Jere Thompson Jr.: We would forfeit billions with private partnership on 121

This is an informative read printed in today's Dallas Morning News

Over the past few weeks a drama has played out in Austin over the future of State Highway 121, a huge roadway that will soon be the equivalent of a 26-mile-long "LBJ Freeway" between Central Expressway and Interstate 35.

The story began over a year ago when the decision was made to obtain badly needed transportation funds by converting Highway 121 to a toll road and then selling a 50-year concession on it.

At the insistence of the Texas Department of Transportation, the North Texas Turnpike Authority – the region's only experienced toll road agency – was ultimately excluded as a bidder.

Last month, Gov. Rick Perry announced with some fanfare that a Spanish company, Cintra, had the winning bid of $2.8 billion for the rights to the toll road. That's when things got interesting.

At the request of state Sen. John Carona, the NTTA responded that it could likely "offer" $6.3 billion using the same general assumptions employed by Cintra.

How can the NTTA produce so much more than Cintra? Because of its lower cost of funds.

The NTTA requires no equity returns and has access to low-interest municipal bonds. This capital structure is significantly less expensive than Cintra's combination of taxable bonds and equity.

Therefore, with the same revenue assumptions, the NTTA can return $3.5 billion more to the region than Cintra. This amount is more than TxDOT spent on new road construction in Dallas, Collin and Denton counties during the past five years.

The contract with Cintra has not yet been signed. By selecting the NTTA, an additional $3.5 billion would become available to the region. By selecting Cintra, that same $3.5 billion would become profits for Cintra and interest income for Cintra's banks.

Which would you pick?

Welcome to the new world of comprehensive development agreements, commonly referred to as CDAs. They involve the sale of a toll road's revenue stream to a private entity in return for huge upfront signing fees and future revenue sharing.

CDAs can sometimes be good. Examples are ventures that the public sector is unwilling or unable to construct, very expensive urban projects with uncertain traffic estimates, and projects in rural areas with no history of toll roads.

The private sector's willingness to accept the construction, financing, traffic and revenue risks in these examples justifies their economic rewards.

On the other hand, a perfect example of a bad CDA is Highway 121. The NTTA is willing and able to finance and construct the project, right-of-way costs are known, construction cost increases are not being assumed by Cintra, noncompete penalties are provided, traffic can be reasonably forecasted, and area commuters have already demonstrated their receptiveness to toll roads. Cintra would capture very high rewards for very little risk.

Because of the controversy over Highway 121 and other projects around the state, a two-year moratorium on CDAs has been proposed in Austin.

Local opponents to the moratorium claim that critical projects will not get built and congestion will strangle our region.

But the proposed moratorium applies only to selling to the private sector the rights to public assets. The NTTA is a public agency and would be exempted from this moratorium. It could build and, with legislative permission, allocate funds to nontoll projects.

If the moratorium halts a flawed selection process, results in more transportation dollars for this region, and permits construction of critical projects without delay, how can it be viewed as anything but good?

How should the Legislature address the use of CDAs and solve the funding crisis?

First, regional toll road authorities should obtain the first right to build new toll projects and should not have to pay TxDOT for this right to build.

Second, toll road authorities should obtain the ability to allocate funds to nontoll transportation projects.

Third, funding raised from tolls should not reduce funding from gas taxes, and all gas tax dollars due this region should be promptly returned here and not spent elsewhere.

Finally, the only serious long-term solution to this crisis is to index gas taxes. When the pain of the status quo exceeds the pain of change, change happens.

The Legislature needs to increase and index the gas tax to fund new transportation construction.

Jere Thompson Jr. is a former chairman of the North Texas Turnpike Authority and its predecessor, the Texas Turnpike Authority. He now serves as the Transportation Chairman for the Dallas Citizens Council and the Trinity Commons Foundation. His e-mail address is jwt@ambitenergy.com.

Krusee is having to play defense

Nice little read........

March madness over tolls grips Legislature

Vexed by private tollway deals, affronted by TxDOT's attitudes, Legislature looks to rein in Perry's turnpike push

By Ben Wear
AMERICAN-STATESMAN STAFF
Monday, March 19, 2007

Mike Krusee looked tired.

