MR. BASS: That

MR. JOHNSON: other?

MR. BASS: would be what we would think we wanted to leave flexibility obviously in the rules and not hard wire it to annually in case we wanted to do it more frequently or less frequently. We wanted to I guess kind of gain some experience on that matter before hard wiring it into the rules.

MR. JOHNSON: Well, I wasn't suggesting that you needed to hard line it into the rules. I just wondered what your expectation or anticipation was.

MR. BASS: I think the anticipation would be annually. And some of that will depend upon once we go out for the initial program call. If we receive applications far in excess of what we have available then that would tend us to do it more frequently. If the applications come in far under then we may want to space the program calls out a little bit more.

MR. WILLIAMSON: Okay. I have one change that I wish to make if I can do so without or ask the commission to make if I could do so without disrupting the impact of the minute order.

In Exhibit A on page 5 of 12 where we lay out our strategies, I know I've been trying at every turn of the page for us to adopt a strategy that says use all of our financial options, not just our new financial options. I made the mistake of using the word "new" a few months ago, and it's kind of been written everywhere.

My intention here, Mr. Monroe, is to make it clear that strategically we will use "all" of our financial option or tools, be it the gasoline tax, the mobility fund, the pass-through toll financing whatever it is. We're not going to leave anything in the bank or untouched. We're going to use all of our tools. And I'm wondering if I could change the word "new" to "all" and that would be okay. Do you have any objection to that, Ted or John?

MR. HOUGHTON: No.

MR. JOHNSON: No.

MR. WILLIAMSON: And just by way of instruction to staff everywhere you see my original mistake of "new," Amadeo just everywhere you see it change it to "all."

MR. SAENZ: Yes, sir.

MR. WILLIAMSON: We want to make it clear to the Legislature we're using all of them, not just part of them. So if I if someone will make the motion to adopt the minute order as amended in that regard.

MR. JOHNSON: I would move.

MR. HOUGHTON: Second.

MR. WILLIAMSON: I have a motion and a second to adopt the minute order as amended. 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 b(2), another rule for final adoption, under Public Transportation. This is some adjustments in real transit rules to comply with federal revisions. Eric?

MR. GLEASON: Good afternoon. For the record, I'm Eric Gleason, Director of Public Transportation.

MR. WILLIAMSON: It's been a long wait, hadn't it, Eric?

MR. GLEASON: That's all right. Lots of interesting topics today.

The rules before you for final adoption repeal current sections of Administrative Code governing Rail Fixed Guideway Systems, State Safety Oversight, and replace those sections with rules consistent with new regulations adopted by the Federal Transit Administration.

Currently TxDOT provides this oversight function for three systems in Texas Dallas, Houston, and the Galveston Island Trolley. All three systems are very much aware of the new regulations and already taken actions to meet the new requirements.

No comments on the proposed repeals and new section were received during the public comment period. The Public Transportation Advisory Committee is in agreement with the rules as written. We recommend your approval.

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

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

MR. WILLIAMSON: 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. GLEASON: Thank you.

MR. WILLIAMSON: Thank you for your patience, Eric. I've been watching you all afternoon back there waiting.

MR. BEHRENS: We've covered agenda item number 13. We'll go to 14, which is under Transportation Planning. And this will be a minute order recommending the use of federal discretionary funds for selected projects. Jim?

MR. RANDALL: Jim Randall, Transportation Planning and Programming Division.

Item 14 this minute order authorizes 33.1 million in federal discretionary funds as approved by the Federal Highway Administration. These funds will be used specifically for the development of 36 projects listed in Exhibit A. We recommend approval of the projects identified in the FY 2006 discretionary program. Staff recommends approval of this minute order.

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

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

MR. WILLIAMSON: 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, Jim.

MR. RANDALL: Thank you.

MR. BEHRENS: Agenda item number 15c, which is a minute order that will seek approval to change the dollar limit on some what we call indefinite deliverable contracts or evergreen contracts and their relation to their use for CDA projects.

MR. WILLIAMSON: Quick, Amadeo, what do we lovingly call this amendment?

MR. SAENZ: What do we lovingly call this amendment?

MR. WILLIAMSON: Lovingly call this the Robert Nichols minute order.

MR. SAENZ: Yes, sir. Robert Nichols minute order. Again, for the record, Amadeo Saenz, Assistant Executive Director, Engineering Operations.

The minute order before you authorizes the department to exceed the dollar limit on and contract limit restrictions for the procurement of under the indefinite deliverable contracts or the evergreen type contracts for services that hire independent engineers for projects that are developed under CDA concession agreements.

Currently the indefinite deliverable contracts or evergreen contracts have limits of not more than two years and not more than $5 million. And we are asking the rules currently allow the commission to give us an exception to that.

We are trying to procure the services of independent engineers that will be the engineers that will manage and oversee the CDA concession projects. And under the CDA rules the CDA agreements that we're signing the independent engineers will be paid for equally by the department and by the concessionaire.

So since we're sharing the cost we have no mechanism under the project specific contracts to allow them to be as part of the selection process. So under this mechanism, by being able to go out there and through the evergreen process, have a pool of consultants on board.

We will then from that pool of consultants on board that are already under contract then, as a CDA project is negotiated and we have an agreement the concessionaire will then select from one of these pool one of these consultants that has been in the pool. And from there then we will negotiate a work order to handle the independent engineer functions for the project.

The limits and the amount the dollar figure are much bigger because some of these projects will take longer than the two years to construct. So we wanted to have the authority to be able to have these contracts to go for five years and also to increase the dollar amount limit to 25 million.

The actual work order will determine the actual amount of time, as well as the dollar limit that will be the responsibility of the department. Staff recommends approval of this minute order.
MR. WILLIAMSON: Members, we had a witness to this minute order and she had to leave. But she submitted her either statement or questions. And Mike would like to ask those questions of Amadeo for us before we ask questions if that's okay.

MR. BEHRENS: Yes. This these comments were submitted by Tina Walker. She works for Parsons Brinckerhoff. And her first question, Amadeo, was how will TxDOT draft conflict of interest guidelines for consultants interested in participating in TxDOT's CDA program I think that was dated July 20, '05 how would that be interpreted for this type of work?

MR. SAENZ: The potential consultants that will that could be selected for this would not be able to be on any proposer team. So, in other words, we have draft guidelines that we've put in place for conflict of interest. And if a consultant is on our independent engineer team they could not be on any proposer team well, not on this proposer team for sure, but not on any proposer team on other CDAs.

MR. HOUGHTON: On any other CDAs.

MR. SAENZ: Yes, sir.

MR. HOUGHTON: Okay.

MR. BEHRENS: Okay. The second question was, does the department anticipate having these teams in place prior to after the selection of a CDA developer for a project or group of projects such as I-69?

MR. SAENZ: We will have if commission grants us approval we will move forward with and have these independent engineer pool of independent engineers on contract before the TTC 69 developer is selected. Yes, sir.

MR. BEHRENS: Okay. Number three, would there be more than one solicitation for services?

MR. SAENZ: Our plan right now is I think we have like seven or eight procurements for CDAs. Our plan right now is to try to bring on board ten independent engineers so we can have ten contracts so we can have a pool of ten for the individual developers to select from.

MR. BEHRENS: Then after all those would

MR. SAENZ: After all those then we could

MR. BEHRENS: we go out with another

MR. SAENZ: We could go out with another in the future. But for right now we will have ten. And that should cover us for the first group of CDAs that we're currently developing.

MR. BEHRENS: If the teams are selected prior to the start-up of a CDA team when would the notice to proceed be issued or would contract execution for these teams be deferred until the developer has been selected and that CDA contract executed.