The Republican state representative from Williamson County, interviewed at his Capitol office last week, for 10 days or so had been fighting what some people call the creeping crud, a debilitating mixture of cold, flu and allergy symptoms hitting many Central Texans this spring.

But Krusee, for much longer than 10 days, has also been fighting the creeping realization among legislators that over the past two sessions, they might have granted Gov. Rick Perry and the Texas Department of Transportation too much power to create toll roads. For the first time in his three sessions as chairman of the House Transportation Committee and the leading legislative architect of toll road policy, Krusee is having to play defense.

For a number of reasons — campaign trail grumbling last year, disputes with Dallas and Houston toll road agencies, lack of deference to legislators by Texas transportation commissioners, turf battles over huge pots of money suddenly coming Texas' way — the Legislature has been gripped by a sort of March madness over tollways, particularly those that would be in private hands for a half-century.

What remains to be seen is what the madness will lead to by the end of the session May 28. As transportation chairman, Krusee can, in theory, block most legislation seeking to roll back tollway powers. And Perry could veto whatever makes it to his desk.

But more than two-thirds of the Legislature has signed on to legislation that would put a two-year moratorium on concessions, contracts with private companies to build and run toll roads. Dozens of other bills limiting tollway powers have been filed. And powerful legislators, including Senate Finance Committee Chairman Steve Ogden, R-Bryan, are talking about using the power of the purse to curb the Transportation Department.

Perry and Krusee may have no choice but to make concessions on concessions and on other prongs of their toll road agenda.

"Watch the budget," Ogden said. "At the end of the day, TxDOT can't spend a dime without our permission. So, watch the budget."

Ogden has a unique role in the situation.

In 2003, when he was chairman of the Senate Transportation and Homeland Security Committee, Ogden sponsored House Bill 3588, a humongous bill that, among other things, authorized Perry's Trans-Texas Corridor plan and allowed the state to enter into concession agreements with private companies. That bill, conceived and carried by Krusee in the House, basically made possible everything that Ogden and most of the Legislature are now stewing over.

Ogden has filed bills that would prohibit the granting of long-term road leases and require that toll roads become free roads when money borrowed by government for construction is paid off. He says tolls should be a mechanism to get a specific road built, not a profit center. Those two short and simple measures would gut the Transportation Department's toll road policy.

Ogden was asked for his take on why he and so many other lawmakers have had second thoughts about their 2003 handiwork.

"What's going on? We had an election, that's what," Ogden said. "All we're doing is reflecting what we heard on the campaign trail."

Others paint a more complicated picture. Repercussions from HB 3588 were already being felt when the Legislature met in 2005. There was grass-roots toll opposition in Austin and San Antonio and widespread unhappiness among farmers and ranchers about the corridor plan to build 4,000 miles of tollways, railroads and utility easements. But although the Legislature made some tweaks in 2005, mostly to appease the rural concerns, nothing like this session's Category 5 blowback occurred.

It's one thing to upset residents of Austin or Fayetteville and quite another to get crosswise with toll road agencies in Dallas and Houston.

The Transportation Department, in its zeal to award long-term toll road leases to private companies and thus reap multibillion-dollar upfront payments from them, has managed to alienate the North Texas Tollway Authority and the Harris County Toll Road Authority.

The local authorities want first shot at operating toll roads in their areas and feel that the state agency has shouldered them out of the way.

On Feb. 27, the Transportation Department awarded a contract for Texas 121, a road in suburban Collin County north of Dallas, to a partnership headed by Cintra, a Spanish toll road company that earlier won a bid to build 41 miles of the Texas 130 tollway southeast of Austin with Texas partner Zachry Construction. Cintra said it could give the state $2.1 billion upfront and $750 million more over 50 years for Texas 121.

The North Texas Tollway Authority declined to bid on that contract, a choice that, depending on who is telling the tale, may or may not have been made under pressure from Texas Transportation Commission Chairman Ric Williamson and his department.