MR. SAENZ: Yes. It would be deferred. We have to first of all, of course, we have to develop a we have to select a developer and execute the CDA agreement. As part of the execution of that CDA agreement then we would go back and from that jointly select the independent engineer from the pool.

MR. BEHRENS: Okay. For the department's cash flow management forecasting purpose on evergreen contracts does the Finance Division assume the full value of the contract will be expended during the initial contract period or is the cash flow forecast based on executed individual work authorizations?

MR. SAENZ: It would be based on executed individual work authorizations.

MR. BEHRENS: Okay. Last one. Has there been an assessment of the potential impact of such large contracts and the associated manpower requirement for dedicated staffing that is typical in TTA CDA-related contracts to the department's anticipated consulting contracting needs over the next three to five years?

MR. WILLIAMSON: Read that again.

MR. BEHRENS: Has there been an assessment of the

MR. SAENZ: I think the question is she's asking and based on the workload that we have for CDA have we determined how many procurement engineers we may be needing, how many GEC consultants we may be needing, and then, of course, now how many independent engineers we would be needing for these concession-type CDAs.

We have gone and had already an approval under the normal evergreen process have acquired consultants for the procurement functions. So we have a pool already, and then those have been assigned all the projects already have procurement engineers.

The big the TTC 69 and the TTC 35 already have GEC consultants in place. So really the only thing we have left for the procurements that are ongoing now are the independent engineer responsibilities. As we identify more projects then we will come back and determine how much more consultants we will need.

MR. BEHRENS: She adds, she thanks very much for the opportunity to address these comments.

MR. WILLIAMSON: I think, Amadeo, if I understand correctly, you're asking us to expand this concept because we're basically asking a firm that wishes to be on this list to forgo any opportunity to make a CDA proposal.

MR. SAENZ: Well, it will be up to the firm to decide if they want to. The reason that I have to have a list or a pool of firms already under contract is so that when let's say I'm going to take the Cintra-Zachry. As we negotiate that facility agreement we need to hire an independent engineer. Our agreement says we will jointly select that engineer.

So because I have to pay for half of it I have to follow my process. And then once so I wanted to have a pool of engineers already in place these are all under contract. Then he would then they would come back and select one of them and we would then negotiate the work order jointly with that particular engineer.

Whether consultant firms want to propose to be independent engineers that's solely going to be a business move on their part.

MR. WILLIAMSON: But our actions today, if we approve your recommendation, that does not trigger the payment of a cash amount to any engineering firm.

MR. SAENZ: No, sir.

MR. WILLIAMSON: The only thing

MR. SAENZ: That's one of the things the really the firms that will come onboard will then be under contract. But they're not guaranteed that they're going to get any work until we execute a CDA and jointly with the developer select one of those firms to be the independent engineer.

MR. WILLIAMSON: So you're retaining firms for a period of time, and they know generally how long you're going to be able to secure their services.

MR. SAENZ: Yes, sir for five years.

MR. HOUGHTON: We're not we can't negotiate price with those firms. Correct?

MR. SAENZ: We will negotiate

MR. WILLIAMSON: Not yet.

MR. SAENZ: We will negotiate price after their under contract and we get to the point to issue the first work order.

MR. WILLIAMSON: But I've been told, hang on, help's on the way.

MR. SAENZ: Currently this is the way we can do it. Now, if those firms if, let's say, we go through the first series and if we have ten and we issue the first three or four work orders and if one of those firms says, I no longer want to be considered, they can always cancel their contract and then they'll be able to do whatever they want.

MR. WILLIAMSON: John? (No response.) Members, you've heard the staff's explanation of the minute order and recommendation.

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you, Amadeo.

MR. BEHRENS: Agenda item number 16 is our state infrastructure bank. This will be to consider approval for Webb County. James?

MR. BASS: Again, for the record, I'm James Bass, Chief Financial Officer at TxDOT.

Back in February of this year you approved a loan of just under $250,000 to Webb County to pay for a preliminary engineering design to study portions of the Bob Bullock Loop. Previously the county had asked to secure this loan through certificates of participation. And this was based on an earlier attorney general opinion.

What the county was not aware of is that the Legislature had addressed that opinion and had given the county the ability to have a direct loan with the SIB. So now the county would prefer to secure the loan with general tax collections and/or their ad valorem taxes.

All other terms of the loan previously approved would remain the same. And staff recommends your approval.

MR. WILLIAMSON: Out of curiosity do we have Mayor Flores' approval on this one?

MR. BASS: I'm not aware.

MR. WILLIAMSON: Members, 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 signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you, James.

MR. BEHRENS: Okay. We'll go taken care of 17. We'll go to 18, which is our contracts for the month of May, both on maintenance and our highway and building construction.

MR. BOHUSLAV: My name is Thomas Bohuslav. I'm director of the Construction Division. Good afternoon.

Item 18a is for consideration of the award or rejection of highway maintenance contracts let on May 9 and 10, 2006, whose engineering estimate is $300,000 or more.

We had 12 projects an average of 2.9 bids per projects. We have two projects we recommend for rejection.

The first project we recommend for rejection is project number 4009 in Harris County had two bidders it was 65 percent over. The low bid was $624,000. It's a mowing contract, and the price for mowing is almost two times what we estimated the cost to be. We think we can get some better prices by going back and rebidding the job.

The second project recommended for rejection is project number 4002, Smith County two bidders 57 percent over. It was $561,000 low bid. This is guard rail repair, and, again, these prices are high. We think we'd like to go back and rebid it.

Staff recommends approval of all projects with the exceptions noted. And I will note there is a very large maintenance contract in here from the San Antonio District that is for striping maintenance. It's a kind of a performance-based contract $23 million. It's five years with a two-year extension.

So it's more of the total-maintenance type contract with performance requirements sort of where we got payments if they don't meet our performance standards. That wild and crazy DE down in San Antonio is doing it to us again.

MR. WILLIAMSON: He's wild and crazy. We all agree.

MR. HOUGHTON: So moved.

MR. JOHNSON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you, Thomas.

MR. BOHUSLAV: Item 18a(2) is for consideration of the award or rejection on highway building and construction contracts let on May 8, May 9, and 10, 2006.

We had 107 projects average of 3.5 bids per project. We have seven projects we recommend for rejection.

First project is project number 3249 in Bastrop County one bidder 37 percent over $888,000 low bid. Overlay work on State Highway 95 and Loop 150. We'd like to rebid it and solicit more bidders get more competition on the project.

Second project is in Ellis County had three bidders project number 3207 26 percent over $5.3 million low bid. This is a rehab of FM 660 there. We had an error in the plans. We busted a quantity on prep right of way item significantly. It would have added another $600,000 overrun so made it almost 50 percent overrun as well.

Next project recommended for rejection is 3054 in Kaufman County two bidders 77 percent over $873,000 low bid. Construction turn lanes in Kaufman at the Kaufman Sports Complex there on State Highway 34. We'll have to go back and bundle this with some other projects to see if we can get economy scale savings by doing so.

Next project recommended for rejection is again in Kaufman County 3233 three bidders 71 percent over $2.2 million low bid. This was a construction of a vehicle weighing system. And we included a special precast concrete pavement design in this thing, and it just cost is extremely high. We're going to go back and redesign it to a more conventional product.

And in Kerr County project number 3246 three bidders 26 percent over $1.4 million overrun. This is for some safety work on FM 2771 for dividing on the roadway there. We need to go back in those plans, refine some additional detail so that we can reduce some uncertainty on how the bidders had to bid the project. I'd like to go back and redesign it and address those issues.

Next project recommended for rejection in fact, the next two projects the first one's 3245 in Webb County and the next one 3045 in Webb County. And we had two bidders on both these projects. The first one was 84 percent over and the second one was 62 percent over.