In Houston, the Transportation Department said in April that it wanted more than $1.2 billion to sell some right of way to the Harris County authority for three more toll roads. That huge price reflected not the real estate value, but what the state could get from a private tollway operator.

Those kinds of huge upfront payments from private road operators excite Williamson and other tollanistas. But they come with a probable consequence to consumers — higher tolls — and stoke fear that the state is underselling the farm to tollway companies.

And legislators are made nervous by the Transportation Department's newfound ability to generate towering wads of cash independent of the state budget.

The Dallas and Houston episodes, along with Williamson's sometimes off-putting certitude about toll roads, have earned the Transportation Department some vigorous enemies in the statehouse, most prominently state Sen. John Carona, R-Dallas. Carona, chairman of the Senate transportation committee, has used that pulpit to bash Williamson and the agency. He also has a thick packet of tollway rollback legislation pending.

Then there is freshman Sen. Robert Nichols, R-Jacksonville, a former transportation commissioner and Williamson ally who is unhappy about language in the pending Texas 130 contract that he says would either tie the state's hands from building free roads near Cintra's section of Texas 130 or force the state to pay Cintra-Zachry tens of millions of dollars in the future. He has filed a Senate bill, with 24 co-sponsors, for a two-year moratorium on private toll road contracts.

State Rep. Lois Kolkhorst, R-Brenham, has a House twin that has 97 co-sponsors.

Those freeze bills, and most of the other toll road bills, may never move, however. This month, Carona has met in private at least three times with Krusee, Williamson and Perry transportation aide Kris Heckmann with the intention of creating an omnibus transportation bill to include elements from the pending bills as well as policy changes sought by the Transportation Department.

"It's important that we take these ideas now and wrap them into some piece of policy that is balanced and makes the most long-term sense," Carona said. "In all fairness, the Legislature has not left the commission with many options other than the pursuit of toll roads."

Which brings up the gas tax. At 20 cents a gallon and holding since 1991, the tax is falling far short of meeting the state's need for new pavement. Carona and Krusee have separate bills to make automatic annual increases to the tax, based on different measures of inflation. Initially, Carona's bill might increase the tax 3 cents a year and raise about $300 million more a year. Krusee's bill might generate a sixth of Carona's.

Neither will come close to eliminating the need for new toll roads.

Perry spokesman Robert Black said the governor, who has steadily opposed gas taxes, "is not going to close the door" on a gas tax indexing bill. Black suggested that if lawmakers take away some powers, "they need to replace them with something. . . . If the Legislature wants to make changes, additions, amendments, that's fine. But let's make sure it pushes forward."

bwear@statesman.com; 445-3698

Credit Cards coming toToll Roads

Cards coming to vending machines, toll roads

Cadbury Schweppes Americas Beverages is working with MasterCard and USA Technologies Inc. to equip 1,000 vending machines with e-Port cashless transaction solutions to accept credit card payments. CSAB's machines (selling Dr Pepper, 7Up, Snapple and Canada Dry) in Dallas, New York and Chicago will be enabled to accept major credit cards, including MasterCard's PayPass.

Also, MasterCard, USA Technologies and Paywerks Inc. are conducting a PayPass trial at exit lanes and service plazas on the Ohio Turnpike, reportedly the first toll road in the country to accept payment cards for self-service toll transactions.

Sources: www.amonline.com and www.greensheet.com

CAMPO delays vote on additional toll roads

The Capital Area Metro Planning Organization (CAMPO) Monday night decided to delay a vote on additional toll roads for six months.

That will give CAMPO more time to study the issue.

State transportation officials want to continue adding toll roads to the area as part of Phase 2 of its transportation project, but hundreds of people crowded CAMPO's meeting Monday night to fight against the idea.

Phase 2 includes parts of Highway 290, U.S.183, Highway 71 and State Highway 45


Source: KVUE News

Public Speaks Out Vs. Toll Road Plan At CAMPO Meeting - Phase 2 Toll Plan delayed

Public Speaks Out Vs. Toll Road Plan At CAMPO Meeting (KXAN)


CAMPO Delays vote on Phase 2 tollways-
At meeting marked by protests board adapts plan to trim it's size (Statesman)