Of course, these are very high prices and we had to pavement surface requirement in this item. It's a does not quite have the competition maybe we'd like to see. And the prices we got were extremely high and we'd like to go back and redesign and see if we can save some money on that.

And with that we recommend award of all projects with the exceptions noted. Any questions?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you, Thomas.

MR. BEHRENS: Agenda item 18b is a contract claim in Tarrant County with S.F.W. Construction. Zane?

MR. WEBB: Good afternoon, Commissioners. For the record, I'm Zane Webb, Director of the Maintenance Division and Chairman of the Contract Claim Committee.

The minute order you have before you approves a claim settlement for a contract by S.F.W. Construction, Incorporated for Project BR 97(277)OX, et cetera, in Tarrant County in the Fort Worth District.

On April 13 a TxDOT Contract Claim Committee considered this claim and made a recommendation for settlement to the contractor. The contractor has accepted. The committee considers this a fair and reasonable settlement of the claim and recommends approval.

MR. WILLIAMSON: Members, you've heard the staff 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 signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries. Thank you, Zane.

MR. WEBB: Thank you, sir.

MR. BEHRENS: Agenda item 19 is our routine minute orders. They're all listed. They were all duly posted. We have the donations, the eminent domain, highway designations, load zoning, right of way dispositions, and then speed zoning. I think you're all aware that the speed zoning has 80-mile-an-hour speed limits as part of that recommendation.

MR. JOHNSON: Mike, earlier in the meeting I heard the Chairman mention his affinity for an 85-mile-per-hour speed zone. Are we moving in that direction?

MR. BEHRENS: We're taking it in stages 75, 80

MR. JOHNSON: Eighty-five, 90?

MR. WILLIAMSON: I was hoping that we could discuss a substitute to lower it to 60 miles an hour.

MR. JOHNSON: Well, you also wanted to put Parker County into this minute order.

MR. WILLIAMSON: Yes, at 60 miles an hour. You're right. Sixty miles an hour I want to do that. I'm wondering, would it be okay to amend it to put cameras everywhere we let people go 85 is it 80 miles an hour? I think we had one witness Mr. Nichols wanted to comment on the speed zone.

MR. JOHNSON: He wants to know why we haven't gone east with this thing. Only on U.S. 79. We can put cameras most anywhere. We just can't use them for anything.

MR. WILLIAMSON: Well, I mean, just recording people going fast and sending them a letter saying Big Brother's watching might be enough. It would spook me. Would it spook you?

MR. JOHNSON: No.

MR. BEHRENS: I don't think any of these minute orders, according to my knowledge, would impact any of the commissioners as far as some of those other items. So we recommend approval.

MR. WILLIAMSON: The speed matter is of all the things on this item the speed matter probably has attracted the most attention. I guess we ought to ask staff for a brief explanation of how we concluded that the speed matter was something that we could move forward with. Carlos?

MR. LOPEZ: Good afternoon, Commissioners. My name is Carlos Lopez, Director of Traffic Operations Division. Chairman, your question is how do we come to this recommendation.

MR. WILLIAMSON: You know, we have obviously have members of the free press watching the decision today. And I think we tried to explain in this briefing yesterday. But it probably would be instructive for those who watch the videotape to understand sort of the process that we follow.

MR. LOPEZ: Okay. Well, I guess the first thing I want to say is the Legislature was debating this bill. It passed 142 to zero in the House, 31 to zero in the Senate. So that gave us a very good indication that they want us to take a look at this.

So what we did is we went out to these highways Interstate 10, Interstate 20 very rural parts of West Texas and did our normal speed studies that we do for any highway to do a speed limit in the state.

And it's something called the 85th percentile method. And that's where we actually go out there and measure speed and calculate what 85 percent of the drivers are going at or below. What we found in all these stretches on I-10 and I-20 that those speeds were between 79 and 76 miles per hour.

And the way we do speed limits in the state we can go up or down from whatever that 85th percentile is. So those speeds support the existing 75. It also supports 80. And that's the recommendation you have in front of you today.

MR. WILLIAMSON: And one of the questions that was asked by a member of the free press was how do we know that's the highways are constructed to safety travel that distance. And I think the engineer director executive director answered that the interstate system was almost always uniform and built to handle speeds really at that or in excess of that.

MR. LOPEZ: Yes, and especially in this part of the state. You have such flat grades, forgiving roadsides, good sight distance I mean, in theory your designed speeds are much higher than what are even being contemplated today.

And, you know, what we have found in these stretches of highway is that after we went to 75 from what previously were 70 the fatalities were actually lower in the post-three-year stretch than before.

MR. WILLIAMSON: One of the members of the free press observed that would people who go slow on 75-mile-an-hour roads continue to go that same slowness on 80-mile-an-hour roads or would they ratchet their slowness up or would that create a safety issue as far as we could calculate?

MR. LOPEZ: I think most of the speeds when you take them they'll be like a Bell curve. And most folks are going to be within I think within five miles per hour of each other when you get to the extremes.

There might still be some folks that don't feel comfortable going 80. And that's okay. But the vast majority of the drivers out there today are going in between that 75 and 80-mile-an-hour range. So it's an appropriate speed limit for out there, but we will keep a very close eye on this.

MR. WILLIAMSON: So I guess one would opine or if one were to have gotten a call, as we all have, from local citizens in the area who say they are opposed to this, I guess they were all surprised to find out that people were traveling very near this all along anyway.

MR. LOPEZ: I think that is the biggest surprise to people, Chairman, when they find out how we set speed limits. It's basically the folks that are on that road help us to best determine what the speed ought to be.

MR. WILLIAMSON: And we didn't like to advertise ahead of time that we were going to be out there doing these surveys and you need to speed if you want the speed limit to be changed. We didn't do any of that, did we?

MR. LOPEZ: None of that.

MR. WILLIAMSON: Ted, anything? No? John?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

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

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. LOPEZ: Thank you, Commissioners.

MR. WILLIAMSON: Is there any reason to go into executive session, Mike?

MR. BEHRENS: No, sir.

MR. WILLIAMSON: Mr. Monroe, any reason you know of? (No response.) Well, is it a record? Seven hours, 12 minutes. It's not?

MR. JOHNSON: For the record, I would like to mention that this past Saturday, May 20, that Ms. Phyllis Renee Chandler became Mrs. Dwayne Gordon and hope that she and Dwayne have a lifetime of happiness together.

MR. WILLIAMSON: We do congratulate her officially for the TxDOT record.

MR. HOUGHTON: And that's a second too.

MR. WILLIAMSON: Now, what I want to know is how long will we have to sit here and chub in order to break the record? I mean, is it within sight?

MR. JOHNSON: Oh, no.

MR. WILLIAMSON: An hour-and-a-half? Lord, no. The most privileged motion is in order.

MR. JOHNSON: You don't want to filibuster?

MR. WILLIAMSON: The most privileged motion is in order.

MR. HOUGHTON: So moved. Move to adjourn.

MR. JOHNSON: I'm going to wait till 4:13 to I'll second.

MR. WILLIAMSON: I have a motion to adjourn. All those in favor of the motion signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed no.

(No response.)

MR. WILLIAMSON: Motion carries. We're adjourned at 4:13 p.m.

(Whereupon, at 4:13 p.m., the meeting was concluded.)

C E R T I F I C A T E

MEETING OF: Texas Transportation Commission
LOCATION: Austin, Texas
DATE: May 25, 2006
I do hereby certify that the foregoing pages, numbers 1 through 343 inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Carol Oppenheimer before the Texas Department of Transportation.



Nancy King/
Diane Swinney 5/30/2006
(Transcriber) (Date)

On the Record Reporting, Inc.
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